MomentumCycles

Momentum Cycles Update for the open of Thursday, April 9, 1998:

The U.S. equity market is ,after 2 months of trend mode, probably entering cycle mode.If so, it is obeying the normal behavior seen after the monthly money flow ends, as we had discussed at the start of the month{excerpt above}.Pre- holiday and end of second week cycles would normally argue for a low Thursday on light volume, followed by an e week long trade.If so, traders could expect to see an upward bias next week into at least part of expiration week.Buy near the close on Thursday, sell into the first sign of strength e week? This cycle trade has worked for us month after month for us during cycle mode months.Remember the action seen in March was an abberation in the normal tendency of the OEX to reverse and rally periodically intramonth.April so far has obeyed money flow cycles within 1 day of our projections.So adventuresome traders might go very lightly long OEX calls near Thursday's close ,for a sell into the first part of e week strength,only if RSI on OEXTRADER'S commentary page link is in the extreme lower area near 20 near Thursday's close,as this would be a likely oversold area to take the trade from.

Stopped out of U.S. dollar long for a slight loss,although trend may still be intact.

Trend:

OEX low went for the upper regression channel line originating back in January 1995. This would be expected to be a resistance line that had a momentum overshoot. The projection oscillator is pointing downward as of the Wednesday close. Odds for Thursday have it going a little lower. Cumulative issues and volume clearly illustrate a nonconfirmation as the index made a new high. This price high was made on few issues and heavy volume. Such tops on failing breadth lead to trend changes.

Breadth:

McOsc issues is working the -100 oversold line as the OEX works the lower regression channel line from January 1998...a moment of truth. ADHL new highs are deteriorating and new lows are flirting with the sell line. Adv/Decl DJIA relative strength is keeping the long term buy mode intact. CODI is still giving clueless information as the regression channel is bordering on a trendchange.

Volatility:

Zone Timer is drifting downward in the lower neutral zone. MVI is working its way upward in sell mode.

Momentum Cycles Cones:

OEX has finally broken away from the March channel. Projection oscillator is pointing downward.

Fibonacci Zones:

Daily trends for the DJIA, OEX, SPX, and NDX are turning down. XAU is working upper fib resistance. TYX is headed up again.

RSI, SMI:

See charts.

Stocks of Interest:

ASTN's president said today that the 18$ million financing "will be taken as wanted for completion of projects.3 million has been taken,more may not be needed.VWAP is still on target for implementation." Support at 2 1/2,present resistance at 3. CMR trying to clear up supply in the 1.35-1.55 area, where current asks number about 30000 shares total.

Pivots:

The obvious trend here is a close below the hourly trendlines(cyan) and the keylines. These pivots with intraday data add to the "feel" of the end of day charts using the above regression channels and probability cones. If you believe a trend remains in motion until it changes, then the half hour and hourly trendlines are very good at assisting in determining the short term trend. The breadth charts such as McOsc, NYA, cumIV are useful in anticipating a breakdown or reversal to the upside. These pivot charts are useful to select prices at which resistance and support are likely to occur.
DJI NDX OEX SPX

Momentum Cycles Update for the open of Monday, April 13, 1998:

We expected an OEX rally from Thursday, but thought it would be nearer the close on a lower RSI.Instead it was near the open.Alternating weekly cycles would have this an up bias for at least part of the week,usually from Monday close to near or after expiration, perhaps into as long as the 21st.Risk for longs however, as we all know, is high,with such respected commentators as Mark Cook, Bert Dohmen,Gail Dudack, and Larry Mcmillan, for example, pointing out the extremes of sentiment and valuation.

Copper rallied to resistance at 80-81,palladium also to 270, silver still above 6.15.If Russian political instability continues, the palladium market could easily surpass the previous 18 year highs seen recently.No Russian deliveries have been made, no dates for such deliveries have been suggested, and both platinum and palladium have few alternatives as industrial metals.One of the few PGM {platinum group metals]domestic suppliers is Stillwater Mining,making new 52 week highs.

