MomentumCycles

MomentumCycles Commemtary for the open of Monday, July 27, 1998:

The promised oversold bounce did occur Friday,as expected,due to extremely oversold short term RSI readings Thursday,but it was pretty weak.Summer Fridays often see traders gone early, so action can be indecisive.Remember,we pointed out longer term RSI measures were not yet close to oversold,so the Friday bounce appeared to be a daytrader's type of move,with some whippy action early next week probable.

OEX was +2.12 open to close Friday,with an intraday move of 552.68 to 561.60,close 558.22.Some daytraders who bought the lows Thursday and Friday appeared to exit at 9:45 a.m.,10:30 a.m.,and 1:45 p.m.,near 9000,and left for the beach.Another intraday negative tick of -1427 was recorded Friday, after Thursday's closing -1074 tick,which gave rise to the weak Friday rally.

Seasonality points to pension fund reinvestment starting Tuesday,July 28,where an oversold rally would normally start to occur into late-July /early August.If early next week does see another short term low,other statistics reinforce this scenario.For instance,NASDAQ Tuesday close{July 21 } to Friday close{July 24} was about -50 points. Intraweek historical cyclical probabilities say that we have only a 22% likelihood of a big rally into next Tuesday's close, but if NASDAQ prices are down over 5 points from the close of Friday ,July 24 to the close of Tuesday,July 28,the following Friday,July 31,will have an 80% probability of being up from the close of Tuesday,July 24.Swing machine,however,{see below},and other volatility measures{under volatility section} see Friday as a possible low.

Remember,investment advisory sentiment is still recording 54.3% bulls,a 4 year high,which is longer term bearish and cautionary for intermediate term longs,according to Investor's Business Daily sentiment research.

Option premium ratio Friday,printed in Monday's Investor's Business Daily on page A 27 as item 5,is .59,not the under .53 reading normally supportive of an over 200 point DJIA rally yet.Put/call not yet indicative of extreme fear.

So,if Friday was the start of a rally,we should have a bounce into next week end,and if Tuesday is instead the start of the rally, after more backing and filling, we should see a bounce into weekend.A Tuesday low has a historically high chance of predicting an ensuing Friday high.

TREND:

This report is a bit longer than usual because of the significance of current conditions. NHNL is dropping deeper into the corrective zone as price pulls back from new highs and is now in reversal territory. ADHL remains on its intermediate term buy but is under attack by decreasing new highs(32) and expanding new lows (247). OEXreg projection oscillator is oversold and made a first reaction low pivot. DJI SMI has reached a 40% SMI level, a crucial make or break level, and the Friday high tested the 50 day average from below. Initial expectations were for a cycle mode between the +3.5% upper trading band and the 21 day moving average. That failed, so the next logical expectation was for support at the 50 day. That has failed for one day, and next week or two should see another test of this 50 day average from below. Note how the 50 day is now horizontal and the last run up to the 3.5% was brief. Well, that indicates that the 50 day, or maybe the 21 day will act as resistance and our presupposed cycle mode will occur between lower channel bands in a downtrend, i.e. between the -3.5% and the 21 day. It also means the SMI may remain below 50, or 60 on a rally, and then in a few weeks trend below its Zero band. The Swing Machine lows started occurring on Friday and indicate Monday or Tuesday as lows also. To summarize, the next two weeks are crucial for the top in this market. Monday and Tuesday could be weak before firming by Wednesday. This would fullfill the requirement for a secondary reaction low on the Super Timer. The DJI failed the 9069 Redline support and came close to the 8819 Greenline support. Short term we are looking for a tradeable rally followed by sideways cyclical action with wide swings. Longer term view is down into the Fall as the multimonth top has been completed in preparation for winter.

FIBONACCI ZONES:

Equity indexes did close below their weekly stop loss levels represented by the white stair step lines. This is serious and may cause further weakness on Monday morning from mutual fund switchers doing weekend analysis. The Ratio oscillators are virtually oversold. Another day or two of corrective, basing action would make a better base for a rebound rally in the next week and a half.

OEX NDX TYX DJI XAU S and P 500 futures SPX

ASTROCAST:

AstroCast has an upward bias into the end of the month.

BREADTH:

NYA breadth was negative but with advances improving over previous days. A close with advances over 1200 and declines below 1000 will be good for call purchases. DJI Onbalance Volume has turned up from a level that previous price reversals have occurred. CODI is making a pivot near the white retracement line implying some upside in the OEX next week. McOsc issue and volume are deeply oversold but haven't turned up yet. Next target for these two is the zero line in the next two weeks in a tradeable rally.

VOLATILITY:

Zone Timer has made a pivot at the extreme oversold zone boundary. Bottoms in the OEX are manifested by spike lows on the Zone Timer and with rounded tops. Bear markets would see the Zone Timer trend sideways and cycling in the lower zones with spikes pointing upward and rounded bottoms. The nature, bull or bear, will be evidenced by which zones the Z Timer hibernates in. Bulls don't hibernate -do they? MVI made a buy pivot at the dynamic and static Buy bands.

MoCone:

Projection oscillator is oversold. Increasing volatility has widened the cone apertures providing for wide ranging prices.

MoPivot:

The OEX and Sept Futures have identical neutral looking pivot charts with a close on the keyline and near the hourly trendline. Day to day keyline shift was minor and characteristice of a potential trend reversal. Firm support was found at S1 indicating some strength. Support at S2 or S3 with a close in the lower zones would have had a more bearish outlook.

RSI, SMI:

SPX RSI made a reaction pivot at the lower band.

ASTN, CMR:

ASTN at 3 1/32,with sellers above 3 1/4 and good buying near 2.CMR at .90 ,awaiting news on cobalt production, any day now.

OEX PERSPECTIVE:

CBOE TRINS had three distinct phases on Friday as a trading low appears to have been put in with a Bearish, Basing, Bullish sequence. Friday ended with the Put Trin in a bullish posture and the Call Trin in neutral. Friday was a rather choppy day with wide swings that are typical of trend reversals. Advantageous exit prices were once again presented to put holders in the first phase along with call entries. There may be residual selling on Monday at which time the August calls(At the moneys or nearby) should be entered. The oversold posture may have some backing and filling before a sustained rise occurs into the first week of August so wait for support at Pivot Sn or lower sides of the Mocones. August puts were peaking on Friday, OEWTL, OEWTM, OEWTN, OEWTO, OEWTP. Calls bottoming, OEWHK, OEWHM.

Here is the snapshot chart.

OEX MECHANICAL TRADES:

OEX Signal Report shows that the Momentum model has kicked in with a buy on the August 555 call on Friday. That adds to the Volatility Aug 555 call yesterday and the RSI Aug 565 the day before. There are some advantages to diversification of models. One is that the entries are likely to be at different strikes as the index bounces around increasing the probability of overall success. Another is an average of price entries, again increasing the odds of net positive profits. Since these entries are generated on the close of the current day, real trades should be made in the next day or two at advantageous times. As with discretionary timing the entries are best done at Pivot or Cone support and resistance levels. OEX Trade Listing shows the recent trades for the models starting in 01/02/98. Since the OEX has been above its 200 day moving average, only call trades have been selected on cycle lows by the Mechanical system as that is defined as the trend. Should it close below the 200 day then put trades would be selected on cycle highs. This length can be changed to any length such as 50 or 21 for more aggressive trading with the attendant risk consequences.

MomentumCycles commentary for the open of Tuesday,July 28,1998:

We had posited a retest of the Friday low Monday or Tuesday due to oversold short term but not longer term RSI readings,and the OEX low Monday at 552.91 indeed hit Friday's low and bounced.Thursday last week saw the first of a series of large negative ticks, promising a rally within one or two days due to its occurance as a large negative closing tick.Friday saw the first day of 2 to 1 equity call/put levels,and Monday saw a second consecutive day,increasing the probability of a bounce.Friday and now Monday saw the 2nd and 3rd consecutive days of large negative ticks ,which made Friday's and Monday's rallies possible from intraday oversold.In fact,although only a large cap affair,from Monday's low to high,OEX was up from 552.91 to 563.72{also the high},and NDX was 1370.97 to 1426{also the close}.

Closing tick Monday was +408,which normally would mean a DECLINE within one or two days.Perhaps this implies more backing and filling Tuesday,as the 28th is in the vicinity of the monthly cash flow low point,prior to pension fund month end reinvestment.

Traders who have entered long OEX calls Friday and/or Monday according to the discretionary commentary and OEX models shown in the last paragraph {always seen at the bottom of this daily page} might consider the Friday/Monday lows as important support.

This market is vulnerable,due to longer term sentiment readings,so a parabolic or trendline stop on positions taken at the last 2 days lows can also be considered as a profit keeping technique.

XAU at STOCHASTIC readings that normally would be setting up for a rally-STO 5 and STO 20 in the cellar.We are below the 3.5% trading band on the XAU.Perhaps a bear bounce back to the lower band,after the lower fib zones are tagged.

TREND:

The ADHL intermediate term system is very close to changing to sell mode. All three ADHL indicators would have been in sell mode if the Dow Industrials had not rallied so strongly today. OEX reg projection oscillator turned up from an oversold level. It should be expected to at least reach the 50 to 60 level this week. DJI closed above its 50 day average breathing life back into a geriatric market. OnBalanceVolume is supporting this rally as it ricocheted off June support. NHNL is deep into corrective territory from which reversals have occurred before. The most we can hope for in this extended market is a trading rally where you want to be extremely careful. This rally will likely take advantage of the end of month seasonality into which savvy holders of stock are selling to institutions that have to buy because of prospectus mandates. The length may be measured in days to a week. Super Timer made a nice call for today. It did not move much off of the buy alert line so the market is still pretty sick underneath. What this indicator does is measure the vital signs of the market like an electrocardiograph does for the human body. That buy alert line is also a bull/bear line. Opportunity lies where risk is greatest...on the fringe.

