MASTERING
THE TRADE
ORIGINAL, INTERACTIVE
SEMINAR ON TRADING USING
TECHNICAL ANALYSIS
EARNINGS
ESTIMATES
U.S.
QUOTES
U.S.
CHARTS
TECHNICAL
OPINION
CANADIAN
CHARTS
SEC FILINGS
BROKER
RESEARCH
Reality Check Charts Archives
11/3/99:
NASDAQ Chart Commentary by
Mitch Harris of the Reality Check newsletter
With all of the optimistic talk about
Nasdaq 3000 and the addition of MSFT & INTC to the Dow, it remains
important to keep perspective and remain objective. The Weekly OTC
Composite chart offers several observations that I thought should be
discussed.
The first point is the bottom line, which
is that the trend remains bullish and the index continue's to push new
highs. Acknowledging this, other points to be made are that there
are warnings that this bullish trend is overbought and divergent.
The bands that have defined the price
trend are known as "Bollinger Bands", after
their inventor, John Bollinger and are plotted along with prices based
on a standard deviation above and below the price movement. The
Nasdaq is trading at the top of this trading band, implying that at
least a pullback will soon take place to the middle "moving
average line".
The other observations are related to the
lower indicators. From top to bottom they are Weekly RSI,
Stochastics, and MACD (moving average convergence/divergence).
1) RSI -
shows that relative strength topped out early in the year and has since
been diverging negatively against the continuous gains made by the
index. This is relavent to the "funneling" effect of
less money going into a progressively concentrated number of key issues.
This has kept the index rising, but not the vast majority of its
componants.
2) Stochastics
- This too is showing a negative divergence by not moving to a new
high with prices. This indicator is a measurement of the market's
elasticity and the divergence suggests that prices will be propelled
lower at some point soon.
3) MACD -
This indicator is another way of looking at the magnitude of the move,
and it too shows that the strength has been consistently diminishing
throughout the year, not all out bearish, but diverging against the
continued price rise.
If these indicators actually begin to
decline instead of just lacking confirmation of the uptrend, it would be
expected that prices will follow very quickly as there is little
strength below the market. This makes the odds of a persistent
uptrend questionable beyond the very short term.
Keep in mind that "weekly"
chart analysis is NOT as fast moving or immediate as is the action of
the shorter term and more volatile "daily" chart. This
is not intended to imply that prices cannot move higher in the near
term. It is to illustrate the lack of broad based strength that
the move is based on at this point.
COMP
Nasdaq Composite
Index
11/2/99
NAV:
Change:
Offer:
Yield:
2,981.63
13.98
3,014.84
n/a
Percent
Change:
52
Week Range:
0.47%
1,766.27
to 3,014.84
Market
Trend Realities (MTR) is a Registered Investment Advisory
which manages personal, corporate, Trust, and retirement accounts on
a fee only basis. Several low cost, flexible management fee
arrangements are available. Investment Advisor, Mitch Harris has
studied the Point & Figure Charting Method under the direct
supervision of Michael Burke, Editor of the prestigious Investors
Intelligence research organization. Management is based on a unique
combination of technical analysis methods and tools which include,
The Point & Figure charting method, Elliott Wave Analysis &
techniques, industry group analysis, cycle analysis, Relative
Strength Analysis, Stochastics, and investor sentiment studies. MTR
offers a very uniquely structured managed mutual fund program using
the RYDEX family of mutual funds, which offer outperformance
potential whether equity markets are rising OR falling! Inquiries
are welcome by calling us at (513) 421-8737, or by email at: mtr@fuse.net
MTR also publishes a monthly investment newsletter called
"Reality
Check", which offers technical commentary on the
stock & bond markets, the Dollar Index, gold & gold stocks (XAU),
Treasury yields, utilities, investor sentiment, and Federal Reserve
policy. It also offers stock trading recommendations each month with
price targets, stop loss points and insider activity. There are 4
trading portfolios, including a short selling account (we are very
proud that our short sale recommendations have averaged 12.5%
"compounded" during the roaring bull market of the last 5
years). Short term market commentaries are updated on Tuesday and
Friday mornings, along with portfolio changes on this web page. They
are also emailed for free to anyone who provides us with their email
address. The regular subscription rate is $200 (US) per year. A
special first time subscriber rate of $139 is available to
viewers. Samples are available upon request. MTR will be happy to
send information on any of the above mentioned services. Please email
us your home or business address and specify your interest(s).
Copyright � 1998-2002 Tulips and Bears LLC.
All Rights Reserved. Republication of this material,
including posting to message boards or news groups,
without the prior written consent of Tulips and Bears LLC
is strictly prohibited. 'Tulips and Bears' is a registered trademark of
Tulips and Bears LLC
Last modified: April 02, 2001
Published By Tulips and Bears
LLC
