11/4-8/2002

Where will the market go next week, November 4-8, 2002?
Next week, November 4-8, 2002, looks like the market will remain in up mode. The market has treaded water for an extended period. This will create interesting contractile tension upon release. For about two weeks there has been a tight 25 point range between 875 and 900. The stochastics started oversold and caught up to the averages as the SPX treaded water. Friday's activity showed the SPX stochastics at 50 and opening upward. Microsoft is expected to help out next week followed by the Fed. Unless the Fed lowers rates it looks good. While that information does not come from the charts, it may be indicative of sentiment. For those market timers and chart enthusiasts who bought when the VIX was near fifty and the SPX dipped below 790, you are looking good to hold and raise your stops.

Check the charts and see what you think.
Bigcharts.com

We skipped a couple of weeks. We were rather busy and occupied with other commitments. We are sorry for the prolonged hiatus. While we were apparently asleep at the wheel, some interesting events showed up on the charts. We'll discuss and show these more fully as time permits. The bottom in July was much more easy to detect clearly from the charts than the October one. The October bottom was uncharacteristically a stealth bottom. It had fewer clearcut "textbook" signs and indications. There was an open and a close barely outside the lower Bollinger band, albeit on two consecutive days. But the SPX dipped lower before heading higher and starting to hug the upper Bollinger band.

Meantime for an explanation of what we have been expecting long term going forward, point over to Bernie Schaeffer's excellent website. Specifically take a look at:
A Bullish Trade in the Making By Bernie Schaeffer 10/29/2002
"But in this piece, I'm going to make the case that the rally off the October 10 bottom may carry quite a bit further than the one off the July bottom...."
schaeffersresearch.com/schaeffer/bernie_observations.asp?ID=6447

Keep in mind that Bernie says that DOW 6,000 is where we are going to be after a few ups and downs. He says this rally should take us to SPX 1100. Wouldn't that be great? Depending on how and how fast we get to that level, the Ultimate Oscillator and the RSI might well be screaming by then.

Yea verily, this guy is good.

It looks like the range of the VIX as an indicator has changed a little as expected. Nevertheless, it is still an indispensible indicator. You can see that it has remained relatively high for an extended period. On October 18, it made a Golden cross.

Click image to enlarge.