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

To: Les H who wrote (15148)	5/27/1999 10:45:00 PM
From: Les H	Respond to of 99985

ROAD MAPS, WAVE PATTERNS, KEY LEVELS! Mike Drakulich, decisionpoint.com STOCK MARKET Yesterdays late surge brought the S&P 500 cash index(1304.83) almost exactly to the 38% retracement (1305.83) level of the most recent 5-wave decline, from the high at 1350.50 to yesterdays lows at 1278.53. Now the huge key is whether that decline was a completed C wave of a corrective decline, or a completed 3rd wave of what MIGHT me a developing 5-wave decline basis daily charts from recent all time highs. If this rally stalls at the resistance that runs all the way from 1305 up to 1320, and then we decline to new lows, we will likely have that 5-wave daily decline, cementing the case that an important top is in place. Conversely, a rally and close above the S&P cash 1321-1322 level, will be a strong indication the decline was corrective and is complete, and new highs are forthcoming. That's why I said yesterday the "easy" trading is over. I view yesterdays strong rally of 171 Dow points with a negative A/D line, Trin of .53, and CBOE Put/call ratios of .55 as more indicative of a corrective rally, then as a market rallying off an important low. The Breadth(A/D line) will be important to watch today, if is strong then the odds of a low increase, if it is weak and the S&P declines off resistance levels, then the odds will favor that this is a corrective rally. We still have to be careful here as the simple 5-day Trin is oversold at 1.27, the 10-day at 1.12, and the Open 10 at 1.02. However, what makes it interesting is that if this is really the "kickoff" of a bigger decline then one would expect to see the 10-day simple Trin get to the 150 level on the first big decline off the highs. So another sharp decline to new lows below yesterdays lows, might give us the 5-waves down as well as get the Trin readings to that 1.50 level. Also, if we really want to see "kickoff" momentum to the downside, then we should see the McClellan oscillator soon get down at least below the -200 level, it closed yesterday just below the -100 level. So we have very important price levels to watch, as well as internal market action to help confirm a Bullish or Bearish outcome. We did the right thing yesterday covering our short S&P position at 1292.50, we were short from 1353.25, making over 60 S&P points. We have a lot to keep an eye on here, and it will give us very clear clues if we interpret this important action correctly. decisionpoint.com