MDA - Market Direction Analysis

[LG]

db: I have not changed my previous position or expectation. I believed that the July 2002 low would prove to be a significant low and it was. I believe we saw the momentum low in July of 2002 followed by the October test that produced a price low.

Per my work, I expected a significant rally to follow. Once the December highs were set, my analysis suggested they would be extended (a little vague for some...gg).

The COMPX high has been extended, but the SPX only approached its December high and its Sept 2000 FRL. My intra-day, daily and weekly models suggested that the SPX 9/00 FRL would not be breached with this test, that to much distribution had already occurred and an accumulation pullback would take place prior to the next leg up. The "next leg" a move I expect to take the SPX above its December 2002 high and above its 9/2000 FRL.

The next challenge is to determine the depth of this retrace. It will be what ever the boyz need it to be in order to accumulate the shares they want.

I always prefer to determine the most likely SRLs and then watch my indicators as the price action approaches them to help me discern where and when to anticipate the next pivot. However since you asked, my "WAG" is...that the COMPX will likely (not a given & not necessary to keep the Oct 2002 rally alive) be kept above its March 2000 FRL during this retrace for psychological reasons. The SPX will most likely be dropped no lower than the 50% retrace mark of the March 12th rally (868.77) with the 38.2% area (867.62) being my preferred target.

As always, we shall see...gg

Regards,
LG

WAG (Wild Ass Guess)
SRL's (Support Resistant Lines or Areas)
FRL (Falling Resistant Line)