MomentumCycles

Momentum cycles update for the open of Thursday, April 16, 1998:

Russia signed the export decrees today for palladium and platinum.Actual deliveries may be 4 weeks in the future, possibly longer.Traders quoted out of Chicago warned against shorting this market, in view of past signed export decrees and delayed actual shipments.We should expect a whippy up and down volatile market until supplies are shipped.

Copper made a 5 month high and reversal lower to 8530 basis MAY.Tight supplies and good demand confirm our previous call for a bullish bias here,due to the higher lows made after our projected pullback.

Silver made a predicted spike high about April 7 and has been edging lower since,still above the suggested stop.Readers remember we had therefore suggested selling any long XAU calls one day after the 91 high, on the open near 88-89.

Bond call buyers{see above from yesterday}had a chance to buy on an intraday pullback from 59 to 59.20, today's close 58.80.

5 day cumulative OEX breadth and volume still dropping, stochastic very overbought,prices at upper band.A close below 527 would bring a large run on sell stops.A parabolic sell stop following held long positions might be wise here.

Readers remember we had previously discussed the probability of a delayed spring planting season, due to weather patterns.Today corn futures were up sharply on such fears,and large fund buying.CRB still holding above 225.

Trend:

The projection oscillator on the OEXreg channel chart is working the 50% line from below. This 50% line does act as a reversal point from either direction. Ideally the OEX would reach for the CYAN channel line before a significant pullback. Thursdays tend to basebuild before the acceleration on Friday.

Breadth:

ADHL generated a sell on Monday given very conservative parameters. Marginal improvement has been made in the breadth measure since then, but it should act as a warning of things to come and perhaps it is wise to take more off the table on further rallies. McOsc of issues is still below the zero line and the volume oscillator has crossed above the issue oscillator and the zero line. This would normally beget a higher issue oscillator and oex level. Both are obviously in the neutral region. The NYA chart shows a narrowing in the adv-decl spread as the nya ramps upward. This is typical of topping out as selling increases into tops rather than a momentum building acceleration that would take prices higher. CODI is back under the Sell Alert line and needs to pivot upward for a sell.

Volatility:

This narrowing breadth occurs as the Z Timer strikes the overbought boundary on the upper side of neutral. MVI is dropping to near the sell line. It needs to pivot upwards in order to generate a sell.

Momentum Cycles Cones:

OEX Keyline for Thursday is back in the resistance area of 4/3, 4/6. This being expiration week strike price range shifts are the norm, sometimes with little overall direction, meaning Thursday would be a partial giveback day in a confidence destroying maneuver for those hoping to close in the money with some "teeny" contracts.

Pivots:

Above the keyline and above the hourly trendline accompanied with a narrow R3-S3 pivot range form the picture for Thursday. The narrow R3-S3 configuration makes for big moves on breakouts.

DJI OEX NDX SPX

Fibonacci Zones:

See charts.

DJI OEX NDX SPX TYX XAU

RSI, SMI:

See charts.

Stocks of Interest:

CMR ASTN

To quote from the Momentum Cycles Update for the open of Wednesday, April 15, 1998:

"Bond call buyers{see above from yesterday}had a chance to buy Tuesday on an intraday pullback from 59 to 59.20, today's close 58.80.

5 day cumulative OEX breadth and volume still dropping, stochastic very overbought,prices at upper band.A close below 527 would bring a large run on sell stops.A parabolic sell stop following held long positions might be wise here."

Momentum Cycles Update for the open of Friday, April 17, 1998:

Bonds strong Thursday to 5.867,June T Bonds up 9/32 to 121 and 10/32.May copper +.50,May silver stopped at the intraday low above 6,but above the suggested accumulation area of 5.5-5.8 from the last low.DJIA between upper 3.5% trading band and 21 day moving average.So far, the 21 day moving average has been support in this leg.A fall to the lower 3.5% trading band,if it occurred, would be an ideal extreme oversold position to take a new OEX long trade from.5 day cumulative breadth and volume still dropping.

We did get the seasonal ex-week rally, and in the time frame projected from Monday.Thursdays have a downward bias, as we explained Wednesday.See below for our projection of Friday's probable action.

