|
PureBytes Links
Trading Reference Links
|
PJ and RT'ers,
At 10:36 AM 8/15/97 -0400, PJLaird@xxxxxxx wrote: >I think we've made it to a rather important level. As mentioned previously, >I think everything remains very positive, as long as we don't fall below >7820. My intermediate term trendline is at about 7800, and a 2.618 >projection of the initial 7/31 - 8/4 drop is that 7820 mark. We kissed 7820 >this morning, and have bounced ever so slightly. > >I'll give the market every opportunity to establish a bottom, but a strong >move below 7800 is my line in the sand for long term securities. > >Peter
I would agree with you about the 7800-7820 level looks like a pretty good support area for the market. However, you stated that if those levels are broken, the value of long term securities are in jeopardy.
I would like to point out several observations including a little symmetry analysis.
1. As I said, I agree the 7800-7820 (SP U7 908-915) looks like a good support level. However, I would like to see some form of climatic selling take place in the next few hours to days that would reinforce that bottom. Until this occurs, the 60 min and daily charts indicate possible further declines based on standard indicators and oscillators. Athough, the daily is now in oversold territory, but has not turned up yet.
2. To date (8/15/97) the Dow has corrected 5.85% and the S&P Cash has corrected 5.27%. As many of you know, my primary method of analysis is symmetry wave, (for newcomers, see my signature below for more info on SymWave). Getting back to the decline. As you know, ideally I was/am looking for a 4-7% pullback in the market before we head higher... possibly to 8800-9200, as stated in past posts. Anyhow, based on the current decline of approx. 5.5%, and the fact that we are at a horizontal support zone in the market, this area looks like a good area to go long selective stocks OR markets with limited DOWNSIDE RISK. Personally, I will be adding positions in the small and mid-cap sectors TODAY. Note: Trying to time the markets is just to difficult, therefore I look for symmetrical/logical pullbacks to add to positions in this market environment.
3. I stated that I believe there is limited downside risk, let me explain. Based on symmetry, as most of you know through my past posts, the S&P has corrected 10% three times in the last 3 years ( 1994, July of '96, and April of '97). Therefore, each time this market declines approximately 10% +/- 2pts (20% rule), we have found a MAJOR bottom and substantial rallies have resulted. Since the market has already declined 5.5%, we have already declined 50% of the symmetrical decline. So, in my opinion, if you did not sell at higher levels several days to weeks ago, it may be a little to late to begin selling now. Personally, I did some selling over the last 2 weeks in which I usually sold 50% of my individual stock positions assisted by a protective trailing stop method. (If I owned 1000-2000 share, I would now have only 500-1000 shares in my account). Further, I have, at the present time, open GTC BUY orders sitting on the books so I can again reenter these securities. At the present time, I am just a few points away from being filled on a variety of stock (CDWC,COMS,ESV,GE,INTC,MSFT, T,WX,MER,MMM,ROSE, TRF,TRV,CA,MOT, T,BK,CSCO,DE,IBM,SWY,) to name a few! And as you can see, that list does not include the small and mid-cap stocks. Anyhow, in my opinion, yes, we will need some form of selloff from the present levels of Dow 7860 before I get filled. But, am I worried if we break the 7800 level, YES AND NO!!! No, because I know that, at the present time, we have excellent symmetrical support at a 10% decline from high to low. Therefore risk is limited to several percentage points and based on the explosive rallies that this market has had over the last three years, "you got to be in it, to win it"! Now for the YES - I am worried caveat. As many of you know, symmetry wave structures can become OVEREXTENDED and FAILURE IS IMMENENT. Based on the current symmetrical wave structure, we have complete 6 waves (and possibly a 7th, if the current all time high results in another 10% decline which would then form a Wave 8 Bottom. And a Wave 8, IS AN OVEREXTENTION!!!. Thus the need for a little concern. I will say this, usually an extended wave bottom IS FORMED and a RALLY DOES RESULT but the rally rarely exceeds new all-time highs. Therefore, if we decline 10% (Actually, for the record the decline from high to low, based on the S&P CASH, equals 9.9% +/- 1.98 pts), I am looking for a RALLY (which could be 5% or more but less than a new all-time high) in the markets but I have got to be very concerned about a failure of the resulting rally and for a continuation of the decline until the NEXT SYMMETRICAL WAVE STRUCTURE SUPPORT ZONE. For your information, this NEXT symmetrical decline occurred in 1990 and measures 20.5% +/-4.1!!!!!! NOTE: A DECLINE OF THIS MAGNITUDE WILL OCCUR SOME TIME IN THE FUTURE, I JUST DON'T KNOW IF IT WILL OCCUR IN THE NEXT YEAR.
4. Ideal situation (and a very possible one): We decline approximately 2 more percent form the current low (Dow 7817) in an extremely chaotic market. One in which we may be down Dow 200-300 points and then rally sharply before the close (I would also like to see a corresponding climatic selloff in the bond market followed by a reversal). This decline CAN NOT exceed 7.92% from the all-time highs in the S&P Cash, if it does, it would suggest caution due to the overextended wave structure that I mentioned above. IF IT DOES NOT EXCEED 7.92%, then a new smaller internal wave structure could be forming and this should lead to substantial gains in the market exceeding the all time high and begin our next leg up to 8500-8700 followed by a symmetrical decline of whatever magnitude we achieve during this pullback. Let's say our current decline finalizes itself at 7%, then we would look for a future decline of also 7% +/- 1.4pts when we get up to that 8500-8700 level before its next journey to Dow 9000.
Ok...Questions, comments and concerns are always welcome.
Have a good day, John Boggio
For recent commentary and more informations regarding SymWave, please go to:
Commentary: http://www.realtraders.com/boggio/disc7_toc.htm Info regarding SymWave: http://www.realtraders.com/boggio/boggiobio.htm
Thank you.
|