FIBONACCI ZONES:

Ratio oscillators are coming off of oversold and the indexes are challenging the weekly balance line(red dashes). If this rally develops sustaining power from the prevailing fear then the upper weekly fib resistance should be tested by Friday. That would make calls purchased last week and today pay off handsomely.

OEX SPX NDX S and P 500 futures XAU TYX DJI

ASTROCAST:

Astrocast is looking up into the end of the month.

BREADTH:

Breadth looks the worst at cycle lows. McOsc are deeply oversold and haven't turned up yet. Price could slip back until a "tweezer" bottom is in place. V bottoms in stock indexes are more rare than tweezer and complex bottoms. CODI made a buy pivot at that famous white line as the index rises to test the short(yellow) and long term(white) trendlines. Remember 100 point moves don't occur everyday and are usually followed by giveback days or doji or harami candle days. NYA breadth momentum really was not behind this price move today.

MoCones:

Projection oscillator has turned up. The new downward regression channel needs to be broken out of and will generate more upside if it does occur. Otherwise there is more downside work. Tuesday's are generally weak unless during a positive moneyflow period and then weakness is a buying opportunity for short term traders.

MoPivots:

The OEX and S and P 500 futures closed above their keylines and hourly trendlines. This is a positive development coming into the positive seasonality. It isn't likely that the pros would sell this market off when new money is available for the pool. More than likely they will bid it up to the moon and then eclipse it next week.

RSI,SMI:

So far so good on the SPX RSI. Longer term SMI is saying being long requires attentiveness.

ASTN,CMR:

Both issues are seeing some selling due to market weakness,and big cap flight to liquidity tendencies.ASTN long term holders will probably get a chance to pick up shares near 2 again this fall.CMR is awaiting cobalt production news.

OEX PERSPECTIVE:

CBOE Trins started the day off in a bearish posture mostly due to the weekend media and the TV lineup. Wouldn't you know it. Just when indigestion climaxes someone steps in and buys, precipitating a lunchtime trend change. It was advised last week and on the weekend to exit August puts and begin averaging into Aug calls. Here is what some of the calls looked like today, OEWHK, OEWHM, OEWHP. One of the puts looked like this, OEWTL.

OEX MECHANICAL TRADES:

The OEX Signal Report is holding with positions recently acquired. Sell premium modes have been disabled because of the large margin and risk involved. The systems could be configured for credit and debit spreads and we might do that someday, but for now it is being kept simple. The OEX Trade Listing is presented each day for new subscribers and websurfers that drop in on Friday and Saturday.

To quote from the MomentumCycles commentary for the open of Tuesday,July 28,1998:

"We had posited a retest of the Friday low Monday or Tuesday due to oversold short term but not longer term RSI readings,and the OEX low Monday at 552.91 indeed hit Friday's low and bounced.Thursday last week saw the first of a series of large negative ticks, promising a rally within one or two days due to its occurance as a large negative closing tick.Friday saw the first day of 2 to 1 equity call/put levels,and Monday saw a second consecutive day,increasing the probability of a bounce.Friday and now Monday saw the 2nd and 3rd consecutive days of large negative ticks ,which made Friday's and Monday's rallies possible from intraday oversold.In fact,although only a large cap affair,from Monday's low to high,OEX was up from 552.91 to 563.72{also the high},and NDX was 1370.97 to 1426{also the close}.

Closing tick Monday was +408,which normally would mean a DECLINE within one or two days.Perhaps this implies more backing and filling Tuesday,as the 28th is in the vicinity of the monthly cash flow low point,prior to pension fund month end reinvestment.

Traders who have entered long OEX calls Friday and/or Monday according to the discretionary commentary and OEX models shown in the last paragraph {always seen at the bottom of this daily page} might consider the Friday/Monday lows as important support.

This market is vulnerable,due to longer term sentiment readings,so a parabolic or trendline stop on positions taken at the last 2 days lows can also be considered as a profit keeping technique.

XAU at STOCHASTIC readings that normally would be setting up for a rally-STO 5 and STO 20 in the cellar.We are below the 3.5% trading band on the XAU.Perhaps a bear bounce back to the lower band,after the lower fib zones are tagged."

MomentumCycles commentary for the open of Wednesday,July 29,1998:

Traders had a lot to deal with Tuesday.The market abhors political instability,witness the recent Japanese financial turmoil over the choice of the new Prime Minister.It appears as if President Clinton may be vulnerable to a perjury charge,since Monica made a deal for immunity by admitting to behavior the President has denied.This unexpected news probably added 100 DJIA points on the downside intraday Tuesday, in addition to Monday's short term closing overbought condition{+408 closing tick,see above}.

XAU fulfilled its short term function by rallying on fear, back to the predicted lower 3.5% band{see above}.

Tuesday recorded a -444 closing tick and an intraday -1471 tick,making 4 consecutive days of - 1000 ticks.Equity call/put at a 3rd consecutive day of basing levels.In bull markets, this would promise a tradeable rally within one or two days.Continued political instability is, of course, a wild card that may remove some players from the arena temporarily, making volatility higher than normal.

Nimble traders who followed the discretionary advice on Monday's evening commentary {above},could have temporarily exited existing calls profitably at the trendline violation from Monday's lows,and even reentered at the support lows Tuesday on yesterday's posted OEX pivot chart.{For new readers,we advise a 1.50 stop loss from the initial price as risk.}

TREND:

TheADHL intermediate term system is quite steadfast in maintaining its buy mode. OEX reg projection oscillator turned up from an oversold level. It should be expected to at least reach the 50 to 60 level this week and next. DJI closed below its 50 day average as the bull/bear war continues.NHNL is deep into corrective territory from which reversals have occurred before. It definitely is confirming a top has been put in. That does not preclude tradeable rallies.

FIBONACCI ZONES:

Ratio oscillators are coming off of oversold in fine fashion and the indexes were contained by the weekly balance(redline) and the lower fib support. Weekly balance should be tested again on Wednesday and if breadth improves, then Friday should see a close above the weekly balance.

NDX SPX OEX TYX XAU S and P 500 futures DJI

ASTROCAST:

Astrocast is looking up into the end of the month.

BREADTH:

Breadth looks the worst at cycle lows. McOsc are deeply oversold and haven't turned up yet. Price could slip back until a "tweezer" bottom is in place. We got that "tweezer bottom" intraday on Tuesday. Wednesdays favor the upside.CODI is still whipsawing in that indeterminate region, now you know where the name comes from.

Super Timer is making a tweezer bottom and the DJI index is bouncing on the green support line. This has the makings of a trading rally.

MoCones:

Projection oscillator has turned up. The new downward regression channel needs to be broken out of and will generate more upside if it does occur. Otherwise there is more downside work. Quote from Tuesday update = "Tuesday's are generally weak unless during a positive moneyflow period and then weakness is a buying oppotunity for short term traders." We had ample opportunity today to participate on weakness.

Here are the cone chartsCone1 and Cone2

MoPivots:

OEX and DSP8U bounced off of S2 Pivot support where you should have been buying calls and going long the futures. The close was near the keyline and hourly trendline..not a bad close after all the excitement.

VOLATILITY:

Zone Timer is in the Extremely Oversold Zone suggesting the mode is to buy calls.MVI is on a buy mode.

RSI, SMI:

SPX RSI is testing the lower band again. Markets need two legs to stand on. Longer term SMI is saying being long requires attentiveness.

ASTN,CMR:

ASTN is seeing supply above 3 and long term support near 2.Close 2 15/16.CMR is awaiting cobalt production figures{which are supposed to be announced soon}.

OEX PERSPECTIVE:

CBOE Trins do not correlate well from one day to the next as they are rather sensitive to intraday trends. They do lock on to the trend and tend to saturate at a specific level indicating a certain amount of participation. Trends in the cboe trins do correlate well with the OEX. Today they were in a bearish posture the entire day. It was advised last week and on the weekend to exit August puts and begin averaging into Aug calls. After Monday's up and Tuesday's down, the calls are pretty much back to where they started. The discretionary advice is still the same to buy calls at MoPivot support or MoCone support. Here is what some of the listed calls looked like today,OEWHK, OEWHM,OEWHP. Some of the nearby puts looked like this,OEWTL,OEWTM, OEWTN. Note that they have been extremely volatile and anyone trying to trade puts would have had a tough time.

OEX MECHANICAL TRADES:

There have been no changes in the OEX signal report. The OEX Trade Listing is presented each day for new subscribers and websurfers that drop in on Friday and Saturday.

MomentumCycles Commentary for the open of Thursday, July 30, 1998:

Reasons for a short term rally starting here:

  1. IBD premium ratio of puts versus calls for Tuesday's trading{printed Wednesday}was .46.Good rallies after large declines start at readings under.53.
  2. Equity put/call on CBOE at basing levels for 4 days in row.
  3. Price near lower 3.5% band.
  4. Multiple nonconfirmations of Wednesday's new low DJIA price,at higher RSI and STO readings.
  5. 5 days in a row of over -1000 negative ticks.

    Money flow low for pension fund reinvestment was Tuesday.

  6. Last several daily bottoms since last week on high volatility,yet close in price on OEX.
  7. 10 day moving average of up volume versus down volume at extremes.

In a bear market,normal technical oversold signals,such as the ones listed here, can be ignored by the market.The probabilities here,however, strongly favor an oversold rally.

