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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: HairBall who wrote (638)	12/6/1998 6:04:00 PM
From: Doug R	Read Replies (2) \| Respond to of 99985

LG, A link to a chart should be on the way momentarily. The rules I'm using for the projection have worked for me on every correction and every recovery for the last 3 years...to within 2 days every time. Doug R

To: HairBall who wrote (638)	12/6/1998 6:06:00 PM
From: LTK007	Respond to of 99985

Excerpt from Martin Barnes interview on Barrons this week--what he says here is also my personal view of the Market now---- << Q: Exactly. What's a rational stock-market investor to do? A: Do you have to ask such difficult questions? Maybe it's not implausible to assume that this bubble is going to keep inflating as rates come down. People will keep feeding money into the market as long as they don't see rates rising, so why not just jump aboard? All I can say is that if you want to play that game, be aware that you're playing a bubble market. Don't try to kid yourself that you're somehow investing on the basis of fundamentals, that valuations are okay. Understand that by definition a bubble is vulnerable to shocks -- and they do burst. You have to be very nimble; don't deceive yourself. If you can post that sign on the wall, "It's a bubble, stupid," and believe it, then go for it. I'm, of course, assuming you have a high tolerance for risk. But most investors, I think, should have low weightings in equities in this environment. It may be that we are making a huge rolling top in the market. The stock market didn't make much headway between '66 and '72, but it was a wild roller-coaster ride. Maybe that's what we're in for. Maybe we're back to a point where timing the market is crucial; maybe our buy-and-hold days are numbered. Maybe this becomes a stockpicker's market, where the rising tide doesn't lift all boats. I just don't think we are in a whole major new up-leg that is going to sustain risk-free, double-digit returns. Q: If we're stuck in a multiyear topping process, what's the likely trading range? A: It is hard to put numbers on it. My point is that, to make money in that kind of market, you really have to be in and out and in and out.>> Amen to that--Max

To: HairBall who wrote (638)	12/6/1998 6:17:00 PM
From: robnhood	Read Replies (1) \| Respond to of 99985

Sort of OT---but maybe not Message 6712484

To: HairBall who wrote (638)	12/6/1998 6:21:00 PM
From: SE	Read Replies (1) \| Respond to of 99985

I likewise tried to draw them, but I must be doing something wrong as my intersection came yesterday and at a level of 8575 or so. Anyway, my read on the market. This is based entirely off of the ES98Z (Dec S&P 500 Mini Future Contract) charts and does not take into account discrepencies that might be noted doing a more wide ranging study looking at the DOW, RUT, SOX etc..... Short term - one to two days, up to 1190, 1195 on the SPZ. I suspect we may retouch the 1175 area before the move. If that happens, it happens tomorrow morning. The only thing that dissuades me from a possible move to mid 1190's is that we are sitting right on the middle tine of a fork at 1183. The fork is the 11/27 high with 12/1 low and the intersection point of those two drawn through the 11/17 high will give you the middle tine landing on 1183. The bottom tine was breached by 6 points or so on 12/3, so I don't know how much respect the market has for this fork. If this fork holds, we head down a lot sooner than I thought, but I believe the middle tine will be broken to the up-side. The main reason I think up is that there is a bullish MACD (12,26,9) divergence on clearly seen on the 10 minute bars and up. This suggests higher prices and since the divergence we have had higher prices. The divergence was not complete until the MACD lines crossed on Friday's gap up open. We have already come 30 SPOO points since the divergence, so I think its up-side might be limited, but there should still be some. The reason I think we might pull back a bit on the open is that there is a slight MACD divergence on the one minute bars and the market ended Friday as overbought. Also we just broke a trendline from the 11/27 highs through the 12/4 mid-day highs and a pull-back to the trendline is usually seen. A small pull-back of 5-10 SPOO points should clear up these little problems and make the way to head back and re-test the old highs. The bullish divergence took 2 1/2 days to set up and we are one day into the divergence. I suggest we head back to 1195 or so and then consolidate at that level for a couple of days. On the longer term charts there is a bearish MACD divergence being set-up. Take a look at the 120 minute chart or longer and it is clear and starts on OCT 19th. The signal line was just breached on this last downswing and using a bit of anticipation I think we shall see over the next week to two weeks a further divergence beting set-up with either a test of the old highs, or a new high, but a lower low on the MACD. If so this divergence will have lasted about two months. While looking at the 240 minute chart, you may wish to note the bullish divergence surrounding the late Aug and early Oct lows. It was confirmed at a price level of about 980 on the SPOOS, and if you bought then you would be 200 SPOO points ahead right now. Not bad for two months work! :) Finally, if you look at a 240 minute chart there is a trendline that can be drawn from the OCT 8th low through the mid November lows. This line has held prices through-out November and was breached at the end of November. A run higher now would again complete the usual course of re-testing of the trendline, however, I don't believe it will quite get there as the trendline is very steeply rising and to retouch it would take a move to the 1230 level or higher. If that happens, all the better for a shorting opportunity. So to recap, I think we might open down and trade lower for the morning by about 5 to 10 SPOO points and then a rally to the 1192 area. This rally could take the next one to two days. I would think a consolidation in that area for a couple of days and then back down again. If we break 1192 and subsequently get through the pyschological barrier at 1200 solidly, this market might run to 1230/1240, but somehow I just don't see that happening. Good Luck and a big BWDIK! -Scott