Sand Spring Advisors LLC
The Unfinished Fib Rhythm of the DJTA & NYA
November 28, 2002
by, Barclay T. Leib
If our November 7th equity market highs have been exceeded, as they have been, does this abrogate our bearish view?
The answer is indeed no, and we warned back at the end of our November 14th Chart du Jour commentary that we were technically unsatisfied at that time with having left a high only at the low end of our anticipated 925-975 S&P 500 resistance region. We suggested that if a "Three Peak & Domed House" hourly S&P chart pattern were not to hold, then a secondary high maybe all the way up at 975 on the S&P into November 26-27 (34 trading days after the Oct 9-10th low) was still possible.
Our trading strategy at the time was to get flat on our prior longs into the November 7th cycle window, but we did not substantially start building any short position until Nov 26th. Wednesday's snap back rally after Tuesday weakness was impressive (if irritating), and maybe 975 will still be seen in the current upswing, but we are now finally comfortable getting ourselves 50% net short our typical exposure at current levels, and then adding to this if 975 is in fact seen. We'll work with a stop loss at 983 against these positions.
Looking at other charts of major indices, we still see a definite low missing in the Dow Jones Transportation average down near 1788. Could UAL's potential bankruptcy announcement in early December send us toward that objective first espoused all the way back on September 18, 2001 and modestly revised back on April 21, 2002?
Elswehere, the New York Stock Exchange Index (NYA) also clearly shows a missing low on a Fibonacci rhythm basis down near 389.80.
All the recent chop has indeed been frustrating, irritating, and difficult -- even for the best of traders. But The time has come to stake a position that this chop will now peter out into more fundamental and technical market weakness.
It's unfortunate not to be able to be more upbeat on this Thanksgiving, but we truly believe that recent market froth is yet another misguided short-term market swing. We also wish all of our readers and subscribers our very best for the holidays.
Non-subscribers are invited to access our November 9th article, "Iceberg Risk: A Rumbling Earth & Mortgage Market Malaise," together with our October 4th subscriber-only missive ("The Ancient History of Math, Current Pi Cyclical Rhythms, and The Macro Picture in Europe and Asia in Relation to the U.S"), and other part articles, by signing up for a quarterly Sandspring.com subscription below.
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