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360-289-9441(March 26, 2000) STOCK INDICES: NASDAQ 100--The NASDAQ 100 June futures returned to its bullish ways with a vengeance this past week, moving from Tuesday's low of 4210.00 to 4882.00 in a wink of three days, with hardly a breather. Indicators are strongly bullish, but not very overbought; RSI is under 70; volatility stands at just over 50 percent; direction and momentum indicators are all bullish in every time frame. 9- and 18-day moving averages are lagging and show the "sell" signal from last week's dip.
Trying to find clues to the occasional dips taken by the NASDAQ is most difficult. They do not conform to trend line analysis. If pressed to use an indicator, I'd try 14-day stochastics, or possibly the 9 day for a more timely indicator. If the trader does not have the deep pockets necessary to stay the course when such dips occur--not "if" they will occur, but "when" they will occur--then a strategy of "out" when the indicator rings and "in" again quickly as the stochastics cross.
A good long run when the uptrend resumes will bolster the account to protect against large drawdowns. Not for the small account and not for the faint of heart, but a dramatic run since last fall--one to remember for the history books. Up strongly again.
Martin B. Miller
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