Morning Briefing, 10/29/2002

[21st Century Alert]

Title: Morning Briefing, 10/29/2002

Click Here! TUESDAY a.m. October 29, 2002   One Year Ago By David Nichols The markets are doing the exact same thing as last year at this time. Strange. Of course, no pattern is truly predictive, but a look back at exactly one year ago is certainly very interesting -- and perhaps instructive, too. Last year the markets were rebounding smartly off the September 21st bottom. But they hit a flat spot into the end of October, and congested sideways. Here's how it looked on the daily chart: This sideways move through the last part of October was setting the stage for another run higher. The market was congesting, gathering its strength again after the initial big move. It's especially interesting to drill down to the 60 minute intraday chart from last October, as this was a period of unusual roller-coaster ups and downs. Very similar to what we are seeing now, in fact. The market was doing its best to shake out everybody, both bulls and bears alike. There were false breakouts, and false breakdowns, false gaps -- just about everything was false. The only thing that held true was the strong daily uptrend, which reasserted itself soon after this sideways congestion period. Now the charts look very similar. Here's the daily and 60 minute OEX charts for the current period: Let me say again that it's never a good idea to read too much into historical chart patterns. The market will always trace out a new path to fool the greatest number of people at any given time. But in this case, it's interesting to see the path that fooled so many people under very similar circumstances at exactly this time last year. The main point of this quick historical look is to show that this type of whippy, up-and-down behavior is entirely in keeping with a market that is consolidating a big run to the upside. This is what sideways congestion looks and feels like. It's actually pretty amazing how well-balanced the market has been over the past week, moving up and down around the same levels for days. If we follow the same script as last year, we'll finish this period of congestion with a day or two of pronounced selling, making everyone quickly believe that we're going right back down to the recent lows, and the bear market is roaring back. But this should prove to be a false breakdown, and the markets will quickly reverse on this widely accepted line of thinking, and zoom right back to the upside. That's what happened last year, and that's exactly what could happen again this year. One last note: I've received some questions about only being halfway loaded into the leveraged Rydex upside funds (RYVYX and RYTNX). If we get a pullback, we'll load in the other 50%. Sentiment Analysis from Phil Erlanger The confidence indices are now right down the middle, showing a market that is balanced in terms of sentiment. There is not an extreme of sentiment either way right here. The prevailing trend in the intermediate-term is up. The short-term Squeezeometers have been jumping around, and are now in the "mature uptrend" rows.   What's a Squeezeometer? More Definitions.   This Morning Briefing is brought to you by 21st Century Alert. Your 21st Century Alert subscription offers so much more. Click here to go to 21st Century Alert's Web site. You can find this article on the Web at: http://www.21stcenturyalert.com/page/tcx/morningbriefing/2002-10-29/ To remove yourself from our mailing list, or to get your username and password so that you can access the Morning Briefing archives on our Web site, click here.