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The current setup in S&P is indeed interesting. We have a nice bull channel
still intact, however we have a possible Wyckoff Thrust on Jan 12 (see
penetration of Blue line from Jan 4 pivot). The subsequent rally was
impressive but failed to penetrate the Jan 8 pivot high and then broke below
the blue line indicating that the Thrust may still be intact. The next key
is to watch the action around 1234-1238 which are nearest support and price
objective levels. A clean break would suggest a move down to 1203. My 45 min
chart already shows a channel break as well as a failure of the Wednesday's
rally to meet price objectives. While NYSE breadth is deteriorating, NASDAQ
breadth is confirming. The daily Amex broker/dealer index is continuing to
confirm the move in the major averages. TBill/EarningsYield Ratio is in the
stratosphere as is the average NYSE specialist short sales. Looking at the
whole picture, I suspect we'll see a correction here, however the market is
extremely vulnerable to a severe external event. Overall, the long term
picture appears to be dangerously upward.
Earl
-----Original Message-----
From: Bill Bancroft <bbancroft@xxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Thursday, January 21, 1999 8:51 AM
Subject: Stock Market Analysis
>Realtraders,
>
>I would like to share some observations regarding the current market
>enviroment. Take a look at the weekly chart of the Dow Jones Industrial
>Average. You will see that it put in a high of 9367.84 the week of
>7/24/98. This was the all-time high for the DJIA until the week of
>11/27/98 (9380.20). The market stalled at this level and failed to hold
>the new highs. Now turn your attention to the week of 1/8/99--a new
>high of 9647.96. At the time it seemed that the Dow was just confirming
>the S&P and Nasdaq that had already posted new highs. But the very next
>week (last week), the market was again unable to hold the gains and fell
>back below the 9380 area. Yesterday, the market was well above this
>level, but AGAIN COULD NOT HOLD THE GAINS. I am saying that this level
>seems to be a significant pivot point. If the market can hold gains
>above this level, it should make a retest of the highs, otherwise, I
>would look for a retest of the recent lows (9080 area).
>
>Other observations (reservations):
>
>The Dow Jones Tranportation Average is no where near new highs, and is
>not confirming the price action in the other market averages.
>On the 3/10/16 MACD, there are sell divergences on the weekly & daily
>S&P, daily Nasdaq, and the daily & weekly DJIA charts.
>Yesterday's last hour was extremely weak (some believe a weak last hour
>is caused by selling by "informed" investors--any stats to back up this
>indicator?)
>Yesterday's S&P's price action was a harami (Japanese candlestick
>lingo)--which is supposed to indicate indecision.
>The Nasdaq failed to hold above its old high (including today's action).
>
>Amazon.com (momentum leader) has broken a bullish trendline (when drawn
>on a semi-log chart----is this valid? I don't know).
>
>For me, I don't call a top until three things happen:
>1. The market breaks a bullish trendline.
>2. The market fails to make new highs (lower highs).
>3. The market breaks through support (lower lows).
>
>The March S&P futures contract broke a bullish trendline (connect the
>lows of 10/8 & 12/14 and extend right) on 1/13/99. It has since moved
>above this trendline, but not convincingly. Right now, I don't have
>enough evidence to call a lower high, so I will call it a trading range
>between 1290.5 (1/8/99) and 1210 (1/13/99).
>
>These observations are decidedly negative, but both the S&P and Dow are
>setting up a weekly inside bar. I would not want to guess which way the
>market was going to come out, but 9367 on the Dow should be a good pivot
>to trade off of.
>
>Thoughts? Comments??
>
>Bill Bancroft
>
>
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