Jerry Favors Analysis, Aug 20, 1999
Last week we told subscribers that we looked for a rally this week which should peak by Tuesday and then be followed by a decline which should bottom near Thursday, August 20, plus or minus 1 day. The Cycles then call for a rally into August 24, plus or minus 1 day. The Dow in fact reached a print high of 11,117 on Tuesday, August 17 - up 143 points from last Friday's close and up 567 points from the August 10 print low of 10,549.10. As expected, the Dow then began a correction which fell 243 points to the 10,873.30 print low of Thursday, August 19. Technically the Cycles suggest a short-term high near August 24, plus or minus 1 day and then a decline into the end of August. However, if any part of this forecast is to be proven wrong it will probably be the part calling for a decline into the end of August. That decline could prove very short-lived, and then rally to higher highs near the end of this month.
The next important resistance level for the Dow is 11,117 on a print basis. If that resistance is exceeded it will suggest a test of the all-time print high of 11,252.10.
We still have an outstanding upside projection for the Dow calling for 11,450 plus or minus 96 points intraday. As long as yesterday's lows in the Dow are not broken from here that projection will remain intact. In fact, if the Dow exceeds 11,253 on a print basis and 11,325 intraday it will confirm a new upside projection calling for a rally up near 11,563 plus or minus 107 points intraday. That projection would call for a minimum of 11,456 intraday.
If the rally fails early next week, the key support will be this week's lows of 10,873.30 on a print basis and 10,810 intraday. If both of those support levels are broken it will signal a stronger decline next week than we would like to see. However, make no mistake: we do remain bullish here and we believe any correction will ultimately be followed by new highs this year.
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