MomentumCycles

Momentum Cycles Update for the open of Thursday, April 2, 1998:

DJIA and OEX attracted to resistance at the old highs on the back of predicted seasonal monthly pension reinvestment monies.2 successive daily higher closes above the old highs project an eventual target of as much as 9200.CRB weakness at the resistance of 230,now retesting the primary support of 225, then possibly the 52 week lows at 221.56-resulting in strong bonds and the dollar.Palladium, among the metals, the one discussed here with high demand and still uncertain Russian supply,the standout today,up 2.30 to 260.50.Other metals down on weak yen/strong dollar/bonds relationship, including copper, which found predicted resistance at 80-81 cents.52 week lows are 73.15,which have held so far.

OEX oversold rally from very low short term RSI numbers yesterday made today's pop up happen.Longer , slower measures of trend, such as 5 day cumulative breadth and volume have not turned up yet.

CMR is attempting to clean up asks in the 1.40-1.64 area,by patient buyers.

ASTN again finding resistance at the old 52 week highs above 4$.

Sure looks like a dollar bull trend starting with Tuesday's close of 101.37 basis JUNE,as discussed here before.

Momentum Cycles Update for the open of Friday, April 3, 1998:

New highs today in DJIA, OEX, S and P 500, DJIU, NASDAQ. DJIA near tagging upper 3.5% band on continued seasonal money flow.Note that monthly reinvestment normally dries up about April 6-7, so April 8 and following may see price weakness if the first 5 trading days of April continue up.Some nonconfirmations of the new highs today in RSI and STO.4 day cumulative breadth and volume rising, 5 day flat.Further rally to the top of the 3.5% band would normally see a lessening of momentum,and/or price retracement.Support at about 8875.

CRB trading between resistance at 230 and support at 225, today 227.86,+.54%,double bottom still intact.

Palladium up again from leg from 250$, up .50 to 261 basis JUNE,silver testing resistance at 6.60,above 6.60 projects 7 basis JUNE.Gold above 310 resistance would be very bullish.Copper resistance 80-81,support 73,close 77.20.

CMR retesting 1.35 support, closed 1.45.Needs to close back above 1.55,then 3 days above 1.64.Asks are slowly drying up in this issue, taken by patient low bidders.ASTN closed at resistance at 4. 3 days above 4 and 3/16 project 5,7, 10.

U.S. dollar in continued and suggested tradeable bull leg.

To quote from the Momentum Cycles Update for the open of Monday, March 30, 1998:

"OEX trading between 521, which is the last important low,and 532.62, which is the all time high.Sell stops clustered below 521 ,buy stops above 532.62.Below 521 will cause further selling, above 532.62, and another short covering run to the upside is likely..Put/call on Friday intraday somewhat bearish at 33 puts to 100 calls.

Our call for XAU strength to continue short term once 80 was penetrated was correct, as Friday brought 83.22 as the close,and 84.20 intraday.

U.S dollar and currencies have not yet resolved the stalemate in place since January.New highs in the dollar{101.47 basis JUNE is the area buy stops are clustered above}will support further highs in bonds and equities, and a close below the 99-98 area leaves a large gap down to the 96 area."

To quote from the Momentum Cycles Update for the open of Monday, March 23, 1998:

"If one examines the futures charts on page B7 of Investor's Business Daily an interesting observation is immediately apparent.Many of the commodity charts are in cycle mode,that is, they obey periodic oscillation measurable by stochastic and other time/price indicators.That is why we were able to project silver, as a recent example, as showing short term support at 5.5 to 5.8 before the last technical rally once the round number of 6 was broken{tyranny of round numbers commentary, previously}.

In leaving cycle mode in other markets,after a period of digestion, closes above previous highs tend to run the shorts in,and another such situation may be about to occur,which would move the U.S. dollar from cycle to trend mode.The dollar has been making ever smaller oscillations,edging up to the early January high slightly over 101{basis June U.S. dollar index}.Buy stops must be clustered at about 101.2. Two consecutive daily closes above 101.3 would likely bring a short covering panic,rewarding a long entry.Conversely,a close below 99 gives you 98.2.Since the dollar correlates strongly with confidence in U.S equities and bonds, this is one trade to watch.New highs in the dollar have frustrated dollar bulls since January 3,so a resolution to the impasse is due soon.One might go long on 2 consecutive daily closes above 101,with a stop at 100.9.An intraday move below 99 gives a daytrade to the 98.5 -98.2 area.

