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You are correct Steve, and lets remember that the most important rule is to get
the rules correct.
Norman E.
"Steven W. Poser (psn)" wrote:
> Dan -
>
> Let me preface this by the fact that though I am a professional market
> technician, I am no expert on the 90% rule. However a few warnings regarding
> that "rule" (there has been much discussion of it amongs members of the
> Market Technicians Association of late):
>
> (1) The rule only comes into affect after multiple 90% down days. We
> probably do not qualify for that.
>
> (2) The rule is based on the NYSE and not the NASDAQ. There are no studies
> of whether it works on the NASDAQ. We have not had a 90% up day or down day
> in this whole run on the NYSE as far as I can remember.
>
> Steve Poser
>
> ---
> Steven W. Poser, President
> Poser Global Market Strategies Inc.
> http://www.poserglobal.com
> swp@xxxxxxxxxxxxxxx
> Tel: 201-995-0845
> Fax: 201-995-0846
>
> -----Original Message-----
> From: Dan Harels [mailto:harelsdb@xxxxxxxxxxx]
> Sent: Thursday, January 04, 2001 1:44 AM
> To: realtraders@xxxxxxxxxxx
> Subject: Re: [RT] NDX Update
>
> Martin Zweig put out a book in 1986 called "Winning on Wall Street". It
> presents a good, well documented, introduction to technical analysis from a
> statistical and market point of view. In other words, it focuses more on
> markets and averages than on candlesticks and price patterns.
>
> A couple of indicators he presents seem particularly pertinent at this time.
> First, he analyzes the ratio of advancing volume to declining volume and
> its predictive value. He found that "when 90 percent or more of the volume
> is on the upside on a given day, it is a significant sign of positive
> momentum". Zwieg goes on to say, "Every bull market in history, and many
> good intermediate advances have been launched with a buying stampede that
> included one or more 9 to 1 up days". The volume on the Nasdaq on January 3
> was 2,898,963 advancing to 213,592 declining which equates to over 13 to 1
> advancing to declining volume. Breadth on the NYSE was not nearly so
> positive and a ratio of only 2.5 to 1 resulted.
>
> The second indicator Zweig presents that seems especially pertinent here is
> his Fed Indicator. This indicator is calculated by awarding or deducting
> points every time the Fed lowers or raises the discount rate. Points are
> also added or subtracted based on the length of time since a give discount
> rate change and based on a reversal in the direction of changes. The points
> associated with a given interest rate change are dropped from the
> calculation after six months and Zweig considers them stale. Zweig's book
> states that the indicator will normally range from -4 or -5 to + 6 or +7.
> A reversal in the direction of discount rate changes wipes out any positive
> or negative points and a cut, as occurred on January 3, kicks in 2 positive
> points. Zweig classifies levels of +2 and above as "extremely bullish" and
> states that "there is no 'moderately bullish' rating simply because ratings
> of +2 led to excellent stock market performance".
>
> I have found "Winning on Wall Street" to be a good resource and a bargain at
> 15 dollars. Vic Sparando's book "Trader Vic; Methods of a Wall Street
> Master" has also proven to be valuable. He details a technique for
> identifying trend reversals and thus buying or selling opportunities.
> According to this technique, a trend line is drawn from the recent high so
> that it just touches the lower high that occurs immediately before the most
> recent lowest low. A trend reversal is indicated when the price violates
> the trendline and then moves back to test the low before the trendline
> violation. The reversal is confirmed when prices move back above the high
> that was put in when the trendline was violated. A chart that illustrates
> what might be a trend reveral in ORCL is attached for reference. Note also
> that an enfulging, bullish candlestick was put in on January 3. Paging
> through the top 50 Nasdaq stocks by capitalization yields the follwing list
> of stocks that appear to be reversing their downtrends. Presumably these
> are among the strongest stocks on the Nasdaq because they are furthest along
> in their reversals.
>
> ORCL, QCOM, NTAP, CHKP, TLAB, BEAS.
>
> FITB also looks interesting as a retracement from a breakout.
>
> Those of you who have read my previous posts know my advice is worth exactly
> what you pay for it. In other words, be very careful and perform your own
> analysis.
>
> Dan
>
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