MomentumCycles

Momentum Cycles Update for the open of Friday, February 20, 1998:

We closed right on the upper 3.5% trading band on the DJIA.The 6 day volume and breadth oscillator has dropped from a peak, as well as the 10 day moving average of up volume and the 21 day moving average of advances versus declines.5 day rate of change is +1%, unaccompanied by either large upticks or downticks.

The last option premium ratio was .85.Since the option premium reversal reading on Friday, February 13,price has been fairly stagnant.Readings in the range .83-.85 for the option premium ratio do not always precede large declines, but readings in this range have often been followed by quick downside volatility.We warned last Friday that short term intraday traders who were long OEX calls from the expected pre-e week weakness into early e-week strength{in spite of the overbought readings} would well be advised to exit any long call positions prior to Thursday.

We are looking forward to a possible MC trade towards the end of the month.

As we had warned, traders who bought silver or silver proxies { silver equities} on the Buffet news spike near 8$ were well advised to wait. Prices in the 6's will be where good support will be likely seen.Any time there are 6 bullish articles in a national magazine on one subject{Barron's on silver 2 weeks ago}, hold on to your wallet.

Breadth:

NYA breadth continued to deteriorate on Wednesday with the McOsc volume oscillator playing catch up with the issue oscillator. Issue oscillator is hesitating at the zero line. CODI made another sell pivot at a higher level than previously. This is an apparent move to milk the money out of stocks at the top without a precipitating a rapid drop.

Volatility:

MVI adaptive bands are beginning to flare in anticipation of the upcoming volatility expansion. MVI bands are slower and continue to narrow. %b is in sell mode. Z Timer made another sell pivot and zone crossing from the extremely overbought zone. This is bearish action.

RSI, SMI:

SPX stochastic momentum appears to have peaked. See charts.

Fibonacci Zones:

Upper weekly Fib resistance is taking its toll on the DJIA, OEX, SPX. NDX came alive today due to promotions and earnings for a few stocks. Amazing how these news items are released the day before the NDX futures and options settle. XAU is below fib support. TYX is back above the daily stop loss. Bonds were dumped again just prior to the close jacking interest rates up a notch and creating a headwind for stock indexes.

Stock of Interest:

CMRon low volume reworking the lower trading range, waiting on more news from the new drill holes.Inco, the major {N.To} that occupies the Thompson belt south of the Canmine BINCO claims, is attracting value investors{see last week's Barron's}.N.To is forming a chart pattern similar to the inverted head and shoulders shape of mid-year 1995.

Pivots:

DJIA, NDX, OEX, SPX

Call this a keyline day all except for the NDX. Anything can happen on Friday. The only thing typical about this week so far is the trade we chose not to take from Friday close to the early part of E week. Those who have read this site for months know that has been one of the most reliable trades posted here.

MCcone:

Just for info purposes, 2/20 is a golden ratio cycle date that might just have more volatility than recent 1/2 std deviation days have had. 2/20/98 was forecast to be a high energy day during the summer of 1997 by measuring the time period between cycle lows and multiplying by the golden ratio. Coincident hits produce an energy date.

Momentum Cycles Update for the open of Monday, February 23, 1998:

Now that the Olympics are over, it's politically acceptable to take military action against Iraq.The new moon over Iraq{ideal for bombing runs} coincides with the 19th trading day of the month{Wednesday-Thursday}, normally a low point in money flow before new month money begins its inflow.Friday's marginal index high unconfirmed by the transports ended with a +800 closing tick,often a precursor of a short term correction starting Monday{or Tuesday}.We should expect a pullback to inside the upper 3.5% trading band this week,ideally with a spike low that coincides with military action, where we would look to go long March OEX.

We are very far above the 50 day moving average{6%}, and MACD allows for a pullback here.The lack of a strong pullback in the 2nd week of February means a continuing rally this week would be 5 weeks in a row.Statistically that makes this week a likely time for a pullback.Market Vane and Consensus are showing 74% and 65% bulls respectively,which is high, and cumulative breadth and volume on the 7 day cycle is down.

One of our systems tracks money flow in and out of low-priced stocks that have had strong correlations with market tops and bottoms.This shows many low priced issues topped short term on Wednesday-Thursday of last week.