Looking at the S&P,if we don't pull back this week, the new Roth IRA monies and fear of underperformance by lemming-like money managers may keep us going until the window dressing end of quarter."

To quote from the Momentum Cycles Update for the open of Friday, March 27, 1998:

"Above the 532 level,the OEX will have no specific level the shorts can target.Below 521, several previous days of support will be violated.Shorter term RSI and STO are not greatly oversold,however, in this leg no good oversold readings have been seen, except fleetingly intraday.

U.S dollar and currencies in a battle.Will the buck take out 101.2 basis June and make a long run for the roses,or break down under 98 from nascent strength in XAU,CRB and oil?Either way it looks to be an important trend altering move.U.S dollar range narrowing greatly, winding up for a volatility breakout.Previous commentaries gave the trade setup for longs and shorts on this one.

Money flow into pensions starts soon.See our comment on the bottom of the page."

Momentum Cycles Update for the open of Monday, April 6, 1998:

Look at the charts for silver, palladium and the U.S. dollar.All 3 have comments in the quotes above, and on the charts.

XAU breakout above 80 previously, brought higher prices as projected,close Friday 87.35.Watch carefully the April 7 area for a possible reversal.

Watch the all time highs in bonds to see if a breakout will occur.We did project 6% before 5.5% a while back,and got that from above and below,twice.Now its time to see if the previous highs will hold as resistance.

Trend:

Technically the beginning of month seasonality has two more days left. Reaching for the OEXreg cyan channel lines would make a fitting terminal projection for this move. The OEX projection oscillator made it up to the 50% level on Friday with a slight decrease of momentum. The ADHL mechanical system aborted a tentative sell signal last week when the ADrs and NHstr pushed back above the buy threshold. The NLstr is still near the sell threshold.

One of the tricks in trading is recognizing trend mode vs cycle mode. There are numerous ways to do this and the view obtained is very dependent on time frames selected. This intraday point and figure chart with an hourly trendline(cyan line) is one way to do it. . Prices run above the cyan line in uptrend mode and cycle about it at the end of the trend. The bottom plot is the JBOC oscillator. This is simply an oscillator based on the open close relationship of the time period selected. In uptrend mode the close is higher than the open most of the time, thus a positive JBOC. When the trend changes, the close open relationship goes into a cycle mode, thus the positive and negative JBOC. This chart is rather unique in the sense that point and figure price which is "timeless" and time based indicators are combined in the same window.

Take a look at this Cissvol chart.

Breadth:

McOsc issue and volume breadth is running sideways in the neutral zone. CODI is not signalling a strong bias either up or down. NYA breadth presents a weakening condition with increasing declines and decreasing advances as last week progressed. The spread plot at the bottom is the net adv-decl and shows the decline as the NYA trended upward.

Volatility:

Z Timer only made it up to the upper neutral zone while the MVI generated another buy signal early last week. VIX decreased as the last weeks trend unfolded.

Momentum Cycles Cones:

Cones narrowed some as the VIX decreased. OEX seems to prefer the lower side of the blue regression channel for the present. The projection oscillator projects a neutral posture with horizontal motion near the 50% level.

Fibonacci Zones:

Fibo zones are starting the week with the equity indexes above the daily stop loss(red stair steps) and above the weekly balance line(red dashes). Ratio oscillators are running in trend mode. T Bond yields, TYX, is the only fibo chart showing weakness.
DJI NDX OEX SPX TYX XAU

RSI, SMI:

See charts.

