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Strategies & Market Trends : Three Amigos Stock Thread -- Ignore unavailable to you. Want to Upgrade?

To: Sergio H who wrote (15061)	4/14/1999 7:48:00 PM
From: Ditchdigger	Respond to of 29382

Hi Sergio..I hope Mr Dorsey doesn't mind me posting this,,but in the name of furthering interest in P&F.. "From the Analyst 04/14/99 Choose an Archived Report Short Term Indicators: Positive There are three main short term indicators that we follow: NYSE High-Low Index (HILO) Percent of Stocks Above Their 10 Week Moving Average (10WEEK) Optionable Bullish Percent (BPOPTI) We want to see that two of the three short term indicators are going in the same direction before we change our stance on a short term basis. We have had the Percent of 10 and the NYSE High-Low both on buy signals for a week now. With Tuesday's action in the market, the Optionable Bullish Percent reversed up. We often say with the short term indicators that you must act on the short term as it oftens turns into the long term. That is again the motto we will follow. Positions can be initiated in stocks that are both fundamentally and technically sound and have pulled back to support. Establish stop loss points and stick to those in case the short term doesn't turn into the long term. But the reversal up in the Optionable is a positive sign that the rally should begin to broaden out. In fact, recent reversals up in the Optionable Bullish Percent from the 40% level have led to nice rallies. The 40% level has been a typical bottoming area for the Optionable Bullish Percent except in extreme market sell-offs like 1987, 1990 and October 1990. June 1998: Hit 40% and then reverse up to 46%. The offensive team wasn't on the field long as the Optionable Bullish Percent only rallied to 50% before reversing back down into a column of O's and eventually falling to a very washed out condition of 10% by August 1998. The NYSE Bullish Percent never joined the Optionable Bullish Percent, remaining in a column of O's the whole time. January 1998: Hit 42% and then reverse up to 48%. The Optionable Bullish Percent rallied to 74% by April and we saw a very strong market place from January to April 1998. The NYSE Bullish Percent was also in a column of X's during this time frame. April 1997: Hit 40% and then reversed up to 46% in May 1997. The Optionable Bullish Percent remained in a column of X's from May until August before beginning to deteriorate. The NYSE Bullish Percent also reversed up in concert with the Optionable Bullish Percent and it too exceeded the 70% level by August moving to 76%. July 1996: The technology correction in the summer of 1996 took the Optionable Bullish Percent to a low of 34% before reversing up in August at 40%. When the technology sectors began to reverse up, a strong ensuing rally carried the Optionable Bullish Percent to the 62% level. The NYSE Bullish Percent also reversed up in August 1996 at 52%. December 1994: In December the Optionable Bullish Percent hit a low of 36%, making a higher bottom from April 1994's lows of 32%. The Optionable Bullish Percent reversed up in January 1995 at 40% and we began another leg of the bull market. The Optionable Bullish Percent remained in a column of X's for eight straight months before reversing down prior to the technology correction in the fall of 1995. In summary, all three short term indicators are positive and that means we will play the short term with stop loss points. Sector rotation will be very important to be sure to check out the sector changes by clicking "Sector Bullish Percents" on the main page. Just as we discussed the other day, the small caps are starting to perk up a bit and we expect that trend to continue. If you have read "A Picture is Worth A Thousand Words," be sure to do that. " ............... "Bear Correction: The bear market is taking a breather. Trading rallies could be seen but the bear market will likely resume. The traffic light is flashing red -- look both ways carefully before crossing the intersection." "Using the same concept as the NYSE Bullish Percent, we keep bullish percent charts of each of the 40 industry groups. The percent of stocks on buy signals in each sector is plotted on a grid from 0% to 100%. As with the NYSE bullish percent, the best buy signals come when a sector goes below 30% and then reverses up. The best sell signals come when a sector goes above 70% and then reverses below 70%. The same six signals (or risk levels) apply."