Replies to post #49413 on Zeev's Turnips Patch-No Politics (ZEEV)

[ajtj99]

Zeev, one thing we may have learned from these tops is that with the exception of the January 2001 top, most of the drops have been fairly long, drawn out affairs relative to what we thought would transpire.

They have almost always also ended up worse than most anticipated too.

With that in mind, I believe it is best at this particular juncture to temper both our near term optimism and pessimism. The recent rise and peak (tomorrow?) will result in a sell-off, but these normally begin slow and build as the stair-step down is established. The tops are normally re-tested just like the recent underlying support levels are. Sometimes we get higher highs, then sell off.

The bulls' main enemy is the falling resistance line off the March 2000 high on the COMP monthly chart:

http://stockcharts.com/def/servlet/SC.web?c=$compq,uu[h,a]maclyyay[pb20!b50!b200!c13!c20!c50!a1500!d...

That line is currently at around 1850 or so. In the middle of 2003 it will be closer to the 1300 level. Why is that significant? Because I believe wherever this current rally ends up could also serve as a double top for a rally that could begin the process of killing the bear.

If we bottom in the 700-800 COMP (even 850) range in late spring, a rally from that level could be explosive, if only because there is so little overhead resistance at the lower levels. (many trendlines will have passed below).

Once the monthly falling resistance line is encountered and subsequently crossed, the end of the bear will be near. The top of this current rally could serve as a target for a double top, and the falling monthly resistance line could then be support on the way to a re-test of these new lows.

Once a re-test proves successful, the bear will be slain, and an orderly bull market could emerge.

Therefore, the keys will be this top we are currently forming and the monthly falling resistance line on the COMP, IMO.

[ajtj99]

BTW, I think if you look back since March 2000, you'll have to admit that this bear has been ruled by the 9-month cycle (March 2000 high, Dec. 2000 low, Sept. 2001 low, July 2002 low). Add 9-10 months to July 2002 and you get April/May 2003. If you add 18-months to Sept. 2001 you get April 2003.

These lows have been 48%, 52%, and 43% below the highs of the cycle. That's an average drop of 48% from the cycle high to the cycle low. That's another case for the 700-800 range for the low in the spring.

[optionking]

ZEEV...so you see 1619 to 950 on NAZ by end of march/april time frame?