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

To: dennis michael patterson who wrote (1994)12/15/1998 10:35:00 PM
From: John Pitera  Read Replies (1) | Respond to of 99985
 
Comments from another market timer, this is from tonight and his
perspective is worth considering.

Today's market was reminiscent of the market days from late July through mid-August when the Dow had a great day, but the overall market performed relatively very poorly. Look, for example, at August 17 when the Dow was up almost 150 points. On that day there were only 165 more stocks up than down on the New York Exchange and there were far more 52 week lows than 52 week highs. Today the Dow was up almost 130 points, but there were only 123 more up than down stocks and there were only 43 new highs versus 105 new 52 week lows. Mind you, the overall market was up from the start as neither the S&P nor the New York Exchange was ever down for the day. When that occurs, and you still see a larger number of new lows than new highs, it means that the market internals are ugly. That is confirmed by the daily advance-decline line which is now below virtually every important moving average between 10 days and 900 days. In other words every moving average to as far out as 3 ½ years long. We expect today's rally to turn right back down as early as tomorrow morning, but the fact that this is December, a month notorious for its cross currents, and the fact that we have already allowed that it is still possible to see new highs on some of the popular averages as we indicated in our recent newsletter prevents us from getting excited about ultra-bearish possibilities just yet. The Dow downside projections given yesterday remain in effect, but another big up-close tomorrow could invalidate that.

Best regards,

John



To: dennis michael patterson who wrote (1994)12/16/1998 12:01:00 AM
From: Smooth Drive  Respond to of 99985
 
TODAY'S LOOK BACK

The DOW INDUSTRIALS didn't do much until the end of the day but then moved up and closed at 8823.3 for a daily increase of 127.7 points or 1.47%. Yesterday's decrease of 126.16 was made up today and then some but still down 204.68 points or 2.27% from a week ago. The Dow closed within 10% of its high, as determined by the high low range, and when that happens there's an 85% chance that tomorrow's high will exceed today's. The TRANSPORTS closed up at 2883.32 for a total of 24.66 points or .86% and made up some of yesterday's loss of 70.85 points. They are still down 222.13 points or 7.15% from one-week back. UTILITIES closed up ever so slightly at 304.48 for a total of .27 points but still down 3.23 points or 1.05% for a week ago. The S&P 500 closed up at 1162.83 for a total daily increase of 21.63 points or 1.90% getting back some of yesterday's 25.26 drop. 85% chance of a higher high tomorrow. The NAZ closed up at 2012.6 for a total of 45.68 points or 2.32% and took back some of yesterday's 62.39 drop. Still down 22.15 points or 1.09% from last week. It also closed in the higher range and has an 85% chance of seeing a higher high tomorrow.

Here's how the referenced indexes look on their 50 day moving average:

	52	52						
	WEEK	WEEK					OVER	OVER
INDEX	LOW	HIGH	CLOSE	BOTTOM	50DMA	TOP	SOLD	BOUGHT
								
DJIA	7379.7	9457.95	8823.3	7293.64	8694.46	9801.26	0.00%	11.64%
DJTA	2260.24	3735.38	2883.32	2254.54	2856.28	3234.91	0.00%	7.14%
DJUA	259.51	323.65	304.48	285.80	306.92	346.43	11.55%	0.00%
S&P	912.83	1193.53	1162.83	933.43	1108.39	1236.82	0.00%	42.39%
NAZ	1343.87	2060.98	2012.60	1423.80	1810.40	2107.87	0.00%	67.97%

THE DOW JONES 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 * < Bearish Support Line
8880 X           *     O       O
8860 X             *           O 
8840 X               *         O
8820                   *       O
8800                     *     O
8780                       *   O
8760 Bearish Support Line >  * O X
8740                           O X   + < Short Term Uptrend Line
8720                           O X +                        
8700                           O + 
                       1 1 1 1 1 1
     1 2 3 4 5 6 7 8 9 0 1 2 3 4 5

-Double Bottom Sell Signals at 6,2940,11/30/98; 8,9020,12/1/98; 10,8960,12/4/98; 14,8860,12/10/98; and reversed up on 18,8760,12/15/98.
-Long term bullish (trading above its Bullish Support Line) and short term bearish (on a sell signal).
-Lower tops and lower bottoms depicts overall weakness.

Today's Action: Reversed back up to 8760. This action can create a traders Short Term Uptrend Line starting at 8700. First resistance at the Bearish Support Line at 8900.

THE 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   + O 
8700                               X +   O * < 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 +
                             +
                       1 1 1 1 1 1 1 1 1 1 
     1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9

-Double Bottom Sell Signal at 19,8850,12/10/98.
-Long term bullish (trading above Bullish Support Line) and short term bearish (on a sell signal).
-Next support at the Short Term Uptrend Line at 8500 and then the previous horizontal support at 8350.

No action today. It will take at least a 3 box reversal (to 8850)for that to occur.

THE NAZ - 4 X 12

2052         *   
2048         X *
2044         X O * < Bearish Resistance Line
2040         X O
2036         X O
2032         X O *     + < Bullish Resistance Line
2028         X O X * +
2024         X O X O *
2020         X O X O   * < Short Term Downtrend Line
2016 X       X O   O
2012 X O     X     O X                          
2008 X O   + X     O X
2004 X O +   X     O X
2000 X O X   X     O X
1996 X O X O X     O X
1992 X O X O X     O X
1988 X O X O X     O X
1984 X O X O X     O X
1980 X O X O X     O X   + < Intermediate Term Uptrend Line
1976 X O X O X     O X +
1972 X O X O X     O X 
1968 X O X O X     O 
1964 X O X O X   +
1960 X O X O X +
1956 X O X O +
1952 X O + +
1948 X +
1944 X
1940 X
     1 2 3 4 5 6 7 8 9

-Double Top Buy Signal at 5,2004,12/7/98; Double Bottom Sell Signal at 8,2012,12/14/98; Reversed up 9,2012,12/15/98.
-Long term bullish(trading above its Bullish Support Line) and short term bearish (on a sell signal).
-Notice the Bullish Triangle. The first column of X's found resistance at 2016 and then reversed down and from then on the tops got lower and the bottoms higher until the Double Top Bug Signal at 2004. A Bullish Triangle requires at least 5 columns.

Today's Action: The Intermediate Term Line held and it reversed up big with 11 boxes. There will be resistance at the Short Term Downtrend line at 2024 and the Bullish Resistance Line at 2028 (also old horizontal resistance there as well).

NOTE: The above P&F charts are usually not leading indicators. They can be, and usually are, bullish at the top and bearish at the bottom. (However, the Dow Jones Utility Average can be a leading indicator for the DJIA and it's on a sell signal.) For example, when our leading market indicator, the New York Stock Exchange Bullish Percent Index (NYSEBP) went to Bear Alert status on May 13th of this year, the DOW dipped and then went higher in July and the above charts were all giving buy signals. Yes - they eventually gave sell signals but the NYSEBP was waaaay ahead of them. The NYSEBP, which is currently in Bull Confirmed status, is used in combination with the Hi/Lo Bullish % Index; stocks above their 10 Week Moving Average Bullish % Index; and the Optionable stocks Bullish % Index. The Hi/Lo and 10 Week moving average Indexes are the short term guys and they have reversed to Bear Alert. The Optionable is very close. But then that's another discussion. Here's some words of wisdom form one of P&F's top men, Tom Dorsey --http://www3.techstocks.com/~wsapi/investor/reply-6840882

Take care,

Eric


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