MomentumCycles

Newest commentary at the bottom of this page- be patient and scroll down- it's worth the wait! By accessing this page, you acknowledge that this information is merely personal opinion and does not constitute investment advice. The writer of this page assumes no responsibility for your actions based on this information. This page is to be used for entertainment purposes only. The information on this page is based on data reported by newswire services. The writer of this page is not responsible for the accuracy of that data. All efforts are made to keep the price data on this page as accurate as possible.

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To quote from the RSI update for market open of Monday September 29 1997:

"Traders are ahead 12 S&P points from Friday's lows entered on the long side at approximately 910 OEX. Stops should be placed at today's 2 PM eastern low at 916.25 or slightly lower. Traders are ahead the equivalent of 249 Dow points IN ONE DAY in an XAU position that was predicted 2 1/2 weeks ago at the gold and silver lows. Traders had several weeks to scale into positions, but just in case you were late and entered at today's open, the XAU was up 3.25 percent just today. Now if you had just made 249 Dow points in one day, wouldn't you take some profits? So the same thing should be done partially for XAU profits entered near the lows and even those scaled into in the past few days."

RSI and Cycle comments for the open on Wednesday, October 1, 1997:

Traders were stopped out Tuesday at 916.25 for an OEX profit of 6.25 points, 9/26's resistance at 914 OEX became Tuesday's support, new resistance is 922.75. Traders took some more profits on the long XAU position which Tuesday was up another 3.84 % THE EQUIVALENT OF 304 DOW POINTS IN ONE DAY!! What a trade!553 Dow equivalent points in 3 days!Take more profits on your XAU long position Wednesday.

Although losing several points on the SP500, and an equivalent amount in the Dow, the non-precious metals equities markets basically gave a big yawn, to the non-surprise of no change in fed policy. The other non-surprise, mentioned here yesterday, was the fairly wide-spread slicing, in tech stock prices, following yesterday's WDC earnings warning. This can continue, and perhaps intensify tomorrow, as Advanced Micro Devices made known its own probable earnings shortfall, today. The DJIA has held above its 21 day moving average for eleven days, since the follow-through rally day of September 16. Currently that average is at 7866. Since the OBV of the Dow is still in a downtrend, a close of the DJIA below the rising 21 day m.a., would be the first notable warning sign of a more protracted downtrend to come. What seems to be contributing most to the current pattern, is the continuing decline in the U.S. dollar index since its peak in July. Also, the T-bond market received no boost from today's fed 'party.' Its close today was slightly lower than the lowest level of the several day's consolidation pattern, after its last huge, one day rally. Intermediate term readings of RSI are now weakening, suggesting the protracted downtrend referred to above. Daily momentum of the DJIA, though still positive, is also slipping again. If the extra liquidity that found its way into money market vs stock funds in August, is not enticed back into equities soon, the price levels of the major averages will be falling to a lower 'bargain buying' plane in October.Remember this is supposed to be the seasonal monthly strength period.Its a warning when it doesnt gather steam to the upside starting with the 1st day of the month.Anyhow, readers of this site were stopped out with 6.25 OEX points profit Tuesday, and are eyeing their 4th vacation home in Nova Scotia with their XAU profits from the last 3 days!

Traders scaled out of more of their long XAU position. Yesterday's close on the XAU was 109.5. Today's open was in the 110 area and the high of the day was 111.33. The close was 108.10, a net loss on the day. So taking profits near the open, or preferably near the high, was the preferred way to finish scaling out of the position. In case there are some traders with small long positions in XAU, I'd scale out of the remainder of the position tomorrow. From our notice that the RSI of the XAU was improving dramatically compared to the S&P and the Dow last week, traders had the chance to realize extremely large profits every day until the beginning of today's retracement. This has been one of the best trades this site has ever recorded in 3 or 4 days, and I hope you enjoyed it! The Dow equivalent profit since last Friday would have been over 600 points at today's high.

