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Harley and Steve:
thanks for your postings.
If you will look at the daily chart of the DJIA for the past 5 days, you
can get it at wallstreetcity.com (telescan site), it appears that while the
lows are higher, the tops are lower, and the DJIA is below its trendline.
I'd add that the recovery yesterday was around a 2/3 retracement, of the
over 500 point drop ( and also on a fibonacci line for the past few days
including yesterdays low. We are not out of the woods yet.
Lionel
At 05:49 PM 10/29/97 -0000, Steven Buss wrote:
>See http://www.pixi.com/~marvel/code/heeding.htm for an interview that
>Richard Arms did with Barron's. He discusses the "volume at the top"
>issue...
>
>Steven Buss
>Walnut Creek, CA
>sbuss@xxxxxxxxxxx
>
>-----Original Message-----
>From: Harley Meyer <Harley.D.Meyer-2@xxxxxxxxxx>
>To: A metastock-list@xxxxxxxxxxxxx <metastock-list@xxxxxxxxxxxxx>; Jim
>Greening <JimGinVA@xxxxxxx>
>Cc: Bill <WPhill9611@xxxxxxx>; Claud Baruch <claudb@xxxxxxxxxxxxx>; Herb
>Carter <carterh@xxxxxxxxxxxxxxxx>; huw evans
><huw.evans@xxxxxxxxxxxxxxxxxxxxxxxxxx>; Jim Greening <JimGinVA@xxxxxxx>;
>MICHAEL J ARNOLDI <marnoldi@xxxxxxxxxx>; Michael Liew <MAL2@xxxxxxxxxxxx>;
>Randy Burkhardt @ Home <randy@xxxxxxxxxxxxxxxx>; Steven Buss
><sbuss@xxxxxxxxxxx>
>Date: Thursday, October 30, 1997 1:39 AM
>Subject: DJIA update
>
>
>>I haven't downloaded yet but just wanted to send the charts while I had
>>time tonight. I don't like it. Well if I'm short then it's actually
>>looks pretty good :).
>>
>>New highs minus new lows declining. This is one of the conditions we
>>look for at the top of a market that has been moving up.
>>
>>Total volume is increasing. From CANSLIM we want price & volume to move
>>together. Here they diverge. For a bullish correction we are looking for
>>prices to move down after volume drifts lower. And looking for prices to
>>move higher from a correction with increasing volume. So this is the
>>area that causes the greatest concern.
>>
>>Since we have volume increasing as prices decreased over the last few
>>days, then this might cause an even deeper correction down the road.
>>
>>If we get a good upward surge in up/down volume with in the next couple
>>of weeks we should be ok. (Remember all 4-5 conditions must also be
>>present). If not & prices move higher be careful.
>>
>>Here is some food for thought: If all 4-5 conditions are true then we
>>can go back into the market with confidence.
>>Review->
>>coming off of a correction:
>>1-NH-NL increasing
>>2-total volume increasing
>>3-surge in up/down volume where 10 day MA >> 50 day MA
>>>> - means "much greater than"
>>4-upper channel of down trending channel is broken
>>
>>Going into a top:
>>
>>Reverse the above conditions.
>>
>>Ok, using a little bit of logic:
>>
>>If 1 and 2 and 3 and 4 (from above) are true then it is safe to go back
>>into the market with confidence.
>>
>>But 2 (increasing volume) can't be assumed to be true given that volume
>>has increased to a record level over the last few days. In essence, we
>>would have to assume that for many weeks in a row that volume will
>>continually move to record levels as prices move higher.
>>
>>Hence the hypothesis is false. Which implies that the entire statement
>>is 'vacuously' true. But we are not interested in 'vacuously' true
>>statements.
>>
>>
>>So is it reasonable to assume that 2 (increasing volume) can be true
>>given the current level of volume?
>>
>>Now if volume decreases to a more reasonable level (average over 50
>>days) then prices will more than likely decrease (observations from
>>William O'Neal & CANSLIM). More than likely under the current
>>conditions, the market might become even more nervous.
>>
>>Hence we could move lower.
>>
>>Q.U.E.D.
>>
>>In closing. After skimming Greenspan's speech I will say that we might
>>be headed to lower levels. I will re-read it because it was very
>>informative with respect to global markets. But when he & Alice Revlin
>>act as cheer leaders and when I hear Alice make comments that investors
>>are in it for the long run. To me she is saying. Hey it is ok if the
>>market moves lower because investors are willing to stick it out and not
>>panic. (Greenspan's fear).
>>In Greenspan's speech he also stated that growth in earning would be
>>slower than previous years, but still growing. Just not at the same
>>pace.
>>
>>One more side note: On Nightly Business Report several weeks ago, there
>>was advice given that one should add to there portfolio. A small portion
>>of short positions, to offset losses from a market decline. Might be
>>some good advice.
>>
>>Harley Meyer
>>
>
>
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