Trend:

The ADHL is improving and it looks like it will retain its Buy mode a bit longer. OEX regression projection oscillator stopped going down and is trending sideways. There is a certain amount of price facilitation or price probing of highs and lows going on. This defines the new channel. NHNL has turned up a bit indicating the worst is over short term. New lows today were 275 vs 340 on Tuesday. Super T has made the awaited Tweezer bottom indicating we should see a strong rally immediately ahead. Once the shorts are convinced the downside momentum is over they will have to cover and the next wave up will be in progress. It just might be quick and lethal to shorts and put holders. OEX regression channel is looking at 571 OEX as a first upside target. August calls would pay off handsomely if this happens within the next week.

Special update on OEX swing machine. Next few days indicate strong moves up.

Fibonacci Zones:

Ratio oscillators are coming off of oversold in fine fashion and the indexes were contained by the weekly balance (red line) and the lower fib support. A rally base appears to be in. Here is the S and P 500 futures chart.

DJI NDX OEX SPX TYX XAU

Astrocast:

Astrocast is looking up into the end of the month.

Breadth:

NYA breadth was much improved over the three previous days. With both advances and declines over 1200 it was a no trend day. We need to see the advances stay above 1200 and the declines drop below 1200, preferably below 1000 for a decent rally into which calls should be exited in a few days, perhaps sometime next week. CODI is still not giving a decisive buy or sell indication. DJI on balance volume is in corrective phase as the DJI SMI hits the oversold line. The DJI is still finding resistance at the 50 day moving average.

Momentum Cycles Cones:

Projection oscillator is hanging in the oversold zone in a bearish feel.The recent regression channel was intermittently broken out of today, but the center line was the dominant trend and prices closed back inside. One week expectations are still to see this projection oscillator move up to the 50% line.

Pivots:

OEX and DSP8U did not make it down to S1 today, implying some strength is coming back in.

Volatility:

Zone Timer is hanging in the extremely oversold zone, increasing the odds we have entered a bear market. That isn't to say we won't have a tradeable move up to the neutral zone just below the Z Timer center line. MVI is in a buy mode and it too is lingering near the BUY bands as the VIX stayed in the mid twenties another day. Generally we would expect Thursday to see the VIX close in the higher end of its range for the day, meaning price weakness in stocks. This being the beginning of positive seasonality may override this expected Thursday scenario.

RSI, SMI:

SPX RSI is making sure the lower band is the stopping point before heading up to the center band in the next few trading days. Markets need two legs to stand on. There tends to be a testing, call it price probing at support and resistance. The first hit is usually not the last so you don't have to take the first impact. Equity markets tend to oscillate, bounce around especially when there is pending news. Now that it has been decided that the President will make a video in mid August, the attention can get back to other factors driving the market. SPX SMI is nearing the center dotted blue retracement line. We could see a bounce any day now.

Stocks of Interest:

ASTN CMR

both suffering price weakness with the recent market decline.CMR.TO likely will be announcing cobalt production plans or contracts sometime before the fall-at which time it will be covered by institutions as a primary cobalt producer,and likely recommended by brokerage firms who feel base metal stocks are extremely undervalued.Rumblings to that effect have been recently coming out of Merrill Lynch.ASTN traders are awaiting placement of trading systems at exchanges or spinoffs of Gomez Advisors or other subsidiaries.

OEX Perspective:

CBOE Trins started the day in a bearish posture which deteriorated further after NY lunch. Intraday trend changes tend to occur during and after lunch. They may start as early as a half hour before T bonds stop trading as traders get a bead on where interest rates are going to close with respect to the previous day. If tomorrow were not Thursday it would be easy to get excited about a strong rally. The selling into rallies that has been going on all week is fighting against a rising tide of buyers chomping at the bit to get in before the next wave up. Another opportunity to get the August calls was presented to patient buyers who waited for lower support on the Cones. The discretionary advice is still the same to buy calls at Pivot support or Cone support. Here is what some of the calls looked like today, OEWHK, OEWHL, OEWHM. Some of the nearby puts looked like this, OEWTK, OEWTL, OEWTM. Note that with the VIX at mid twenties the calls and puts are all over the place. Limit orders are a necessity with strategically placed entry levels. Let the market come to you. In a volatile market as this chances are good that your price will be filled if it isn't too far out of the pit.

OEX Mechanical Trades:

There have been no changes in the OEX signal report. August 555 and 565 calls are held in the RSI, Momentum, and Volatility models. The OEX Trade Listing shows the recent summary of trades since January 1998.

MomentumCycles

MomentumCycles commentary for the open of Friday,July 31,1998:

Since before the July 17th top,we have had more down issues than up issues on the NYSE.The psychological wear and tear on investors and money managers of so many down days brings the option premium ratio {item 5 of psychological indicators in Investor's Business Daily,end of section A} to the area that usually precedes good oversold rallies.The last reading of the OPR was .41.Readings below .41 are rare,except near decline bottoms or bear markets.

At the interior top of the June-July rally, the OPR was well over 1.00.At the price top ,it was in the .70's, a major non-confirmation.

Put/call at the price top had a string of multiple days near the .40 to .45 area,revealing GREED.Since last Thursday, and most strongly Wednesday this week,put/call revealed increasing FEAR.Short term RSI which gave us the initial 90 point bounce earlier this week,had to get in sync with longer term RSI, which was still too high.That's why there was more basing in time{if not much in price}.Readings Wednesday did not confirm the new DJIA closing low,showing short term selling pressure waning.

5 days of over 1000 negative ticks, and the recent high negative closing tick almost guaranteed a rally within one or two days.

The recent near tag of the 200 day moving average of representative mutual funds{shown in IBD,section B 1st page} brought out buying by fund managers to support their favorite stocks.

Money flow low was due Tuesday,and apparently WAS Tuesday.

Keep a close eye on CODI position.This rally did not start deep in the buy zone, so a huge run like that from the October 97 low is less easy.We are already fairly near the sell alert line.CODI can stay in the sell zone for some time during strong uptrends,but is wonderfully accurate in picking tops and bottoms in trading zone markets.

Always be alert for a possible Tuesday low near the end of the month, near or under the 3.5% lower trading band,especially after 2 or 3 weeks of good selling,and a Friday-Tuesday selloff-basing pattern.

TREND:

The ADHL continues to improve with fewer new lows and improving advance decline breadth. It remains on its intermediate term buy. OEX reg projection oscillator turned up nicely and because of the time of month is expected to move higher yet. 572 looks to be in reach early next week if not on a Gonzo Friday.NHNL has continued is recovery indicating the worst is over short term. New lows today were 171 vs 275 on Wednesday vs 340 on Tuesday. Super T lived up to its name with a super rally on Thursday. Note that it has spike bottoms and when the index is in trend mode the Super T will spend more time at higher levels. We need to worry when we see Super T drop and the Index continuing to rise.If DJIA rises above Resistance 1 and 2, then the previous highs should be challenged. August calls are beginning to pay off. Don't forget that what comes out of thin air disappears into thin air.

OEX Swing Machine, courtesy of C Lee, indicates higher prices on Friday. Two possibilities are for a strike price range shift to the upside. The others are for mixed indecisive movement.

FIBONACCI ZONES:

Ratio oscillators are coming off of oversold in fine fashion and the indexes were contained by the weekly balance(redline) and the lower fib support. A rally base appears to be in. Seasonality should assist the indexes through the weekly balance lines and then the next resistance is at the upper weekly fib level. That would make for one heck of a Friday if we could be so lucky.

OEX SPX DJI S and P 500 futures XAU NDX TYX

ASTROCAST:

Astrocast is looking up into the end of the month.

BREADTH:

NYA breadth gave us that rally inducing relationship with advances greater than 1200 and declines less than 1000 on Thursday. CODI is now moving towards the sell alert line and in really strong markets it will drop below that line before giving another sell signal. Hopefully we will get a tag or penetration of that line next week. DJI OnBalanceVolume is improving, the SMI is turning at the oversold line, and the DJI closed above the 50 day average. Now it needs to get above the 21 day average in order to repair the technical damage. Keep in mind though the expectations are for nothing more than a cyclical market between the +3.5 and -3.5 bands at the most. Would be lucrative to be able to enter and exit calls and puts at these two bands for a few months. This might just happen in synchronism with expirations and payroll seasonality until we get into tax season in October where other factors dominate, such as tax loss selling.

Snapshot indicated healthy trading on Thursday. TICK was above zero, Trin was way below 1.0, VIX was dropping, PREM spent most of the time between Fair Value and Buy Programs, T-Bond yields -TYX dropped. Combining all this produces the kind of rally we experienced. Note that when the DJIA turned down at 9041 the PREM or difference between the snp futures and spx cash headed south big time. This seldom has any meaning into the next day. For those who don't know, the SPX cash index stops updating at 4:00PM+ and the S&P futures and OEX options continue to trade for another fifteen minutes. That is why the PREM will continue to change after 4PM, the cash is fixed, but the futures are changing.

MoCones:

Projection oscillator moved up to the 50% line and if the momentum continues it has plenty of time to get to overbought early next week where August calls should be exited. The OEX also closed above that short downtrending regression channel.Here is the cone chart.

MoPivots:

OEX and DSP8U closed in a strong posture with the probability of higher levels on Friday. Any day you get close to a hundred point move, some retracement should be expected so you don't want to rush in the next morning with a market order on the open for either options or futures. In this case you might expect an initial bounce to R1, a pullback to the Keyline and then further seasonal rally. This is just guesswork of course.

