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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club
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To: Boca_PETE who wrote (7307)7/30/1999 2:02:00 PM
From: Mr. BSL  Read Replies (2) of 15132
 
Pete, benchmark highs are defined as the area between the intraday high and the closing high on a day that the market makes a new high. For example, if the s&P500 breaks the record of 1420, reaches 1440 and closes at 1430, the benchmark high will be between 1440 and 1430. If in the next week or two, the S&P goes into this area and does not CLOSE above 1430 (esp on weak volume) then we have a successful test (from a bears point of view) of the benchmark high. After a few successful tests on low volume, you can be pretty sure the market is heading down. If you have an unsuccessful test, you will get a close above 1440 and the uptrend will be intact.

This is the opposite of benchmark lows. Remember the discussion about benchmark lows during the April 1997 gift horse? The DJIA moved down from 7000 on March 7th to 6477 on April 3rd with an intaday 4/3 low of 6379. The benchmark low was 6377 to 6477. The market rallied for about a week before retesting this benchmark low on the 11th. The DJIA went as low as 6358 but closed above 6377 at 6391 (a successful retest). The next trading day it closed at 6452 for confirmation. The uptrend was intact and we had a nice run for about 6 months.

Hope this helps

Dick
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