Trend:

OEXreg projection oscillator turned down on Thursday at the 50% line, typical behavior at distribution tops. Also intersections of regression channels mark significant points in time and or price.

Breadth:

NYA breadth turned quite negative in advance of expiration Friday. Note the double spike bottom intraday. Looks like a prelude to some upside movement on Friday as a washout liquidation appears to have occurred. McOsc issue and volume, intermediate term indicators, are now firmly negative. Summation index, a long term indicator, has peaked and is rolling over. CODI made a sell pivot in the sell alert region. ADHL, a long term indicator, is now in sell trend mode.

Volatility:

Z Timer backed off the overbought level and closed in the center of the neutral region as the "teeny" call holders were forced to liquidate. At the same time the "teeny" put holders see a pot of gold tomorrow. Unfortunately, Friday will likely see another shakeout to the upside as the market makers corner the market on "teenies". Look for a breadth reversal mid day as the OEX goes into settlement. MVI made a sell pivot, but it would have more significance if it occurred closer to the lower band.

Pivots:

Closes below the keyline and below the hourly trendline(cyan) reflect the breadth and price weakness. Support was found between S3 and S2. Note the double bottom spike in the afternoon.

DJI NDX OEX SPX

Momentum Cycles Cones:

Thursday saw a strong day on the downside to the solid red cone at the OEX low. Projection oscillator is still working the 50% line as price works on a double top.

Fibonacci Zones:

XAU looks like it might have found support at the weekly fib support zone as the ratio oscillator bounces at the 50% level. Equity indexes found resistance at the fib resistance zone support at the weekly balance line(red dashes). TYX is working the weekly balance line also. Here are the DJI, NDX, OEX, and SPX charts.

RSI, SMI:

See charts.

Stocks of Interest:

CMR working the lower area of support at 1.30, where value buyers are accumulating from the speculators. ASTN working the 2 1/2 area, on disappointment at the slowness in VWAP implementation.ASTN still has that 18$ million to call on to go forward with the plans for the Chinese exchanges, and other products as well.

Intraday update 11:30 am:

Place a stop loss on the bond trade at or slightly below your entry price at 5.910 to 5.920.

Momentum Cycles Update for the open of Monday, April 20, 1998:

Russian political instability still bolstering platinum and palladium,which should see whippy up and down action until actual delivery dates are confirmed and/or the metal is shipped to Japan.Still a bullish bias here,with traders afraid to short these metals, having counted on firm delivery dates in the past and been burned by Russian delays before.Copper up from the suggested support 73 area to the 83 area on new housing strength and drawdowns in LME stockpiles.Bonds above our suggested entry from 5.90 to 5.92,to 5.869 Friday.

We had forecasted that April would bring a more normal cyclical action to the OEX trader, and so far our projections have been within 1 day of the projected dates for turns.We had looked for a high in the April 6-7 area, followed by a pre-e week decline, followed by a rally that would gather steam from Monday's close, into expiration, possibly as long as the 21st.We correctly posited a confidence shaking retracement Thursday followed by an up Friday expiration.The DJIA is near to the upper 3.5% band ,with 5 day cumulative price and volume still dropping, and 1 day volume actually cumulatively negative.That's a large nonconfirmation.We should see a monthly cyclical decline to near the end of April, followed by a rally into May with pension fund reinvestment monies from near the end of the month.April 27-28 would normally mark the start of the monthly pension reinvestment and the end of cyclical monthly weakness.Remember the OEX historically spends much more time in normal weekly ebb and flow of price than it does going straight up in trend mode as it did in March.

Large speculators in S and P futures are net long for 2 weeks running.Historically that often brings price retracement.When they get net short again, the market takes off.

We are recommending a put bias on rallies over the next several days.Please read additional comments below on stops.