RSI update for the market open of October 2, 1997:

That famous phrase from the Ghostbuster movie "Who ya gonna call?" took on new meaning today, with WORLDCOM'S 'bidbusting' offer of $30 billion for MCI COMMUNICATIONS. Bill Gates is even sitting up and taking notice. Trading volume in each of those stocks, also helped push Nasdaq volume to a record for one day, of 955 million. Yet with all the hoopla, the Nasdaq composite could only manage a meager 4+ point gain. The SP500 gain of more than 8 points puts it within striking distance of a new closing high, any day now. The overall tech sector was still stymied by the AMD earnings warning, and a no comment, until reporting date of October 14, from INTEL. The latter's daily chart pattern is starting to weaken, as it breaks below the triangle formation it's traded in since July. The combination of the renewed T-bond rise, and a positive day in the U.S. dollar index provided the strength for the major averages. Gold and silver began some consolidation from their recent sharp advances, and crude oil retraced a bit more from its 'pole' move. Daily RSI of the DJIA and SP500 are now showing **potential** divergent patterns. This will be much more significant if the rally continues through Friday, following the employment report, and then quickly falls back into the current trading range. The continuing bond rise, and the constructive looking consolidation patterns of the major averages, should produce an upside breakout. The missing link, however, continues to be the lack of upside volume in the high cap stocks, which formerly fueled previous strong and sustained rallies.

VIX update for the open of trading October 2, 1997:

RSI for the XAU and Stochastic for the XAU are still positive. It is POSSIBLE that we may be in a longer term up turn for this index. In new bull trends, RSI and Stochastic stay overbought for much longer periods than during a trading market. If so, we left some money on the table for someone else. But our philosophy is to nail down big profits whenever possible in a short period of time due to premium decay. If the XAU is indeed in a longer term up trend, we will try to catch the next oversold position to reenter. Now let's turn to the non-metals equities market. The closing VIX Z score on the AMOS chart has made a crossover of the VIX Z score average, which is a technical buy regardless of the zone it occurs in. Both the VIX Z score and the MVI are in neutral regions. The most encouraging sign is from the NYA chart as advances are much stronger than declines and this is also manifested in the McOsc chart. Intraday things don't look as good on the hourly TICK and TDAC charts. CODI is in the indeterminate region, but its trend has turned down again which is a positive reflection of the market. Perhaps it will drop to the Sell Alert line over the next four trading days. The next Bradley turn date where a short term change of direction could occur is October 3. So if the market rallies to this point and we get overbought conditions, one would want to look for an exit point. If by some chance the market sells off to that point, it would be a low. Cycle dates are not always exact, and can be off by a day. One uses these to make a game plan (IN ADVANCE) how to react to overbought or oversold conditions. Knowing in advance when the turn might occur gives you good confidence in making a good trading decision. On this page most of the turn dates given have been accurate within a day and often we've gotten the turn exact on the day. Seasonality suggests that October 3 may be a high.

VIX update after close of trading on October 2, 1997:{We are out of XAU, but will continue to post the RSI and STOCHASTIC of that index.} Just as religious holidays and anticipation{or fear !} of government reports can drain liquidity from the markets, it will return once the former influences have passed. In fact, the effect is to compress the energy and when it is released price moves are greater, taking out stops that were caught in gap openings. We are right in the middle of the beginning of month seasonality and our new proprietary indicator says the market has a bias to the upside on Friday. This indicator is used to judge the most probable market reaction to government reports on the FOLLOWING day by monitoring the action on the previous day's close. In the past -6 readings have predicted badly received government reports, and +6 readings have predicted neutral or positive reports. A significant event occurred today. The volume of OEX calls dropped to half of what it was on Wednesday and the P/C volume ratio moved from the sell region into the neutral region. We have a somewhat neutral view from the volatility indicators MVI and AMOS charts. Adaptive MVI is still climbing towards the overbought band and if we get the anticipated buying climax in the next day or two we will be set up for a nice short trade in the coming weeks. NYA advances still outnumber declines and the NYA is above its trendline. Hourly tick and TDAC are still not encouraging whereas CODI is trending in the right direction for an upward price bias. That reflects the difference between intraday and end of day indicators. The McOsc chart is most impressive. The upper regression line has been breached and the issue and volume oscillators are confirming it. It has the feel of higher prices ahead.

