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

To: Ramsey Su who wrote (2842)	12/25/1998 5:07:00 PM
From: James Strauss	Read Replies (2) \| Respond to of 99985

Ramsey: At times like this we have to follow the tape... It has moved up in the face of negative news... The fact that the broader markets (S&P 500 and NYSE and Nasdaq) have already hit new highs tells me that the market advance is spreading out beyond the big caps... Just as the McClellan Summation Index went to new multiyear lows in the July August period, they can go to new multiyear highs now... So... Until the tape says otherwise, the direction is up... Jim

To: Ramsey Su who wrote (2842)	12/25/1998 6:30:00 PM
From: bobby beara	Read Replies (1) \| Respond to of 99985

Ramsey, lower highs in the summation index along with higher highs in the indexes are bearish divergences and almost always proceed sell-offs. We are coming back to zero in the McClellan Oscillator and starting to level out making a lower low on the Summation. There are no guarantees that breadth will broaden out here and make the McCllellan Oscillator go much into positive and if you have followed the McCllelan Oscillator you will know it makes quite a reliable complex bottom formation with the first spike into positive territory a false breakout, then makes a higher low and the 2nd time it crosses zero which is the buy spike. You will notice this situation on both the 6/15 bottom and the 10/8 bottom, higher lows and 2nd trips off the bottoming structure into positive territory. This is very bearish to have the OEX, SPX and the NDX make new highs while the Oscillator is in negative territory. This is much narrower breadth than produced the high on 7/20 and is not even produced on the buy spike of the oscillator, but the (if it even crosses zero) first cross into positive territory. Extreme narrow breadth is not the signature of a healthy new bull market ready to break out and make Dow 10,000. This is a rally that is on it's last legs. I expect that this dip in the Oscillator is just the left shoulder of the inverted h&s pattern of the complex bottom and the buy spike won't come in till late January and that should be a nice rally. Since this is a very volitile year (most in history), I would expect to see the bottom of the Oscillator go well below -200 before setting up a tradeable bottom, that has been the case since April. I did post on this thread last week that -184 was a buying opportunity, I believe that opportunity is over it's time to fold em. This little spike into new high territory is just enough to give the bulls hope and get enough bullishness in the air to set a top, just like the little spike low in early October got everyone talking Dow 6000 and set a bottom. bb