Our call for silver weakness to near the end of the month ,and the Buffet spike up near 8$ as a short term high was correct. Longer term investors should view silver as a classic follow the big money situation.With a little help from poor weather for soybeans this summer,we will get some more action in silver.

In summary, look for a cover shorts, sell OEX puts near midweek{Thursday?} and a go long OEX calls in that time frame.

Breadth:

Long term readers of Momentum Cycles should now be aware of the OEX expiration rally that starts in the second half of Expiration Fridays and runs into the close. It isn't guaranteed to happen every E Friday, but it happens more often than not. The week following E week is just as likely to retrace some of the movement of E week. Since February is a short month we have the end of month cycle beginning about mid week barring a change in perspective by investors and money managers. Taking a look at the DJIA daily and weekly charts we have to sound a few notes of caution. The DJIA is a sensitive index since it is constructed from only 30 issues. Breadth measures on the NYA are often compared to the DJIA as is done on these two charts. Remember that 2/20 was the Golden Cycle Energy date, +1,-1 day. Only more trading days will confirm or reject Friday as a change in trend date of any significance. In the past the DJIA responds quickly to a reversal in the New Highs/New Lows indicator. It also is in sync with the daily OnBalance Volume plot. The weekly candle chart has a terminal appearance. Also, on the NYA chart the intraday A/D line is divergent from the the index. The McOsc of issues have gone flat the last two days. CODI is back in the indeterminate region. The OEX low penetrated its trendline as index momentum slowed.

Volatility:

MVI center line is beginning to roll over as its bands hint at expansion in volatility next week. Z Timer is back into the Extremely Overbought zone. It can come out of that zone by passage of time, and or decline in index levels, and/ or an increase in volatility. A coincidence of all three is an energy point. Speaking of coincidences, the OEX regression chart has an intersection of reg. channels on 2/25. These channels{ dating back months and years} have an influence on support and resistance of current prices.

RSI, SMI:

The SPX RSI and SMI charts are of particular interest here because of the SPX breakdown in relative strength and saturation in stochastic momentum.

Fibonacci Zones:

The equity indexes start next week between the weekly balance(red dashed line) and the upper weekly fib resistance zone and with the Ratio oscillators in overbought. This simply reflects the trendmode state they have been in and says little about change in trend other than the odds are for a change.

DJIA, NDX, OEX, SPX, TYX, XAU

Stock of Interest:

It looks like we are finally getting some movement off the base CMR has been building. Positive volume has been much stronger than negative volume producing a rising price phase and finally a positive directional movement indicator. Perhaps some positive momentum will develop here if the price bands can be broken triggering technical buys on computers that follow it.

Canmine is setting up the autoclave at Werner Lake to produce extremely high quality cobalt concentrate which is in great demand internationally.Once this occurs, further company operations can be run out of revenues.Many mining companies run operations by selling more and more shares, effectively diluting the value of future discoveries.Canmine's philosophy is to fund the company's expansion by enhancement of the revenue stream.

Pivot Points:

Early in the day it looked like the short term bearish views of the indicators presented here were going to get confirmation by price movement as pivot levels S1 and S2 were tested. Such was not to be the case as they rallied in the PM to close above the keyline. DJIA, NDX, OEX, SPX.

Momentum Cycles Cone:

Now that the February expiration is out of the way we can look further out in time for the March expiration. Recently the daily price action has been confined by a +0.5 to -0.5 std dev probability cone. This reflects the narrowing of the MVI bands above. At some point soon we should see daily price move to the red cone. These projected levels can be used as initial and extended price targets for day traders.

Momentum Cycles Update for the open of Tuesday, February 24, 1998:

Saddam sold long oil positions into Friday,and then shorted oil on Friday close and covered Monday.Just speculation of course, but what a way to game the oil market!To be able to move a market as big as oil with your own country as a pawn...Temporarily the game continues;the Mideast can be seasonally unstable until the weather gets too hot for war.Saudi Arabia has recently been making noises about excessively low oil prices.

