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To: Jeff Mizer who wrote (54650)	10/3/1998 11:05:00 AM
From: donald sew	Read Replies (6) \| Respond to of 58727

INDEX UPDATE ------------------------ I want to express extreme caution for the next 3 weeks in OCT. I am noticing another pattern developing with signaling a possibility of the market dropping hard again. About 2 weeks ago I had mentioned that I noticed a pattern similar to that of the 8600 STAIRSTEP which I compared 8/21 with 9/21. 3 days after 8/21 we had the beginning of the hard drop to 7400, and 6 days after 9/21 started the recent decline. Well Im noticing another strong decline about to happen, but this time is strongly hinting that we will break 7400 before OCT expiration. To negate this pattern the DOW would need to close above 8080-8100 and/or intraday surpass 8182 within 2-3 days. Please understand that this is a specific pattern. Here are some signs that would confirm the pattern over the next 2-3 days. On a closing basis the DOW forms SPINNING TOPS or DOJI's and the close is less than 100 points. As for timing, if the SPINNING TOPs/DOJI's occur within the next 2-3 days then the downtrend could start towards the middle/end of next week(WED/THUR/FRI). The first negative day may be small but will increase dramatically and the time span for this downtrend could last 3-5 days. So this downtrend should go right into expiration week. If Monday is negative, this could also negate the pattern or it could mean that it is starting faster than expected. Most of the European markets are CLASS BUYs so they should pop up Sunday night, which should help push our markets up intraday. The key is the close. If we close in the middle of the range forming SPINNING TOPS/DOJI then that would be signs of indecisiveness which would lead into the forthcoming downdraft. If the DOW closes near the HIGHS, but only up less than 100, such would weaken the pattern but not negate it. The last time I reconized this type of pattern (8/21 & 9/21) I was off 3 days, so lets say plus or minus 2-3 days. It is not the concern to nail it on the day but to express extreme caution since the result of this one could be very negative. So this downswing could start as early as MONDAY, which is unlikely, and should start as late as OCT 12/13. I am more comfortable with the time frame of this strong downswing to start in the 5 day period of OCT 7/8/9/12/13. The probability is strong that it will break 7400 to the downside. The probability is fair to good that this downswing will take the DOW to 7000. The probablity is weak to fair the this downswing could take the DOW to 6600 range. If this dowswing takes the DOW to 7000 or 6600, we could expect an extremely strong rebound to start in the last 2 weeks of OCTOBER. Also expect a DOUBLE BOTTOM formation that would take about 5-7 days to form and complete before the strong move up. This strong move up could take the DOW as high as the 8500-8800 range, so that should be a great short/mid-term buying opportunitiy. The logic behind the a strong rebound is my RUBBERBAND/GUITAR STRING EFFECT. If the DOW does not break 7400, the DOW could still rebound to the 8500-8800 range, but it is more likely that it would just range trade again in the 7400-8200 range. Keep in mind that many thought the previous rebound was strong, but actually it was technically weak. The DOW rebounded from the SEPT 1 lows of 7401 to 8160, which is 760 points. It appears to be alot but is only 39% of the total decline from the JULY 20 HIGHs. The market internals never improved strongly, and the time it took to gain the 760 points was about 20 trading days(too long to say it was a strong rebound). Take a look at the STAIRSTEPS at 9000, 8600, 8000-7800. If you notice the time of each subsequent STEP got longer and the drop off was larger in the subsequent step. During the 8600 STAIRSTAIR, notice the number of times that the DOW tested the support area at 8350 range. I believe that Friday's test was the last test of 7500 and the next time it should break it an break it hard. For the time being feel that the highest this rebound will take the DOW is the 7950-8050 range, on a intraday basis, but will not negate the big downswing unless there is a close above 8080-8100 and/or a significant(50 points) intraday pop above 8182. Seeya