Go to Jeff Salisbury LWGate Home Page.From: "Hill, Ernie" <Ernie.Hill@ElPaso.com>
Subject: RE: [CANSLIM] M
Date: Fri, 10 May 2002 18:44:26 -0500
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Eric,
Nice analysis, and I agree that it is likely that we have yet to see the
lows for the year.
E
- -----Original Message-----
From: Eric Jaenike [mailto:ericjaenike@yahoo.com]
Sent: Friday, May 10, 2002 4:48 PM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] M
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 class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span style=
=3D'font-size:
10.0pt;font-family:Arial;color:navy'>Eric,<o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span style=
=3D'font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span style=
=3D'font-size:
10.0pt;font-family:Arial;color:navy'>Nice analysis, and I agree that it is =
likely
that we have yet to see the lows for the year.<o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span style=
=3D'font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span style=
=3D'font-size:
10.0pt;font-family:Arial;color:navy'>E<o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 color=3Dnavy face=3DArial><span style=
=3D'font-size:
10.0pt;font-family:Arial;color:navy'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 face=3DTahom=
a><span
style=3D'font-size:10.0pt;font-family:Tahoma'>-----Original Message-----<br>
<b><span style=3D'font-weight:bold'>From:</span></b> Eric Jaenike
[mailto:ericjaenike@yahoo.com] <br>
<b><span style=3D'font-weight:bold'>Sent:</span></b> Friday, May 10, 2002 4=
:48 PM<br>
<b><span style=3D'font-weight:bold'>To:</span></b> canslim@lists.xmission.c=
om<br>
<b><span style=3D'font-weight:bold'>Subject:</span></b> Re: [CANSLIM] M</sp=
an></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D3 face=3D"Time=
s New Roman"><span
style=3D'font-size:12.0pt'><o:p> </o:p></span></font></p>
<p style=3D'margin-left:.5in'><font size=3D3 face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'>Wanted to point out a couple of things re: M. Th=
e 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 bott=
om.
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 fr=
om
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 th=
at
while sentiment indicators (focusing on put/call and bullish/bearish measur=
es)
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 activi=
ty
in the last few weeks was insufficient to clear all the sellers out. <o:p><=
/o:p></span></font></p>
<p style=3D'margin-left:.5in'><font size=3D3 face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'>Of particular interest is the activity on the Ru=
ssell
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 sto=
cks,
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 th=
at
stage. <o:p></o:p></span></font></p>
<p style=3D'margin-left:.5in'><font size=3D3 face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'>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 ba=
sed
on the activity of that position, but I would keep the weakness in these
smaller cap indices in mind. <o:p></o:p></span></font></p>
<p style=3D'margin-left:.5in'><font size=3D3 face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'>FWIW. <o:p></o:p></span></font></p>
<p style=3D'margin-left:.5in'><font size=3D3 face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'>Eric <o:p></o:p></span></font></p>
<p style=3D'margin-left:.5in'><font size=3D3 face=3D"Times New Roman"><span
style=3D'font-size:12.0pt'> <b><i><span style=3D'font-weight:bold;fon=
t-style:
italic'>"Hill, Ernie" <Ernie.Hill@ElPaso.com></span></i></b>
wrote: <o:p></o:p></span></font></p>
<blockquote style=3D'border:none;border-left:solid #1010FF 1.5pt;padding:0i=
n 0in 0in 4.0pt;
margin-left:3.75pt;margin-top:5.0pt;margin-bottom:5.0pt'>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 face=3DArial=
><span
style=3D'font-size:10.0pt;font-family:Arial'>Hi group,<o:p></o:p></span></f=
ont></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 face=3DArial=
><span
style=3D'font-size:10.0pt;font-family:Arial'><o:p> </o:p></span></font=
></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 face=3DArial=
><span
style=3D'font-size:10.0pt;font-family:Arial'>Once again my turn signal crit=
erion
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 t=
ime
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 no=
w.
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=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 face=3DArial=
><span
style=3D'font-size:10.0pt;font-family:Arial'><o:p> </o:p></span></font=
></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 face=3DArial=
><span
style=3D'font-size:10.0pt;font-family:Arial'>I see very strong resistance i=
n 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 wi=
th
the upper part of that range being the most likely target.<o:p></o:p></span=
></font></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 face=3DArial=
><span
style=3D'font-size:10.0pt;font-family:Arial'><o:p> </o:p></span></font=
></p>
<p class=3DMsoNormal style=3D'margin-left:.5in'><font size=3D2 face=3DArial=
><span
style=3D'font-size:10.0pt;font-family:Arial'>E<o:p></o:p></span></font></p>
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