Charts courtesy of Yahoo.com.  NOTE: As a Platinum Zone member, you may call Sunny at (760) 930-1050 if you have any questions about terms used herein.

Commentary

THURSDAY NIGHT, OCT 24, 2002:

Today the Dow30 retreated for the fourth time from the overhead Attractor at 8530, this time falling just a little deeper than the last 3.  So we now have a broadening formation formed by the last 3 bars.  Yesterday we warned that it was not a good sign.  Today we have to refer you to Bulkowski's "Encyclopedia of Chart Patterns" and note that this is what Technical Analysts call a Broadening Top.  Generally these broadening formations will touch the top line three times and the bottom line two times while forming the pattern.  Also, generally, they take longer to form than just a few days.  If we look at the same chart on a different time scale, say a 15-minute chart, we might be able to read more into the pattern.

On the 15-minute chart (Figure 2) the pattern opens up a little and while it still looks like a broadening formation, it also looks like a W pattern.  According to Bulkowski these patterns are reversal patterns with 69% of them meeting the predicted price target.  The predicted price target is most likely between 20%-30%.  You can see from the trendline I drew on the lows that if this turns out to be a broadening formation, it isn't quite over.  On the Dow the pattern would need to fall just a little further to touch the trendline, at about 8200.  You can also see, on the same chart, that I have marked an Attractor at 8258, which could easily arrest the downward motion tomorrow.  Because the double overlapping cycles are still in the upward phase, my vote is that we will drop slightly lower tomorrow, followed by more upside activity.

It was a bit troubling today that on the QQQs we broke below the newly formed uptrend line, even though we stated yesterday that trendlines prefer to be at 45 degree angles.  On the daily chart it looks like the Attractor at 23.56 will stop the downward motion.  Barring any world shaking events, I expect a bounce upward off that line.

Our short-term, intraday model went into sell mode today at noon PT.  That's probably a whipsaw trade, with our entry too late in the move.  As I said in the Alert today, I'm staying with the long trade, and overriding the system, in expectation that we will bounce upward off the Attractor lying at 23.75.  If we drop below 23.75, I'm out--with a bigger loss.

GOLD

The weekly chart of gold looks like it will move down to 300 if you feel like shorting some gold contracts.

BONDS

The Attractor at 108 stopped the precipitous fall of the @US and it looks like time for a bounce upward towards the 110 range.

VARIOUS COMMODITIES

Coffee looks ready to run up to 72.  Sugar has been long the model since July, so it's too late to get long.  Instead it looks like it might be getting ready for a shorting opportunity as it has bounced up against overhead Attractor at 7.22.  Cotton looks like a potential long play from current prices to 49.50, where there is a clear Attractor that will likely hold prices down.  Soybeans look like they could get into some range trading with a bounce back from the current level in a head-and-shoulders pattern to a measured move near 480.

SUMMARY:

Traders: Our model has us short the QQQs, the SPoos, and the DIAs, but we are likely to get whipsawed in the current position.

Investors: We are long the Dow, expecting a pullback near 8200 followed by a run up to 9000.  On the SPoos we are long the nearby contract, expecting a move to 952 unless something else develops that changes our minds.  A pullback to 855 would not surprise us, but anything lower is a reason to get out and take the loss.  We are also long the QQQs, which are showing the same patterns and same analysis as the other indexes.  The expected pullback on the QQQs is at 23.56, with all bets off if we drop below that mark.

SPoos Attractors:

950.00 and 911.50 are looming overhead, pulling the SPoos upward.  855 is below us and should act as support.  Very long-term, it looks like we could be headed for a move on up to about 1049, of course chopping along the way.  Both the long-term and the short-term SPoos models are in buy position.

How Did We Do?
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