Go to Jeff Salisbury LWGate Home Page.From: Eric Jaenike <ericjaenike@yahoo.com>
Subject: Re: [CANSLIM] M
Date: Fri, 10 May 2002 14:48:19 -0700 (PDT)
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Wanted to point out a couple of things re: M. The most recent low of 5/7 was not accompanied, IMO, with the type of price/volume activity or sentiment indicators that normally accompany a sustainable bottom. While we started accelerating to the downside, we did not get to the point where the selling pressure was finally spent. Note the decreasing volume from May 1-6 (focusing on the Nas) as the index slid. May 7 saw an increase in volume, but downside stalling as the index barely closed down. Also note that while sentiment indicators (focusing on put/call and bullish/bearish measures) moved in the direction of extremes associated with a true bottom, they did not actually achieve those extreme levels. Now, we have a distribution day appearing in the indexes at the beginning of the nascent rally, indicating that selling pressure still exists. This supports the conclusion that the activity in the last few weeks was insufficient to clear all the sellers out.
Of particular interest is the activity on the Russell 200, S&P 400, and the IJS (which tracks the S&P 600 Barra value subindex). These smaller cap indices are starting to underperform and experience selling pressure. This indicates that we are entering "the beginning of the end". By that, I mean that the selling pressure is finally hitting the last pockets of strength in the market: smaller cap stocks, including small cap value. Typically, a bear will attack the weakest groups first, then move one by one through each remaining pocket of strength until most or all groups have been taken down. To me, we appear to be entering that stage.
I consider this to be a bullish development. We need, IMO, to clear the sellers out to finally get to the point where we can have a solid bull run. Of course, individual stock positions need to be managed based on the activity of that position, but I would keep the weakness in these smaller cap indices in mind.
FWIW.
Eric
"Hill, Ernie" <Ernie.Hill@ElPaso.com> wrote:
Hi group,
Once again my turn signal criterion has been met by yesterday's price action. Maybe this time the low made on 5-7 will hold. The coming reaction to this current downtrend will have a hard time getting very far. I call it a reaction because the downtrend was very technically damaging from my point of view, and I don't see much chance of a fundamental change in trend, at least not the way the market looks right now. If the coming reaction is stronger than I anticipate then I may be forced to change my interpretation.
I see very strong resistance in the 1103 to 1111 area on the S&P. The highest probability that I see for the top of this reaction is 1111 to occur within four days either side of 5-22. If M is able to take out this resistance level then the next most likely target from which to expect a turn back down would be in the 1126 to 1137 range with the upper part of that range being the most likely target.
E
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<P> Wanted to point out a couple of things re: M. The most recent low of 5/7 was not accompanied, IMO, with the type of price/volume activity or sentiment indicators that normally accompany a sustainable bottom. While we started accelerating to the downside, we did not get to the point where the selling pressure was finally spent. Note the decreasing volume from May 1-6 (focusing on the Nas) as the index slid. May 7 saw an increase in volume, but downside stalling as the index barely closed down. Also note that while sentiment indicators (focusing on put/call and bullish/bearish measures) moved in the direction of extremes associated with a true bottom, they did not actually achieve those extreme levels. Now, we have a distribution day appearing in the indexes at the beginning of the nascent rally, indicating that selling pressure still exists. This supports the conclusion that the activity in the last few weeks was insufficient to clear all the sellers out.
<P>Of particular interest is the activity on the Russell 200, S&P 400, and the IJS (which tracks the S&P 600 Barra value subindex). These smaller cap indices are starting to underperform and experience selling pressure. This indicates that we are entering "the beginning of the end". By that, I mean that the selling pressure is finally hitting the last pockets of strength in the market: smaller cap stocks, including small cap value. Typically, a bear will attack the weakest groups first, then move one by one through each remaining pocket of strength until most or all groups have been taken down. To me, we appear to be entering that stage.
<P>I consider this to be a bullish development. We need, IMO, to clear the sellers out to finally get to the point where we can have a solid bull run. Of course, individual stock positions need to be managed based on the activity of that position, but I would keep the weakness in these smaller cap indices in mind.
<P>FWIW.
<P>Eric
<P> <B><I>"Hill, Ernie" <Ernie.Hill@ElPaso.com></I></B> wrote:
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<P class=MsoNormal><FONT face=Arial size=2><SPAN style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">Hi group,<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face=Arial size=2><SPAN style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face=Arial size=2><SPAN style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">Once again my turn signal criterion has been met by yesterday's price action. Maybe this time the low made on 5-7 will hold. The coming reaction to this current downtrend will have a hard time getting very far. I call it a reaction because the downtrend was very technically damaging from my point of view, and I don't see much chance of a fundamental change in trend, at least not the way the market looks right now. If the coming reaction is stronger than I anticipate then I may be forced to change my interpretation.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face=Arial size=2><SPAN style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face=Arial size=2><SPAN style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">I see very strong resistance in the 1103 to 1111 area on the S&P. The highest probability that I see for the top of this reaction is 1111 to occur within four days either side of 5-22. If M is able to take out this resistance level then the next most likely target from which to expect a turn back down would be in the 1126 to 1137 range with the upper part of that range being the most likely target.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face=Arial size=2><SPAN style="FONT-SIZE: 10pt; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal><FONT face=Arial size=2><SPAN style="FONT-SIZE: 10pt; FONT-FAMILY: Arial">E<o:p></o:p></SPAN></FONT></P></DIV><CODE><FONT size=3><BR><BR>******************************************************************<BR>This email and any files transmitted with it from the ElPaso <BR>Corporation are confidential and intended solely for the <BR>use of the individual or entity to whom they are addressed. <BR>If you have received this email in error please notify the <BR>sender.<BR>******************************************************************<BR></FONT></CODE></BLOCKQUOTE><p><br><hr size=1><b>Do You Yahoo!?</b><br>
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