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

To: Vitas who wrote (6595)	2/17/1999 11:48:00 PM
From: Magnatizer	Read Replies (1) \| Respond to of 99985

Vitas Magnets (horizontal) and magnet trendlines (sloping) are most basically Support and resistance areas. They define where markets make decisions. Tops, bottoms, consolidations are all parts of the decision process. When markets or stocks are moving strong one way or the other the decision has been made and there is little left to doubt. It is the decision areas where one is pressed into making buy or sell decisions on a technical reading. If resistance holds the decision has been made by the majority that the issue or index is fully valued at that moment. If resistance fails to hold the majority has decided the value of the issue or index is not yet fully valued and the next area of resistance becomes the target. This is in a uptrend In a downtrend support works the same way. If it holds the majority feels the stock is at a bottom for the time being.... In the current market environment (consolidation IMO) the trendlines tend to act as the norm or axis. Once the majority makes the decision to leave the consolidation a break away from the axis will occur and the direction of the market will be defined. Hope this answers your question. I like to give a stock or index 2 days after breaking away from a magnet trendline to return to said line. If it does not return (or touch intraday) I assume the direction of the stock/index is now defined and I can trade accordingly. Of course I use other technical indicators to aide in my decision making process so I can attempt to enter before the trend is defined therefore making or exiting in a good position. ht david