Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Les H who wrote (14465)	5/20/1999 5:02:00 PM
From: Les H	Respond to of 99985

FORTUCAST FINANCIAL TIMER PRECISE TIMING AND MOVEMENT ANALYSIS BY BARRY ROSEN "Serving Futures Traders Since 1987" UPDATED MAY 19 FOR MARKETS OF MAY 20, 1999 STOCKS and JUNE S & P e-minis WEEKLY CHART TREND: Topping at DOW 12916. DAILY CHART TREND: Bottoming. TODAY'S EXPECTED DIRECTION: Higher? NEXT HOURLY CHART NEXT DAILY CHART NEXT WEEKLY CHART TURN: 5/21 H TURN: 5/21 H; 5/27 L TURN: 7/99 H SWING TRADERS STRATEGY: Buy breakouts at 1352 stop with a 1339.75 stop. Exit 1370. (05/20) DAY TRADER'S SUMMARY: We did put in bullish RSI divergence on the double top at 1350, and if we go much higher, then we will quickly head toward the 1370-1374 region. Our computer model is still suggesting a 63% chance of a fall toward the 1318 region. A break of 1340 should start signalling that possibility. Major cycles are higher but some of the minor cycles are not supportive. We suspect that the major cycles will win but we will watch the key numbers for a stronger sign. First resistance is at 1356 and then 1360 and 1362. BIGGER PICTURE (05/20) After looking more closely at our 1987 analogue (the 12-year cycle analogue) and the current telescope pattern, we are going to extend our time window for topping. We apologize for getting you prematurely short mutual funds or options and we will lighten up. There may be a 20% chance of topping by the end of May but we are a bit more skeptical. We have been unsatisfied with the telescoping pattern and the widening breadth of the market, especially with the Russell 2000 and the NYSE breaking out, and we spent one full day painstakingly researching patterns and cycles. Our conclusion is that we still could be higher at least 1-2 more months and that we will not feel complete until the DOW goes over 12000 and probably hits the 12916 region. In looking closely at the telescoping pattern on the DOW, we cannot make a case for a pattern completion without 3 more highs. The highs appear to be DOW 11256, DOW 11716 and then DOW 12916. While we could see the first two highs completed by May 31, the last one should take longer. In between, the DOW may fall 725 points and issue a false breakdown. Until the S & P cash closes below 1275 and the DOW falls more than 800 points from any high, it will be premature to top-pick. BULL MARKETS that enter their final phases have a way of making fools of people. It will take a major political and economic event to turn this market around since it has already ignored the bombing of the Chinese embassy, the collapse of the Russian stock market and their economy, and other major events. But whatever straw that breaks this camel's back will probably be accompanied by a rate hike in July or August. We do see late July and early August as presenting several potential events that could turn this market around. There will be a shift in some of the optimism within 3-4 weeks but we have bonds bottoming and moving higher into mid-July. Moreover, in looking at all the markets and patterns, we cannot whole-heartedly say that the end is near. It will still be hard to favor longs at these nose-bleeding levels, but just like silver, when it went to $50, there will be a lot of bears with nose bleeds. S & P NOTES: The next three key highs for the June S & P appear to be 1391, 1448 and then something over 1500. We do expect divergences to happen on the broader market. We should get a pullback to June S & P 1318-1320 and that should be the best exit for short mutual funds and puts or a place to spread puts to protect them against erosion. OEX NOTES: (05/20) Exit Sept. and Oct. puts on pullbacks when the June S & P 500 reaches down to the 1318-1320 region. Alternative: Spread them by selling one strike price below your entry and lift the second leg into the high. OPTIONS TRADERS: We recommend that you switch to trading mini contracts on the S & P since options are so unforgiving. If you choose options, make sure you evaluate delta decay of options, manage your money and buy options that have enough time in them and do not trade against the major weekly chart trend. INTRADAY SERVICES now in effect: QUICK-TRADES HOTLINE: updated at 8:20 am and hourly from 9:30 am-2:30 pm CDT. Now contains more commentary at $4.95 PER CALL. Call 1-800-788-2796 for details. S & P COMMENTARY LINE: Updated with pre-opening comments at 8:20 and at 10:35 am, 12:35 pm, and 2:00 pm; more detailed and priced quarterly. JUNE T-BONDS WEEKLY CHART TREND: Bottoming. DAILY CHART TREND: Lower to 114.27. TODAY'S EXPECTED DIRECTION: Lower. NEXT HOURLY CHART NEXT DAILY CHART NEXT WEEKLY CHART TURN: 5/20 L; 5/21 H TURN: 5/27 L; 6/1 L TURN: 5/99 L; 8/99 H SWING TRADING STRATEGY: Hold shorts with a 119.10 stop. (05/20) We should be lower on Thursday with worst upside overnight action at 118.16. Any surprise news stories would take us to the 118.27 or 119.03 region. If we get much beyond there, it's time to get out. If you are patient, we should see the 114.27 region by May 27. Thursday's support begins at 117.24 and then 117.09 and 117.00. With the Fed's bias toward tightening, and an 85% chance of a move to lower numbers toward the 114.27 region, we need to continue to jump on selling this market. OVERALL: (5/17) Once bonds bottom in late May, we expect an 8-point rally back to the 122-124 region into around July 19. The last deflation cycle is due to bottom around July 17 and we expect that we will be starting a multi-year inflation cycle. First target for bonds as early as November is probably the 99.10 region.