Trend:

Twice as many big cap companies are beating Wall Street earnings expectations as those that are not meeting the forecasts. Thirty percent have reported so far. This comes as a surprise to the fundamentalists that forecast a more dismal picture. Well, technical analysis saw the index trends continue up in spite of the gloomy and incorrect fundamental forecasts and historical valuation comparisons. The old adage, price tells all, seems to have been right again.That's why we projected a rally to April 6-7, a decline the following week, and an e week rally. The OEX regression channels did a pretty good job of telling the story. Now the projection oscillator and the channels may be telling us that the torrid upward pace of the first quarter is slowing into a sideways choppy cycle affair. It is typical for a consolidation to occur in the second quarter after a strong first quarter followed by a high into the August/ September time period as indicated on the Rainbow monthly and weekly charts.

Breadth:

Friday morning began with a third successful test, point C, of the double A,B spike low on Thursday. ADHL chart remains on an overall sell from early last week with two of the three breadth indicators in sell territory. McOsc issue and volume oscillators just pulled back up to the lower edge of the neutral region, thus the longer term Summation continues downward. CODI moved up into the indeterminate region on Friday as the OEX hangs closer to the lower regression channel line and short term(yellow) trend line. A close below the Cyan trendline would be a serious event.

Volatility:

Z Timer is now back in Overbought and the MVI is closer to the lower sell band.

Momentum Cycles Cones:

Cone 1 shows Friday was a strong day reaching the +1 red Std Dev cone. Cone 2 shows the price probabilities for Monday. It also shows the slowing of upward momentum via a more horizontal regression channel.

Pivots:

Friday was a beautiful expiration day for those with realtime systems that could follow the move above the Keylines and the Hourly trendlines(cyan).

DJI NDX OEX SPX

Fibonacci Zones:

The equity indexes start next week close to the weekly fib resistance. Considering the overbought nature and the time of month, purchase of puts could be bought at the market and on rallies(preferably) for a holding period of a week with exits at the lower weekly fib support lines or on a daily basis using the Pivot lines as targets. Keep a $1.5 stop loss on the puts. Always have an initial stop loss and initial target with potential extended targets if in profits followed by the moving stop loss.

DJI NDX OEX SPX TYX XAU

RSI, SMI:

See charts.

Stocks of Interest:

CMR changing from a speculators issue to one only held by long term investors.Rebasing in the 1.00 to 1.35 area.INCO, among other majors, is rumored to be sniffing around the extensive Canmine claims in the Thompson belt.Even without BINCO, the nickel/cobalt complex at MASKWA and WERNER LAKE are likely to support a major mining operation with favorable funding this year. ASTN will eventually get VWAP approval and the hot money will flood back into this issue.Right now it's a battle at 2 1/2 -3.Impatient holders have given up on the approval, and long term holders who know the Chinese potential, among other things, are buying shares from the impatient.

To quote from the intraday update 11:30 am for April 20:

"Place a stop loss on the bond trade at or slightly below your entry price at 5.910 to 5.920."

Momentum Cycles Update for the open of Tuesday, April 21, 1998:

Failure to penetrate 5.80 brought a pull back to test support{and slightly violate it} Monday a.m..We posted an intraday advisory once 5.90 was broken,thus stopped out below or at breakeven from the entry at 5.9 to 5.92.

This is most likely a retesting of support and post expiration weakness, also seen in OEX weakness until 2:15 Monday.So bonds may still make a run for the new highs clustered below recent resistance last week.

OEX index weakness may wait till the end of the week and/or the start of next before taking hold.Traders who bought OEX puts on the early Monday strength had a nice day trade which could have been sold into once the downtrend was broken early afternoon.

A long trade will almost definately be on for next week, between April 27-29.

Trend:

OEX regression channel has a terminal candlestick on Monday. Projection oscillator is not encouraging. ADHL is still holding last week's sell signal. Until breadth and the new highs and lows improve, the long term up trend will be considered to have ended last week.

Breadth:

NYA breadth was negative in issues and positive in volume which is a characteristic of tops. Note the DJI chart with the hi/lo, VA%, AD line, MoneyFlow indicators. Money is continuing to flow into the market but price and breadth are not being taken higher with it. This is classic distribution action and is providing ample opportunity to exit longterm positions and institute short positions. McOsc issue is remaining below the Neutral Region. CODI is touching the Sell Alert line again.

Volatility:

Z Timer reached for the Extremely Overbought zone on Monday and the MVI inched further downward towards the sell band. The bandwidth is indicative of the potential for a rather large movement in price should a sell mode take place.

