MomentumCycles

MomentumCycles commentary for the open of Monday, December 20, 1999:

Expiration played out pretty much as laid out in Friday's commentary, with a volume pop on the open for SPX and NDX settlement, then a flat movement into midday and a dip on the close {rather than the widely expected rally into the close}.We also got the cyclical rate of change mid-month tax-selling abatement rally for Thursday and Friday,which was predicted for our readers to start on December 16 as early as 2 weeks ago.{Total open the 16th-close the 17th of 84 NASDAQ points.}

The FlowRate chart shows the Friday double hump volume activity. Once again the fibzones gave valid targets a day in advance. OEZLL and OEZAL were satisfactory performers. There is some indication {in addition to seasonal probability history} by way of the Red Trend Exhaustion index that tax loss selling is finally abating. The green TEI has yet to turn up. SuperT still has a divergence that probably won't disappear until January. This ends the expiration trade for December. Next trade should come in the last week of December where we look for a trading low to play the run into the first week of January.

Next week should be volatile due to FED concerns and post-options expiration effects.

Hines Ratio is still showing Put Alert level concern. Total EquityCP is less extreme and the Dot system is still on a buy trend. SMI and 3NDX are still in buy trends.Commercial hedgers have increased their S and P 500 short positions.

XAU STOCHASTIC 5 is short term overbought,with a move from the lower 14% band to the 50 day moving average {tag of the upper 3.5% band} as predicted due to the lifting of tax selling and a good move in the underlying metal.21 day intraday volume percent shows a longer term nonconfirmation of the recent succeeding new lows.Price oscillator is still rising from oversold. HL has not yet recovered, as have some of the other components,from the recent trading lows.We still are holding a small position in HL as a long term call on the sector.

Here are the other charts:

5 DAY ADVANCING VOLUME CHART. OEX CODI CHART. NDX CODI CHART. FRIDAY'S CONE CHART. MONDAY'S CONE CHART. CV CHART. DOW NSYNC CHART. EODCV CHART. INDU CHART. INDU60 CHART. INDUB CHART. MCOSC CHART. MOSS CHART. OEX 30 MINUTE CHART. OEX DAILY CHART. OEX FIBRET CHART. OEX NSYNC CHART. RISK CHART. SENTIMENT CHART. TPZ CHART. VIXPF CHART.

MomentumCycles commentary for the open of Tuesday, December 21, 1999:

The most positive development we have is that the Red TEI is rolling over in its 1999 finale. This continues to relax the depressant on the breadth environment. Barring any surprises by the Fed we might just get that catapult into the new millenium. The rising TYX is counterproductive to the millenium rocket ride, but a strong economy can support higher rates. That appears to be the road ahead. ADV/DECL and Flow Rate painted negative issue and volume breadth for Monday. The End of Day Cumulative Volume is looking like a millenium crash is in front of us, but if we can be permitted to paint a ray of optimism here, the RSI of EODCV is nearing a reversal level that occurs at Price lows. McOsc has been building a base in oversold territory as the NYA finds support near 630. Midas NYA support is at 625.80. Monday's Cone gave us a neutral to moderately down day as the Modified Options Strategy Spectrum is describing and as the Projection Oscillator is projecting. The negatives will probably remain with us for a few more days.

The RISK Monitor bands are pinching as we close in on the millenium party. The bands should flare apart in the next two weeks. At the moment, the DOW upside target is 11480 and as has been said before, the least risky time to enter was in October. Expiration always puts some distortion into the EquityCP and Sentiment charts and now that it is passed we have a clearer picture. Cyan/Yellow Dot trend indicator is still on a buy, but is within one day of going into sell mode. It may not. It just depends on post-Fed meeting perceptions of market players.

OEX came within 0.3 points of hitting the TPZ most probable price for Monday and Tuesday. The swing low requirements for this time and price zone have been met. We won't assume a pivot low is in until Tuesday close since the time zone does have one more day to work out the price levels.

The 4 XAU charts below show Monday's predicted decline from the upper 3.5% band on STOCHASTIC 5 readings of short term overbought.Longer momentum readings show a developing bottom on what must be overwhelming bearish sentiment due to price weakness and tax selling.HL is still suffering from this.Intraday volume percent seems to show longer term accumulation for XAU components.

Here are the charts:

5 DAY ADVANCING VOLUME CHART. ADVANCE/DECLINE CHART. OEX CODI CHART. NDX CODI CHART. TUESDAY'S CONE CHART. INDU CHART. INDU60 CHART. INDUB CHART. MOSS CHART. OEX 30 MINUTE CHART. OEX DAILY CHART. OEX FIBRET CHART. OEX NSYNC CHART. OEXPF CHART. SUPERT CHART. XAU1 CHART. XAU2 CHART. XAU3 CHART. XAU4 CHART.