Stocks of Interest:

ASTN's president said Friday that "news unrelated to the VWAP will probably be announced Monday that will ensure the future of the company."Present support is 3.50, strong resistance at 4, where rumors have it that players at Guilford securities are shorting ASTN.We view it as probable that ASTN will enter the Chinese markets as a major player in trading systems.Remember ASTN plans to spin off divisions and retain part equity ownership of the spinoffs which go directly to ASTN's net worth. CMR attempting to clean up asks in the under 1.50 area.Close was 1.45,phase downside momentum and VA% seem to be improving.

Pivots:

Multiple days are shown on Monday's charts to illustrate the validity of Pivots as resistance and support. As of Friday the hourly trend(cyan line) is still up. Friday looks like a timeout or consolidation day with prices ending right on the keyline for Monday.
DJI NDX OEX SPX

Momentum Cycles commentary for Tuesday, April 7,1998:

Note, the rest of the commentary,including charts will be available before the open each day this week,due to problems with the satellite dish.

OEX last support 532 on the breakout, then 521.Weakness here was expected and discussed,being towards the end of monthly money flow and pension fund reinvestment.Traders who played the long side in the week before the end of the month and exited into seasonal strength did well.

Warren Buffet sold 1/3 of his silver above 7$ when the public was buying{remember the Buffet spike when 6 bullish articles came out in Barron's that weekend, which we termed a short term sell?}.When that news hit the press today,even though its old news,a feverish rally that almost tagged 320 gold at resistance, and tagged 269.9 palladium at resistance,and silver at 6.570 resistance,aborted.We were stopped out at palladium support at 259.Those long silver from suggested support at 5.50-5.80 should perhaps use 6.15 as a protective stop, to keep profits in case a run on longs is done again into the 584-590 SIK support area.

We had projected a further XAU rally once 80 was cleared.We had looked for a short term spike and reversal on about April 7,and perhaps we were a day off.Closing remaining longs in XAU near the open might be a good trade unless gold and silver futures are strongly up prior to XAU opening tommorrow.XAU closed today at 88.89, after earlier above 91.

CRB testing 225,below that its the 52 week low at 221.56.Strong resistance at 230.Below 220 or so,deflation is a reality.That number is the support from the January 1991 time frame.

Haven't given up on U.S. dollar long, even though some profit taking today.

Bond buyers at 6% from the last tag, sellers at 5.75 apparently.Close above the highsat 56.62 and more of the same,but not there yet.Await the breakout, if it comes.

Check this news on ASTN,big guns gave them 18$ million{that was the news we told you to expect ,we just didn't know what it would be.}That's close to the present market cap of 27 million.Short sellers came out again above 4$,closed down 1/16 on the news.You'll need some patience on this one.Once they start the spinoffs and the entrance into the China trading exchanges,we could see some good interest.

CMR attemting to clean supply up in the 1.40-1.55 area, where about 30000 shares still are offered.

We feel some interesting drill results will likely be seen soon,from previous measurements.CMR has the most interesting series of properties of any Canadian junior.

Trend:

OEXreg projection oscillator has crossed below the 50% line in sell mode again. Cumulative issues shows a marked deterioration since about 3/25 and today 4/6 the cumulative volume is rolling over. The point and figure chart ended the day below the hourly trendline in sell mode along with the JBOC oscillator. Although the hourly trendline has not turned down, the last two days appear to represent topping action.

Breadth:

ADHL has armed one of the three components for sell mode, but the new highs and new lows have not deteriorated enough yet. McOsc issues crossed below the zero line and must always be given respect when this happens. CODI is in the indeterminate region and apparently clueless to what has been going on. NYA chart shows in intimate detail how breadth has been deteriorating since 3/31.

Volatility:

Z Timer turned down in the neutral region which reflects the true weakness of this week long rally. MVI has turned up reflecting weakness in the lower half of very wide bands.

Pivots:

Close below the hourly trendline and below the keylines on some charts is a definite sign of weakness.
DJI NDX OEX SPX

Momentum Cycles Cones:

Projection oscillator is pointing downward and crossed below the 50% sell line.

Fibonacci Zones:

See charts.
DJI NDX OEX SPX TYX XAU

RSI, SMI:

See charts.

