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

To: bobby beara who wrote (7720)	3/8/1999 12:56:00 AM
From: HairBall	Read Replies (4) \| Respond to of 99985

To bobby bear and ALL: Interstate 35 Road Kill Trading System (Weekend Update - Sorry its late.) As of late, I have been mainly posting my charts. Several PMs asking me to give interpretation has lead me to the conclusion that I have not contributed my input much lately. So I will start by interpreting my charts which can be found at Monty's MDA Chart Site at: cp-tel.net RUT (Russell 2000 Index) Well it seems to have found support after making a new low on 2/18 at 388.58. It leveled off and began trading sideways in a range. However, a current descending triangle formation can be argued if one allows for a slight up slope in the lower horizontal trend line. However, short formations are less reliable. The move up Friday found resistance in the area of its longer-term support/resistance* line and adjusted up the previous upper descending trend line of the Descending Triangle. If this formation holds, it would portend a break to the norm, which would be down. The Oscillators are in a short-term buy, short/medium term is still in a sell and the medium/long term remain in a sell. The Fast Stochastic is nearing the overbought area. The sideways price action finally resulted on Friday with a close above the centerline of its long term trading Envelope. This price action has resulted in a stay of the downward momentum and portends at the least continued sideways action and the possibility of a mid term reversal. COMPX (NASDAQ Composite Index) Well I labeled the chart formation (in blue) a Descending Triangle which is bearish. But the lower trend line is slightly rising which should negate this read. A second read could be made that this formation is a Bullish Pennant looking at it from the rise off the Oct low. I usually am not unsure about formations, but this read is unclear to me, I must admit. The Oscillators are in a short-term buy, the short/medium term is still in a sell and the medium/long term remains in a sell, for now. The Fast Stochastic is in the mid range, but rising. With Friday's move it closed not only above its long term trading envelope centerline but above its 50 day SMA. This portends at the least continued sideways trading and possible a medium trend reversal. UTIL (Dow 15 Utilities Index) Well, the price action for this Index was oscillating around multiple support and attraction lines. The long term support line, the center tines for both the short and medium term forks and just below the centerline of its long term trading channel. With the dramatic moves on Thursday and Friday this Index pushed up through multiple resistance areas. The centerline of the long term trading envelope, the 200 day SMA, the upper tines of both the short and medium term pitchforks. In addition it penetrated intraday the upper band of the longer term trading envelope and the 50 day SMA closing just below the 50 day SMA for the day. The sht/med oscillator reversed over Thursday and Friday giving both a short-term and short/medium term buy with the medium/long term remaining in a sell. The Fast Stochastic rose into overbought territory with Friday's action. The past two-day's price action portends at the least sideways action and possible a medium term reversal. TRAN (Dow 20 Transports) The Dow Transports continued the move up and away from the falling wedge formation trading inside the upper half of the long term trading channel. This move up has progressed up along the lower tine of the short-term rising pitchfork. On Friday the price action penetrated the upper tine of the medium-term fork, finding resistance at the falling longer-term resistance line. The oscillators are all in buy signals, but the medium/long term needs several sequential days with a buy signal for confirmation. The Fast Stochastic is in the overbought area. This price action portends the continuation of rising prices, but has strong resistance to over come at the descending long-term resistance line. DJI (Dow Jones 30 Industrials Actual Data) The DJI after breaking out above the bullish wedge in mid Feb, it retraced and struggled along the upper descending trend line, often finding intraday support at the longer-term support/resistance line. With Thursday and Friday's price action it completed the break and rose above the previous high to complete. In doing so, it broke out above the upper tine of the medium-term pitchfork and closed back within the shorter-term rising pitchfork. The price action found resistance at the longer-term rising resistance line, closing slightly above. The oscillators are in buy signals for both the short and short/medium term and remain in a sell for the medium/longer-term, for now! The Fast Stochastic is now in the upper overbought range. Segmented Day Technicals (Not yet ready for prime time short-term models, of which the time periods shall not be revealed.) Since this is the first time I am using them. I want to point out that I use even shorter-term timing models coupled with Level II analysis to time my Intraday Trades. The Segmented Day Oscillator found support on 3/3 at its 200 period moving average and gave a buy signal the next day Thursday 3/4 at 11:40 am EST and remains currently in a buy. The segmented day Stochastic is in the extreme overbought area. Consulsion I thought my charts were expressing my expectations of the Market action for me. I had several conversations with Donald Sew expressing my expectations. I realized even though I had expressed my expectation over the phone to him and posted my charts on a regular basis, that my expectations were possibly not made clear on MDA. I will start interpreting my charts and posting my expectation more often. At the end of last December I stated that I thought the Market as measure by the DJI would take 6 to 8 weeks to reveal a topping process. I think that process has been revealed. The bullish formation of the DJI starting at the first of the year lead me to believe that once the almost vertical rise in the COMPX broke to the left of its support line, a pullback would occur in the high flying NAZ issues. But, the DJI would most likely trade sideways as it paused to allow some equilibrium to return between the DJI and COMPX. The A/D line, the new highs/new lows, the NYSE stocks below their respective 200 day SMA, coupled with TYX.X in a rally since the low of Oct 5 still infers divergence and lack of support with the recent two day blast off. PE's on some of the high flying tech stocks have come back down with the pullback on the NASDAQ, but interest rates have risen as well. As often is the case, at cross roads in the Market, there are many divergent signals. I believe these divergences will cause many individual investors to be left standing by the train when it leaves the station. The question is it heading south or north? Some good posters on MDA have supported the continuation of the rally off the Oct 8 low. One in particular “Stock Operator” has issued a caution regarding this quick pop to the upside. I found this advice very insightful and completely in line with my own thought process. So I will echo that caution. Don't marry any position at this time. This bull Market is not going to give in easy, but a real need to bring the Market back to historical norms is indeed over due. I suspect the Market will have some continued upside movement, but limited. I expect more sideways movement with the topping process to continue. My investment portfolios are in cash. Once again, I will be day trading only until the Market reveals more of its intent. Short-term I think Donald Sew as usual has given good parameters to watch and Stock Operator has given sage advice. Keep an eye on the resistance lines on my charts.  Note: Support/resistance lines are trend lines that once offered either support or resistance and have been broken. They then reverse and offer the opposite, depending on which side of the line the price action is. However, the importance/strength of these lines can diminish with repeated crossovers. Finally, there has been a lot of good analysis on this thread as of late. I thank you all! Those of us that do contribute our analysis, know the time invested in each other's post. (All Disclaimers Apply) BWDIK as always… Regards, LG

To: bobby beara who wrote (7720)	3/8/1999 6:04:00 AM
From: Moominoid	Respond to of 99985

I DU BELIEVE WE HAVE A RECIPE FOR A BLOW-OFF. Nice chart. You seem to be seeing the same things I have been seeing for a while (see my messages over last few weeks) - in many ways a rerun of 98 - with 3-4 months difference in timing. The peak should be in 3-4 weeks or so. Where the market came within a wisker of falling into the abyss. Lows like this produce a lot of bearish sentiment that we've seen in the last few weeks, especially on the techs and rates. On technicals - stochastics and my own ones I don't think it really was that close. My own TA method shows a major turning point on SPX about 3-4 weeks out if the same percentage moves happen now as in June-July 98. If the rate of increase is slower the rally can last longer by that method. Of course while I called the general market right recently I have had a big chunk of my US account in Apple computer and lost a pile of dough <g> David