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

To: donald sew who wrote (7859)	3/9/1999 3:58:00 PM
From: StockOperator	Read Replies (3) \| Respond to of 99985

Don, Some of the analysts that are saying how great this market looks at 9800 were most likely saying the market was getting ready to collapse prior to last week's advance. Even the pros have flip-flopped quite a bit recently. Regarding the stocks to buy now. The one group of stocks that has exhibited much strength during this whole consolidating period has been the telecom group. Stocks like LVLT, WCOM, QWST, RNWK, PMCS. I believe their area of expertise is in addressing the band width issues. I would agree. Market breadth has been horrible. The Dell's and CSCO's are all trying to working through their own corrective patterns. That's why I'm watching how things progress here. If we do break up here, breadth should definitely improve. Time will tell. SO

To: donald sew who wrote (7859)	3/10/1999 5:09:00 AM
From: Arik T.G.	Read Replies (1) \| Respond to of 99985

Donald, Thanks for a very good post : >> The problem I have playing the upside, is that the number of stocks moving up are less and less. Those that move up, move up big which skew the index to the upside. Its just getting harder and harder to find stocks to buy to the upside. The usual stocks in the past to go long with like INTC, DELL, CPQ, CSCO, GTW, LU are only showing signs of weakening. Most of the strength is only in a few DOW stocks, like GM, MRK, UTX, JPM, JNJ. It's just like last June - July, only worse. Last time it was the Russell 2000 that topped in April and only corrected up while the big caps went to new highs, now it's the Russell and NASDAQ including the Naz big caps (NDX), leaving the burden of lifting the index to drugs and financials (MRK, PFE C AIG and AXP all ran to new highs) with the help of the two Dow heavyweights GE and WMT. The Russell 2000 has created a beautiful H&S (Left shoulder November, Head January, Right shoulder almost complete), with the neckline not far away (389.5). EWave count on the RUT from the 4/98 peak is painfully clear - A clear cut 5er from 4/21 top to 6/15 is 1, then correction to 7/16 while the big caps went to new highs, then a VERY clear 5er to 10/8 being the 3, and now we're in C of 4 that should not pass 430. The next down move (5) should take us at least to the October lows. A closer look makes me think that the Russell is just ending / has just ended c of 2 of 5, after 1/20 top C of 4, and should turn down soon / is turning right now to break the H&S neckline. NYSE composite shows a giant inverse H&S (Left shoulder 4-7/98, head 10/98, right shoulder 1-3/99) with neckline at 616. Same formation can be found on the London FTSE, which was the better of the European stock indexes. The FTSE is currently trying and failing to break the neckline, a failure that could lead to a bear. Let's see if the NYSE can do better or will the RUT and NDX pull the market down. So the possibilities are: 1. Bullish scenario- NYSE composite breaks and holds over 616. RUT fails to complete the H&S by holding over 407.5 NDX reaching new high IF the former two happen, then the market gets all the depth and width it needs for me to consider us on 3 of 3 off the October lows, which means months of upside. 2. Bearish scenario - NYSE composite fails to break or hold above neckline, reversing down. RUT breaks neckline by breaking and holding under 389. SPX fails to hold over 1285, reversing down. NDX breaking support at 1875 (Naz 2240) In this scenario the Russell and Naz continue to lead the market down, with the 2/1 - 2/18 move on the Naz being the 1st leg down, and the Russell targeting the October lows. The battle between the two scenarios could be resolved within days, and up to three weeks time. Guess which scenario is my favorite ;-) ATG