MomentumCycles commentary for the open of Wednesday, December 22, 1999:

The Red Trend Exhaustion Index continues to roll over and the McOsc is gradually working its way up to the zero line. End of month seasonality says the price and breadth trends should continue with minor pullbacks. No great sell should occur until after the first of the year. We may get a decent correction in January and another run up into February at which time we get the best put trade of the year. In fact the first week of January can be brutal as those deferring capital gains into the new millenium take profits. I've seen the first few days of January run up and then smash into the end of seasonality as stops are taken out in grand fashion. The selling just comes out of the blue and novice traders shake their heads in wonderment as to what the heck happened. My personal best put trade came in February 1994 just after the Fed let it be known how serious it was about raising interest rates. This time should be no different other than that they may not wait until February. They may wait a week into January to make sure that Y2K is behind them. Any interest rate rises will come early in the year rather than during the months immediately preceding an election. If I were a betting man I would say the first half of the year will underperform 1999 and the second half will be goosed to make people feel happy as they enter the voting booths.

XAU still encountering the crosscurrents of interest rate uncertainty and short term overbought,longer term oversold.

Here are the charts:

5 DAY ADVANCING VOLUME CHART. ADVANCE/DECLINE CHART. OEX CODI CHART. NDX CODI CHART. TUESDAY'S CONE CHART. WEDNESDAY'S CONE CHART. EODCV CHART. EQUITYCP CHART. FLOWRATE CHART. INDU CHART. INDU60 CHART. INDUB CHART. MOSS CHART. OEX 30 MINUTE CHART. OEX DAILY CHART. OEX FIBRET CHART. OEX NSYNC CHART. RISK CHART. SENTIMENT CHART. SUPERT CHART. TYX CHART. VIXPF CHART.

MomentumCycles commentary for the open of Thursday, December 23, 1999:

TAMAGOTCHI THING

Preholidays make for choppy trading, thus the inclination to stand aside and observe and study and catch up on other things. Seasonal biases continue to dominate as the "bah humbugs" begin to fear a serious correction. It is the same people that cheered it to these heights and will be the same people wondering where the bottom is when the inevitable corrections starts. The truth of the matter that sector rotation creates an ongoing revitalization. The major corrections don't come of their own accord, but due to stimuli such as interest rates or tax reasons. Fundamentals are the last consideration. Of course brokerage firms could induce a selling frenzy, but that is not in the cards as the forecasts for 2000 have been laid out and buy and holders will be rewarded. The broad market has been under such massive selling pressure all of 1999 that any severe correction in the NASDAQ is likely to benefit the traditional way of investing by routing money into the quality bluechips with earnings and dividends and reasonable PE's.

Technically the market continues to wind down or up depending on your perspective as 1999 comes to a close. New lows are keeping the lid on a bit longer. Makes you kind of wonder what will happen when the new highs exceed the new lows once again starting late next week or the week after. This market could go through the roof once the selling abates.I am getting the feeling that rationality will return to trading/investing in 2000. It will take a serious blow to knock some sense into the participants. The cliche this time of year is "If Santa fails to call on Broad and Wall, the market will fall".

Perhaps it is time to take a look at the Volatility chart. It has had quite a run in the year-end rally just like at the end of 1998. Following that rally it peaked on 1/11/99 and went into a winter consolidation and we expect it to do something similar in 2000. Note that the 5 day and 20 day historical volatilities are dropping to reversal levels. They should reach a low next week at which time we would like to play the normal monthly seasonality trade. That is going to be hard to do after such a long run.

XAU continues its consolidation near the previous lows.

Here are the charts:

5 DAY ADVANCING VOLUME CHART. ADVANCE/DECLINE CHART. OEX CODI CHART. NDX CODI CHART. WEDNESDAY'S CONE CHART. THURSDAY'S CONE CHART. EODCV CHART. EQUITYCP CHART. FLOWRATE CHART. INDU CHART. INDU60 CHART. MCOSC CHART. MOSS CHART. OEX 30 MINUTE CHART. OEX DAILY CHART. OEX FIBRET CHART. OEX NSYNC CHART. RISK CHART. SENTIMENT CHART. SUPERT CHART. TEI CHART. VIXPF CHART.

MomentumCycles commentary for the open of Monday, December 27, 1999:

From a trend exhaustion standpoint the Red TEI has been working on a high(index low) as the indexes consolidated and then broke out to the upside. We expect the Red TEI to work lower over the next week as the new lows and declining issues decrease. At some point the Green TEI should start moving up. Then we look for a put entry. The intent of this posting is not to recommend every potential trade that comes along but to share some of the various ways to look at price and breadth action that can be used in making trading decisions. Thursday's action was one of the best in a long time on both the price and breadth fronts. ADVDECL was clearly in the up trend mode with advances greater than 1500 and declines below 1200. Flow Rate was also in a confirming roll. Thursday was a red cone day that took the projection oscillator to overbought levels, and can go higher. Markets don't necessarily stop and reverse on a dime so this current trend mode may turn into a horizontal cycle channel mode as gains are digested. It was also pointed out today by one analyst that the market may broaden out in January since the breadth has been so narrow to the present. MOSS has broken out of the neutral zone and moved into overbought. Let's see how long it trends there. Other indicators such as the RISK and INDU 60 minute, OEX Nsync reached an overbought status, but we don't want to jump the gun here on trying to short a strong rally.

