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

To: The Perfect Hedge who wrote (2995)	12/28/1998 6:58:00 PM
From: bobby beara	Read Replies (3) \| Respond to of 99985

B. You NUTZ, Schwab is NOT going to blow up fundamentally, they are raking it in from overtraders like us -g- However, the panic buying parabola is begging short me -g- (yes I did) When the viagra wears off the NUTZ will go limp -g- With this mega dose, I expect we could have one more day, after all AMZN's CIBC Oppenheimer target is 400 - WHY NOTZ -g- Interesting to note, if today was the DOW top we are within decimal points of the 5/13 topp. bb

To: The Perfect Hedge who wrote (2995)	12/28/1998 7:06:00 PM
From: dennis michael patterson	Read Replies (1) \| Respond to of 99985

Jerry Favors Analysis - Monday, December 28, 1998 8 p.m. At the highs today the Dow was up over 44 points and at the lows the Dow was down over 28. We closed up 8.76. While today's action was not strong the Dow did manage to close up slightly. In fact so far the Dow has closed up 7 days in a row. The market is still overbought,at least by several short term indicators. The 5- Day RSI is still showing a very overbought 81.90. The Trin-5 closed at an unofficial 3.89,once again below the key 4.00 level which tends to occur near at least short term highs. The 10-Day Trin closed at 0.85,which is near overbought territory. The most reliable overbought readings here occur when the 10-Day Trin falls below 0.80. The takeaway value for Tuesday is 1.36, so if the Trading Index at the close tomorrow is near 0.85 or lower the 10-Day Trin will fall below 0.80. The 5-Day Advancing Volume, which we use to identify market tops, actually peaked on December 21. Since then it has been moving down while the Dow has continued to rally. That is a short term negative signal, although it could be negatively affected by seasonal tendencies here due to the holidays. Volume tends to dry up near the holidays and to pick back up in January. We are 1 day outside of the Cycle forecast for a short term high near Dec. 22 plus or minus 2 trading days. One day is not a problem but if the Dow continues to rally for more than 1 more day we may have to conclude the Cycles may be wrong here. If so we would expect a high near January 4 plus or minus 2 days. Several days ago we discussed a phenomenon called "The Santa Claus Rally". This refers to the market's tendency to rise during the last week of December into the first 1 or 2 trading days of January. Over the last 45 years there has been a so called "Santa Claus Rally" over 77% of the time. So the Cycles are fighting the Santa Claus Rally seasonality. The question is which one will win out? We frankly would go with the Cycles but tomorrow's closing action will be important for the very short term. Any decline below 1231.70 in the March S&P futures Tuesday will suggest a probable decline below 9189.41. That would suggest lower prices. The March S&P futures closed at 1233.50,down 6.00. So it would not take much of a decline to take the S&P futures below 1231.70. Any rally above 9263 on a print basis in the Dow Tuesday will signal higher prices,at least very short term Tuesday. The top of the 21-Day 3 1/2% Exponential Trading Band Tuesday should be near 9342 plus or minus 20 points or so, so there would be strong resistance to any rally in that area. If any rally above 9263 fails tomorrow we should see a fairly sharp decline. Stock traders and mutual fund switchers we see no reason at this point to sell long positions, so we will continue to hold longs. Short term traders we are not sure about the next 1 or 2 days, until we are sure whether the Cycles will prove correct or the normal seasonal "Santa Claus Rally". One thing we are convinced of is that the market will see either an important high or an important low near January 4 plus or minus 2 days. If we rally into that time frame look for a top. If we decline into that time frame look for at least a short term low. If we do not take a long or short position in the next 1 to 3 days we will be taking a position for short term traders, by which we mean option traders, near January 4.