VOLATILITY:

OEX Zone Timer has risen to the edge of neutral and oversold. Best call entries were at the bottom of the chart as we all know now. The timer can continue to rise but risk increases for any new entries as there are quite a few nervous, trigger happy stock holders around. Hopefully the Zone Timer will reach the center line or higher giving the call holders a decent exit price. The MVIs have moved all the way to their centerlines which can be viewed as halfway to overbought. Again, ideally they will move to the opposite band in a strong seasonal money flow rally. Some traders might still want to get in on this but you just have to realize that options are best entered in a contrary fashion so premium is not pumped up. Once a trend is under way it just might be better to use the futures since they don't have any of the greek influence.

RSI,SMI:

SPX RSI held at the lower band and is turning up. The SPX SMI made a typical 38% retracement and if it turns up here then all that talk about bear mkts, is just bull dung. Don't get sucked into the classification game because it doesn't really matter as long as you are staying close to what the tape is telling you. It is best not to make too many assumptions about what is going on and it is best to turn a deaf ear to the tv tube or at least mute the volume and watch the ticker.Talking heads love stocks at tops and hate them at bottoms.

ASTN, CMR:

Base metals may well see some rally from oversold in the third quarter, as commercial hedgers have a large long position opposite the speculators.CMR should benefit.We estimate about 10 million in cash flow for CMR in 1999,based on estimated cobalt prices and continued demand for high % quality cobalt.

ASTN has good buying at 2 and selling above 3.One or more of their initiatives will,when announced,bring back buying interest into this issue.

OEX PERSPECTIVE:

CBOE Trins were super bullish right from the open and stayed that way the entire day. Look for this pattern near the end of each month as pension money hits the fund managers. Patient call buyers who averaged into the August calls at lower S levels on the MoPivots and Cones,as advised, are now beginning to see the rewards. The best entries are behind us now and discretionary traders should hold their positions. A momentum peak should be used to sell into. That could be on Friday or early next week. This is how the calls performed today,OEWHK, OEWHL, OEWHM. Puts looked like this, OEWTK, OEWTL, OEWTM. VIX has begun dropping from a high of 26 on Wednesday to 22.49 on Thursday. Ideally the rally won't end until VIX is in the mid to high teens. That would be the ideal place to exit the calls.

OEX MECHANICAL TRADES:

There has been a change in the OEX Signal Report and the Trade Listing. This needs some explanation so that it does not mislead anyone. The change in the mechanical RSI model is to exit the August 565 call on Friday 7/31. This might be puzzling to some{ if not most} readers that have followed this. If you recall it has been stated here that the mechanical trades are premature by a day or two for several reasons. One is that the signals are generated on the end of day data and are priced by the model with a theoretical price near that of the close. In reality the entry/exit would have to be the next day and it is often at a better price. The OEWHM was entered by the model on 7/21 at 13. On 7/22 the OEWHM shot up to 20 where with a 7$ one day profit,traders should have taken some{if not most} profits. The discretionary trading section above was advising entries on 7/23,7/24 and early this week as noted on the OEWHM chart. Now then, there is another feature of the mechanical models, and that is they have a maximum holding period once they are entered. This holding period can be changed but it defaults to 7 days for the RSI model, thus it is calling for an exit tomorrow, but as far as the Trade Listing goes it will be priced at Thursdays close. The mechanical models are being run with factory defaults and are used as a reality check against the discretionary trading above.

MomentumCycles commentary for the open of Monday,August 3,1998:

Traders who bought the lows last week from the cone and pivot charts were stopped out on 7/30 and 7/31.Please read the next to last paragraph on the page regarding oft repeated stop loss and profit stop strategies.If there is a continuation selloff,especially with Europe leading, into early next week{another Tuesday low, perhaps?},an oversold rally may well appear from lower support levels, as discussed below.It was earlier remarked last week that Investment Advisors held a remarkably sanguine opinion about market risk, and that risk as a result,intermediate term, was higher than normal for longs. We were searching last week for an oversold {and quite possibly countertrend} bounce.As of Friday,we do have one of the highest oversold negative total accumulative tick readings in recent market history.

With numerous cycle analysts and technicians making analogies with previous precrash formations, it is of interest to compare the SuperTimer for the summer of 1987 with that of 1998. Looking over a period of a few years with the eyeball technique, corrections appear to be confined to Super Timer levels between -150 and zero. Crash modes, defined as 1000 point drops in the DJIA occur below -175. As of Friday the Super Timer is about -100. The dynamic support/resistance lines(yellow,green,red) do look similar for '98 and '87. There are some similarities and some differences. The first thing of note is the Super Timer for 1998 is still in the corrective region and has been making higher lows since late April. On Friday it did drop back to that yellow uptrending support line while the DJIA has been finding support on the green S/R line near 8821. Back in '87 the index just sliced through the green support line and the Super T headed down to crash mode levels. So, I guess you could say there are some similarities in the major price peaks as presented in Barron's this weekend, but that is such a small part of the story, and so far the recent action is corrective and not of crash mode variety.

TREND:

The ADHL is holding onto its intermediate term buy mode. OEX is hanging onto the January '95 regression channel line. Red channel July '96 support is just below at 545. The projection oscillator dipped back to test the 50% line from above. Still a 50/50 toss up for rally next week. NHNL is making another stab at the Panic Oversold level where decent rallies have begun. SuperTimer is geared up for another rally attempt as 8820 has held for over a week and the SuperT is back to the bounce level.

FIBONACCI ZONES:

Weakness on Friday drove the indexes back down to weekly support. Ratio oscillators are getting firmly oversold. The outer fib range is narrower than last week meaning the daily ranges may be narrower also. Most indexes start between the weekly balance with weekly support just a few points below Friday's close. These weekly fib supports might just be decent entry points for a move up to the weekly fib resistance bands midweek.

OEX SPX NDX DJIA XAU TYX S and P 500 futures

ASTROCAST:

TBA for August.

BREADTH:

NYA breadth gave us that downtrend inducing relationship with declines greater than 1200 and advances less than 1000 on Friday. CODI pivoted at the sell line finally driving the OEX down to slightly below the 548 support line. Has taken quite awhile to get there, but it has finally happened. Since 548 provided support for quite a while, we should get a tradeable bounce from here. Alternatively, the OEX will drop back down into the previous trading range. DJI is cycling between the -3.5% band and 50 day average+,- alluded to some days back when it was pointed out that the 50 day was tracking sideways. The DJI SMI dipped a bit below its oversold line postponing the green buy arrow indication. The McOsc issue and volume are at a higher low as the index is at a lower low for the past week. This sets up a technical Buy divergence as "breadth momentum precedes price". Also the 10% component of the McOsc issues (not shown) has generated a trendline buy signal for call options and long futures(as always stops need to be in place for speculative trades).

MoCones:

Projection oscillator was turned back down at the 50% line. We always have to expect this line to provide some resistance on the way up and support on the way down. A one day reaction should always be anticipated. Usual positive seasonality may take this oscillator above zero next week. The price range cones have widened again as VIX has moved back up to the mid twenties.

Here is the cone chart.

MoPivots:

OEX dropped down to S2 on Friday and starts Monday in a weak posture below the Keyline and hourly trendline(cyan). The DSP8U is similar looking. Keylines have stepped downward.

VOLATILITY:

OEX Zone Timer dipped back into the extremely oversold zone. Earlier posts have cautioned about the Z Timer remaining in the lower half the chart and cycling between oversold and neutral. Such a signature is an indication that a bear trend has set in. MVIs made a typical midband reaction accentuated by end of month liquidation. The upper MVI is again near the fixed Buy band. A downward MVI pivot here would signal another Buy, or call entry that might be good for a few days. Best call entries are in the extremely oversold zone of the Z Timer and the MVI at the Buy bands so the set up is in place. We just have to wait for them to show their hand. The high VIX reading implies wide ranging prices short term. A declining VIX implies fear is reduced and accompanies rising prices.

RSI, SMI:

SPX RSI is still working the lower band. The longer it stays there, the more powerful its move up. Once the Monday morning weakness is out of the way, a move up towards the center band is expected. This is of course barring a meltdown inwhich case emotion overrules any logic based on the indicators herein. The SPX SMI is very close to the center line where bounces occur.

ASTN, CMR:

ASTN's president recently made a trip to China.As part of their long range plan, ASTN intends to place trading systems in major exchanges world wide.We would guess that this trip might have something to do with this plan,since China has some of the fastest growing exhanges.Along with other NASDAQ stocks without large institutional sponsership,ASTN is suffering with the present market.Short term traders sold at 3 5/8, long term holders are holding from various prices under 3 ,from 2 to 2 15/16.

CMR will come alive once the long awaited cobalt contracts are announced.

OEX PERSPECTIVE:

CBOE Trins were mixed in the AM and turned bearish the remainder of the day with a panic blowoff into the close as the new CNBC bear comes on a half hour before the close. Reason would expect some downside follow through Monday morning. This is how the calls performed on Friday, OEWHJ, OEWHK, OEWHL, OEWHM. Puts looked like this, OEWTJ, OEWTK, OEWTL, OEWTM. VIX rebounded to 26.89 increasing the volatility component of both puts and calls, but giving the trend edge to puts. A reminder on the seasonality call recommendations starting back on 7/23 was to buy at lower OEX pivot S levels using the often repeated $1.5 initial stop and trailing any advances with the stop to make sure profits don't slip away. Using this sequence entries would have been on 7/24,27. Exit on 7/28. Re-entry on 7/28,29, exit on 7/30,31.

OEX MECHANICAL TRADES:

There has been another change in the OEX Signal Report. The RSI model has picked up the OEWHJ August 550 call at 13 5/8. Here is the OEX trade listing.

Note that the dates on the above 2 charts are incorrect, but the data is current.

MomentumCycles commentary for the open of Tuesday,August 4,1998:

Normal monthly money flow cycles would have the 10th or 11th of August as a short term high,the 21-24 of August as a low,and a good rally into September 10.

