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----- Original Message -----
From: <A
title=mike-burk@xxxxxxxxxxxxxxxxxxxxxx
href="">Mike Burk ; <A
title=mike-burk@xxxxxxxxxxxxxxxxxxxxxx
href="">Mike Burk
To: <A title=mike-burk@xxxxxxxxxxxxxxxxxxxxxx
href="">Mike Burk
Sent: Saturday, May 08, 2004 10:27 AM
Subject: 5/8 Report
<A
name=OLE_LINK4><A
name=OLE_LINK1><SPAN
><SPAN
>Technical market report for May 8,
2004.The good news is:
<LI class=MsoNormal
><SPAN
><SPAN
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>The current period of weakness should produce
good long side entry points soon.
<SPAN
><SPAN
><SPAN
>
<SPAN
><SPAN
><SPAN
>The new low indicator, a 10% trend (19 day EMA)
of new lows is the best indicator for identifying bottoms.<SPAN
> New lows dry up very quickly after
peaking near a price low making the indicator easy to read.<SPAN
> In the charts below the new low
indicator is plotted on an inverted Y axis so increasing new lows push the
indicator downward while decreasing new lows move the indicator upward (up is
good down is bad). The charts are
scaled so that minimum and maximum values of the indicator or index, for the
period showing, go to the top and bottom of the
chart.
<SPAN
><SPAN
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>The first chart shows the NYSE new low indicator
and the S&P 500 (SPX). The
indicator is at its lowest point since March of 2003 and
falling.
<SPAN
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><v:shapetype id=_x0000_t75
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aspectratio="t"><v:shape id=_x0000_i1025
type="#_x0000_t75"><v:imagedata
src=""
o:title="NYSE-NL-2yr"><IMG
src="gif00139.gif">
<SPAN
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>I have recently written about the problem of
contamination of NYSE data by the large number of Bond ETF’s traded on the
exchange. The chart below is
similar to the one above, but the indicator is calculated with NASDAQ new lows
and the index is the NASDAQ composite.
The patterns vary a little, but both indicators are at their lowest level
in over a year and still heading downward.
<SPAN
><SPAN
><SPAN
><v:shape id=_x0000_i1026
type="#_x0000_t75"><v:imagedata
src=""
o:title="OTC-NL-2yr"><IMG
src="gif00140.gif">
<SPAN
><SPAN
><SPAN
>The indicators can be ignored when they are near
the top of the screen because there are very few new lows.<SPAN
> Long standing rules of thumb as to the
trigger levels for concern are several consecutive days of more than 40 new lows
on the NYSE and 70 on the NASDAQ.
April 19 was the last day there were less than 40 new lows on the
NYSE. The 70 level has only been
exceeded twice on the NASDAQ with 77 new lows on April 30 and 90 last
Friday.
<SPAN
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>The chart below shows the same indicators and
period as those above, except the index is the Russell 2000 (R2K) and new lows
are calculated on the component issues of the R2K for 6 weeks rather than 52
weeks as reported by the exchanges.
It is not clear on the chart as shown that the indicator hit a new low
for the past year on Friday.
<SPAN
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><v:shape id=_x0000_i1027
type="#_x0000_t75"><v:imagedata
src=""
o:title="R2K-NL-2yr"><IMG
src="gif00141.gif">
<SPAN
><SPAN
><SPAN
>All of the charts above cast doubt on the
significance of the recent March low as a major low.<SPAN
> One can minimize the significance of
NYSE data and argue that the NASDAQ has yet to reach critical mass, but we are
close.
<SPAN
><SPAN
><SPAN
>The chart below shows the same indicators as
those above, but the period is one year, the index is the SPX and new lows are
calculated on the component issues of the SPX for 6 weeks rather than 52 weeks
as reported by the exchanges. This chart still supports the idea that the recent
March low was significant because the new low indicator has a long way to go
before reaching the March low. If
this decline ends soon, the relative strength shown suggests a transition of
leadership from the secondaries to the blue chips.<SPAN
> If this decline does not end soon the
chart will merely be showing how the follow the
secondaries.
<SPAN
><SPAN
><SPAN
><v:shape id=_x0000_i1028
type="#_x0000_t75"><v:imagedata
src=""
o:title="SPX-NL-1yr"><IMG
src="gif00142.gif">
<SPAN
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>The current period is dangerous.<SPAN
> Seasonally the end of April beginning of
May period is one of the strongest and that seasonal strength failed to arrest
the decline. Most of the new low
indicators hit one year lows on Friday and all of them are heading
downward. There were 706 new lows
on the NYSE on Friday, the last time that number was exceeded was July 24, 2002
when there were 917.
<SPAN
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><SPAN
>When reading the new low indicators it is
prudent to wait until there have been 5 consecutive up days to avoid being
whipsawed. The value of the NYSE
new low indicator on Friday was 190, any number of NYSE new lows greater than
190 will keep that indicator moving downward.<SPAN
> The value of the NASDAQ new low
indicator on Friday was 42, any number of NASDAQ new lows greater than 42 will
keep that indicator moving downward.
<SPAN
><SPAN
><SPAN
>I expect the major indices will be lower on
Friday May 14 than they were on Friday May
7.
<SPAN
><SPAN
><SPAN
>Last weeks forecast was another miss.<SPAN
> The pattern of seasonal strength ended
Thursday and the market followed that pattern pretty closely, but, Friday’s
losses wiped out all of the gains made earlier in the
week.
<SPAN
><SPAN
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>This report is free to anyone who wants it, so
please tell your friends.They can sign up
at:http://www.guaranteed-profits.comIf it is not for you, reply with
REMOVE in the subject line.Thank you,Mike Burk W6/L10/T2<BR
><BR
>
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