Trend:

Chaos theory defines regression channel lines as "attractors". So far the blue channel line has been attracting prices for three weeks and is providing support for a slowing of momentum. The OEXLT chart shows the entire lifetime of the blue regression channel and how prices are on the "extended" side by being on the upper side of the channel. This comes at at time when valuation measures are setting historical records and prices are discounting 1999 earnings. This is termed "looking across the valley", as there will most certainly be a confidence shaking correction before the year is over, perhaps before it is half over. Here is the regular OEX regression chart.

Breadth:

The ADHL chart is once again bordering on a sell mode now that the ADrs is near the magenta line, and the NLstr is flirting with its sell trigger. NHstr is armed for a sell. McOsc issue and volume have pulled back up to the zero line and the Summation index is rolling over. The Summation index is the longer term view of breadth trend. CODI is indeterminate. The OEX on CODI chart closed on the yellow trend line which is now ponting sideways to down. NYA 4/8 was a key day with a lower low in price but improvement in breadth which brought out the divergence buyers on 4/9.

Volatility:

Z Timer has been oscillating about the neutral line. What it may be saying is that the trend mode for the first quarter is over and the market has now entered a cycle mode. If this is in fact the case, it will be interesting to see what the major horizontal support and resistance levels will be. The MVI is closer to a sell than a buy.

Pivots:

Prices made it back up to the hourly trendline(cyan) in pre-holiday trading. Thursday's action is what is normally expected on a pre-expiration week Friday. Since the financial markets were closed on Friday, the e-week seasonality was advanced one day.
DJI NDX OEX SPX

Momentum Cycles Cones:

The projection cones have been extended to the upcoming expiration. There should be some up and down trendless price movement as the expiration zeros in on a strike price that minimizes the market makers liability. This action actually begins the week prior to expiration.

Fibonacci Zones:

For once DJIA, OEX, SPX index prices were contained by the weekly fib support and resistance, i.e. there were no price breakouts. The NDX had a tag of the weekly Triple Switch in a moment of extreme weakness. Ratio oscillators are no longer running max out in saturated mode as though the above mentioned concepts of trend mode becoming cycle mode have some validity. Note that this also comes as the deadline for tax filing arrives and as the deadline for 1997 IRA contributions disappears. This removes one of the prime movers of this first quarter rally. The popular new Roth IRA gave it an extra kick. It is hard to imagine how prices will hold up when the money flow disappears in the coming weeks. Here are the TYX and XAU charts.

RSI, SMI:

See charts.

Stocks of Interest:

ASTN is suffering from buyer impatience with the approval of the VWAP system.It is highly doubtful big institutional investors would commit a potential 18$ million to a 21$ million market cap company unless the technology was impressive, and the approval but a matter of time.ASTN 's president feels the cash infusion, which will be taken as needed, insures the long term future of the company.Readers here entered long at prices from 2 1/2 to 2 15/16.If VWAP is indeed the future for Philadelphia as well as the Chinese exchanges{which have no SEC!!},this could be a huge winner. CMR working on the 1.35 to 1.55 area, patient low bidders trying to clean up remaining supply.Recent drill results have been very exciting.There well could be an "elephant",{a monster deposit, in mining terms} on one of the Canmine properties.

Momentum Cycles Update for the open of Tuesday, April 14, 1998:

OEX critical support 527, below which there are a lot of stop losses. Bonds between 5.75 and 6. A breakout in either direction is significant. ASTN and CMR working the lower edges of their support zones. Copper and palladium testing resistance at 82 and 278. Silver at 6355, above our suggested stop. Both 5 day breadth and volume on OEX still not rising. Stops should be tightened up on long OEX trades, in case support is broken.

