| Subject: A breakout above or below it, and subsequent follow-through has a high probability of moving further in that very direction in the weeks ahead.the manner in which it has traded around its 100-week moving average.However, if prices continue to rise and breadth figures show substantial improvement…we will quickly reverse and move to an aggressive long position from a short position. |
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Issue Date: 2003 July 20 
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Date Posted: 26/07/03 9:56:31pm
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From: getmenews Replying To : waveguy (post 3596) Jul 22 2003 2:43PM
's message, "Join us for a Rally to 1119?buy one or two call August call options at 1060" on 26/07/03 10:01:46am
Counter-Trend Rally Points To Weakness Ahead
Over the past many weeks, we have addressed the major indices through a “prism” of sorts with the S&P 500 Index and the manner in which it has traded around its 100-week moving average. Our reasoning is simple: A breakout above or below it, and subsequent follow-through has a high probability of moving further in that very direction in the weeks ahead. And, given prices have traded nearly right on this very important weekly closing level for several weeks now increases its importance. Our targets had been, and will continue to be two-fold given recent trading around this level – an upside potential of 1150-1200; or, a downside target of 965, and if broken…followed by 910.
At this time, Friday’s rally in the S&P 500 Index brought prices back to the 993 level. However, this rally was weak indeed, and more a rally of the “triple or quadruple” witching variety that occurs 4-times per year. Hence, given the last week’s sharp decline in the mid-cap, small-cap and technology sectors, and given Friday’s rally – we shall add our subjective comments as being – “ Friday’s rally was counter-trend in nature, and thus we will look to be sellers upon it in the coming weeks ahead”.
Therefore, we believe lower prices towards our initial target of 965, and then potentially lower to 910 are intact, and as such we are trading accordingly. However, if prices continue to rise and breadth figures show substantial improvement…we will quickly reverse and move to an aggressive long position from a short position. But until then…we will do nothing more than look to add to our short positions.
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