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

To: HairBall who wrote (4119)	1/17/1999 11:01:00 PM
From: Gersh Avery	Respond to of 99985

LG .. Where is don?? Gersh

To: HairBall who wrote (4119)	1/18/1999 9:57:00 AM
From: donald sew	Read Replies (17) \| Respond to of 99985

INDEX UPDATE ========================================= I will be reducing my postings on SI, and limit them to more critical periods as right now. Recently I have not posted much and have received numurous PM's, email so to explain I want to state that in the past I have enjoyed posting on SI and I have learned alot and I have shared also. I no longer enjoyed posting as much as I did before due to attacks or disagreement in position without statistical basis which I have received mainly in the form of emails, and also here over the past 6 months. I have been trading this way with my technical analysis for approximately 2 years and I have felt that I have learned much and shared, and I have previously considered this an educational forum until recently. One may not believe it but Im not one for alot of this GURU junk and have become uncomfortable with it. I have done my best to be explicit on my posts in more of an educational way, unfortunately I have become aware thru emails that some are following me too closely, so recently I stopped posting my trades. Well enough of that, since I believe we are at or very close to a critical turning point. 1) The DOW is currently in a WEDGE formation. The UPPER TRENDLINE - connect the highs in late NOV(near 9380) and the recent one about 6 trading days ago(near 9650). If you extend it backwards you will notice that it also meets the peak around the middle of AUG(near 8700). The LOWER TRENLINE - connect the lows in OCT(near 7400) and the lows of DEC(near 8700). I am only eye balling it, so it appears that the apex of this WEDGE is targeting about 10,000 around the end of MAR/early APR. It is my understanding that normally the WEDGE will be broken to either side before it gets to the apex, so I am concluding that a strong movement will occur prior to end MAR/APRIL. Taking a close look at the lower trendline of this WEDGE which is also the main support trendline one will notice that just last week the DOW and most of the other indexes have broken it to the downside but have bounced back above it. That quick movement below that trendline, even though it bounced back above it immediately, is a slight hint of negativity forthcoming, but still requires further confirmation. Keep in mind that this wedge is rising so there still is a possibility of higher highs and still be within the WEDGE. This is not to say that the DOW cannot break thru the WEDGE to the upside, but up to now, we have only received a negative sign when it just quickly broke the lower trendline, so no hint yet of a break-out to the upside yet. 2) ANDREW'S PITCHFORK. Use the highs of late NOV(near 9380 - call POINT A) as the starting point or pivot point, whatever one wants to call it Now draw a vector from the lows of DEC(near 8700 - call it POINT B) to the recent peak(near 9650 - call it POINT C). Now draw a vector from POINT A which bisects VECTOR BC, and call it the main or middle line of the PITCHFORK. From both POINT B and POINT C draw vectors parrellel to the MAIN LINE of the PITCHFORK. One will notice that the PITCHFORK is now trending downwards. 3) COMBINE THE PITCHFORK WITH THE WEDGE. I am only eyeballing it, but if anyone can give closer dates and prices please help. You will notice that within 1-2 weeks and near 9500 VECTOR C of the PITCHFORK(upper trendline which is declining) will intersect the rising LOWER TRENDLINE of the WEDGE. I would really appreciate it if someone could give a more precise junction point since I do not have computer generated charts and what I have is limited. The best I can do is say that such intersection will occur in about 4-8 trading days. If the DOW breaks the UPPER TRENDLINE of the PITCHFORK(VECTOR C) to the upside, it would be the first hint that the DOW is going higher, although it is not conclusive and it is not uncommon to have slight breaks of the PITCHFORK only to have it return back into the parameters of the PITCHFORK. 4) In light of the intersection of the PITCHFORT(VECTOR C) and the LOWER TRENDLINE OF THE WEDGE to occur in about 4-8 trading days, I feel that there could be a breakout or breakdown in the DOW very soon. 5) It is obvious that volitility is picking up again with the recent big intraday move. If one checks the VIX, it appears that a MEGAPHONE is developing(LOWER LOW and HIGHER HIGH), which implies volitility on the rise. 6) I will not go into alot of detail except to say conservatively that the market internals are still weak in relations to previous BULL TRENDs. Keep in mind that during the strong runup last spring the NEW HIGHs were consistently in the 200-400 range. Since this strong upswing started in OCT the NEW HIGHs have not even consistently stayed above 100, although there were spikes above 100. I am not keen to make a decision based on NEW HIGHs/LOWs on a daily basis, but lets just say that with the DOW up 219 points on FRI and the NEW HIGHS only getting to 43 is not a sign of great strength. YES, YES - I know it can change. Also the A/D is also relatively weak. In light of the above I am leaning more towards a significant top occuring soon, if it did not already with the recent peak at 9650. A possibility is a retest of 9650 which fails to go higher forming a nice DOUBLE TOP. The DOW is right now at a weak resistance line with stronger resistance at 9380 and 9650. As previously mentioned, I have either closed all my longs or hedged them by selling calls, and initiate a small trading PUT position, when the DOW was around 9600. If I do go long it will be only with short-term trades(1-3 days or just intraday). A break to the upside of the PITCHFORK and I will start trading(short-term) on the long side. SHORT-TERM technicals on the DOW is in the mid-range around 40 so if the DOW does head straight up, it should hit a CLASS SELL in 2-3 days. I have also mentioned recently that on a statistical basis, over 100 signals from various indexes, when the timimg of my CLASS 1 SELL or BUY signal are right on time it implies that the reversal should be normal and for the DOW thats in the 400-600 range, and per my last SELL signal which was timely we got that amount for the pullback. When the signals are late it implies the the market is strong and the reveral will be small, and when the signals are early it imples that the market is weak and the reversal should be strong. I have statistically kept track of the timing of my short-term CLASS signals whether they were SELLs or BUYs. Sorry for the length of this update, but since I will not be posting much just wanted to be thorough. seeya