Stock Market Highlight #5
All-time S&P 500 high through the first 5 months of 1998 is sold short the very day of the high.
(COMMENT #s 270, 271, 277, 281)
UPDATED 19980403
COMMENT 1998-270
1. The new "Cycles" books should now be in your hands.
2. Turn to page 297 in the old book and 297 in the new.
3. Can you see the large weekly "Inversion Cycle" peak that occurs THIS WEEK in this market?
4. Omigosh!
5. "Investor's Business Daily" printed a new 12 month low in bearish sentiment of 22 percent in YESTERDAY's edition BEFORE the 100+ point runup in the DJIA.
6. They're going nuts at CNBC celebrating the move above 9,000 (08:40 CST).
7. If you turn to the same market information page in IBD (it's about 4 from the end on the right page), you can also see, in the upper-left corner, that mutual fund cash was at 4.9 percent, a many-year LOW - - - in FEBRUARY!
8. In other words, it's not possible to tell how much lower this cash level has gone.
9. Let's use the two market entry techniques repeatedly cited in these COMMENTS (the abbreviated version of the "ALMANAC V" trading system [see page 256 of "The 1998 $upertrader's Almanac - 1st Half Edition] and the entry techniques on page 236 of "The $upertrader's Reference Manual") to enter short positions in the indexes in this complex.
UPDATED 19980403
COMMENT 1998-271
1. The classic DJTA / DJIA DIVERGENCE remains (see pages 171-184 of "The $upertrader's Reference Manual").
UPDATED 19980406
COMMENT 1998-277
A big up opening this morning is expected in the stock indexes which should be treated as a NEWS story and the techniques of Friday reapplied to these openings.
UPDATED 19980406
COMMENT 1998-281
1. Note how the weekly "Inversion Cycle Index" on page 301 of "The $upertrader's Book of Linear Time Cycles" occurs THIS week whereas that on page 297 occurred LAST week.
2. Now note, on page 297, the upward movement of the "Linear Cycle Index" (the solid line in the chart) into this general period of time.
3. What is important with respect to this index is that price has been following the expected trend by moving HIGHER.
4. What most people fail to realize when using the "Linear Time Cycle Indexes" is the importance of price following the expected trend into a peak / trough before the projected turn might be considered to have any validity. In other words, if a "high" is projected, price should be trending UP INTO the projected high.
5. If price is not acting as expected prior to a projected turn in the "Linear Time Cycles", the projection is ignored.
6. Now look above the chart to the "Window Index".
7. Note how this composite of the high cycles only is moving to a crescendo this next week.
8. You can also turn to page 93 where this peak in the "Window Index" is listed under "Cycle Lineups" under "WWX - HI" (i.e., weekly window index for the cycles consistent across "HI"s).
9. The other lesson to be gleaned from this COMMENT is how the information for each market in the complex was used to CONFIRM the general expectation (see pages 297 AND 301).
10. Also note Point #s 26. and 27. in the following COMMENT.
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