For the 10-11th period of August to be a high, a rally should start soon.We are certainly oversold enough.Again Monday, an over 1000 negative intraday tick was recorded{-1267}, with,however,not an over negative 400 closing tick{high -380's}.DJIA closed at a number near previously seen support during the year,but last hour action,with continuation from Europe Tuesday,could see more downside follow through.CBOE equity put/call again at basing numbers.5 day rate of change, however, not at the -5% seen before the quick rallies to the 21 day moving average from the lower 3.5% trading band,but instead, at -3%.Liquidation is occuring in many unrelated and often uncorrelated areas, perhaps in a global effort to get into cash.CRB selling down into ever stronger commercial hedger hands, approaching the 12 year low,and presently at 204.69.XAU ,despite OBV downside nonconfirmations, broke through the narrowing trading range to the downside on low volume,presently 61.65.Bonds up as a safe haven.Information on stops for OEX positions at the bottom paragraph.

TREND:

The ADHL is holding onto its intermediate term buy mode. OEX is sandwiched between two long term regression channels. This compression is bound to cause some dynamic action on Tuesday.NHNL deteriorated further as new lows increased to a shocking 359 with new highs at 24. On the optimistic front the SuperTimer is geared up for another rally attempt as it bounced off the uptrending yellow support line. The Super TC is a cousin of the Super T and is sort of like the Summation Index is to the McClellan Oscillator. When the Super TC is trending down you want to be on the short side, but when the Super Timer is down in the corrective zone you have to be prepared for a reversal, maybe only a short term reversal.

FIBONACCI ZONES:

Further Monday weakness put indexes firmly in the lower weekly support zone. Daily and weekly Triple Switch lines are in the down mode. Normally a bounce would be expected from this level with the Ratio oscillators so oversold. Breadth just has to improve before these indexes are going to have a sustained rise.

OEX SPX NDX S and P 500 futures XAU TYX DJIA

ASTROCAST:

TBA for August.

BREADTH:

NYA found support near 550 as breadth was quite negative.CODI is still on a sell trend. The DJI SMI moved below the oversold line postponing a price reversal. The McOsc issue and volume oscillators are forming a complex bottom in preparation for a reversal. Also the 10% component of the McOsc issues aborted the recent trendline buy from last week, but is set up again for another buy as soon as tomorrow. What it needs is some improvement in NYA breadth. Snapshot shows just how bearish things were today with TICK below zero much of the day. TRIN was misleading with its action below 1.0. There were numerous sell programs prevalent, so the big guns are still trying to tank the market. Sell programs do have to be unwound at some point.

MoCones:

Projection oscillator backed off from the 50% line for a second day. Bearish action would be indicated by this oscillator tracking between 50% and the oversold level.

Here is the cone chart.

MoPivots:

Looks like the MoPivots are set up for an explosive breakout on Tuesday. The R3 and S3 range is very narrow on both the OEX and DSP8U.

VOLATILITY:

OEX Zone Timer is leaving bear tracks in the lower zone making call buyers look foolish and put holders intelligent. The upper MVI is again near the fixed Buy band. This MVI made a sideways pivot that might be the first signs of another buy signal. Best call entries are in the extremely oversold zone of the Z Timer and the MVI at the Buy bands so the set up is in place. We just have to wait for them to make zone and band crossings.

RSI, SMI:

SPX RSI is still working the lower band and has generated multiple buy signals. The SPX SMI is very close to the center line where bounces occur.

ASTN, CMR:

ASTN showing good one day relative strength by closing at 3,perhaps by buyers hoping for news about overseas trading system placements.

CMR awaiting mid year cobalt contract news.

OEX PERSPECTIVE:

CBOE Trins reflected another mixed trend day as the bulls and bears slug it out. This is how the calls performed on Monday, OEWHJ, OEWHK, OEWHL, OEWHM. Puts looked like this, OEWTJ, OEWTK, OEWTL, OEWTM. VIX climbed the wall of fear again back to 27 ,pumping up premiums,and making puts show wide swings in prices.

OEX MECHANICAL TRADES:

The OEX Signal Report reflects the seven day default exit by the sell of the August 555 calls at a loss on the volatility band model. If it takes too much time to pay off and the index gets too far away from the strike price the model will exit the position. It could re-enter again but it would be at a strike that is in the money. This is also reflected on the OEX Trade Listing. The RSI and Momentum models are still holding positions, but the momentum model only has one more day and it will default exit also. Note that the recent losses have been due to premature entries. Time decay will pick up in the coming days so the models do not want to play on the steepening part of the decay curve.

Items of interest:

Fourier analysis is questionable since history does not repeat exactly, especially in the market. So this chart is presented with the qualification that this projection changes with each day of new data. Currently it is saying a low is developing and a rally is forecast immediately ahead.

MomentumCycles commentary for the open of Thursday,August 6,1998:

Tonight we will look at one indicator that functions well in both bull market corrections and rallies in bear trends.This indicator is cumulative breadth.

Last Thursday,many futures traders in the pits were discussed as being convinced to buy the dip and hold the Thursday rally's long position because one day breadth had turned 2 to 1 positive.Indeed, it was a tradeable rally as a day trade, and if traders had used a trendline or parabolic stop on long positions from the Wednesday lows, they would have done fine as a short term countertrend play.But the market abruptly reversed Friday,setting up for what we guessed would evolve into a Friday-Tuesday low and short term reversal pattern.

Among other things,the 5 day rate of change Tuesday reached -6%{now its -5%},and the option premium ratio reached.28,a multiyear low.

Those who trade with a longer time frame than intraday wonder how one can determine when the trend has turned to up again despite intraday whipsaws and retests.One of the quickest way to determine trend reversals when the lower 3.5% band is penetrated{now similar to October 1997}is to wait until 3 day {or even better 5 day}smoothed cumulative breadth turns positive.This may entail waiting a bit,even after the rally starts and the retest occurs.But once these slower measures of trend turn up, the rally is likely to have good legs.

As of now, with Wednesday still 1250 up and 1820 down, 3 day breadth is still falling.We'll keep an eye on this indicator for those who have less of a "gunslinger" nature.

Don't forget we use a 1.50 stop on positions as a stop loss, and a 1.50 parabolic or trendline stop to protect profits.

Trend:

The ADHL remains on its intermediate term buy mode, simply amazing. OEX found support on the 4/97 center regression channel line and the projection oscillator turned up. We should expect some basing on this channel line as confidence is rebuilt and the back offices catch up. Here is the most shocking statistic today, new lows hit 578 and new highs 11. This is an historical record. These are the kind of numbers you find at the bottom of bear markets. Super Timer closed above that yellow trendline giving indication a trading low may be in place. The Super TC is a cousin of the Super Timer and is sort of like the Summation Index is to the McClellan Oscillator. When the Super TC is trending down, as it still is, you want to be careful, but when the Super Timer is down in the corrective zone you have to be prepared for a reversal. The Super T is headed back up at least for one day. Unless another big selling wave hits, it looks like the crash mode has been averted for the time being. Shrewd institutional traders should let some buoyancy return before pulling the plug again with more stock distribution. The upper side of a trading channel would be the strategic place for this.

Fibonacci Zones:

Monthly fib support should hold, it better hold. Ratio oscillators are in position for a decent late summer rally. Best thing would be for some sideways consolidation before rushing back up. That would let the sell mentality rethink its course. Best to think cycles rather than trends at this point though.

OEX NDX SPX XAU S and P 500 futures DJIA TYX

Astrocast:

Astrocast is not available yet for August.Money flow cycles, which use a different methodology comparing historical monthly,weekly and yearly NASDAQ prices and dates,have {believe it or not!,August 10-11 as a high{may invert?},August21 -24 as a low,September 10-11 as a high}.

Breadth:

NYA breadth improved a bit today but is still negative. This helps the McOscs put in their complex bottom. The 10% McOsc has not yet given the futures and call option buyers the all clear signal. Snapshot shows fewer sell programs than previous days. Might just be that the officials of this game feel some speculative upside pressure has been released and excesses in either direction risk loss of control. The last thing anyone wants is a melt down. So the vote here is for some consolidation, maybe even a slow drift back up to the Zero line on the McOsc. Codi is indicating this possibility by generating a buy pivot on Wednesday.

Momentum Cycles Cones:

The regression channel on this chart is containing prices nicely in a downtrend. Projection oscillator is tracking sideways in bearish action, maybe that was just a retest of the low side and we can now try for the centerline and above again. Average volatility for Wednesday was about the same for Tuesday so the cones apertures remain wide providing large price swings between support and resistance.

Pivots:

OEX and DSP8U closed above their keylines for Thursday after forming a rather significant double bottom intraday. It looks like there is rally potential here.

Volatility:

OEX Zone Timer came back inside the playing field but still remains in the bear trend zone. Bullish action would be evidenced by zone migration up towards the neutral line. MVI made a buy pivot on Wednesday. The MVI is often a day early so maybe Thursday will have inverted action and instead of closing down will close up.

RSI, SMI:

SPX RSI closed inside the bands which are getting wider apart providing room for gonzo type moves. We are looking for a successful test of the bands from inside and then a rally towards the center line. This becoming a a safer time to try the call side as margin calls are satisfied and selling abates.

Stocks of Interest:

ASTN and CMR both showing the general weakness of secondary and tertiary issues.ASTN is awaiting the placement of trading systems domestically and internationally.ASTN's treasury has plenty of cash to fund company expansion through purchases and has plans for spinoffs of divisions, notably Gomez advisors.ASTN's president was the former CEO of INSTANET and did a good job of increasing the long term share price of that company.Short term traders sold at 3 5/8 at the top of the second failed rally.Long term holders have small positions from 2 to 2 15/16.