Stocks of Interest:

ASTN CMR

To quote from the Momentum Cycles Update for the open of Friday, April 3, 1998:

"New highs today in DJIA, OEX, S and P 500, DJIU, NASDAQ. DJIA near tagging upper 3.5% band on continued seasonal money flow.Note that monthly reinvestment normally dries up about April 6-7, so April 8 and following may see price weakness if the first 5 trading days of April continue up.Some nonconfirmations of the new highs today in RSI and STO.4 day cumulative breadth and volume rising, 5 day flat.Further rally to the top of the 3.5% band would normally see a lessening of momentum,and/or price retracement."

To quote from the update of Tuesday, April 7, 1998:

"We had projected a further XAU rally once 80 was cleared.We had looked for a short term spike and reversal on about April 7,and perhaps we were a day off.Closing remaining longs in XAU near the open might be a good trade unless gold and silver futures are strongly up prior to XAU opening tommorrow.XAU closed today at 88.89, after earlier above 91."

Momentum Cycles Update for the open of Wednesday, April 8, 1998:

Charts missing will be posted before Wednesday's open.

Readers sold XAU longs near the open Tuesday,at prices ranging from 88.71 to 88 at a good profit.Close was 85.92,so the early feeble gold and silver pre-opening prices presaged the correction.

Silver {SIK}at 6395,still above the suggested stop.

U.S. dollar still in what appears to be a correction within a bullish move.

Seasonal monies did dry up in the projected time frame,as seen above,and today's OEX landed near the 532 initial first support.We prefer to go long from the lower 3.5% band where price is more oversold, and downside nonconfirmations can produce a stronger rubber band effect.Today's DJIA did not penetrate the 21 day moving average,so we are not greatly oversold on the 7% band oscillator of price.5 day cumulative breadth and volume flat.

Trend:

Two of three components of the ADHL system have armed for a sell signal. If the new low strength increased we would have a sell under the current conditions. There are also some other acceleration and indicator levels that would generate a sell, but the three indicator system mentioned here is the most obvious at the moment. OEX regression channel projection oscillator is projecting downward again. Looks like the blue line channel is guaranteed to be tested.

Breadth:

Declines overwhelmed advances as the equity indexes capitulated to the finale of beginning of month seasonality. Down volume also swamped up volume. New highs dropped precipitously. New lows would not be expected to pick up until more selling occurs with price erosion. McOsc issues and volume are decidedly below the zero line and decidely below the neutral region. -100 for the issue oscillator is usually the end of a minor correction, but this one just appears to be starting. NYA chart shows the extreme breadth weakness often characteristic of the end of the seasonality at the beginning of the month. CODI

Volatility:

MVI is pivoting upward in sell mode. Z Timer is pivoting downward in sell mode.

Momentum Cycles Cones:

Two views are presented here. One is today's candlestick on the cones calculated yesterday. Note the OEX low tagged the red cone. The other view is tomorrow's projections. The projection oscillator is still pointing downward.

Pivots:

Again the market had closes below the hourly trendlines(cyan) and the Keylines. Support was found in the vicinity of the S3 levels.
DJI NDX OEX SPX

Fibonacci Zones:

DJI NDX OEX SPX TYX XAU

RSI, SMI:

See charts

Stocks of Interest:

ASTN sold off on stop running, profit taking, and may have to rebase in the 2 1/2 area.Some misunderstanding of the 18$ million institutional investment package may also be present, as well as impatience about the implimentation of VWAP. CMR patiently cleaning up asks in the 1.35 to 1.55 area,with pre opening bids ahead of asks in the 1.44 region.

To quote from the Momentum Cycles Update for the open of Friday, April 3, 1998:

"New highs today in DJIA, OEX, S and P 500, DJIU, NASDAQ. DJIA near tagging upper 3.5% band on continued seasonal money flow.Note that monthly reinvestment normally dries up about April 6-7, so April 8 and following may see price weakness if the first 5 trading days of April continue up.Some nonconfirmations of the new highs today in RSI and STO.4 day cumulative breadth and volume rising, 5 day flat.Further rally to the top of the 3.5% band would normally see a lessening of momentum,and/or price retracement."