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Realtraders,
Back on 4/6/98 I wrote a post (Titled - "MKT: S&P 4/6/98) regarding the
divergences that I saw taking place in the S&P 500, since that time, this
market has not exceeded that April 6 high. Subsequent to that post, this
market experienced it largest pullback in over 4 months, declining just
over 3%...WOW! Since, the market has become a little more choppy and has
again attempted to rally past it old 4/6 high, but to date, it has failed.
My current analysis continues to suggest more unstable times in this
market over the next few weeks and I doubt we will be able to achieve a
sustainable rally until we decline approximately 5-7% in this market. This
correlates to an approximate level of 1060-1085 on the June S&P, currently
we are at 1126.50 (a/o 4/23/98 close) . These areas that I have identified
were derived from both Symmetrical and Fibonacci analysis.
Finally, I thought I would bring to your attention a worst case scenario
possibility. If we had a decline in the magnitude of 13% from the all time
high, we would symmetrically match the 13% decline that we experienced in
October '97. Such a move downward would correlate to approximately the
1000 level on the June S&P or approximately 985 on the Cash index.
Further, such a decline would correlate with major 'classical' charting
formational supports near this same level.
Although I am not expecting this magnitude decline at this time, it is
just something to think about in advance.
BTW, in that 4/6/98 post, as I said, I mentioned divergent sell signals
that appeared to be forming on both the 60 minute and daily charts. Take a
look at those daily charts again and include your favorite oscillators or
indicators (my favorites are Stochastics, RSI and MACD) and you will see
that the daily's are looking a little more ominous.
Personally, I am short the S&P at 1134.50 and have raised cash levels to
35% in my core stock portfolio.
Hope this helps,
John Boggio
PS I have enclosed a 15 min chart of the June S&P and have included a,
relatively small symmetrical wave structure. The 'small' structure is
showing symmetrical support (on a very short term basis) right now or in
the next few hours. This is depicted by the yellow, near-vertical line on
the chart. This also corresponds with an oversold Stochastics oscillator
and would add confluence to this support area. I would look for any
bounces during the early morning hours to add to my initial short position
or to free up more cash. If we decline below 1116.50, we will have broken
this wave structure and increased selling should ensue. As you can see on
the chart, I have also included some other 'classical' support zones which
should hold the market, at least temporarily and may provide an opportunity
for a trade.
Once those supports at 1100-1105 are broken, I would think that our
target of 1060-1085 would follow very soon.
Have a good day.
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