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

To: stockycd who wrote (12931)	5/5/1999 11:59:00 AM
From: donald sew	Read Replies (1) \| Respond to of 99985

Just updated the INDEX UPDATE at 11:50am homestead.com seeya

To: stockycd who wrote (12931)	5/5/1999 12:00:00 PM
From: Les H	Read Replies (1) \| Respond to of 99985

Greg Nie, Everen Securities For: May 5, 1999 Easy come, easy go with Dow 11,000, at least for yesterday, as the specter of weak bonds weighed on stocks for most of the session. While our key internal indicators remain in the bullish camp, a stretched out, modestly overbought market looks ready for a May timeout after an impressive April. We look for a bout of profit taking to pull the Dow off 5-10%, a range we feel is consistent with the gyrations and volatility recently exhibited, before another rally attempt plays out before the end of the quarter. Thus, we advise aggressive and speculative accounts to take a temporary look at the sell side. For investors, we continue to advocate scaling in and position building. However, a little bit of patience may allow one to pick up favored issues at better prices. Our basic schematic of price, volume and breadth remains in decent shape. Price charts of the averages, including the revived Dow Transports are sporting bullish intermediate-term patterns. Our primary volume and breadth indicators are also in bullish territory. Thus, the anticipated near-term pull back has a high probability of being a temporary move, simply to work off the overbought condition. We would look for this pull back to find support at Dow 10,000 or better. The rapidity of the April rally leaves first chart support at Dow 10,000. As an aside, the time to get overly and overtly defensive would be a rally that fails to reach a higher peak, not the case just yet. However, enough pre-conditions exist to look for a round of profit taking sooner rather than later. The Dow Industrials are historically stretched out with the average still 20.1% above its 200-day moving average. Major moves have been difficult to sustain at levels 18% or better above that mark. To a certain extent, the COMP is also extended at 20.2% above its 200-day. In addition, the stocks over 10-week moving average indicator (74.0%) is in overbought territory while its sister, the 30-week indicator (60.1%), is at its highest reading since May 1998. Sentiment is moving closer and closer to "red-flag" status. This week's Investor's Intelligence shows 58.6% bulls and 27.6% bears, awfully close to the clearly bearish 60%/20% mix. The current bullish level matches up with the mini-peak in early January 1999. Simply put, we sense the market has earned a May vacation after an energetic April. Bonds are the wild card with the risk of a further rapid rise very real. For the last 18 months, it has taken sharp moves in bonds to forcefully influence equities. A break below the March low of 119-09 in the June bond contract (USM: 119-21) could create that havoc. This would simply be the convenient excuse to push a market ready to work off that overbought anyway. SPX: 1332.00