MomentumCycles

MomentumCycles commentary for the open of Tuesday, March 30, 1999:

In the face of weak breadth and rising rates,historically the market rises strongly only 3% of the time.In fact,Monday saw RSI,STOCHASTIC,Intraday 21 day volume percent,5 day rate of change,and cumulative volume at the upper 3.5% band nonconfirmations.But never underestimate the power of end of month seasonality. It can overcome the most bearish interpretation of multiple breadth nonconfirmations. We will say it again, "trade price, not breadth". With breadth confirmations we would be inclined to stay with a trade longer, as the trends would last longer. The breadth nonconfirmations are a clue that something is rotten on Wall Street. So we will continue to target 30% to 50% profit on the trades and look for another entry. The time and sales records for the OEX options opening trades at 9:36 showed it was difficult to impossible to get Friday's closing prices on the OEYDH and OEYDI and exit on the OEYPI. However, at 9:46 it was still possible to enter calls and make nice gains for the day, up to the point of the red cone and crash up cone representing the 1 and 2 standard deviation days. Cone ID shows we had a Crash up day the entire day. Also the NYA chart maintained a Strong Plus Trend day as has been defined here before, with advances greater than 1500 and declines less than 1200. Such days would be expected to move the EquityCP and Sentiment charts into the Buy Puts zone. They are not quite there yet, and that may come in the next 5 trading days. If we can get the AMOSS and other indicators maxed out we should then have a super put trade, as the real money flow driving this market should dry up. There was one period today when the TICK had trended downward for an unusual two hours, and then it turned positive. That must have been the final washout of sellers for this end of quarter. The best guess here is that the upside is very limited from here and that more distribution will occur at levels above DOW 10K and SPX 1300. A sideways market is not great for holding OEX options, so we need to wait for a better entry on the long side again or wait for the positive seasonality to run out of time.

One chart of significance tonight is the pending sell on the VIX chart. Now, the VIX could trend lower, but at the moment we have to be cognizant of Vix moving below the lower band and closing back inside as the OEX hits the Upper Projection band. If it were not for the seasonality we would be ready to jump into some puts...patience is needed here. Another chart of significance is the TYX chart reflecting bonds under pressure...a negative for stocks. A third is the strength of the Moontide chart confirming the day's rally. The late Friday consolidation provided an explosive buy signal on the open. The 5Adv5Decl chart looks to be pretty good for leading into trades and at the moment is still long. It is just that the CODI is giving us whipsaw conditions, so we would rather wait for safer entries. If anyone is still holding the OEYDH or OEYDI, another chance to exit should be available near Monday's highs over the next few days. Just take note of how fast the OEYDH lost value in the closing minutes of Monday's trading. Finally we have the indicator in the night sky that will begin waning. Strange how that full moon influences things. Of course the B&D Moontide has nothing to do with full moons yet look how steady and strong the former was today and how full the latter is tonight.

XAU has broken the December lows.XAU investor interest is at an almost all-time low,since even strong oils recently haven't gotten the traditional correlation with an XAU rally going.We are,however,now approaching the STO 5 and 20 oversold areas,where XAU usually bases for a while before an oversold pop.A cross above the 20 level on both these STO readings{not there yet} is most usually a good short term buy.

Here are the charts we examine nightly:

5 DAY ADVANCE AND DECLINE CHART. ADHL CHART. CODI CHART. CONE CHART. CYCLE CHART. INDU CHART. MCOSC CHART. MOONTIDE CHART. OEX FIBRET CHART. OEX FIB CHART. OEX PIVOT CHART. OEYDJ CHART. PITCHFORK CHART. RSISTO CHART. SACHAN CHART. SPX FIBRET CHART. SUPERT CHART. TYX CHART. VIX CHART. XAU CHART.

MomentumCycles commentary for the open of Wednesday, March 31, 1999:

Although the main focus is the OEX and other equity related indices, it's worth examining all the charts at the bottom of the page nightly for trade setups and overbought/oversold parameters.For instance,after our successful call for the 30 year T bond to stop declining in price short term on Thursday,March 4,traders who had previously shorted the T bond once yields rose above 5.5% were able to exit at the exact top of the yield spike at 5.719%.Recently,the TYX chart showed a profitable short and cover setup that culminated on yesterday's TYX CHART.30 year T bonds had a nice short covering rally Tuesday,responding to our overbought/oversold parameters quite accurately.

Similarly,the XAU showed a sell arrow recently once the congestion bottom at the 61 area was broken,projecting a move to test the 48-low 50's area seen as a target on this XAU CHART.STOCHASTIC 5 and 20 are both in the extreme oversold area.However,the best rallies come from 3 to 4 consecutive closes at the lows of the day to the lower 14% band.We have had 2 consecutive closes at the low of the day and the 14% band is in the low 50's.A cover short XAU but not quite go long XAU is thus a logical position at this point.