The market is giving us the following picture using the 30 minute bars from the first of the year. Taking the pivot low on 12/20/99 the TPZ High was projected to be between 796.71 to 799.66 by 12/23. The OEX came pretty close to that with a high of 795.66. Now if we assume a pivot high is in and move the cursor to 12/23 high we have a projection for a TPZ pivot low between 12/27 10:30 and 12/28 13:00 with a price zone overlap of 786.23 to 766.07. The low side of 766 would seem to be a stretch of the imagination. If you take a look at Monday's Cone chart the first green cone support is at 786 to 788. Trendline support is at 782.5 which is also a red cone day where strong support would be found. There is an 68% probability that the OEX will close inside the inner red cone and a 83% probability of a close within the outer red cone. In order to reach the unimaginable 766 we would have one of those 5% probability crash type days. Because of the positive seasonality currently in existance the low is expected to be more conservative, i.e. the TPZ Low and the green cone, i.e. 786 to 788.

The XAU accumulation chart shows internal strength was likely building while price was declining.A minimum rally from the lower 14% band to the 50 day moving average was predicted and achieved.XAU price oscillator is showing resistance at the 50 day.Momentum of price of 7 versus 35 days is still rising.We expect an eventual rally to the upper 14% band at minimum.

Here are the other charts

5 DAY ADVANCING VOLUME CHART. EODCV CHART. EODCV2 CHART. EQUITYCP CHART. FLOWRATE CHART. INDU CHART. INDUB CHART. MCOSC CHART. OEX 30 MINUTE CHART. OEX DAILY CHART. OEX FIBRET CHART. OEX NSYNC CHART. SENTIMENT CHART. SUPERT CHART. TYX CHART. VIXPF CHART. V0LATILITY CHART.

MomentumCycles commentary for the open of Tuesday, December 28, 1999:

The positive breadth of last week did not last long. Adv/Decl turned negative as did the net flow rate. This turned the McOsc back down at the upper edge of its neutral boundary. The Red TEI remains on a buy. Long weekends beget a slow comeback and produce low volume days from which long term conclusions are best avoided. Note that both the up and down volume on the 5ADVOL chart dropped as normal for the holiday atmosphere. We won't really know the character of the market until the last trading day of 1999 is behind us and we are into 2000 for a week or two. The NDX took a hit but recovered as the candlestick oscillator gave a mid-day buy. The OEX also had a similar pattern. I would like to point out again how well Fibonacci Trader calls the intraday shots with the fib channels and candlestick oscillator using 3 minute bars in time frame one, the 30 minute period for the middle time frame, and the daily period for the high time frame for the fib zones. Tuesday is a narrow range day as defined by the daily fib zones and activity should pick up as more participants are back. Cone Projection oscillator is overbought but we don't expect significant volume or trends to return until next week. One big negative is the continuing lagging of the End of Day Cumulative Volume. The EODCV is still in a bear market as it remains below its 200 day moving average. This is the time of month when we normally look for a Call trade but I am personally having psychological resistance in doing so. The price conditions appear to be much more on the overbought side with high risk to longs. As a matter of fact the INDU has reached the BollTop band on the Risk Monitor. Acrophobia is the fear of high places, and in looking down the price channel to the October low the vertical nature of the ascent makes the viewer feel the market is in a high place. Looking back to summertime is like looking across a valley. Looking to the future is like standing on the edge of the Grand Canyon and looking up and down. There is no denying that once Y2K is behind us and IF TBond yields tick downward, we could have one heck of a rally as breadth spreads to the majority of stocks that are still seeing selling pressure. This should peak on Tuesday and lessen as the week progresses. This should help the red Trend exhaustion continue down and the green TEI turn up. This can occur even if price remains in a neutral zone on the Moss chart. This would be a rather bullish event and would push the McOsc to higher levels. From a breadth standpoint the market is still oversold to neutral. An improvement here can keep prices rising into 2000. EquityCP and Sentiment are flirting with the put buying alert level as the blueline and yellow dot trend indicator continue to say the path is up. CODI OEX hit the Sell Alert level on Monday. Perhaps we are close to a short term put trade, but seasonality argues against it. When an apparently overbought market such as the Nasdaq can drop a hundred points and rally back to make a new high, the partying just isn't over yet.

XAU has hit short term resistance at the upper 3.5% band,as seen by the red down arrow generated at today's 68.67.Some components,such as HL,are still showing lingering effects of tax selling.

Here are the other charts

CODI NDX CHART. FLOWRATE CHART. INDU CHART. INDU60 CHART. INDUB CHART. OEX 30 MINUTE CHART. OEX DAILY CHART. OEX FIBRET CHART. OEX NSYNC CHART. OEXPF CHART. SUPERT CHART. VOLATILITY CHART.