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Strategies & Market Trends : Stock Attack -- A Complete Analysis

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To: Trading Machine who wrote (36614)11/28/2000 10:58:11 PM
From: donald sew   of 42787
Short-term technical readings:
DOW - midrange
SPX - lower midrange
OEX - lower midrange
NAZ - oversold, mini double bottom signal
NDX - oversold, mini double bottom signal
SOX - oversold, mini double bottom signal
VIX - 30.39, upper midrange

Per my short-term technicals the overall market is now back around the oversold region. As negative as the NAZ/NDX/SOX was today, the DOW and SPX still have not set a LOWER LOW; therefore the possibility of the MID-TERM BOTTOM arriving last week may still be in play for the overall market, which is better represented by the SPX.

It was interesting to see the VIX move up today while the overall market sold off. Is that a hint of too much complacency or just an anomoly. Im suspecting its some level of complacency. It was also interesting that the PUT:CALL RATIO is just at .68, which is not yet at extreme levels in light of the heavy selling in the NAZ/NDX. The levels of the VIX and PUT:CALL RATIO are not at extreme levels which commonly mark major bottoms, so Im suspecting that there is still more downside down the road.

The NEGATIVITY in the NAZ/NDX was obvious today.
1) SOX broke the DESCENDING TRIANGLE to the DOWNSIDE, implying that there is still more downside in the future. Doesnt mean that it will come immediately.
2) The NAZ/NDX established NEW LOWER LOWs, so the downtrend continues for now.
3) The BTK(biotechs) gave up all of yestersdays strong gains and some more. Although it is an IMPERFECT formation, one could argue that the BTK got a BEARISH ENGULGING pattern, implying further negativity.

Unfortunately the NAZ/NDX are now giving hints of NEW LOWER LOWs in the future, which also implies that the MAIN BOTTOM has not yet been set.

For the very short-term I got what I call a double bottom in the SOX/NAZ/NDX per my short-term technicals, which is hinting that a bounce should start/occur tomorrow. It does not predict the size of the move so it could be small or large. So its possible for more intraday selling tomorrow then some sort of a rally into the close, and it could also rally right from the open.

For the NDX there is a trendline around 2595-2600 for tomorrow. That trendline is also the lower trendline of the BULLISH WEDGE. Not to push the issue of the BULLISH WEDGE since it may become a negated pattern, just mentioning the trendline. 2586 is also a horizontal support line which was the last peak prior to the strong rally of late 1999 which eventually led to the all-time high. Feel some sort of bounce should start in this region.

Although it looks so negative for the NAZ/NDX right now, I am suspecting that the capitulation phase is still in the future, not right now. The DOW/SPX only sold off a little. Capitulation is when all 3 major indices are selling off hard, market internals at extremes, sentiment(VIX/PUT:CALL) at extremes/TICK at negative 1200+/etc. Sorry, but no major capitulation yet.
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