Pivots:

Prices declined and bounced near Monday's Keyline and hourly trendline. They closed near Tuesday's Keyline in a neutral posture. The NDX was the exception by rallying up through R3.
DJI NDX OEX SPX

Momentum Cycles Cones:

Monday's price movement on the OEX was contained within the Average Cone. Intraday movement in OEX puts was sufficient to make a few coins, but from open to close it was a wash to negative.

Fibonacci Zones:

Prices were contained between the upper weekly fib resistance and the red dash balance line except for the NDX and XAU. XAU is nearing weekly fib support as its ratio oscillator hits the oversold level. A little more basing in here and the XAU would be set up for another move up. The NDX was strong enough to close above weekly fib resistance.
DJI NDX OEX SPX TYX XAU

RSI, SMI:

See charts.

Stocks of Interest:

ASTN and CMR are working the lower area of their support zones.

Momentum Cycles Update for the open of Wednesday, April 22, 1998:

Our bullish bias has been correct towards palladium, platinum and copper on LME drawdowns and continuing Russian political instability and lack of committment to firm delivery dates.July platinum up 1 to 416.90,June palladium up 10.45 to 296.55,May copper up close into producer selling resistance {85-6}at 84.15.

We suggested XAU was hitting support yesterday on our fib and pivot charts,setting up for a long trade,today up 7% to 89.48.Notice resistance at 90-91, then 95, then 100.A pass through the previous highs targets the next area.

Corn up 12 on Midwest cold, wet weather,thus planting delays,as previously forecast.All leading to CRB retesting support at 225 , today 227.23.

Cycles suggest reentering puts here on OEX during Wednesday, for a trade into the end of the week or the start of next, followed by a long trade before monthly money flow about April 27-29, is the preferred strategy here.

Use the pivot and fib charts below to pick entry and exit prices.Use a 1.50 stop loss.

Trend:

Boy, is this ever getting dicey! New lows picked up 7 more and new highs picked up 10 from Monday. The SPX inched higher but the ADHL indicators are bordering on another sell signal. The OEX regression channel projection oscillator looks like it is about to roll over. The Cyan reg channel line is providing strong resistance to further advances.

Breadth:

We have a real nonconfirmation and divergence on the McOsc chart. Note that the issue oscillator is not following the volume oscillator upward as the index stalls out. This really looks like it has a lot of breakdown potential. CODI made a sell pivot at the Sell Alert Line. NYA issue breadth spread has been pretty close to the zero line for two days now. DJI A/D osc and Up/Down osc are producing an artificial intelligence expert rating of 1 up and 99 down for tomorrow. The AD line has gone flat to slightly down as the index makes incremental new highs.

Volatility:

Z Timer extended into the Extremely overbought zone on Tuesday as the MVI dropped closer to the sell band. Wednesday tends to be a pivotal day for the week.

Pivots:

The Keylines provided support numerous times today as the index remained above the hourly(cyan) trendline. The NDX found R1 to be a centroid of support. Wednesday sees the indexes open slightly above the keyline and below R1.

DJI NDX OEX SPX

Momentum Cycles Cones:

The average range volatility cone contained the OEX very tightly on Tuesday. The Projection oscillator is pointing sideways with a very small upward bias as the index works on multiday resistance. The keyline remains near the high back on 4/6. Here are Tuesday's and Wednesday's cones.

Fibonacci Zones:

XAU had a breakout as the other indexes met with stiff resistance at the weekly fib resistance levels. Even the TYX hit the weekly fib resistance. A continuation of TYX upward should bring the others back toward the red dashed weekly balance line, if not on Wednesday, then on Thursday and Friday.

DJI NDX OEX SPX TYX XAU

RSI, SMI:

See charts.

Stocks of Interest:

ASTN chasing the hot money out and being accumulated by the patient longer term buyers.May have to rebase under 2 1/2 in a general market correction, but longer term potential in the teens or more. CMR showing VA % accumulation by value buyers even as price retests the 1 to 1.30 area.We expect more and more positive drill results into mid year and cash flow from cobalt and nickel into 1998 end and strongly into 1999.