On a related note, watch the CRB to see if the 52 week lows will break.The 52 week lows are at 221.56 and Monday's close was 226.10.A confirmed double bottom would be bullish for commodities;a deflationary break will spill over to XAU , now near the lows {52 week XAU low 61.23, now 69.60}.

Although the OEX is acting as if it will never correct more than intraday, a break down into the Thursday area would be a chance to get long into the normal early month strength of March.Again , we can only measure the probabilities,and some retracement prior to new month reinvestment is likely.After Wednesday {or more likely,Thursday}, positive monthly money flow into pension funds in the first few days of the new month usually temporarily overrides an overbought market.

Breadth:

NYA had an early morning pop to the white trendline and then retreated, followed by a late day push to earlier highs. Advance/decline breadth was balanced keeping restraint on prices. As we coast into the end of the month there should be a certain degree of churning. Perhaps some selling first to create a better buying opportunity. This week is a tough one with mixed forces at play. Some are from the post expiration phenomenon and the others from the pension money flow cycle. Post E week does not overlap this period in other months. McOsc of issue and volume may be beginning to take their toll on the price index. CODI refuses to produce enough selling to break the OEX trendline, but this is typical topping action. It will come. The DJIA prices compared to the NYSE breadth numbers makes an interesting chart that only a bear could love.

Volatility:

Z Timer is again registering extreme risk. MVI bands are curving over and the MVI adaptive tested its zero line from below on Monday. VIX continued to another intraday low of 18.95. This is making the options more affordable, but a declining volatility and rising index does double jeopardy to put holders. When we get a good decline with some volatility expansion, some nice profits should be available in puts.

RSI, SMI:

TYX RSI is the standout today on the upside and the XAU RSI is losing it. SPX is peaked out in overbought.

Fibonacci Zones:

TYX made a nice move in the Fib charts. XAU is getting down to weekly fib support. The other indexes (DJI, OEX, NDX, SPX) have their ratio oscillator running saturated in overbought zones.

Stock of Interest:

CMR still testing the lows near the 1.20 area.An effort to break the upper band of the trading channel was made Friday.Buyers near 1.00-1.10 at the lower channel took some profits at 1.22 for a short term 15-20% profit.More good drill results and/or cobalt news at Werner Lake will be seen in the next several months.

Pivots:

Pivot ranges are slightly narrowed for Tuesday with opens expected in zone 4 and on or near the keylines. Support is expected at S1 and S2.

DJI NDX OEX SPX

Momentum Cycles Cone:

Had another day of the half std dev quality. This is the kind you get with news pending on the economic and political fronts. On the positive side the projection oscillator is projecting above the 50% line.

Momentum Cycles Update for the open of Wednesday, February 24, 1998:

Continuation of the deflationary scenario, or nascent bull trend in commodities?Let's watch the CRB to see if the retesting of the double bottom holds.CRB 52 week low is 221.56;today's close 224.14.

In a related vein, XAU 1986-1987 low in low 60 area,1993 low 67-68, recent 52 week low 61.23, today's close 68.77.

A key concept for rally continuation is relative strength of NASDAQ versus DJIA.When the NASDAQ is stronger than the DJIA , confidence is present.Tuesday's DJIA was down .48%; the Nasdaq down .74%.That's the reverse of confidence.One day does not make a trend, yet it is instructive that this is the first day in a while with this inverted strength.

Another key concept is breadth and volume smoothed over various time periods.Our 5 day breadth cycle{ smoothed }is flat after having topped at a higher level last Wednesday.The next several days action MUST resume the rally to avoid this indicator turning down.

If we get more downside momentum, we may wait till Friday, or possibly later to get long.Remember Thursdays around the 19th day of the month have historically strong downside action.We did say that this week would have a high probability of correction, since the 2nd week of February didn't correct.10 day moving average of up volume is still dropping from last Wednesday's peak, that of down volume still rising.

Breadth:

NYA index made a double top near 539 that was not confirmed by the A/D line. McOsc issues and volume illustrate how serious this divergence can be. Both oscillators have crossed the zero line which is an official sell signal by some fund managers. This crossing also coincides with a rolling over of the summation index. By any calculation this market is justified to enter a corrective mode of an intermediate term nature measured in weeks rather than days. CODI is continuing its sell trend as the OEX weighs heavily on its trendline. Looking at the DJIA chart with nyse breadth indicators also illustrates topping conditions.

