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We came incredibly close to SP1432 but didn't violate it and 25 minutes
prior to the close it looks like we could close up for the day. An early
peak at the NYSE model shows that it took a hit today but remains in buy
territory. Early peak at the NASDAQ model shows it should close the day
even deeper in dodo. Since we use the most recent ((pivot high minus
previous pivot low) plus the recent pivot low) to project various
possible levels for the next rally, we must view the deep run of today's
decline as negative projections of the next high ... bottom line is that
the current projected minimum high would put in a double top instead of
a new high. Frankly, it appears that there is more downside than upside
in the SP. We will be taking money off the table in our Vanguard 500
Index fund on today's close.
Earl
----- Original Message -----
From: "Earl Adamy" <eadamy@xxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Friday, March 31, 2000 7:04 AM
Subject: [RT] Market outlook 1 of 2
> SP (June) declined to 1493.50 exactly .25 under the 38.2% retracement
of
> w.3 - the minimum target for corrective w.4. The way this correction
is
> shaping up, it could turn out to be another ABC of which the A decline
> may be complete. At minimum, I would expect to see a short rally
return
> to the area of the previous high followed by a retest of the 1490 area
> which should offer a trading opportunity to go long the futures. This
> correction is likely to require until at least 04Apr. If the 1490 area
> holds, I would expect to see w.5 reach 1623 (minimum 62% expansion)
and
> perhaps 1703 (100% expansion). The 1703 just happens to coincide with
> the upper channel of the historical channel chart (attached) I've
posted
> periodically for some years now. The NYSE timing and breadth models
are
> holding up very well during the correction which appears to confirm
> price expectations.
>
> I expect that the April SP rally could cap the major indexes for some
> months to come, if not years. What most have lost sight of is that the
> SP EarningsYield/TBill relationship (normally 0.90 when in "balance")
> was already extended far beyond levels of the past 60 years i.e. at
1.87
> it is nearly 50% above its peaks in Ju73, Dec80, and Aug87. The SP
> valuations were vastly overextended, but the NASDAQ pushed the
envelope
> so much further that the SP looked positively cheap near the 28Feb
low.
> It wasn't cheap, it isn't cheap, and the next rally combined with
> further rate increases should put the EY/TBill ratio into orbit at 2.0
> or higher. Any close below SP 1432 will switch me from SP index fund
to
> Money Market. Should SP reach 1700, I will switch to MM. Should SP
reach
> 1623, I will switch 50% to MM and switch the balance if the previous
> pivot low is violated. Should SP reach 1700, I will switch the
remaining
> 50% to MM.
>
> The NASDAQ, not only remains in sell mode, but continues to
deteriorate
> badly. The NYSE timing model, which switched from sell mode into
> extended sell mode on the 15th, severely violated a possible double
> bottom on Thursday. This is confirmed by the rest of the breadth
models.
> At a minimum, NASDAQ appears to need a good deal more work before any
> meaningful rally is mounted. Given the fact that we are approaching a
> seasonally weak period for tech stocks and the prospects for a top in
> SP, it's possible that the prospects for ND are dismal.
>
> Earl
>
>
>
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