CMR long term holders are awaiting news of incipient cobalt production and contracts.At 1.00 or under,CMR is a long term value play on the scarcity of high quality cobalt.this metal,unlike many others,is in the position of silver a while back when Warren Buffet was buying at prices near 4$.He sold some near 7$.CMR is long term call on cobalt with an exploration kicker.This one will take some patience, but a rally to 1.60 or 2.00 is not out of the question once production kicks in.

OEX Perspective:

This selloff has presented put buyers with a good lesson in volatility. With the VIX rising to 34.67 today there have been ten point swings in option premiums that have left panic put buyers with immediate double digit losses as VIX closed near its low for the day. That activity is akin to buying fire insurance when the house is burning down. Some of the calls look like this, OEWHF, OEWHG,, OEWHH, OEWHJ, OEWHK. Some puts behaved this way, OEWTF, OEWTJ, OEWTK, OEWTL, OEWTM.

OEX Mechanical Trades:

Momentum model re-entered the fray with a Sept 530 call, OEWHF. All models now have positions, except the Sell Premium model which has been disabled because of the excessive margin requirements. One of the filters in these models is not to buy puts when the OEX is trending above the 200 day average. It also has a volatility cutoff that has not been triggered yet.

Here is the OEX trade listing.Here is the OEX signal report.

MomentumCycles commentary for the open of Friday,August 7,1998:

Don't forget the trailing 1.50 stop on initiated long positions,or alternately.a protective 1.50 stop loss from the initial price of the position.

The last 3 readings of the option premium ratio were .37,.29,.42.This kind of reversal pattern at low values is relatively rare,with the .29 reading usually seen only once every 3-5 years or so.In intact bull markets,within a correction,this reversal pattern normally leads to a good rally.In bear markets,however, sustained low OPR readings are normal,especially sustained readings in the .40's.

For more conservative traders, or nervous intermediate traders looking for a confirmation the decline is over,and a new sustainable rally is most likely confirmed, 3 day cumulative breadth is presently not yet rising.3 or 5 day smoothed cumulative breadth rising once the lower 3.5% band is penetrated to the downside{a relatively rare event},is a good longer term indicator the rally will have legs.

If you look at page A25 of Thursday's Investors Business Daily,you will notice the similarity of the chart pattern of the S and P 500 to January 9-10 1998.Advisory bullish sentiment,however, still is high for a major bottom.In the January low, successful higher retests occurred 4 and 10 trading days after the print low.

Trend:

The ADHL remains on its intermediate term buy mode. OEX found support and rallied off the center regression channel line and the projection oscillator turned up. Super Timer closed above the zero line giving indication a trading low may be in place. A close above the zero line also turns the Super TC upward in buy mode. NHNL has moved back up to the level where panic occurred on the way down. New lows were significantly better with 304 vs 578 on Wednesday. That would seem to mark some sort of trading low.

Fibonacci Zones:

Monthly fib support held today. Ratio oscillators are in position for a decent late summer rally.

OEX NDX SPX XAU TYX S and P 500 futures DJI

Astrocast:

AstroCast is not too encouraging for August.

Using money flow cycles,we also get date "hits" on August 10-11, and August 21-24.Since both astrocast and money flow cycles have significant short term trend changes on or about the same "hit" dates,we should watch carefully the action preceding the dates to see if they are highs or lows, or will invert, as astrocast is suggesting.

Cycles sometimes invert the "hit" dates,so what has been a short term high historically becomes a low or vice versa.

Breadth:

NYA breadth improved a lot today. This helps the McOscs in building a firmer bottom marking the low for this move. The 10% McOsc has given the futures and call option buyers a buy signal. Perhaps Friday will make it more evident if we get continued improvement in breadth. Snapshot shows very positive TICK action. Codi is testing the Buy Alert line just to make sure. DJI OnbalanceVolume broke a downtrendline as the DJIA is holding above the 200 day average.

Momentum Cycles Cones:

Decent positive action on Friday will take the OEX above the regression channel and place the projection oscillator above the 50% line. This should bring in more trendfollowing buyers. You can be guaranteed there are buy stops sitting outside this channel that will boost it higher, just as there were sell stops just inside confining the candlestick to the inside of the channel. Volatility is still running in the high twenties, 28.32 on the close. This keeps the cones wide open for wide ranges in price.

Pivots:

OEX and DSP8U closed above their keylines and above their hourly trendlines for Friday after gradually creeping up all day. The keylines also stepped upward hinting at a change in daily trend to upward. It looks like there is rally potential here, especially with the narrow range between the keyline and R3. A sharp run up through the R1,R2,R3 would cause some excitement.

Volatility:

OEX Zone Timer closed right on the Oversold and Extremely Oversold line. The upward direction and zone crossing is encouraging for call holders. Bullish action would be evidenced by zone migration up towards the neutral line. MVI is still in a buy trend. It did move back to that center white line that sometimes provides a change in trend for the index.

RSI, SMI:

SPX RSI closed inside the bands which is a constructive move for Friday. SMI, is configured with longer term parameters,and is close to turning up.

Stocks of Interest:

ASTN rose to 3 1/8 on twice normal volume.Maybe some news about to break?CMR basing about .82-.85 awaiting cobalt contract news.Some big major will want that cobalt this fall.

Assured high % quality supply in a politically stable country,a rare thing for cobalt these days.

OEX Perspective:

The CBOE Trins locked into a bullish spread that continued into the close after some early morning whipsaws. Near the money calls looked like this, OEWHF, OEWHG, OEWHH, OEWHK. Puts behaved this way, OEWTF, OEWTG, OEWTH, OEWTJ.

OEX Mechanical Trades:

There were no additional changes for the mechanical models for Friday. OEX Trade Listing,OEX Signal Report.

MomentumCycles commentary for the open of Monday, August 10, 1998:

It is not a coincidence that domestic weakness,both political and financial,is accompanied by a sudden increase in international terrorism and more resistance from Saddam and the Iraqis.Markets sense political weakness as efficiently as Congressmen,terrorists, and 3rd world dictators.On August 17,President Clinton will try to explain an apparently unexplainable contradiction.On August 18,the Fed meets,although the financial and political picture no longer resembles July 17,which was the height of exuberance.

If one measures the top of political/market confidence with just the put/call ratio,from about June 20 to July 21,most IBD put/call readings were in the mid.40's,with a tag of the "guaranteed correction level" July 13-15.

Fear began to increase with Greenspan's "the party is winding down" speech,the probability of physical evidence to support Monica's new version of events,and more undramatic political/financial moves from the Japanese elite.

The put/call ratio in IBD hit .70 on Tuesday last week,the day of closing price low/greatest fear.A .80 reading would have given higher oversold readings,similar to June 12 and April 6,which led to multi-week, multi-hundred point rallies.

The shape of the August 3-7 put/call ratio is different than the 2 previously cited examples.It reveals a quick lessening of fear,unlike the June 12 and April 6 experiences.Fear rose to a second peak about April 12,with a reading close to .65 as the market continued to RISE,showing skepticism.Fear rose to a second peak June 19 as the market continued to RISE strongly,with a reading of .73,showing healthy negativity.

We do not presently have the second peak in fear,as Friday's reading shows belief in the present rally with a reading of .46.Put/call readings have been dropping since last Tuesday{remember the Friday/Tuesday cycle !}.Perhaps this suggests a retest of the lows will occur,or hopefully higher lows with a healthy dose of increasing fear.

Money flow cycles would normally call for a short term top between Friday,August 7 and as late as Wednesday,August 12,with key dates August 10-11.

Two days of high intraday plus ticks Wednesday and Thursday,and later Friday's near +400 closing tick{+357},with the lack of a second peak in fear {IBD put/call}made us suggest a trailing 1.50 profit stop on OEX long call positions taken near the recent lows,or from Wednesday or Thursday,as the lead sentence on Thursday's p.m./Friday's 7.30 a.m. commentary.After a tag of the 8745 level,near a high plus{over 850} tick,Friday weakness set in.

Numerous "price hits "occur near 8800,making this a key level.

Money flow cycles would normally see a short term low about August 21-24,with a short term high September 10-11.Astrocast ,however,shows a high {inversion} near August 21.We will watch action surrounding these key "hit" dates to see if other indicators show a low or high may be in place.Cycles do invert,but often the key dates surround important short term highs or lows.These hit dates can offer confirmation to other indicators.

3 day breadth very marginally rising,5 day still dropping.

Trend:

The ADHL remains on its intermediate term buy mode. OEX will most likely test the Cyan regression channel line sometime next week. Super Timer closed above the zero line giving indication a trading low may be in place. We need to see higher lows on the Super T on any further weakness in the DJIA, perhaps on a retest of the 200 day average. If that fails then 8200 is the next cumulative volume support level. Did you notice how closely R1 held on the DJI's rally today, within a few points of a perfect tag? A Super T close above the zero line also turns the Super TC upward in buy mode. NHNL continues to improve and needs to continue to improve next week. New lows were significantly better with 134 vs 578 on Wednesday.

From another service we have this quote about RSI breakouts in optionable stocks, "The BBR's short-term market-timing indicator, the "alternative indicator", followed Thursday's very bullish +235 reading (and automatic buy signal) with another very bullish +250 reading on Friday. These are 2 of the largest positive readings ever for the BBR. Friday's reading is a positive divergence, since the SPX was down on Friday. The BBR stays on its buy signal generated Thursday. As of Friday's close, the SPX is 0.18 points lower than Thursday's close. The BBR has an excellent track record, but no market-timing indicator is perfect. So if you are making trades based upon this market-timing indicator, you must set stops that are appropriate for your trading strategy."

