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<x-rich>Realtraders,
On Tuesday, when the market was in the midst of a 170 pt Dow decline
(the largest in 3 weeks), I posted a short message regarding symmetrical
support. I have reposted it directly below:
<center><color><param>ffff,0000,0000</param> No time to do a
complete analysis but just to let you know, we have symmetry support on
the SP U7 at approx the 90000 level +/- 300 basis points.
</color></center>
Since I have a little more time, I thought I would give further details
as to what I am currently following. I have enclosed a chart of the SP
U7, 15 minute, and have identified three (3) wave structures that I
was/am following. Each wave structure is identified by the near vertical
color coordinated line draw on the chart. The smallest is the white
line, the middle is the yellow and the largest structure is the purple
line.
Let's start with the smallest. You will notice the first white line on
June 27-30. This decline measures 1900 basis pts +/-380 (20% rule). The
second white line (note: both lines are exactly the same size) formed at
the high on 7/7/97 at 93225. Notice how the market declined to the 91585
level. This decline equaled 1640 bpts and MATCHES the original wave
decline. From that support zone, the market rallies approx 1500 bpts and
then again rolls over. For the day trader, opportunities do exist.
Now lets move to the next largest wave structure, the yellow line.
This structure had a high on 6/25 at 91120 and a low on 6/26 at 88500.
This decline measures 2620 bpts +/- 525. Now AGAIN use the 7/7 high of
93225 (the reason we are using this high is because NO new high was
made), and now look at the low that was formed on 7/9/97 at 90700. This
high to low measures 2525 bpts and MATCHES the original 'yellow' wave
decline to within 95 basis points. A buy signal is issued. As you can
see, we have rallied a maximum of 1800 bpts and currently stand up 1450
bpts.
Note: Now that we have declined GREATER than the original 'white' line
wave structure, that wave is no longer valid and can be completely
ignored in any further analysis. Also, this is a perfect example of a
smaller wave structure REPEATING its symmetrical relationship BEFORE the
larger wave structure.
Now for the largest structure, the purple line. Quickly, it measures
3140 bpts +/- 630 pts. IF WE DO NOT MAKE A NEW HIGH, HIGHER THAN 93225,
and we begin to break down below the 90700 low, we should find
symmetrical support at around the 90000 level +/- 630 bpts.
Finally, this is where it gets a little tricky. As many of you know, I
have been providing symmetrical relationships for sometime now which
began with the April lows. As you know, back then I was using the June
contract for my analysis and then had to switch to the CASH S&P when the
contract expired due to illiquidity of the September contract back in
April of '97. I discussed this in my 6/24/97 post to this forum. At
that time, I indicated that the CASH index was indicating a Wave
structure of 1-2,3-4,5-6. Where wave 5-6 corresponded to the time period
of the first 'purple' line on this enclosed chart. However, when I
measure the magnitude decline of the CASH index verse the SEPTEMBER
futures contract, they do not match up. Specifically, the SP U7 shows a
decline of 3140 bpoints. This decline is the LARGEST decline that this
Sept. contract has seen since the April lows, thus making this drop an
ORIGINAL WAVE (and we can call it a <italic>new </italic>WAVE 1-2). When
I compare it with the CASH index, <italic>this </italic>same decline is a
WAVE 5-6 and suggests an over extended wave pattern and failure is likely
in the not to distant future.
Thus my dilemma. Is the 'purple' line on the Sept contract a NEW Wave
1-2, in which it would suggest another great buying opportunity is just
around the corner IF it is MATCHED with a Wave 4 bottom. Or is this
structure a continuation of the CASH index, in which we would be in the
process of forming a WAVE 7-8. Obviously, if the latter is true, it
would suggest that failure should be expected and new buying should be
reserved for the nimble day trader.
Just some thoughts,
John Boggio
PS I will be going out of town on Friday 7/11 and will be back on Sunday.
If you have any questions and would like them answered before I go, try
to get them to me before 10:30am est on Friday morning.
</x-rich>
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