Volatility:

MVI is rolling over. A close below its -2 band would reflect a change in market trend to down. Perhaps we will see a few closes below this band. Z Timer is on a sell pivot once again with a zone crossing to the downside.

RSI, SMI:

It is impossible to miss the behavior of the TYX, 30 yr T Bond yields on these charts. XAU has dramatic action also. SPX will be next.

Fibonacci Zones:

TYX shows dramatic action on its fibonacci chart also. In two days it has jumped from below the weekly balance line(red dashes) to above the upper weekly fib resistance line. This is breakout mode type of behavior and coincides with an analysis of Fed thinking on the future of interest rates and inflation.

DJI NDX OEX SPX XAU

Stock of Interest:

Canmine Resources is beginning to shape up technically after directional movement has been positive for three days and the price phase is about to turn positive. Fundamentals support a move up in price.Recent bids and asks have been more balanced.Wednesday's pre-opening is 50 lots bid,45 asked.If Canmine has what sulphide deposits suggest,possibly confirmed by what appears to be a rumored staking rush all around their properties,a Diamond Fields type price multiple would not be beyond reach.{Diamond Fields discovered the Voisey Bay deposit, and vaulted from .40 to 40$.}A wall of volume accumulation with price movement will be the thing to look for.

Pivots:

Support has a 58% chance of holding between S2 and S1. If it doesn't hold at S2 or S2A, then probability of support at S3, S3A is only 31%. This means there is potential on Wednesday for meltdown, or at the least a drop to the red or green cones on the MCcone chart.

DJI NDX OEX SPX

Momentum Cycles Cone:

The recent half standard deviation days may be coming to an end as the market makes a top. Once we see some serious selling, the red cones should contain price action for intraday lows. This week still has crosscurrents ahead with post Expiration and pre beginning of month money flows. The DOW 5 and 10 trusts should have dramatic effects on rotation within the 30 stocks as the managers make P/E adjustment selections. Their selling is likely to occur in the next 3 days and the buying in the first few days of next week. Sell first, buy second.

Momentum Cycles Update for the open of Thursday, February 25, 1998:

We don't like the short side at the end of the month.By all rights, we should pull back, but pension flows normally dominate the next 5-7 days.Normal cycle bias is up into the first week of March.At new highs, the easiest direction is usually up.

We have a new stock to nibble at on pullbacks for adventuresome traders below , under stocks of interest.More conservative traders would wait for a violation of the downtrend line ,seen below on the 2 year chart.

Breadth:

Three trading days(settlement days) before the end of the month and what do you get? Front running of the automatic pension deposits and a new high on the DJIA. Not only that, you get very good NYA breadth and decent volume. McOsc issue and volume were even resurrected from disaster by bouncing off the zero line. Wednesday was reported to have three or four buy programs and a couple of sell programs. A sell program clipped 30 points off the high for the day. This market can move fast when those programs hit. Crash days are predominantly created by repeated programs of one type. That all said and done, where does that leave CODI? Embarrassingly on a sell trend, unconfirmed by the OEX bouncing once again off of its uptrend line. CODI worked well in the cycling mkt of last year, but fails on its own in a trending market, thus, the use of the trendline on price. All CODI is useful for in this mode is an alert.

Volatility:

Z Timer is going to stay overbought a bit longer. Perhaps into the end of next week. MVIs are bouncing off the lower band and MVIa crossed above its neutral line. Even though the bands are narrowing and one is curving downward, the shorter term price cycle is viewed in context of the longer term band cycle. The narrow band is a set up for an explosion in volatility. There has been talk about a March correction by a few pros, even the bulls acknowledge that one is necessary for the market to remain healthy. Now that the DOW is back at its all time high we need to see what happens to price and breadth.

RSI, SMI:

See charts for commentary.

Fibonacci Zones:

Upper weekly Fib resistance is being challenged at mid week. Will it be a pivot day? Will Thursday be give back day? End of month seasonality says otherwise, but who knows.