Fibonacci Zones:

Ratio oscillators are oversold and attempting to turn up. Lower weekly fib zones for next week are below this week's low zones and the high to low spread is greater than this weeks. Next week may be even more exciting. Most indexes are still below their daily and weekly triple switch trendlines. Bearish action would be indicated by more selling when the indexes rally to the down trending daily TSW as they did today. Pre Expiration weeks tend to be "downers" as stocks and options are positioned for minimum liability by the influential participants. Here is the S and P 500 futures chart.

SPX NDX OEX XAU DJIA TYX

Astrocast:

AstroCast has a bearish feel for August.

Breadth:

NYA breadth improved again for the second day. This helps the McOsc in building a firmer bottom marking the low for this move. The 10% McOsc has given the futures and call option buyers a buy signal. Snapshot shows the inverse symmetry between TICK and TRIN. TRIN trended above 1.0 in the afternoon indicating more selling after the morning rally. There are those who still want out of this game. DJIA On Balance Volume broke a down trend line as the DJIA is holding above the 200 day average and is sandwiched between the -5% and -3.5% bands. The DJI SMI is trying to turn up. A bear trend would keep it at this level in a sideways trend. CODI is fluctuating near the Buy Alert band as the OEX appears to be resuming its cycle mode within the old horizontal channel.

Momentum Cycles Cones:

OEX closed right on the upper side of the down channel and right on the longer term horizontal regression channel centerline. Volatility continues to decrease so the cone apertures are narrowing. Here are Friday's and Monday's cone charts.

Pivots:

OEX and DSP8U closed in a very neutral looking posture for Monday. No bias indicated.

Volatility:

MVI is still in a buy trend.

OEX Zone Timer had a zone migration from Extremely Oversold to Oversold. Best long call option and futures entries occur when the Zone Timer is in Zone 1, Extremely Oversold.

RSI, SMI: SPX RSI closed inside the bands, which is constructive for next week. SMI is configured with longer term parameters, so its turn up is delayed from the RSI.

Stocks of Interest:

ASTNholding up fairly well at 3 1/32,awaiting news. CMRattempting to solidify a bottom,awaiting a cobalt contract.

OEX Perspective:

The CBOE Trins cycled from bullish to bearish to mixed. End of positive seasonality officially ended after lunch today, i.e. 5th trading day of the month. Payroll money was absorbed by massive selling earlier in the week. Near the money August calls looked like this, OEWHF, OEWHG, OEWHH, OEWHK. September 525 and 530 calls looked like this: OEWIE, OEWIF. August puts behaved this way, OEWTF, OEWTG.

A bit of day trading philosophy is to take advantage of quick gains especially when a 40 to 50% gain is handed to you in hours. If you need encouragment or specific advice when you are beginning to see a rally fizzle, then check to see if the OEX or the DJIA, or SPX or front month futures contract is stalling at one of the pivot levels or cones for the OEX. That is what half the rest of the world is looking at in addition to intraday breadth numbers. Some daytraders use extreme TICK readings to enter and exit positions, i.e. enter calls at -600 or lower tick and exit at 400 or higher tick. Friday was a perfect example of 600 to 1069 high tick for an exit if you bought the calls earlier.

OEX Mechanical Trades:

There were no additional changes for the mechanical models for Friday. OEX Trade Listing, OEX Signal Report.

MomentumCycles Commentary for the open of Tuesday, August 11, 1998:

Many of the indicators we use {see below} are getting oversold again,however, equity put /call on CBOE was near to,although not quite at basing levels Monday.Again,as we discussed Thursday and Friday,a rally with substantial multi-week, multi-hundred point legs can most easily occur when point rises occur on a secondary peak of fear,shown by multiple consecutive basing level days of equity put/call.Friday's readings were nearer short term topping levels rather than basing levels,accompanied with 2 intraday high plus ticks,showing short term exuberance

.Monday's tick readings were as low as -852,which is constructive,but no -1000 multiple low ticks indicated extremes such as seen last Tuesday .

A welcome addition for the bulls Tuesday and days following would also be strength in pre-opening trading seen in Germany,France and especially London, which has been leading our market.Global markets were quite weak Monday.Otherwise,without near term global support its likely more downside is immediately ahead.

A strong close above DJIA 8800 on good breadth and volume would likely change the short term picture quite a bit.Looking back over the past year,multiple price"hits"occur at 8800,both as support and resistance,so this number has clustered buy and sell decisions around it on the specialist books.

Possible failure last Friday near the previous breakdown point slightly below 8800 made us counsel a discretionary 1.50 trailing profit stop for OEX long call positions taken Tuesday and Wednesday near the pivot zone lows,and that discretionary advice was posted on the Thursday p.m./Friday pre-opening commentary as the opening paragraph.Short term exits were possible Friday above 8700, and also near the secondary +850 tick Friday at 8745.

Trend:

The ADHL remains on its intermediate term buy mode. OEX is working between two regression channel lines with the projection oscillator not quite overbought yet. Super Timer closed back inside the consolidation zone putting the Super TC in a horizontal trend implying a horizontal price trend. We need to see higher lows on the Super T on any further weakness in the DJIA, perhaps on a retest of the 200 day average at 8483.33. If that fails then 8202.92 is the next cumulative volume support level. NHNL ticked down from a change in trend line. All in all, Monday's performance showed little follow through from last weeks volatility. We may just have an inversion on our hands with the pre-expiration week ending up rather than down as expiration posturing occurs.

Fibonacci Zones:

Ratio oscillators are oversold and attempting to turn up. Indexes closed near the weekly balance line(red dashes).

DJI NDX OEX SPX TYX XAU S and P 500 futures

Bear modes are indicated by the Ratio oscillators staying near the 25% line and rallies in the indexes which fail at the weekly balance and Triple Switch Daily lines. Also note that the equity indexes are below both the weekly and daily TSW lines. The weekly TSW is the white stair step and the daily is the stair step that alternates between green and red in down trends and up trends respectively.

Astrocast:

Astrocast has a bearish feel for August.

Breadth:

NYA breadth deteriorated a bit keeping the McOsc in oversold territory. The 10% McOsc is still on a buy from last week. The DJIA is holding above the 200 day average and remains sandwiched between the -5% and -3.5% bands. The DJI SMI is trying to turn up. A bear trend would keep it at this level in a sideways trend. CODI is fluctuating near the Buy Alert band as the OEX appears to be resuming its cycle mode within the old horizontal channel.

Although CODI is hanging near the Buy Alert band, it should be cautioned that in previous severe corrections, CODI has risen even much higher. The best buys have occurred in the region above the Buy Alert Zone.

Momentum Cycles Cones:

OEX closed right on the upper side of the down channel after finding resistance at the keyline. Volatility increased a tad opening the cones a bit for a bigger move on Tuesday. Projection oscillator has not reached overbought yet. Here are Monday's and Tuesday's's cone charts.

Pivots:

OEX and DSP8U closed in a neutral to weak posture for Tuesday, evidenced by closes below the keyline and the hourly trendline.

Volatility:

OEX Zone Timer closed in the oversold zone. The upward direction and zone crossing is encouraging for call holders. Bullish action would be evidenced by continued zone migration up towards the neutral line and above. MVI is in neutral and tested the center band from below.

RSI, SMI:

SPX RSI continues to hold up this week. SMI, is configured with longer term parameters,and is close to turning up.

Stocks of Interest:

ASTNreaching for the secondary top at 3 5/8.Recent support was found under 3 at 2 3/4.Trading system placements or a spinoff of divisions may well be rumoured or in the works,accounting for recent relative strength versus other secondaries and techs. CMRworking the recent bottom awaiting cobalt production news.

OEX Perspective: (this section lists discretionary trades based on the above analysis) No discretionary trades are currently recommended. CBOE Trins were mixed reflecting a zigzag trend in the OEX. Near the money August calls looked like this: OEWHF, OEWHG, OEWHK. September calls looked like this: OEWIE, OEWIF. August puts behaved this way: OEWTF, OEWTG, OEWTH.

OEX Mechanical Trades: (disclaimer - this section lists trades from an off the shelf commercial package and is purely technical. It is used as a "reality check" on the discretionary trades above. The trades listed here are purely speculative and lack a sentiment perspective. They may or may not be successful. History has shown that these models may be premature in their entries.) There were no additional changes from the mechanical models for Friday. OEX Trade Listing, OEX Signal Report.

MomentumCycles commentary for the open of Wednesday,August 12,1998:

Finally,a true basing day on equity put/call,with a -1641 tick.Closing tick,at 490,however,was higher than we like.

Best is a string of basing equity put/call days,during a rising market encountering disbelief.One day at these levels can bring a bounce,and the Friday close/Tuesday close NASDAQ weakness supports such a bounce with only a 20% chance historically of continued uninterrupted down days into the weekend.Of course,this may be one of those times statistics and probabilities fail!

Intermediate term fund traders are presently {and have been mostly} in money market during this entire decline,using our global equity/money market switching strategy,with a total loss since July 17{THE top} of about 2.3%,based on TIAA-CREF global equity prices,which fairly represents most global equity fund performance.

Liquidation is occuring globally in the CRB,making new 52 week lows into very strong long term hands{the 12 year low is 198},and the XAU,making a new 52 week low,tagging the 86-87 low,and especially in secondary and tertiary markets such as Russia and Turkey,which get the swine flu when we get a cold.

The global refuge is the dollar and bonds,so weak bonds pre-opening reveal a lessening of global fear,and strong bonds an increase in global fear.Similarly, pre-opening European trading tends to lead our market,so a strong Europe may signal a rally start here.

