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Post by DJF on Mar 22, 2004 21:57:03 GMT -5
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Post by DJF on Mar 22, 2004 22:11:29 GMT -5
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Post by DJF on Mar 22, 2004 22:58:02 GMT -5
- In Sep 2001 crash scenario, $BPCOMPQ MACD reached lows of -5.0, with the breakdown starting around -2.0. Current MACD histogram lies at -2.66 and is confirmed downward trend. However, unlike Sep 2001, there is a bullish divergence in the MACD histogram - this could be very important as it would mark a bottom in the rate of accleration in the decline => hidden bullish strength
- $BPCOMPQ Ultimate oscillator 'disappeared' {grey boxes} off the scale prior to the turnaround (but also before one bull trap). However, in the case of the bull trap, the MACD histogram did not crossover to confirm a buy signal - the MACD did confirm the real signal in October 2001. Current $BPCOMPQ Utlimate oscillator is about to 'disappear' => end of decline could be very soon although MACD is still a couple of weeks from crossing over.
- The Sep 2001 $NASI slow stochs [39,1] spent the best part of four months below the 20-trigger line. In the current picture slow stochs have only spent two months below this line; therefore a decent bounce is not likely before May.
- In the Sep 2001 $NASI, the Ultimate Oscillator 'disappeared' twice {the grey boxes} in the first two months of the decline. A similar picture is been mapped out in the current decline. The first rally in the Sep 2001 $NASI Ultimate Oscillator {end of July to beginning of August} brought the market from 1,939 to resistance at 2,103; also the 50-day SMA. But this rally was *not*confirmed by slow stochs [39,1], or by a crossover in the 20- and 50-SMA in the market. Should a similar relief rally happen now - look for a move to the 50-day SMA, or the closest resistance at 2,050-2,065.
- MACD expansion in the Sep 2001 $NASI reached lows of -200, with the indicator bottoming at -1250 on a range of 1350 points from high to low. In the current decline, the MACD is at -138, with the indicator at -310 and a range from high to low of 940 points. This has to be close to a major bottom - the events of the last couple of weeks do not compare to Sept 11th.
- If the market was to map a similar crash as per Sept 11th, although it is important to note in 2001 that 'Step 1' happened prior to the events of Sep 11th, we are likely looking at another 6-10 days of declines. We do look to have put in a 'Step 1'; a horizontal consolidation and a gap breakdown on higher volume. The question is now, will we see a step up in the 'Fear' selling. Based on early March volume, the answer is "Yes", but if you retrace the volume trendline to include the early March volume as average, then the answer is "No". In Sept 2001 (and before Sept 11th), the market had begun its fear capitulation, which overshot into exhaustion as the event of Sept 11th unfolded. Assuming no repeat of Sept 11th we are likely to see a firm bottom over the next couple of weeks that should be tradable upto the election
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