Re: [CANSLIM] Market tops

From: Eric Jaenike <ericjaenike@yahoo.com>
Subject: Re: [CANSLIM] Market tops
Date: Tue, 19 Nov 2002 17:25:36 -0800 (PST)
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This is a tricky time in the market, as there are a lot of cross currents. Seasonality and beta chasing are playing a large roll in supporting the market, as is short covering.
This market action reminds me a lot of 4Q '01. There is a lot of subsurface weakness, but strength in certain sectors- notably semiconductors and other techs- is helping prop the market up.
Note how the indices don't want to roll over, even though few breakouts are following through. The support is evident in two places: 1. in the indices, in that distribution days are coming on mediocre increases in volume, and dip buyers quickly come in and support the indices; 2. stock are generally reluctant to break down the way they would in a weaker environment. I have come across numerous stocks that break down from ranges, and then find support and don't continue their rollovers (this is, of course, not the case with all breakdowns, but enough that it shows some underlying buying power).
I think this market is running on residual momentum from the Oct low, combined with seasonality and short covering.
I would tend to scalp this market on either side, rather than try to hold for larger gains.
Eric
 rolf hertenstein <rolfh@mindspring.com> wrote:Went back to WON books today to see if I could understand what
the market is telling me since the FTD of 10 October. During October,
the DOW, S&P500 and NASD experienced several distribution days.
Below is the date and percent drop for each index:

DOW S&P NASD
10/22 (1.0) 10/22 (1.1) 10/22 (1.3)
10/24 (2.1) 10/24 (1.5) 10/24 (1.6)
10/28 (0.9) 10/28 (0.8) 10/28 (1.2)
10/31 (0.4) 10/29 (0.9) 
10/31 (0.6)

According to WON, this would have raised caution flags by
the end of October. Until yesterday, only the S&P had another
distribution day in November [11/13 with a small (0.1)]. In 
November, the 3 indices had several accumulation days, especially
the NASD with the following gains:
DOW: 0.4, 0.1, 0.3, 0.2, 1.7
S&P: 0.8, 0.9, 0.8, 2.5
NASD: 2.0, 0.2, 2.3, 2.6, 1.3, 2.3, 0.9

Yesterday the NASD had a distribution day and today both the DOW
and S&P did, though with small % loss and not tremendous volume 
increase.

So, I have the following questions:
1. Do the accumulation days in early November negate the October
distribution days, i.e., do we start counting distribution days again now?
2. Or are we still under a yellow flag? Asked differently, how often do
several distribution days *not* signal a probable xx% M decline?
3. Is the better performance of the NASD (less dis days and more 
powerful acc days) implying that perhaps folks are still chasing old
90s favorites? And does this tell us anything about the health of this
rally?

TIA for any thoughts or opinions. I've spent most of my 'stock' time
over the past year trying to understand the M.

Rolf 



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<P>This is a tricky time in the market, as there are a lot of cross currents. Seasonality and beta chasing are playing a large roll in supporting the market, as is short covering.
<P>This market action reminds me a lot of 4Q '01. There is a lot of subsurface weakness, but strength in certain sectors- notably semiconductors and other techs- is helping prop the market up.
<P>Note how the indices don't want to roll over, even though few breakouts are following through. The support is evident in two places: 1. in the indices, in that distribution days are coming on mediocre increases in volume, and dip buyers quickly come in and support the indices; 2. stock are generally reluctant to break down the way they would in a weaker environment. I have come across numerous stocks that break down from ranges, and then find support and don't continue their rollovers (this is, of course, not the case with all breakdowns, but enough that it shows some underlying buying power).
<P>I think this market is running on residual momentum from the Oct low, combined with seasonality and short covering.
<P>I would tend to scalp this market on either side, rather than try to hold for larger gains.
<P>Eric
<P>&nbsp;<B><I>rolf hertenstein &lt;rolfh@mindspring.com&gt;</I></B> wrote:
<BLOCKQUOTE style="PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #1010ff 2px solid">Went back to WON books today to see if I could understand what<BR>the market is telling me since the FTD of 10 October. During October,<BR>the DOW, S&amp;P500 and NASD experienced several distribution days.<BR>Below is the date and percent drop for each index:<BR><BR>DOW S&amp;P NASD<BR>10/22 (1.0) 10/22 (1.1) 10/22 (1.3)<BR>10/24 (2.1) 10/24 (1.5) 10/24 (1.6)<BR>10/28 (0.9) 10/28 (0.8) 10/28 (1.2)<BR>10/31 (0.4) 10/29 (0.9) <BR>10/31 (0.6)<BR><BR>According to WON, this would have raised caution flags by<BR>the end of October. Until yesterday, only the S&amp;P had another<BR>distribution day in November [11/13 with a small (0.1)]. In <BR>November, the 3 indices had several accumulation days, especially<BR>the NASD with the following gains:<BR>DOW: 0.4, 0.1, 0.3, 0.2, 1.7<BR>S&amp;P: 0.8, 0.9, 0.8, 2.5<BR>NASD: 2.0, 0.2, 2.3, 2.6, 1.3, 2.3, 0.9<BR><BR>Yesterday the NASD had a distribution day and today both the DOW<BR>and S&amp;P did, though with small % loss and not tremendous volume <BR>increase.<BR><BR>So, I have the following questions:<BR>1. Do the accumulation days in early November negate the October<BR>distribution days, i.e., do we start counting distribution days again now?<BR>2. Or are we still under a yellow flag? Asked differently, how often do<BR>several distribution days *not* signal a probable xx% M decline?<BR>3. Is the better performance of the NASD (less dis days and more <BR>powerful acc days) implying that perhaps folks are still chasing old<BR>90s favorites? And does this tell us anything about the health of this<BR>rally?<BR><BR>TIA for any thoughts or opinions. I've spent most of my 'stock' time<BR>over the past year trying to understand the M.<BR><BR>Rolf <BR><BR><BR><BR>-<BR>-To subscribe/unsubscribe, email "majordomo@xmission.com"<BR>-In the email body, write "subscribe canslim" or<BR>-"unsubscribe canslim". Do not use quotes in your email.</BLOCKQUOTE><p><br><hr size=1>Do you Yahoo!?<br>
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