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Earl Adamy wrote:
>
> Just to take the counterpoint, I would suggest that the 12/14 close below
> the 1160 support (just above the the channel 3sd boundary and .382 fib
> retracement noted on chart I posed a couple of days ago) combined with
> further deterioration in breadth confirmed the breach of 1160 support and
> makes the close above 1160 suspect. Unless today's (12/16) breadth improves
> markedly, I would suggest that a reasonable short would be to short 1181
> with a target of 1143. A significant improvement in breadth would nullify
> this trade. This of course is what makes markets, nor is it a trading
> recommendation.
>
> Earl
>
> -----Original Message-----
> From: Bill Bancroft <bbancroft@xxxxxxxxx>
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> Date: Wednesday, December 16, 1998 12:13 PM
> Subject: S&P Support/Resistance
>
> >Hi all-
> >
> >I would like to point out a practical use of support and resistance
> >using the S&P 500 March 99 Contract that may end up being a conservative
> >trade.
> >
> >First, on 11/6, the S&P hit short-term resistance at 1160. Nine days
> >later, the S&P had penetrated the 1160 level on the upside. One of the
> >basic tenets of technical analysis is that "Resistance becomes
> >Support". On 12/3 the S&P's selloff ended at 1160.5. Resistance had
> >become support.
> >
> >On Monday (12/14), the S&P closed below 1160, seemingly breaking
> >support. Yesterday, the market opened higher and continued higher,
> >taking out even Monday's high. Maybe support held after all. If so,
> >that would be twice the 1160 level has held. Another basic tenet of
> >T.A. is the more times a trendline or support/resistance is tested
> >successfully, the more reliable it becomes.
> >
> >A conservative trade would be to buy the S&P if it takes out yesterday's
> >high (1176.5), especially if the market retests 1160 and it holds
> >again. One place to put a protective stop is below the low of either
> >today or, if the market retests successfully, below the low of the
> >retest day. More agressive traders could enter on a penetration of the
> >high of the retest day or today, whichever is lower.
> >
> >It is a conservative trade because I am not trying to call the bottom
> >here. If the market continues to fall, then the trade will not be
> >triggered. The price action will confirm the trade. The only
> >"indicator" I used in this analysis is price.
> >
> >I am not recommending anyone actually execute this trade, I am just
> >trying to start a discussion on recent market action. I look forward to
> >your comments.
> >
> >Bill Bancroft
> >
Earl,
My vote is for your analysis. A sustained rally is suspect with constant
negative breadth,extreme negative ticks, poor up vol. vs. down vol.
NYSE. Rgds, Harry
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