DJI NDX OEX SPX TYX XAU

Stocks of Interest:

CMR really does appear to be creating a base to support a future rise.Remember other major and minor players are staking claims all around the Canmine properties at Binco.The Thompson belt may be MUCH larger than originally thought.

We are looking at another high risk, potentially high return issue.It too, has a long downtrend about to be broken to the upside. Resistance is at 2 3/4 - 3 1/8, and long term resistance at the purple trendline.It had 12x normal volume today on an explosion above the upper trading band.We would buy a little on a pullback as a speculation.The double bottom is in place at 13/16 or thereabouts.The 2 year chart is fairly close to a breakout or at least a test of the falling trendline.

At the Philadephia stock exchange in late December the rule change in regards to ASTN's electronic trading was printed in the Federal Register.The public had 21 days to comment on the rule change and no comments were made. SEC approval is expected momentarily. Note that ASTN has never made a profit up to this point. Westergard has done an analysis with a projected price of 36 dollars in 3 years. This can be found on the http://www.wbn.com site on the Friday, January 9 analysis. Sources close to the company say the Philadelphia exchange revenues are just the start. Other exchanges and trading products will be soon available to add to revenues. Rumors have it that large pension funds and mutual funds are interested in this type of trading. There is a very small public float; most of the shares are held by people who don't wish to sell at this price. There are probably less than a million shares available for daily trading.

Hong Kong trades 5.5 billion shares a day and there is no electronic trading yet. ASTN has a strong possibilty of accessing trading at this exchange. Possibly also Shanghai. Fred Rittereiser is very well respected in the field of electronic trading and he is in charge of management. The UTTC division will be spun off most likely in late summer. ASTN willl have a 60% ownership of the spin-off, which could add as much as 10 to 15 dollars to the share price.

Pivots:

Today was an R2 day except for the NDX which could be classified as an R1 day until near the close when it played catchup. Odds are best for reaching S1, S1A on a pullback on Thursday if the Keylines fail.

DJI NDX OEX SPX

Momentum Cycles Cone:

OEX found resistance at the red cones on a strong day. This is a change from recent weeks. Similar results would be expected below the keyline on a strong down day.

To quote from the Momentum Cycles Update for the open of Thursday, February 25, 1998:

"CMR really does appear to be creating a base to support a future rise.Remember other major and minor players are staking claims all around the Canmine properties at Binco.The Thompson belt may be MUCH larger than originally thought.

We are looking at another high risk, potentially high return issue.It too, has a long downtrend about to be broken to the upside. Resistance is at 2 3/4 - 3 1/8, and long term resistance at the purple trendline.It had 12x normal volume today on an explosion above the upper trading band.We would buy a little on a pullback as a speculation.The double bottom is in place at 13/16 or thereabouts.The 2 year chart is fairly close to a breakout or at least a test of the falling trendline.

At the Philadephia stock exchange in late December the rule change in regards to ASTN's electronic trading was printed in the Federal Register.The public had 21 days to comment on the rule change and no comments were made. SEC approval is expected momentarily. Note that ASTN has never made a profit up to this point. Westergard has done an analysis with a projected price of 36 dollars in 3 years. This can be found on the http://www.wbn.com site on the Friday, January 9 analysis. Sources close to the company say the Philadelphia exchange revenues are just the start. Other exchanges and trading products will be soon available to add to revenues. Rumors have it that large pension funds and mutual funds are interested in this type of trading. There is a very small public float; most of the shares are held by people who don't wish to sell at this price. There are probably less than a million shares available for daily trading.

Hong Kong trades 5.5 billion shares a day and there is no electronic trading yet. ASTN has a strong possibilty of accessing trading at this exchange. Possibly also Shanghai. Fred Rittereiser is very well respected in the field of electronic trading and he is in charge of management. The UTTC division will be spun off most likely in late summer. ASTN will have a 60% ownership of the spin-off, which could add as much as 10 to 15 dollars to the share price."