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

We had suggested last weekend that there was high probability for an OEX rally starting Monday close into at least part of expiration week, possibly into as long as the 21st.Indeed, the rally officially started fairly near to Monday's close.We strongly suggest, in view of the many non-confirmations of Tuesday's DJIA high on 5 day rate of change,RSI,STO,cumulative breadth and volume{the 5 day is still dropping},that last Wednesday's lows be monitored as risk for long positions, that is, 527 OEX.We are nearing the upper 3.5% trading band, where resistance is normally seen.A confirmed close above 542.19, with a lessening of non-confirmations,would be a different story.Strangely enough, the internal strength of this rally has been weakening since February 6, although prices are still rising.

One might review our global equities trading strategy{see index page} for those who trade mutual funds.

ASTN suffering from impatient speculators who have given up on the VWAP implementation.At 2 1/2 to 2 15/16, this is a cheap bet not only on the future of trading by institutions who demand the fairest price, but the eventual entrance of ASTN into the huge Chinese markets{where there is no SEC!!}.

CMR at 1.35, reworking the lower edges of the support zone.All the hot money is out of this issue, and what remains are patient value buyers.There is no question that both the MASKWA nickel deposit and the WERNER cobalt deposit are commercially viable.CMR will probably either have to buy an autoclave or a mill{or both}to process the ores, but the richness of the deposit ensures the eventual success of a commercial operation.What the price does not reflect, is BINCO,which probably is only a hint of what is most likely a viable second portion of the Thompson nickel belt.If so, CMR may have a herd of "elephants".

June palladium up 900 to 287.05. July Platinum up 50 to 4291.Both on continued insecurity about Russian deliveries.Stillwater Mining up 1 3/8 to a new high at 27 7/16 {up 5.28% today}.Copper edging higher at 8200 {MAY}.Silver and gold weaker since the projected spike high near April 7.

Bonds can't decide on 5.75 or 6.A close above 123.03 basis JUNE bullish for a trade to 124, possibly 125 to 128.Below 119.17 bearish.Long bond trades should use 119.17 as risk.June calls on pullbacks {basis the JUNE 122 call} might be a way to trade this.

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

"We had suggested last weekend that there was high probability for an OEX rally starting Monday close into at least part of expiration week, possibly into as long as the 21st.Indeed, the rally officially started fairly near to Monday's close.We strongly suggest, in view of the many non-confirmations of Tuesday's DJIA high on 5 day rate of change,RSI,STO,cumulative breadth and volume{the 5 day is still dropping},that last Wednesday's lows be monitored as risk for long positions, that is, 527 OEX.We are nearing the upper 3.5% trading band, where resistance is normally seen.A confirmed close above 542.19, with a lessening of non-confirmations,would be a different story.Strangely enough, the internal strength of this rally has been weakening since February 6, although prices are still rising.

One might review our global equities trading strategy{see index page} for those who trade mutual funds.

ASTN suffering from impatient speculators who have given up on the VWAP implementation.At 2 1/2 to 2 15/16, this is a cheap bet not only on the future of trading by institutions who demand the fairest price, but the eventual entrance of ASTN into the huge Chinese markets{where there is no SEC!!}.

CMR at 1.35, reworking the lower edges of the support zone.All the hot money is out of this issue, and what remains are patient value buyers.There is no question that both the MASKWA nickel deposit and the WERNER cobalt deposit are commercially viable.CMR will probably either have to buy an autoclave or a mill{or both}to process the ores, but the richness of the deposit ensures the eventual success of a commercial operation.What the price does not reflect, is BINCO,which probably is only a hint of what is most likely a viable second portion of the Thompson nickel belt.If so, CMR may have a herd of "elephants".

June palladium up 900 to 287.05. July Platinum up 50 to 4291.Both on continued insecurity about Russian deliveries.Stillwater Mining up 1 3/8 to a new high at 27 7/16 {up 5.28% today}.Copper edging higher at 8200 {MAY}.Silver and gold weaker since the projected spike high near April 7.

Bonds can't decide on 5.75 or 6.A close above 123.03 basis JUNE bullish for a trade to 124, possibly 125 to 128.Below 119.17 bearish.Long bond trades should use 119.17 as risk.June calls on pullbacks {basis the JUNE 122 call} might be a way to trade this."