In the future, we will attempt to set clearer entry, exit and stop loss parameters.We are traders , not financial commentators.Sometimes what we assume is clear amongst ourselves may not be clear to all readers.We strongly suggest you attempt to get live feed on prices if you trade options, or at least 2-5 minute delay.Don't bet everything on one trade, scale in and out of positions, and use a moving stop to protect your gains, and a fixed mental stop for losses.Remember , nothing works perfectly all the time, not cycles, not overbought/ oversold oscillators, not vix, not rsi.What you get here is 3 people who live and breathe the pulse of the market, and have the scars to prove it.We know what doesn't work- we've tried almost everything.What you get here is what DOES work for us,and has a real life track record.Neither permabears nor permabulls are flexible enough to trade the ever changing currents of this increasingly faster market.

VIX intraday update: the market at 12 noon Eastern time is touching the upper Vix oscillator band, suggesting a possible turn end today or Monday.Those long S&P or its proxies might consider taking some profits.

To quote from the Cycle update from October 1, 1997:

"The next Bradley turn date where a short term change of direction could occur is October 3. So if the market rallies to this point and we get overbought conditions, one would want to look for an exit point. If by some chance the market sells off to that point, it would be a low. Cycle dates are not always exact, and can be off by a day. One uses these to make a game plan (IN ADVANCE) how to react to overbought or oversold conditions. Knowing in advance when the turn might occur gives you good confidence in making a good trading decision. On this page most of the turn dates given have been accurate within a day and often we've gotten the turn exact on the day. Seasonality suggests that October 3 may be a high."

To quote from the VIX update after close of trading on October 2, 1997:"{We are out of XAU, but will continue to post the RSI and STOCHASTIC of that index.} Just as religious holidays and anticipation{or fear !} of government reports can drain liquidity from the markets, it will return once the former influences have passed. In fact, the effect is to compress the energy and when it is released price moves are greater, taking out stops that were caught in gap openings. We are right in the middle of the beginning of month seasonality and our new proprietary indicator says the market has a bias to the upside on Friday. This indicator is used to judge the most probable market reaction to government reports on the FOLLOWING day by monitoring the action on the previous day's close. In the past -6 readings have predicted badly received government reports, and +6 readings have predicted neutral or positive reports. A significant event occurred today. The volume of OEX calls dropped to half of what it was on Wednesday and the P/C volume ratio moved from the sell region into the neutral region. We have a somewhat neutral view from the volatility indicators MVI and AMOS charts. Adaptive MVI is still climbing towards the overbought band and if we get the anticipated buying climax in the next day or two we will be set up for a nice short trade in the coming weeks. NYA advances still outnumber declines and the NYA is above its trendline. Hourly tick and TDAC are still not encouraging whereas CODI is trending in the right direction for an upward price bias. That reflects the difference between intraday and end of day indicators. The McOsc chart is most impressive. The upper regression line has been breached and the issue and volume oscillators are confirming it. It has the feel of higher prices ahead.

In the future, we will attempt to set clearer entry, exit and stop loss parameters.We are traders , not financial commentators.Sometimes what we assume is clear amongst ourselves may not be clear to all readers.We strongly suggest you attempt to get live feed on prices if you trade options, or at least 2-5 minute delay.Don't bet everything on one trade, scale in and out of positions, and use a moving stop to protect your gains, and a fixed mental stop for losses.Remember , nothing works perfectly all the time, not cycles, not overbought/ oversold oscillators, not vix, not rsi.What you get here is 3 people who live and breathe the pulse of the market, and have the scars to prove it.We know what doesn't work- we've tried almost everything.What you get here is what DOES work for us,and has a real life track record.Neither permabears nor permabulls are flexible enough to trade the ever changing currents of this increasingly faster market.

