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Author: amilian Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 36686  
Subject: My market view FWIW Date: 2/16/2002 12:39 PM
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Hi all.

Haven't posted much lately, with the bub being such an excellent distraction :-)) But I've been lurking when I can and but thought that I would go out on a limb and add my 2c worth today about what we could/might/maybe see as far as market direction in the short term.

Personally after witnessing market forces over the last few days, I can't help but have a bearish tendancy right now - for the short term anyway. That's after having considered both compx and Nqs using those whacky Bollinger Bands I use (oversolds being ignored), plus considering excellent reviews of Nqs support/resistence (many thanks Janny and Stevie - who by the way do not get praised enough for their hard work, generous spirit, and willingness to go out on a limb to be shot down by those very few snipers who don't share the rare vision and TA expertise that they both have developed). Both would probably modestly and politely disagree with what I say, but I know that many here - and on other boards - would not. Assets to this community - and great people to boot!

Seemed to have strayed from my original intent in this post - sorry, couldn't help it. Back to the subject:

IMO it's a significant technical occurrence that VXN/VIX has turned up from a test of the historically significant 22.00 region at the same time that NQs/Compx support levels start failing whilst oversold conditions for both are being ignored (as I see them using BB's of 100/2 with RSI of 10 on 15 min chart). Also of significance is that on an hourly chart, COMPX and NQS failed at BB midline (otherwise known as 100d sma) The lower BBand on hourly for NQs currently at 1382 and for COMPX 1743. I think both lower levels will be reached early next week. And if that happens, that means support recent support for compx of 1772 and NQs of 1406 will have failed and here we come September lows - all IMHO :-)

Sorry I can't post a chart for interval charts I've mentioned - stockcharts only allow free dailies now :-(( but if you are able, use the settings I've suggested and check it out.

As for the daily perspective: Lower BBand (using 100/2.5 settings) on the daily currently for COMPX is 1459 and RSI at today at 38.5%. For NQs, lower BBand on daily is 1149 and RSI 38.4%. Those levels are my bearish targets for the short term and I'm looking for RSI to get below 20 and lower BBand penetration for an oversold condition and reversal setup. Here are some pictures:

http://stockcharts.com/def/servlet/SC.web?c=$COMPQ,uu[m,a]daclyyay[pd100,2][vc60][iUb10]&pref=G

http://stockcharts.com/def/servlet/SC.web?c=$ndx,uu[m,a]daclyyay[pd100,2.5][vc60][iUb10]&pref=G

(note the extreme oversold condition that led to the recent rally. IMO, that is the technical condition that will lead us out of this market mess) Here's my post and thread from months ago about that: http://boards.fool.com/Message.asp?mid=16056107

Read it and you'll see my reasoning behind my bullish tendancy from late Oct/early Nov to when I stopped posting there at the end of year due to lack of interest in my posts. I then started a thread here at this board....... http://boards.fool.com/Message.asp?mid=16154508 and remained bullish until 1/2/02 when I posted a bearish signal here http://boards.fool.com/Message.asp?mid=16380703 and then the next post commented, "I'm still bullish, but I'm thinkin that if the 200 sma fails (and low of 12/20 of 1918) we might see a relatively quick return to daily BB midline, which is 1806 after today".

Well, we sure got that - and now it seems we may be headed lower...

So to summarize, if recent support for NQs and COMPX from 6 days ago fails, we are sure to go down with some higher volatility. Hopefully, it turns into a fearful capitulation, VXN spikes up whilst we test the lows of Sept. Hopefully, the lows hold with a true capitulation double bottom will occur. Perhaps then, we daytraders will enjoy the higher volatility and certain bullish market direction and believers of LTBH theory will have the absolute perfect entry point.

And by the way, considering the b/o over NQs/COMPX resistence on Thursday IMO it was a low volume headfake. As others have commented, it was an unimpressive move up.

BUT having said all that, I'm not naive enough to think I'm right in what I see in the charts. There may be something that occurs that will change my interpretation - something I am always looking for. Things can turn on a dime and it's why you've got to always consider new events in formulating a trading strategy. Fact is, market sentiment RULES. The market is always right. And if recent support holds well - or NEW support levels create themselves on the way down, and if bulls throw enough money into the market despite what the charts say, then 'go the bull'.

But until that happens, I'm back to looking at weak charts and short selling .....

Happy trading!

Greg.
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