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<x-rich>Realtraders,
About two weeks ago I posted a message titled, "MKT SymWave for the
SPU8 7/16/98 Part 1" in which I gave a complete symmetrical wave analysis
of the S&P market index. In that post, I indicated that I was following
a wave magnitude that measured 55.7 points (based on the S&P Futures
contract, SPU8). I have enclosed a snipit of that post directly below:
<color><param>0000,0000,ffff</param> With that said, let's look at chart
SYST716D, a 15 minute chart. Let's begin with the Wave 'a' high on
6/10/98 at 1139.70. The wave 'b' low occurred on 6/15 at 1084.00. This
decline measures 55.7 points and if we calculate the leeway, we get a
range of 44.56 - 66.84 points. Therefore, considering that the SPU8 has
rallied over 100 points from its June low, it is not to unrealistic to
expect that our next decline of any significance could/should fall within
our symmetrical target of 55.7 point +/- 11.14 points. Further, if you
add this 55 point move to the TOP of the Wave 'a' high, you get
approximately 1195 on the SPU8 and suggests that this current rally is
close to exhaustion. Thus, if this market does not go much higher than
our closing high of today (7/16/98 at 1193.50), and a decline ensued, a
55 point symmetrical decline plus our leeway, would take us back to
approximately the 1148.94 to 1126.66 on this contract. Further, I have
included a Fibonacci retracement scale on this chart and it too indicates
a 50% Fib retracement at the 1138 level. Combine this with classical
chart formation analysis of old highs acting as new support levels and
again we have confluence in the 1140 area. Finally, since this rally has
been extremely strong, I would be a buyer as soon as the market declined
to the minimum leeway area so as not to miss the next leg up, thus
forming a Wave 'd' bottom and a new go long entry signal (near the 1150
area which also has a 38% Fibonacci support level associated with it).
</color>
In the above snipit, I stated, at that time, the current high was
1193.50 and based my calculations on that number. As we now know, the
market put in its high a day and a half later at the 1199.40 level.
Therefore, all we would have to do is recalculate our target zone based
on that new high. Simply, 1199.40 - 55.7 = 1143.70. Note our leeway of
11.15 points does not change and therefore, we get a recalculated target
zone on the SPU8 of 1154.85 to 1132.55.
I have attached a 15 minute chart similar to the one I sent with my
original post, which includes the current trading activity. Based on
yesterday's (7/27/98) low of 1135.00, we find that the magnitude of this
decline is 64.4 points (1199.4 - 1135.00) AND falls within our
symmetrical target zone as identified above. Therefore, it would appear
that a new BUY signal IS being issued at this time and at these levels,
based on this analysis. Further, as we know, yesterday the market made
a rather impressive intraday reversal of approximately 170 Dow point and
45 Nasdaq points. However, breadth was still anemic in the broader
market and the Russell 2000 was actually down over 1%. Not a great sign,
but at least the symmetrical support level held in the midst of almost
every CNBC guest analyst forecasting that we are now in the beginning a
major leg downward (M. Biggs is predicting a 20-30% drop).
Finally, over the next few hours to few days, we should probably
pullback a little and digest yesterday's gains and even possibly retest
the lows of 1135.00, BUT THIS SHOULD HOLD and provide a bottom so that
this market can again move to new highs. As I previously stated , I am
expecting a continued rally to approximately Dow 10,000 +/-, over the
next few weeks to two months. At which point, I will then become a large
seller of current long stock positions in anticipation of a decline first
measuring approximately 13% followed by a rally and then a failure of
that rally with a projected decline of approximately 20% from the
all-time high.
Hope this helps,
John Boggio
</x-rich>
Attachment Converted: "c:\eudora\attach\sysp0728.gif"
<x-rich>
For recent commentary and more information regarding SymWave, please go to:
Commentary: http://www.realtraders.com/Boggio/disc7_toc.html
Info regarding SymWave: http://www.realtraders.com/boggio/boggiobio.htm =
=20
Thank you.</x-rich>
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