VIX intraday update: the market at 12 noon Eastern time is touching the upper Vix oscillator band, suggesting a possible turn end today or Monday.Those long S&P or its proxies might consider taking some profits."

VIX update for the open of October 6, 1997:

Friday was a good example of trading intraday vs end of day. The MVIs(mviA & mviB) generated an intraday sell signal at the price high Friday and a special alert was placed on the website. Thursday pm we cautioned readers to expect a crossing or tag of the upper bands Friday or Monday so we gave it some extra attention. NYSE advancing issues were pretty strong all day and decliners made an effort to punch above 1200 and failed. OEX on the McOsc chart hit overhead resistance and pulled back as the issue and volume oscillators appear to be aging from the August lows. TICK and TDAC are behaving like stubborn children and not going along for this price ride at all. Some ride it was with a high tick of 1361 and a low tick of -1173 and a neutral closing tick of about 200. With the Five Day AMOSS in overbought zone 5 and the P/C volume ratio back into the sell region, and CODI making a sell pivot, things don't look too promising for the bulls next week. Gold stocks in the XAU are holding up pretty well on the RSI and SMI charts. In real honest to goodness gold bull mkts the pull backs are short in duration and price. Remember that we predicted October 3 as a seasonality high for equities. Bull markets end when the more aggressive, speculative, volatile stocks have had their day as the leaders. Once the NASDQ stocks have had their run after the blue chips have peaked, traders and investors should be looking for a broad market decline that lasts more than a few days or weeks. The NDX chart is showing a topping and consolidation. The NDX breadth chart shows something ominous. There's an extremely high probability of NDX weakness near term. Many readers wanted to know the significance of a +1361 and -1173 TICK range in one day. Let's take a look at the one minute tick chart and see what happened. The +1361 tick reading occurred right after a gap opening which was alluded to yesterday due to price/time compression factors and a "coiling" MVI, like a rattlesnake ready to strike, and like a tick vol indicator creeping sideways with no trend, "calm before the storm" as it was put. If I can read a PRE chart (see the previous above comment on PRE), then there are others with big bucks that were long going into this thing and planning to bail big time at the first signs of divergences. Dumb shorts were caught going into the report and had to pay up to cover. Late comers thought that they better jump on board. Dynamic stops, i.e. parabolic, percentage, etc., triggered continual selling since the buying was done in previous days starting back on 9/26. This is the profit taking phase of our seasonality. Friday is not generally a good day to be buying anytime, especially when the mideast rumors are flying, too much is unknown. But why 1000? It is sort of like 600, 400, 200 on more normal days, a psychological level. There may also be a more mechanical reason. Usually the advancing and declining issues vary about 1200 =,-. TICK is only a number referenced to the last trade and not the beginning of the day. It is very easy to get a large negative tick after a large positive tick on a big move day like today when oppositely polarized news affects the market. I would not give it a lot of significance other than it fits the description of a key reversal day, higher high lower low kind of thing at least for awhile. Net today is toppish action.

