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Commentary

SUNDAY NIGHT, OCT 6, 2002:

Friday's negative activity on the day took us as low as 7472, slightly higher than the low of Sept 30.  Is it a double bottom?  Or are we on the way further down?  

I had lunch on Friday with Larry Williams; his sage advice, and let me echo it here, was "you can't ignore the trend."  And, since the end of January 2000, no matter how you slice it, the trend is down.  Unless and until proven otherwise, we're going down.

That said, it still looks like we are carving out a bottom.  There is a head-and-shoulders formation on the monthly Dow chart that goes back to the end of October 1998.  At that time there was a low of 7379, which is the Attractor we appear to be headed for at the moment.  That's another 150 points down on the Dow.  If we are carving out a bottom, then that Attractor will act as support at or near 7379 and we will bounce upward from there.  If it's a head-and-shoulders and we go for the measured move down, then we will be headed for 4467.  Wow!  If that is the case, it will probably not happen all at once, but will continue grinding away for several more years of bear market waves downward.

Dow Cycles

In the past few weeks we mentioned cycles, and watched two overlapping cycles carry the market upward.  The same cycles are now both headed downward, hence the strength of the attraction in the downward direction on the Dow.

As the cycles analysts always point out, the convergence and/or culmination of cycles doesn't necessarily tell us whether the market's direction will be up or down, but it does usually tell us whether the move will be strong or weak.  Conflicting cycles usually flatten out a move and coincident cycles sharpen a move.  

So, right now we are midcycle on the smaller cycle, just ready to turn down.  And, on the overlying larger cycle we have already turned down.  Let's just say it doesn't look good. 

What do we do?  Find stocks with very strong fundamentals that are in congestion formations and watch for breakouts; short the EMinis or QQQs; buy the Rydex Ursa fund.  Those are just a few suggestions.  What about Gold?  There's another possibility.  The trend on gold at the moment is upward on the daily chart since August, and on the longer term, it's up since April 2001.  With gold currently at 323, how much farther up could it go?  The recent high was 331.90, which gives us about 8 points profit.  If you are interested in the much longer term holding period, the next major Attractor above 331 is at 373, but that move could take as long as 2 years to form.

QQQs

We have been short on the intraday QQQ model since 10/02 at 12:30pmPT at 21.00.  We are currently closed at 20.35 with a heavy Attractor sitting on top of us at 20.51.  In fact, 20.51 held down most attempts to move upward on Friday.

We have slight divergence on the intraday RSI, so that could speak to some upward efforts on Monday, but heeding Larry's words, the trend is still down.

Intraday traders, the model is still holding short overnight with 65 cents profit currently.  On 5000 shares that's about $3,000.  Not bad for 2 days work.  Paid subscribers, watch your email for intraday alerts as they happen, real-time.

If you are wondering what the "bands" are on the chart above, we'll talk about that intraday tomorrow.  Those are my new SolarBands, which serve well for trend following as well as profit taking, and stop loss protection.  More on that Monday.

How Did We Do?
Click here to view archives of past Platinum Zone commentary, including the Weekend Stock Alerts.

Weekend Stock Alerts

Last week's stock alerts were hit on four stocks: FRE, MDT, MER & SPC.  We profited on three of the trades and hit the stop-loss on the fourth, for a net profit of $260.

Click Here to go to the Weekend Stock Alerts Archives to view prior weeks' performance.

10/06 Sunny Side of the Street Weekend Stock Alerts:

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