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To: ViperChick Secret Agent 006.9 who wrote (49969)	8/16/1998 12:46:00 PM
From: ViperChick Secret Agent 006.9	Respond to of 58727

To: +David Plonk (24409 ) From: +Arik T.G. Sunday, Aug 16 1998 7:41AM ET Reply # of 24430 David, 1. Elliotte count from the top Your count explained each and every move last week. Congrats! On closing basis, if the market wanted to start correcting already and forget the 5 down, then it should have closed over OEX 526 on Friday. Yes, the 5th wave down looks pretty much in place. I thought that we'll have only two waves down from the top, relying on previous bubbles decline from the top, which always made only two waves down before the relief rally (NYSE 1929, Nikkey '89 and Hand Seng '97). 2.More supportive evidence for a sharp decline on monday 1) The OEX reached the 520 area three times: on Aug 5th, 11th and 15th. On the first time it jumped like snake bitten and closed 12(!) OEX points higher, on the second time it made a second itraday test of that area and rallied quite strongly to close 7 OEX points higher. On the third time (Friday) it rallied 3 feebly and closed only 3 OEX points above the daily low. And so, unless we jump at the open to OEX 526 or higher, it looks like the support at 519, which held for the last 8 trading days, is going to be taken. 2) On a closing basis, the OEX looks poised for a sharp decline, mimicking its behavior after the first leg down: From 7/23, which marked the end of the 1 down, the OEX made 2 up days, then two down days, then one strong up day, then one even stronger down day (Friday), which marked the beginning of the 3 down. From 8/4, which was the end of the 3 down, we had two up days, then one day almost unchanged, then two down days, then one up day, then two down days probably starting the 5, since we closed Friday at a new ST low, same as Friday 7/31 was a new ST low. 3. Contradicting signals 1) Russell 2000- this index looks like it had built a strong short to medium term support (see 14 days RSI) just under the 400 mark, and was very reluctant to participate in the recent declines. It formed a triangle which may be broken to both sides (400 downside 407 upside) on Monday, but since it is so far under its 200 DMA I suspect the next move could be to the high 420s. 2) There was a clear intraday H&S formation the OEX made on Wednesday and Thursday, with neckline slightly rising from 528 to 528.5 and head topping 537. This formation's target price of 520 was indeed reached, and it held. OTOH we might be building the right shoulder of a new H&S formation (neckline from Tuesday's low at 518 to Friday's low at 519.77), and once the nekcline is crossed at 520, we'll have a new target of 503, very close to your 495 target and the 200 DMA. 4. Conclusion The important numbers to watch for the OEX on Monday are 527 and 520. 1) If the OEX manages to reach levels higher then midday Friday (527) and the RUT supports by moving over 407 then it looks like we've seen the end of the first big wave down and we're starting the correction to around OEX 555 on 8/26. 2) If the OEX moves between 520 and 526 for 3-4 hrs. then it is probably building a right shoulder and will break the 520 neckline in the afternoon, targeting the 503 on Tuesday morning. 3) If we gap down, and break 520 ATO, then any retrace to 518 or so should be used to short, and the decline may be very steep, to OEX 495 or so. But I recommend closing OEX puts after the close, because you may not be able to get a decent price on Tuesday. Futures are better closed Tuesday morning. In this scenario Monday and Tuesday may look like a half scale repeat of the October mini crash. ATG