RSI comments for market open of Monday,October 6, 1997: Recently it was reported how the gaming industry has failed to garner enough interest in New Orleans, to continue with existing or uncompleted projects. One reason seems apparent, after Friday's financial market action, that other Las Vegas, Wall Street. The market opened Friday with one of its strongest early gains in history, following very bullish T-bond and SP500 futures trading reaction to the October employment report. Yet, even with NYSE breadth and volume nearly 3 to 1 positive, and the DJIA still ahead 60 to 70 points, internal measurements of the "quality" of those numbers, indicated the potential intraday weakness that lay ahead. First, was the NYSE tick. At the height of the rally, with T-bonds up nearly 2 full points, and the Dow 100+, the tick figure was much more than 1000 positive. **Very** often this is an indication of at least a short-term trading top. In fact, traders with profitable long positions, should consider the 1000+ positive tick factor to be an automatic signal, to take profits. A short while later, when the DJIA was still up 60+ and the breadth numbers were as indicated above, the TRIN or ARMS index showed a reading of 1.05 and higher. Again, this is nearly always a sign of potential further weakness, immediately ahead. This was especially the case Friday, as the 10am edt TRIN reading had been .55. While most TV and radio media analysts, were still focusing on continuing apparent market strength, at noon edt, traders could have been fortunate enough to turn their just-acquired trading profits, into further additional gains, on the short side. When the downside momentum increased enough to lift program trading curbs at 2:15pm edt, these new profits were virtually guaranteed. Curiously, and in rarely seen action on the same trading day, the NYSE tick reached the -1000 level. Once again this is almost always an excellent signal, this time to exit profitable short positions, intraday. The backdrop to all this furious action was the indicated cycle turn date of October 3, previously referred to in these site's comments. The so-called fundamental reason for the abrupt turnaround, were the jitters surrounding mid-east hostilities, and their influence on crude oil prices. The vertical move in those prices has been **highlighted here regularly** for several days. Nonetheless, the 'average' investor, not having the time to focus on all of the above, would consider the closing numbers Friday to be indicative of a typical market rally day, of the last two weeks, or so. In fact, the SP500 futures, which closed with more than a 10 point premium to cash, could portend further gains, early in the coming week. Such action would still be the **end** of this up-cycle. Daily RSI and stochastic readings of the DJIA have begun downside bearish divergences. The daily DJIA momentum, though still positive, and rising slightly, is nowhere near as positive as the levels seen in the previous rally, which culminated with the August high. Five day rate-of-change of the DJIA reached 4%+ intraday, and finished at 2%. This was lower than the previous rally level of 3%. The McClellan oscillator neared the +100 level Friday, which should be a double top, to the previous high, set in mid September. It might be bullishly comforting, as many pundits would have us believe, that smaller cap issues can support equities during the normally lower, late fall period. However, unless new earnings information is surprisingly excellent, another lower price adjustment must be expected soon. We will look for a shorting opportunity in the next 2 days on an intraday tag of Friday's high , if it occurs.

VIX update after the close of trading on October 7, 1997: The McClellan oscillator chart is showing increasing divergences between the issue oscillator and the OEX which has closed above resistance. This is occurring on the last day of the commonly accepted beginning of month seasonality. Looking at the NYSE advances and declines intraday we see that the advances decreased from Friday and Monday, also the declines have increased. This is why we are seeing the McOsc of issues rolling over. The tick and TDAC never did confirm this last move up in price for many days. They are still suggesting this is a distribtution top. In fact, the Tick Vol X is contracting in a behavior common to significant price breakout(up or down). Again, this is occurring as the MVIs have closed above their upper bands and are now in sell alert mode. It is necessary for these to turn down before actually entering short positions because they can trend above the band for one or more days. CODI is in the middle of the indeterminate region. Signals from CODI are best taken at the extremes. The RSI and SMI charts have not changed much as gold stocks are holding on to their gains as yields put in a low and the SPX becomes more overbought. This SPX overboughtness is quite evident on the AMOSS chart which has the 90 and 20 days in Extremely overbought, 5 day overbought, and the VIX Z score in sell territory. Conditions are conducive for some more profit taking, but again it is necessary to wait until the Z score pivots, which could occur any day now, to go short or buy puts.

Cycle comments:

The Dow and the S&P's are in slightly different cycles,where the Dow is meeting resistance first at about 8170, then if exceeded, at about 8230.In time , the Dow is already 1 or 2 days past its time reversal target.The S&P's may have a day or 2 left before a reversal.

Intraday post 11:30 am Wednesday:

NDX is showing a strong cyclical component as evidenced by the straight thin line in the lower plot and in the sinewave plot below the price plot. If Tuesday in fact was the last day of this seasonality period then the price cycle of the NDX is right in sync with it. Special caution: the market will do what it wants when it wants and indicators such as this are only mirrors of what has happened. This is the third day in a row that the NDX breadth information is giving a sell signal. Here is a 6 minute chart of the NDX showing the work going on in the resistance zone. Sometimes an index has to take out the previous high in order for the VIPs to get short if they missed it the first time. The next drop could be a fast one if the signal is for real.

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