On the OEX, so far we have seen up strong, down weak, up strong, down weak as we lead into end of month seasonality. Wednesday and Thursday should have more significant advances, unless, of course, world events have an adverse influence. UC payroll indicator should strike tonight and be felt on Globex and on the open Wednesday. When speaking of breadth divergences, we need to speak in terms of the time period under consideration. There is no question of the long term divergences that impact intermediate to long term investing. However, intraday we may have confirmation for day trades that are counter trend to the long term breadth implications. We place a heavy emphasis on the end of month seasonality and tend to overweight the money flow, and will trade on the long side with OEX calls in anticipation of the high probability rally. End of quarters are a bit trickier because of the window dressing that can have a bit more selling. MomentumCycles issued an intraday email update to purchase the April 655 and 660 calls, OEYDK and OEYDL for 13 1/2 and 10 1/2 respectively.We had also mentioned that the next several weeks would have increasing volatility,both up and down{a day trader's paradise} due to the numerous and previously discussed crosscurrents.

Here are the charts we examine nightly:

5 DAY ADVANCE AND DECLINE CHART. ADHL CHART. AMOSS CHART. CODI CHART. CONE CHART. CYCLE CHART. EQUITYCP CHART. FIBRET CHART. INDU CHART. MCOSC CHART. MOONTIDE CHART. NYA CHART. OEX PIVOT CHART. PITCHFORK CHART. RSISTO CHART. SENTIMENT CHART. SUPERT CHART. TYX CHART. VIX CHART. XAU CHART.

MomentumCycles commentary for the open of Thursday,April 1,1999:

We had warned readers that the end of March and first 2 weeks of April would be increasingly volatile due to crosscurrents of tax payments,quarterly reinvestments,IRA payments,seasonality,and Japanese fiscal manueverings.We also recommended tight stops and warned this period would be a daytraders paradise.

Wednesday was paradise for both daytrading bulls and bears,and as a result,seasonality and technical signals are quite mixed after Wednesday's trading. What this means is a "on the one hand...on the other hand" type of qualifying statement. VIX system has generated a sell but it could find another reversal on Thursday. ADHL is still on a sell, but very close to a generating a buy signal when the New Lows reverse. If we have seen the end of end of quarter selling then the New Lows could change dramatically on Thursday. McOsc is in neutral near zero, but it could bounce or drop through. 5 day ADVANCE/DECLINE has reversed, but not crossed yet in full fledged sell. EquityCP and Sentiment are more neutral now after issuing a sell with their peak and drop as price peaked. Moontide volume gave sell signals on Tuesday followed by issue sell signals after the Wednesday rally. The OEYDK and OEYDL were exited at a 30 to 50% gain via email profit stop suggestions. OEYDL was re-entered later in the day below 9 1/2, albeit prematurely. The attempt is of course to complete the seasonality trade which historically has a positive bias and doesn't recognize such things as divergences and valuations. This second entry was also stopped out with the typical recommended 1.5 stop loss for money management purposes of conservative types. Speculators may want to use a 50% stop on this trade if still long.

XAU was suggested yesterday as quite oversold,and short covering from the breakdown sell at 61 was recommended.XAU open 56.99,high 60.33,close 59.76,up 6% from yesterday,so Wednesday's open was almost perfect timing for a short exit.As yet there is no STO 20 crossover above 20,which usually confirms longevity to a short term XAU rally.

Here are the charts we examine nightly:

AMOSS CHART. CONE CHART. CONE ID CHART. INDU CHART. MOONTIDE CHART. NHNL CHART. NYA CHART. OEX FIB CHART. OEX FIBRET CHART. OEX PIVOT CHART. OEX WEEKLY CHART. PITCHFORK CHART. SACHAN CHART. SPX FIBRET CHART. SUPERT CHART. TYX CHART. XAU CHART.

MomentumCycles commentary for the open of Monday, April 5, 1999:

This has been a rough end- of -quarter period to trade. If the action of the S and P on globex Thursday night and Friday morning sticks until Monday morning, then the OEYDL should pop upwards. However, that is a bit further out of the money than we like to trade. So, the at the money is the OEYDJ. The underlying technicals and option sentiment reflect an overall neutral to positive bias for Monday.3 day smoothed cumulative volume is dropping,but 3 day cumulative breadth is flat.5 day rate of change is at 0%{neutral}.DJIA price is at the 21 day moving average,neither overbought at the upper 3.5% band,nor oversold at the lower 3.5% band. Bonds rallied on good news on Friday. VIX is hanging out in the low twenties as though it does not expect selling in the immediate future. CODI is in midstream at the whipsaw level. Puts are best entered when it drops below 4 and then rises, best to wait for overbought conditions. AMOSS and MOSS are not at either extreme either. Positive seasonality should still be with us for a few more days.

XAU rallied from below the lower 3.5% band to trade back within the bands.No STO 20 crossover yet.The recent action appears at this point to be a retest of the breakdown from previous much tested support at the 61 area,which failed recently.

5 DAY ADVANCE AND DECLINE CHART. ADHL CHART. CONE CHART. CYCLE CHART. EQUITYCP CHART. INDU CHART. INDU FIBRET CHART. MCOSC CHART. MOONTIDE CHART. NYA CHART. OEX FIB CHART. OEX FIBRET CHART. OEXTLSYS CHART. PITCHFORK CHART. RSISTO CHART. SENTIMENT CHART. SUPERT CHART. XAU CHART.