Momentum Cycles Update for the open of Friday, February 27, 1998:

First volume, then price.When indexes or individual stocks rise above the upper trading band on a huge wall of volume after a long basing period or downtrend line violation,big buyers want stock.CMR was up 33.33% in one day today{.40 cents}, cleaning up the supply from the last 3 months under 1.65 in one day.It took 289,198 shares.This was over 10x recent daily volume.Continued volume of this nature will be neccessary to push through 1.75 , then 2.00.The fundamentals support a much higher price if Binco proves out as the geology suggests.Accumulation was suggested at prices at or under the present level,at 1.35,and again traders had a chance to low bid in the 1.00-1.15 area.

ASTN had a similar rise today on 15x average daily volume, up 16.67% today.Buyers could lightly enter on the early morning profit taking retracement at 2 15/16.The close was 3 9/32.Resistance is 3 17/32.This one has good fundamentals also if any of the exchanges take the ASTN electronic trading systems.Volume suggests that may be in the works.Small positions in speculative stocks can be taken for possibly big returns when fundamentals warrant.

Breadth:

NYA breadth was net positive yesterday and today but it was declining in the face of a rising index. Tomorrow and early next week is going to really put a signature on this stage of the market. Ask yourself why are the equity indexes rising in the face of a cloudy economic future with flat to marginally better or worse earnings, with no quick fix for Asia, with interest rates making a major trend change from down to sideways(maybe up). If the only answer you can come up with is the inflow of funds, then you are wrong on that account too as the stats indicate that money flow into the market in January is actually lower than it has been for a few years. In the last few weeks, new money has stopped flowing in. Ask yourself again, "why are the indexes rising?" Prices can rise on declining volume, as they are, but not for long. Once this payroll cycle is over, maybe before, there should be a reality check coming due. If the index does not rise on Friday and early next week, and the modus operandi is to sell into strength, then, the makings of a decent put trade are at hand. There was a bit of front running on Wednesday prior to the "UC payroll indicator" which struck today. This means there is fresh money available for funds, unless much of the buying was done in advance and the market could go flat next week. To paraphrase another service, a 3% correction is at hand due to overextension, a -5% is assured if momentum picks up, and -10% is probable if fund types who bought in over 1000 liquidate. McOsc CODI

Volatility:

If 16.09 was a valid reading on the low for VIX today and the close was 19.18 then there may have been a subtle top put in intraday. Take a look at the VIX chart and the volatility of VIX. It is approaching extreme lows. This occurs at tops. Z Timer made a down move on another sell pivot. MVIs just seem to be hanging out waiting for things to collapse after registering several sell signals. The expectations by professionals on the sell side are that they will be able to hand stock to funds and individuals after this payday at elevated prices from earlier in the week. Lets not speculate too much about what will happen if there is a buyer's strike on Friday and next week, but just continue to watch divergences between price and breadth and intraday look for lower tick readings with higher index levels. Basically what is being forewarned here is that there is a rather strong volatility expansion ahead. Next week might be the time to average into put positons.

RSI, SMI:

XAU RSI jumped today as it sometimes does as a prelude to crises and general equity collapses.The CRB has not made new lows yet;the double bottom is so far intact.The Saudis want higher oil prices-could it be they are choking on paper and are afraid of a future falling dollar?

Fibonacci Zones:

Most of the charts are ending at the upper weekly fib resistance.

DJI NDX OEX SPX TYX XAU

Stocks of Interest:

Finally we got the breakouts that have been a long time in coming with CMR. ASTN's chart preceded Canmine by only one day in its run above the upper band.Volume must continue to support price.

Pivots:

Narrower pivot ranges for tomorrow facilitate more volatile action.

DJI NDX OEX SPX

Momentum Cycles Cone:

Projection oscillator is nearing the overbought level between 80% and 90%.

Momentum Cycles Update for the open of Monday, March 2, 1998:

Watch the CRB.Just when commodities have officially been pronounced moribund,a double bottom may be in the making{52 week low 221.56, Friday close 227.65}.Watch the dollar.Just when it has been annointed as the new gold standard, is it possible that the german mark is showing signs of life?We will be watching these as well as XAU carefully.Lot of determined silver sellers at our short term sell on the Buffet spike at 8$,lot of support at 6$.

The rise in the OEX and S and P to new highs should be accompanied by a rising cumulative tick.This last week ,it has not.OEX longs should be aware of rising risk as this adds to another set of nonconfirmations.

