MomentumCycles

MomentumCycles commentary for the open of Wednesday, May 26, 1999:

It looked like for a while today that we had something to cheer about on the upside. However, TRIN just could not stay below the key level to produce an up day. CODI remains in the Buy Alert level. It needs to turn down on an end of day basis to generate a buy signal that has more staying power. INDU finally hit the -3.5% band today. That is almost to the 50 day simple moving average. Its OBV continues downward. The bottom hasn't formed yet. Most of the indicators have dropped back to the oversold levels, and since they are oscillators, they can go lower to sideways if the downward trend continues. The Stochastic Momentum Index on the EquityCP and Sentiment charts has yet to bottom and turn.

Those who choose to use the typical suggested 1.50 stop loss on the OEYFL {see below} avoided the late afternoon decline from about 16 to 12.

AOL hit our yesterday's cited support of 112 exactly and then bounced slightly.Downside volume was very large,however,and momentum has not yet turned upwards,much like the general IIX index.The current move has the potential to break the 112 lows,in spite of the saturated oversold STOCHASTIC readings.We would avoid a long position here until momentum turns.

XAU momentum is still falling,and so we are avoiding the long side until a momentum turn.Like AOL,XAU is saturated in an oversold STOCHASTIC position.

Here are the charts:

5 DAY ADVANCES CHART. AMOSS CHART. BREADTH CHART. CONE CHART. CYCLE CHART. DSP9M DAILY CHART. DSP9MPD CHART. DSP9M WEEKLY CHART. INDU CHART. INDU OBV CHART. MOONTIDE CHART. NHNL CHART. NYA CHART. OEX FIB CHART. OEX 30 MINUTE CHART. OEX WEEKLY CHART. OEYFL CHART. PITCHFORK CHART. SUPRET CHART. VIX CHART. XAU 30 MINUTE CHART. XAU DAILY CHART.

MomentumCycles commentary for the open of Thursday, May 27, 1999:

Seasonality began to show its face on Wednesday. The market bounced from oversold levels and ended the day with a Buy signal from CODI.Option premium ratio reached basing levels of .35,in conjunction with the 18th trading day of the month.The 18-19th trading day area often marks money flow lows prior to monthly pension reinvestment. UC Payroll indicator should strike on Thursday providing additional gains. Those who bought the seasonality concept and averaged down in strike price did very well with OEYFJ, OEYFK, and OEYFL.Those who reentered or entered new long positions Wednesday at the lows did well also.

Even though Wednesday was a much improved day, the market still stands on shaky ground. Fib levels continue to be one of the best targets to use for support and resistance. Looking at the hourly/daily/weekly S&P futures chart of the day session, the DSP9M chart shows a tag of 1307.82 was support on Monday and is now resistance on Wednesday. The hourly trend is up, but the daily trend is still down. It will take a move above 1320 on Thursday to change the daily to up.

FNM and AOL both made short term momentum reversals Wednesday;implying that 66 on FNM is a short term low and that the intraday stop run to 105.0625 in AOL may have been a short term low and reversal.

XAU has not yet made a momentum reversal.

Here are the additional charts:

AMOSS CHART. CONE CHART. CYCLE CHART. DSP9M DAILY CHART. DSP9MPD CHART. EQUITYCP CHART. INDU CHART. INDU OBV CHART. MOONTIDE CHART. NYA CHART. OEX FIB CHART. OEX 30 MINUTE CHART. OEX WEEKLY CHART. PITCHFORK CHART. SENTIMENT CHART. SUPERT CHART. VIX CHART. VOLATILITY CHART. XAU 30 MINUTE CHART. XAU DAILY CHART.

MomentumCycles commentary for the open of Friday, May 28, 1999:

One more day to go, and May is history. Correction is still the mindset of traders and portfolio managers. Trying to trade against this is not a wise thing to do. Several of the charts appear to be shaping up for a Call trade, though. Super T is forming a divergent pattern as DOW tests the Green support level near 10356. The PitchFork may switch to the dark blue fork once VIX drops back to the low 20's. VIX gave another buy signal on Thursday. CODI, yellow line, is still in the Buy Alert zone. AMOSS and MOSS are putting in a trading low. Breadth and Moontide need to improve before anything lasting on the upside can occur. As it is now, gains quickly disappear, but it looks like we may be seeing the beginnings of a double bottom in price and breadth. Friday holds the key for this perception. Lots of portfolio adjustments occur at month end and beginning of month providing intraday tradeable swings, but you really have to be glued to the screen. Both EquityCP and Sentiment are at levels where Call buying has been profitable short term. INDU OBV and INDU are testing support levels. UC payroll indicator will strike on Friday.

Many momentum oscillators such as RSI,STOCHASTIC,and 5 day rate of change are at levels that appear at or near oversold lows.

Both AOL,as representative of the seasonally weak techs;and FNM,as representative of the interest rate sensitive sector,sold off,but held above recent trading lows.We are looking for sustainable momentum reversals in both sectors,but whipsaws are the current condition.

Rumors were circulated on the Street Thursday {most probably aided by those holding short positions!} that a rate rise by the FED is in the works for Friday.These rumors accounted for some of the selling,which fed on the additional retail internet chat about margin calls.

Examining the option charts below enables readers to see how a trendline or a 1.50 stop loss might be used for proper money management.

Here are the additional charts:

5 DAY ADVANCES CHART. THURSDAY'S CONE CHART. FRIDAY'S CONE CHART. CYCLE CHART. DSP9M DAILY CHART DSP9MPD CHART. DSP9M WEEKLY CHART. NYA CHART. OEX FIB CHART. OEX 30 MINUTE CHART. OEX WEEKLY CHART. OEYFJ CHART. OEYFK CHART. OEYFL CHART. VOLATILITY CHART. XAU 30 MINUTE CHART. XAU DAILY CHART.

MomentumCycles commentary for the open of Tuesday, June 1, 1999:

Friday ended with numerous buy signals.Unless we get further interest rate fears due to economic reports, the OEX calls should continue to appreciate.Last week traders were at the mercy of numerous crosscurrents,including end-of-month booksquaring,reduced seasonal money flow into mutual funds,monthly pension fund reinvestment,unpredictable intraday volatility due to traders leaving early for Memorial Day,Russian political instability,and fears of war in the Indian region.These factors increased the number of price changes so that each day saw open to close moves averaging 150 DJIA points up or down.

Bullishly we are at the lower 3.5% trading band with cumulative breadth positive;normally a bullish chart configuration.RSI and STOCHASTIC are in positions normally seen at rally starts;the option premium ratio is at basing levels {.40 after readings in the .30's}.Using the NASDAQ rate of change indicator,a decline low "hits" about June 1st,approximately in the present timeframe.

An extremely bearish reading,however,and to be noted,is the present unusual reading of public versus specialist short sales,which is at a five year low of .41.There is also bearishly a high % of bullish investment advisors.This reading is near a five year high of 61.2%{currently 60.7%}.

For those traders who are holding long OEX call positions,a trailing 1.50 profit stop, or trendline stop might be considered.We also have found useful the 1.50 stop loss from the initial purchase price.Posts are also sometimes made intraday for entrance and exits if special circumstances warrant.

If you have heard that there may or may not be a central banker consensus that a rising gold price is to be avoided at all cost...we suggest you read this issue of Barron's{page 35}.

Here are the charts:

AMOSS CHART. CODI CHART. CYCLE CHART. EQUITYCP CHART. INDU CHART. OEYFJ CHART. OEYFK CHART. PITCHFORK CHART. SENTIMENT CHART. SUPERT CHART. VIX CHART. VOLATILITY CHART. XAU CHART.