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

To: HairBall who wrote (1629)12/14/1998 2:01:00 AM
From: Smooth Drive  Read Replies (4) | Respond to of 99985
 
Hello LG,

Hang in -- this is the kind of thread I was looking for to contribute and learn. Do you remember when Ian Wosnam (sp?) was winning his first green jacket but was being heckled pretty good? It was bothering him until Tom Watson suggested he smile at the hecklers and say "Thank you very much." It so bothered the hecklers that they stopped.

WEEKEND LOOK BACK

The DOW INDUSTRIALS were down Friday 25.82 points or .29%. For the week they were down 194.38 points or 2.16%. TRANSPORTS were down 83.04 points or 2.76% and for the week 122.74 points or 4.02%. UTILITIES were up .72 on Friday and ended the week down 4.52 points or 1.46%. The S&P 500 was up on Friday by 1.44 points or .12% and ended the week down 10.28 points or .87%. (The S&P 500 closed within 10% of the high low range as a deduction from the high – and 85% of the time you will get a higher high the next day.)

The above indexes have traded a minimum (MIN) and maximum (MAX) above or below their 50 day moving average in the past year, and ended the week overbought (O/B) or oversold (O/S) as depicted below:

	50 DMA	CLOSE	MIN	MAX	O/S	O/B
DJIA	8652.76	8821.76	16.11%	12.73% 		15.34%	
DJTA	2843.63	2929.51	21.07%	13.26%		22.78%
DJUA	307.28	304.42	6.88%	12.88%	13.51%
S&P	1101.89	1166.46	15.79%	11.59%		50.57%

From a point and figure basis, when both the Industrials and Transportation are on a sell signal, then we have a Dow Theory Bear Market. And, that is the current case. Tonight I'll show a portion of the two DJIA charts that I hand chart using a 20 box and a 50 box chart. The 20 box chart is a shorter term indicator and the 50 box more mid to long term.

DOW JONE INDUSTRIAL AVERAGE 20 X 60

9360     X   *
9340     X O X *
9320     X O X O *
9300     X O X O   *
9280     X O X O     *
9260     X O   O       *
9240     X     O         *
9220     X     O           *
9200     X     O             *
9180     X     O               * < Bearish Resistance Line
9160     X     O
9140     X     O  
9120     X     O X  
9100     X     O X O  
9080 X   X     O X O    
9060 X O X     O X O X   X
9040 X O X     O   O X O X O X
9020 X O X         O X O X O X O
9000 X O           O X O X O X O
8980 X *           O   O X O   O
8960 X   *             O X     O < Double Bottom Sell Signal
8940 X     *           O X     O
8920 X       *         O X     O  
8900 X         *       O X     O
8880 X           *     O       O
8860 X             *           O < Spread D/B Sell Signal
8840 X               *         O
8820                   *       O
8800                     *     O
8780                       *   O
8760                         * O
8740                           * < Bearish Support Line

The first Double Bottom Sell Signal occurred at 9240 on 11/30/98. Subsequently there have been 3 successive sell signals with the last occurring at 8960 on 12/10/98. Although this stock is officially bullish because it is trading well above its active Bullish Support Line, which is all the way down at 8120 -- the Bearish Resistance Line is clearly now in control. There's old horizontal support at 8740 and you can see the Bearish Support Line at 8740 as well. The first bearish price objective was 9160: 9360 less ((5*2)*20. As we met that the next one was 9060: 9360 less ((5*3)*20) which has also been exceeded. Notice the lower tops and lower bottoms. The 20 box P&F chart is often a precursor to the 50 box -- so let's take a look at it.

DOW JONES INDUSTRIAL AVERAGE - 50 X 150

                                   *
9350                               X *
9300                               X O *
9250                               X O   * < Bearish Res. Line
9200                               X O
9150                               X O
9100                               X O *
9050                               X O X *
9000                               X O X O * < S/T Downtrend Line
8950                               X O X O
8900                               X O   O
8850                               X *   O < D/B Sell Signal
8800                               X   * O
8750                               X   + * 
8700                               X +     * < Bearish Support Line
8650                               X
8600 O                         X   X 
8550 O                         X O X
8500 O                       + X O X     + < Short Term Uptrend Line
8450 O Bullish Res. Line>  +   X O X   +
8400 O                   +     X O X +
8350 O                 +       X O +
8300 O               +         X +
8250 O             +           X
8200 O           +             X
8150 O         +   X   X       X 
8100 O       +     X O X O     X
8050 O     +   X   X O X O     X
8000 O   + X   X O X O X O     X
7950 O +   X O X O X O   O     X
7900 O X   X O X O X     O     X
7850 O X O X O X O X     O     X
7800 O X O X O X O X     O X   X 
7750 O X O X O X O       O X O X         + < Bullish Support Line
7700 O X O X O X         O X O X       +
7650 O X O X O X         O   O X     +
7600 O X O X O               O X   +
7550 O   O                   O X +
7500                         O +
                             +

Like its little brother, this index is also bullish in that it is trading above its Bullish Support Line, but it is short term bearish because of the sell signal at 8850 that occurred on 12/10/98. Has good support at 8800 from the Bullish Resistance Line and at 8750 from the Bearish Support Line. Bearish price objective of 8450: 9350 less ((9*2)*50).

Some would contend we are short term bearish. Guess we'll see.

Take care,

Eric



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