I missed today ... but thought I'd post this. Not everyone likes Jerry Favors ... but I believe he is excellant and has called this move in the DJIA. This post is the last 'freebie' from his site, but very relative today imho ....
'Welcome to a new service provided by www.jerryfavors.com
March 17, 2000
After the January all-time high, the Dow fell 1927 points, or 16%, to the 9796 closing low on March 7. In the process, the first sell signal of the last 20 years was given by the Gann Quarterly Chart. Over the last 100 years every sell signal from this chart was ultimately followed by a decline below the intraday low of the prior year. There have been no exceptions. There have been numerous times, when after the signal was given, the Dow began an extremely strong rally which lasted for several weeks and sometimes months. In several of those cases the Dow rallied back up near the prior all-time high. However, in each case those rallies ultimately failed to reach new highs and the Dow broke down to new lows.
In our March 13 newsletter we updated the status of several momentum indicators, and stated the following: "The momentum indicators are about as equally disparate here as the comparison between the Dow with the seemingly invulnerable Nasdaq. There are several key momentum indicators which are showing very bullish readings while others are showing bearish readings." One of our favorite indicators is a simple 5-Day Moving Average of Advancing Volume. After the February 25 low in the Dow, the 5-Day Advancing Volume shot up strongly, reaching a high of 667.4 on March 3. That day marked the highest reading in the 5-Day Advancing Volume in over 8 years. That would normally be a very bullish signal.
On March 10 the 10-Day Rate of Change rose to its highest level since January 20. This is very bullish action.
We discussed the Trend Exhaustion Index, an indicator discovered by Dr. Clifford Creel, which was explained in an old issue of the magazine, Technical Analysis of Stocks and Commodities. What we look for in this indicator is bullish or bearish divergence at key turning points. While the Dow has fallen to new lows, the Trend Exhaustion Index has risen to its highest level of the last 20 months. This is a very bullish pattern.
One of our favorite indicators, Stix, normally signals you are near a bottom when it falls below 45. On Friday, March 10 Stix closed at 44.83, once again below 45.
The above are just a few of the momentum indicators suggesting we should be near some sort of important bottom. If we had to weigh the bullish momentum indicators against the bearish ones we studied, we would have to say the balance of the two must be considered bullish. So we must weigh the important sell signal off the Quarterly Chart against the bullish readings we are seeing in several key momentum indicators.
Whether the Quarterly Chart signal proves correct from here, or not, we believe that some further rally is likely. We currently have an upside projection for the Dow calling for 11277 plus or minus 167 points intraday. If that projection is reached, there will be extremely strong short term resistance in that area.
Announcement:
Late last year we announced that future access to this commentary would be available by ID/Passcode. Other concerns, related to Y2K at the time, took priority over that change. We have resumed plans for ID/Passcode access. This commentary will be temporarily suspended so that we can devote attention to completing and implementing those plans. Please monitor this site for future announcements, or email our office to request that ID/Passcode information be emailed to you when it becomes available.
The Jerry Favors Analysis
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email: info@jerryfavors.com'
Stephen
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