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

To: donald sew who wrote (6048)	2/11/1999 7:42:00 AM
From: NickSE	Read Replies (1) \| Respond to of 99985

Donald, I keep a running chart of new highs v. new lows and it shows how narrow the breadth has been during the entire runup. There are a lot of issues out there in a stealth bear and no one would see it by looking at the averages. -ng- NYSE members.home.net Nasdaq members.home.net As for the immediate future, I feel the key to watch is the market internals, especially the NEW HIGHs/LOWs. If the NEW LOWs start getting above 100 consistently, thats a real sign of trouble. On the other hand if the NEW HIGHs were to get back above 100 consistently that would be a good sign that the BULL is back in force, unfortunately I dont see that happening, since in the runup from the OCT LOWs the new higs were not able to stay above 100 for more than a few days. If it couldnt do it during a 2000+ plus rally, it dont look good now. If the NEW HIGHs/LOWs, just stay in the current range I feel that the market will just continue what its doing, and that is basicly range-trade. Later, Nick

To: donald sew who wrote (6048)	2/11/1999 8:13:00 AM
From: John Pitera	Read Replies (1) \| Respond to of 99985

Don, good points on market internals and new highs and new lows. The divergences in this market are staggering...as pointed out by John Murphy 1997 mkt high 500 new highs 1998 April high 300 new highs 1999 Jan high 100 new highs Bulls up to 61.2 higher than last week (highest since Jan 1987) Bears down to 25.9 lower than last week Peter E has some great observations on the the weak breath and technical nature of the market and he has important price parameters that will signal a major move out of this trading range 9053.26---below breakdown of range 9650--above breakout to 10K and more likely 10400- 11200 Peter Eliades' Stockmarket Cycles update for Wednesday, February 10, 1999. This is truly a unique market in terms of the technical action. A few times over the past six weeks, the S&P 500 Index has closed at new all time highs accompanied by our own CI-NCI ratio readings of below .96. We have pointed out that, that had literally not happened since 1929 in this whole century --in other words, to see a new all time S&P high accompanied by such horrible breadth readings. We did not tell you how horrible those breadth readings were however. The January 29 all time high on the S&P was accompanied by a CI-NCI reading (for those of you who are unfamiliar with that terminology, see your introductory material that comes along with the subscription) the CI-NCI reading that day was .957, just slightly higher than today's .952 reading. If you are curious as to when the last time the ratio was as low as .952, the answer is December 21, 1994 at that low just before this last phase of the bull market exploded to the upside in a series of new highs that lasted at least into January of this year on the S&P Cash. That is over four years later. In fact, the only readings lower than today's .952 reading over the past eight years, was November-December of 1994, when that bottom was being formed and January of 1991, when that important low was being formed. The fact that some indices are making new highs with these readings being in oversold condition is truly remarkable, but the fact that the only other time this century has the coincidence occurred, was 1929, is quite ominous. The one part of the '29 analogy that we cannot do away with yet, is whether there remains one final move to the upside which could possibly last as long as several weeks. That is why we are watching the parameters of the January 8 high on the Dow and the January 25 low. Our 108-109 week cycle tells us that the time window in January is important enough to tell us whether breaking the high or the low of that month would mean that we saw an important cycle top or an important cycle bottom. The low that we are watching was 9063.26 on January 26 and the high that we are watching, of course is around 9650 or so on the Dow. Mutual fund switchers, Rydex switchers are in the Ursa fund. Fidelity Select switchers are in cash. All mutual fund switchers should call daily after 3:20 p.m. ET and each market evening. Stock Index futures traders, you are short the March S&P. Place your initial stops at 1243.00. Attempt to cover your short sale at 1213.50. If you are stopped out, or if you do cover at 1213.50, you may reshort on any move below 1209.80 with a stop at 1215.90. The March bonds appear to be one or two down days away from giving significantly lower projections down to around 114, but that has not occurred as yet. No new projections on the XAU or gold. Have a great day. We'll talk to you tomorrow.

To: donald sew who wrote (6048)	2/11/1999 8:50:00 AM
From: Vitas	Read Replies (2) \| Respond to of 99985

The Hindenberg indicator which flashed a sell on January 29th is comprised of new highs and new lows both being over 86 on the same day (over 2.4% of issues traded), while the McClellan oscillator is below zero and the NYSE is in a 10 week uptrend. It was developed by Jim Miekka and named by Kennedy Gammage, who noted that the market usually crashes and burns after the signal. Norman Fosback developed the High-Low logic Index. It is computed as the lesser of the number of new highs or of new lows divided by the total number of issues traded. "The concept of the indicator is that either a large number of stocks will reach new highs or a large number will establish new lows, but normally not both at the same time. Since the High Low Logic Index is the higher of the new ratios, high readings are infrequent. When a high indicator reading does occur, it signifies that market internals are inconsistent with many stocks reaching new highs at the same time that many stocks establish new lows. Such a condition is considered bearish for stock prices." quote from The Encyclopedia of Technical Market Indicators. Vitas

To: donald sew who wrote (6048)	2/12/1999 10:48:00 AM
From: StockOperator	Read Replies (1) \| Respond to of 99985

Don, Thanks for your response. I just wanted to say that my timeframe as a trader is not long term at all. I have chosen to take that approach on this thread when making my market calls, because you can very easily be both at the same time. The intermediate term trend can be bearish while the longer term remains bullish. Which is something I believe we have experienced of late. Because my analysis tries to capture what has happened during the course of the day. My posts tend to be on the longer side. So its just easier to stay with the longer term trend on this thread. Good luck trading. SO