[RT] Visiting the 20 year support trend lines on INDU and TSE 300

["Tony Pylypuk" <tpylypuk@xxxxxxxxxxx>]

Both INDU and TSE 300 ran to (and slightly through) their apparent 20 year 
support trend lines (on semi-log charts) before finding planting their feet on 
the ground and running back to close above those long term support trendlines. 

In the case of INDU the rebound was particularly impressive and "V" shaped on 
a 1 minute bar chart. As some wag on CNBC noted it was the best 144 point 
decline in recent memory and it was like making a 45 foot putt to score a triple 
bogey.
It should be noted that the 20 year support trendline for INDU was defined by 
only two data points over 20 years and for the TSE 300 it was defined by two and 
confirmed roughly by a third data point over 20 years. The apparent penetrations 
were not significant, in the case of INDU approximately 30 points on 8500 and in 
the case of the TSE 300, 80 points on 6690. 
With respect to INDU, it is troublesome, however, that the descending support 
trend line for the current bear market was decisively broken and that INDU 
closed below it. Will that trend line which presently sits in the neighbourhood 
of 8800 now act as resistance? If so, will the 20 year support trend line 
ultimately overwhelm it by providing superior support? 
With respect to TSE 300, the wave count is somewhat more troubling. If one 
assumes that the formation which evolved over the period from January 2000 to 
February 2001 was a valid head and shoulders formation, then subtracting the 
measurement (2900) from the top of the head (11400) to the neck line (8500) 
implies a low which is below current levels - specifically 8500 - 2900 = 5600. 
While the zig-zag function displayed on my chart does not show a breakdown of 
wave 4C(5) into subordinate waves, I have inserted labels for what I think may 
be the constituent subwaves, which by extrapolation, would allow for an end of 
the current bear phase in the vicinity of 5600 to 6200, depending upon how waves 
4C(5)iv and 4C(5)v unfold.
All of which needs to be considered in the context of the current dislocation 
of the American and western economies and in the context of the possibility of 
further terrorist activity.
Nevertheless, I went long in the last hour of trading today and will take 
further long positions early tomorrow if the markets hold.
All of which is simply what I see, and is offered on that basis since I am 
not licensed to advise etc.
Regards,
Tony Pylypuk



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