Breadth:

NYA breadth narrowed the last three days and the McOsc bounced off of zero as the DJIA made new highs. The question is, was there a decent OEX call option trade to make during the end of month seasonality, and if so, when was the time to enter? The OEX calls chart illustrates that even in light of declining breadth, the cumulative breadth issued a buy late on 2/24 and could still have been entered on 2/25. Momentum Cycles is aware of the seasonality at this time of month, but passed on issuing a call trade because of the overbought risk that other indicators were warning of. Instead we opted to pass on the call trade and hope for a put entry during {or possibly slightly after} the first week of March. We will be watching for the indicators to join the others in advising specifically when to time the next trade. CODI turned down from the middle of its indeterminate region after its latest sell signals were aborted each time the index tagged the trendline and bounced.

Is the market" too high"? Some prominent analysts say no:others say yes.One analyst who measures value in terms of historical measures of risk may be found at http://homepages.together.net/~wbarnes/stockmarket.htm. "STOCK MARKET RISK for 2/20/98:

To quote," The Risk Index at Friday's close was 5.11 on a scale of 0 to 5.3. The S&P 500 is now overvalued by about 32%, based on the relationship between earnings, dividends, interest rates, and price corrections since 1980. Maximum recommended stock allocation for long term investors is 68%.

COMMENTARY

Earnings yield and dividend yield are at historic lows, hence stocks are especially risky. Global political and economic uncertainties create additional concern. The U.S. economy is having difficulty absorbing all the money that is being invested in it. Any hint of rising inflation or economic instability will result in a large price correction. ... Are bonds a good investment? The average long bond yield since 1980 is about 9%. We are far below that now (currently 5.9%). Also note that the long bond is more than 1% below its moving average, suggesting that rates will rise. When this happens, long bond holders will see the value of their investment drop. The spread between the Three-month T-Bill and the Thirty-year Bond is only 0.7%. Buyers of long bonds are NOT getting their money's worth. Better to buy short/intermediate maturity, get most of the coupon, and less of the price risk."

Volatility:

Z Timer made another sell pivot and zone crossing on Friday just as the MVIs ran into resistance. VIX picked up some from its Thursday low. It was an interesting Friday in that the S&P,NASDAQ, and transports were weaker than the DJIA. Also there were many times during the last few days when the NYSE TICK was trending negative below zero and the DJIA was trending positive as though to disguise a distribution.

RSI, SMI:

XAU appears to be stronger than yields and SPX.

Fibonacci Zones:

DJIA, NDX, OEX, SPX start the week off between the balance line(red dashes) and the nearby weekly fib resistance zone. XAU and TYX have relatively wide zone ranges.

Stocks of Interest:

CMR ASTN CMR ASTN

The first test,which has passed, is a violation of the downtrend.Both ASTN and CMR have broken their long downtrend channels on the verge of improving fundamentals.Next came a close above the upper trading band.Volume preceded the price move.Now a successful test of the breakout must occur, and volume must make a "wall" on increasing price gains.For ASTN,the 2.50 to 2.75 area must hold for the breakout to be valid.For CMR,1.50-1.55,should hold.Click on the above charts to see the resistance lines.

If the general market suffers a correction, these 2 issues can still make gains if the public begins to recognize their value and undervaluation.In addition, small stocks have been out of favor for an extended period.There have been periods where they outperform during index weakness.Remember, these were small positions taken for a possibly outsize return.It is easy for a 1.50$ stock to go to 2.50$ in a short period of time with a small number of tradeable shares and strong and determined long term holders of the remainder.It is harder for a 150$ stock to move to 250$ on a huge number of shares outstanding.

Pivots:

This week starts with the NDX weaker than the DJIA, OEX, and SPX. The OEX finished last week right on its keyline and the DJIA and SPX were just above their keylines.

Momentum Cycles Cone:

OEX candle for Friday was very indecisive and only had an inner cone distribution like so many of the days in this recent uptrend. The beginning and end of the trend should be marked by red cone or larger distributions as the masses enter and exit the trend. The projection oscillator retreated from the 80 level.