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<DIV><FONT color=#000000>RTs,</FONT></DIV>
<DIV><FONT color=#000000></FONT> </DIV>
<DIV><FONT color=#000000>Further to prior post on correlations, here is a
technical view of the market:</FONT></DIV>
<DIV><FONT color=#000000></FONT> </DIV>
<DIV><FONT color=#000000>Lower plot = modified vix (refer article in July 95
TASC by S. Jack Karczewski) on a weekly chart of both the OEX and VIX. Looks at
a 2+ year history with notations appropriate.</FONT></DIV>
<DIV><FONT color=#000000></FONT> </DIV>
<DIV><FONT color=#000000>Only reason for sendng this chart is to corroborate Ben
(profittaker) and BobR's charts using completely unrelated analyses that state,
simply, sell now and buy the next bottom whenever it will be.</FONT></DIV>
<DIV><FONT color=#000000></FONT> </DIV>
<DIV><FONT color=#000000>Data as of Friday close.</FONT></DIV>
<DIV><FONT color=#000000></FONT> </DIV>
<DIV><FONT color=#000000>The red line (zero line) often acts as support on the
daily chart. We are pretty close to zero on the daily, but nowhere near on the
weekly.</FONT></DIV>
<DIV><FONT color=#000000></FONT> </DIV>
<DIV><FONT color=#000000>The bollinger bands when contracted, warn of imminent
volatility expansion. </FONT></DIV>
<DIV><FONT color=#000000></FONT> </DIV>
<DIV><FONT color=#000000>Volatility expansion/contraction is NOT, in my humble
opinion, purely a directional play - it is more useful for trading options
(buying or selling deflated/inflated premiums). However, it does help put the
underlying price action into some quantifiable psychological
perspective.</FONT></DIV>
<DIV><FONT color=#000000></FONT> </DIV>
<DIV><FONT color=#000000>As you will see from the dark blue lines, over the past
2 years, the weekly modified vix has broken down weeks before the price gave
way. This pattern is not as distinct on the daily chart.</FONT></DIV>
<DIV><FONT color=#000000></FONT> </DIV>
<DIV>The proximity to the zero on the daily leads me to believe that the
downthrust, if any, may be sharp but short-lived; and once again in agreement
with Ben/BobR's analysis, be a "buy the dip" for intermediate term
traders.</DIV>
<DIV> </DIV>
<DIV><FONT color=#000000>Momentum (chart not attached) has been week for 18 days
in a row on the daily chart - mostly at its lowest levels of computability, and
the market seems to be on the minus side of oversold - though not by much. This
reinforces the upcoming upswing.</FONT></DIV>
<DIV><FONT color=#000000></FONT> </DIV>
<DIV><FONT color=#000000>Final thought:</FONT></DIV>
<DIV><FONT color=#000000></FONT> </DIV>
<DIV><FONT color=#000000>When a trading range and wedge formation is this
obvious to everybody watching the dailies, I'm inclined to think that whenever
volatility explodes and the market makes its first violent move, it will more
likely be a stop-runner fake out move rather than the new trend.</FONT></DIV>
<DIV><FONT color=#000000></FONT> </DIV>
<DIV><FONT color=#000000>Regards</FONT></DIV>
<DIV><FONT color=#000000>Gitanshu</FONT></DIV>
<DIV><FONT color=#000000></FONT> </DIV></BODY></HTML>
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