Trend:

The ADHL remains on its intermediate term buy mode. OEX reg returned to the Cyan 4/97 channel line as it created a double bottom looking pattern. Super Timer closed back inside the consolidation zone and near the uptrending yellow line. So far we have a positive development here with a higher low on the Super Timer and a lower intraday low on the DJIA. NHNL dropped back deeper into the corrective zone and it too closed at a higher level than last week. This is the stuff that bottoms are made of.

Fibonacci Zones:

Indexes tested the weekly fib support zones as the Ratio oscillators remain oversold. Volatility is so high that it is entirely possible the upper weekly fib resistance level could be tested this week.

DJIA OEX NDX XAU TYX SPX S and P 500 futures

Astrocast:

AstroCast has an upward bias into expiration.

The 5th trading day{last Friday} did turn out to be the short term high of money flow from pension fund reinvestment,only temporarily able to turn back the down trend.Next important money flow period is August 21-24,which is likely to be a significant low or high period.

Money flow cycles may be inverting this month,as projected on Astrocast.

Breadth:

NYA breadth was of the magnitudes to aid in the fomation of a complex bottom in the McCosc issue and volume. A complex bottom with left shoulder, head, right shoulder, is a more significant bottom and likely to support a longer price advance. The 10% McOsc is preparing to generate another buy signal on improved breadth. The DJIA finally failed the 200 day average and closed below the -5% band and the 200 day average. Indexes do not often close below the 200 day average,without some turn back towards the average. The DJI SMI is trying to turn up. A bear trend would keep it at this level in a sideways trend. CODI made a significant buy signal and as usual is a day early.

Momentum Cycles Cones:

OEX low on Cone811 was right on the centerline of the short term regression channel and the one std dev red cone. The close was near the upper channel line. According to this, the trend is still down and the projection oscillator peaked and is rolling over. Volatility increased a tad opening the cones a bit for a bigger move on Wednesday. Cone812 shows the support/ resistance using the implied volatility look-a-head.

Pivots:

OEX and DSP8U closed in a neutral to weak posture for Wednesday, evidenced by closes above the keyline and below the hourly trendline. Keylines are shifted down for Wednesday.

Volatility:

OEX Zone Timer dipped back into the extremely oversold zone. Bullish action would be evidenced by zone migration up towards the neutral line and above. Whereas bearish action would be more of the same sideways migration in zones 1 and 2. MVI is in neutral and tested the center band from below, failed, and then moved on up to near the static buy band. MVI adaptive in the center plot is more neutral looking.

RSI, SMI:

Closing SPX RSI continues to look good with support at the lower band.

Stocks of Interest:

ASTNholding up fairly well,considering the massacre in secondary techs.CMR looks very weak,along with the whole mining sector.Many of the junior mining firms with no income flow or near term prospects for cash flow or earnings will not survive this period.CMR is about to change to a producer with the yet to be announced cobalt contract.Cash flow, no debt, and strong cobalt prices due to Congo instability will enable this issue to survive longer term.Cobalt cash flow will be denominated in U.S. dollars.Price action near term,and into tax selling season,may be weak.

OEX Perspective:

CBOE TRINS were bearish following a mixed opening and closed with a bearish view. Near the money August calls looked like this, OEWHE,OEWHF, OEWHG, OEWHK. September calls looked like this,OEWIE, OEWIF. August puts behaved this way, OEWTF, OEWTG, OEWTH. It is sheer speculation to trade in this highly volatile environment. Due to the "oversold" nature and pre-expiration week schenanigans anything can happen. Intraday trends are sufficient to scalp some coins, but risk is high. There seems to be an inordinant amount of political, economic,international news to spook the markets. Perhaps an overvalued market has become fairly valued. That does not mean a rally is imminent that will return it to the recent lofty levels. The earnings outlook just does not justify that. Wednesday does have a propensity to be an up day.

OEX Mechanical Trades:

There one change in the mechanical trades with the exit of the losing RSI 550 call. Three positions still remain. OEX Trade Listing, OEX Signal Report. (These mechanical trades are generated by an off the shelf commercial pkg and are used as a reality check of the discretionary trades that may be referred to on occasion above.We advised a 1.50 trailing profit stop on OEX long call positions Thursday for last Friday as the opening paragraph,in time to exit into the rally top/end of seasonal money flow.)

MomentumCycles commentary for the open of Thursday,August 13,1998:

8:30 a.m. update:Global markets are very weak early Thursday a.m.,suggesting an early downside bias in the U.S. Thursday.Don't forget the 1.50 trailing profit stop on any long positions taken from the past 2 days lows,or alternately, a stop loss of no more than 1.50 below the entry price for any initiated long call position.

Have we merely filled the gap from the Monday ,August 10,and Tuesday,August 11 breakdown?Good question.

Another basing day on the CBOE equity put/call ratio,the second now,supportive of slightly more disbelief in the current rally from Tuesday's reversal off the double bottom.Even better would be another day tommorrow with a rising market and increased put buying.2 basing days in a row support a 2% rise,3 or 4 days in a row 3-4%.

CODI position is worrisome,as we didn't start this bounce from deep in the buy zone.However,a legitimate buy pivot was made Tuesday.Wednesday also had troublesome +832,+600,+600,+700,and +600 intraday upticks.

However,the double bottom has held so far, and at many times tested support this year.The recent retest had several stochastic and RSI nonconfirmations,as well as option price resistance in some of the put series to further short term gains.

Many traders put on OEX shorts around 532-534,which has 16 price "hits"since August 6.Quite a few stop buys may be clustered above that level,which can be manipulated by the specialists if they intend to run a short covering panic into expiration,prior to a possible new round of distribution{if post option week is down, as ASTROCAST suggests.}

Weak bonds,pre-opening,and strong London support further OEX rally.Strong bonds,weak London support another retest of the recent lows.You probably have seen bond prices intraday recently moving counter to OEX index prices,almost tick for tick,since bonds seem to reflect the amount of global financial and political fear.U.S.Bonds are presently the safe haven for nervous global capital.So any extremely bad political news{such as a Malaysian credit default,a yuan devaluation,etc.,make bonds a good short term long day trade,if you are quick enough!

CRB,XAU still encountering liquidation,with the CRB nearing major multi-year lows of 198.

Trend:

ADHL remains on its intermediate term buy mode. OEX reg continues to work the '96 - '97 channel lines with 547 a nearby upside target and support at 524. Super Timer closed well into bullish territory. NHNL continues to improve as it rises out of the Crash and Oversold Panic levels. A move back above zero would take the indexes into a strong close in the August options expiration.

Fibonacci Zones:

Indexes are headed for a test of the weekly balance and Daily Triple Switch lines again as the Ratio oscillators begin their climb out of oversold. Perhaps the upside pressure will be great enough to blast through and head for the upper weekly fib resistance by Friday close. Volatility is decreasing but still above normal and is substancial enough to provide the slingshot energy to higher prices.

DJIA OEX SPX S and P 500 futures NDX XAU TYX

Astrocast:

AstroCast has an upward bias until 8/20. A related cycle timing system(not shown) has a very significant energy point on 8/18. If we could be so lucky as to have a rally up into the 18th as the AstroCast is indicating it would do wonders for Aug and Sept calls.

Breadth:

NYA breadth was extremely positive and similar to that coming off completed bottoms. A complex bottom with left shoulder, head, right shoulder is a classic bottoming formation on the McOsc. The 10% McOsc generated another buy options and futures buy signal with its trendline crossing and higher low. The DJIA closed back above the 200 day average and below the -3.5% band. A move above the -3.5% could inspire a move to 8648 on the Super Timer chart. Indexes do not remain below the 200 day average very long in bull markets. The DJI SMI is trying to turn up. A bear trend would keep it at this level in a sideways trend. CODI was precient with its buy signal yesterday. It is now in the indeterminate zone. OEX ran into resistance at that yellow trendline. A break above that would then put resistance at 545 -548.

Momentum Cycles Cones:

OEX close was outside the upper channel line indicating price momentum is changing direction. The projection oscillator has resumed its climb and has not reached overbought. Volatility decreased a tad narrowing the cones for less range on Thursday.Here is the cone chart.

Pivots:

OEX and DSP8U closed in a reasonably strong posture for Thursday above a rising Keyline and above the hourly trendline which is also on the verge of turning up.

Volatility:

OEX Zone Timer made a zone crossing, i.e. positive for call holders. Bullish action would be evidenced by zone migration up towards the neutral line and above. Whereas bearish action would be more of the same sideways migration in zones 1 and 2. MVI upper is on the retracement center line where sells occurred in a bearish trend previously. If it drops through this center band and heads down to the lower band it would be indicative that the recent washout is over. MVI center is nearing the narrow sell band...bands are flaring though so the actual sell may come from higher levels..no sell here yet. Thursdays tend to be weak and VIX closes in the higher end of its range, maybe a one day sell before the "buy the Friday close of pre e-week" will keep things moderated the rest of the week. VIX did close at 27.7 far from the mid 34 of yesterday and last week at the lows. VIX trend is down and price trend is up.

RSI, STO:

RSI and Stochastics are on a buy.

Stocks of Interest:

ASTN has shown good relative strength during the recent decline.A move through the 3 5/8 area would target 4.Support recently was 2 3/4, and long term buyers are there at 2.

CMR attempting to wait out the sellers until the cobalt contract comes out.The financials on this are denominated in U.S. dollars, so profits on the sold material will not be subject to Canadian dollar depreciation.

OEX Perspective:

CBOE TRINS are bullish. Near the money August calls looked like this, OEWHE,OEWHF, OEWHG. September calls looked like this OEWIE, OEWIF. August puts behaved this way, OEWTF, OEWTG, OEWTH.

OEX Mechanical Trades:

OEX Trade Listing, OEX Signal Report.