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Strategies & Market Trends : Tech Stock Options -- Ignore unavailable to you. Want to Upgrade?

To: Jerry Olson who wrote (50125)	8/18/1998 9:21:00 AM
From: donald sew	Respond to of 58727

INDEX UPDATE --------------------------- The futures at this time are strong - up 8, and Europe is rallying nicely so for the time being it appears that our markets may continue yesterdays rally and may break above the 8600 resistance area on a closing basis. Recently I have been mentioning the STAIR STEPs with the first stair step at the 9000 range and the current step at 8600. I had also concluded that it would react similar to a triangle in that a strong drop or a strong surge would be forthcoming once the the step is completed. Therefore if we close above 8600 significantly, say around 8650 such would indicate that we are heading up more and possibly strongly. It could also all happen in one or 2 days, but please keep in mind that it would require a nice close above 8600, otherwise the 8600 STAIR STEP could still hold. Surprising, with yesterdays very strong performance which took the DOW 200 point up off the intraday lows, my short-term technicals just touched the the overbought line. I made a calculation that if we continue up with now dips on a closing basis, then we will get into the CLASS SELL territory within 2-3 days with a target of 200-300 points higher. That would put us right at right back to the intraday highs of AUG 4, which was the day that the DOW dropped 300 points. This decline started at 9367 and got as low as 8217 which is a 1050 point drop, assuming that this immediate pullback is over. Normally the retracement of a strong pullback is 62% so lets us 50%-70%. That would put the target of the retracement at 8842-9052. Well, that would put us right back close to the 1st STAIR-STEP near 9000 with the high of 9041, and there are many strong resistance in that area. Assuming that we move up from here, it appears that the top before the next strong pullback which could take us to LOWER LOWS is in the 8850-9041 range. Even if the DOW does break 9041 there is another very strong resistance line at 9100, so I will conclude that since there is immense resistance in the 9041-9100 range that would be the maximum we could see, before heading back down. Frankly, I feel 8850 will be hard enough to break to the upside. Ok, now enough for the upside talk since I just got a small position in PUTS yesterday.gggggggggggggggggggggg If we do not clearly close above 8600 today, that could imply that the 8600 STAIR-STEP is in effect and that we could head back down again. At this moment the probability of that happening is less than the market heading up, but it is only slightly less probable. Per my short-term technicals there is more downside than upside. The upside potential for the short-term (1-5 days) is about 200-300 points, but the downside is about 400-500 points. Such calculation has nothing to do with support lines, just a mathematical calculation per my system. To further explain, it would take about a maximum of 600-800 points for my short-term technicals to swing from severely oversold to severely overbought. Again, we need a close over 8600 today to imply that we are going to continue higher. The last possibility is that we just hang around 8600 with volitile intraday moves. On just a subjective basis, I believe that most may accept the downside around 8000-8200 and the upside around 8800-9000, so lets say 8000-9000. Well we are basicly smack in the middle of that range now. Seeya