Chip, I've become Switzerland on what the DJIA formation is and what it means, I did see a couple
of comments in the current Barron's Market Watch about the DJIA chart formation, I'm posting them here
but not endorsing them........... after all I'm Switzerland -g-
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MARCH 5, 2001
Market Watch
A Sampling of Advisory Opinion
The Squeeze Play
P.O. Box 2680, Acton, Mass. 01720
FEBRUARY 26 ~ Many moons ago, before the Dow surpassed the 10,000 milestone, we contemplated 12,000 as a long-term objective. Twelve thousand seemed to be a level high enough to make 10,000 "appear" as support. The Dow indeed did hit 11,750.28 on January 14, 2000 -- close enough. Since then the path of the Dow has etched out two hard tests of the 10,000 level, with a descending level of peaks. To technicians, this is a potential descending triangle -- a bearish pattern. The level to watch for in the Dow is 9600. If that level fails, the descending triangle pattern will be complete, leaving lots more downside potential.
-- Phil Erlanger
Investment Quality Trends
7440 Girard Ave., La Jolla, Calif. 92037
MID-FEBRUARY ~ There is an old market expression, "The trend is you friend." Once you identify the major market trend, you are less likely to make mistakes. Now, according to the Dow Theory and other major market indicators, the primary trend in the market is down. Therefore, it's wise to use caution and be conservative in selecting stocks. We should sell overvalued stocks and confine purchases to undervalued blue chips with rising dividend trends. We can never tell when the tide will turn; we know, however, that it won't turn on a dime. The turn of the tide is a process that can't be recognized until it is well under way. Therefore, it makes sense to start positioning our capital in undervalued stocks now, slowly and carefully, but keeping enough capital in reserve to add to our positions when a change in the primary trend becomes apparent and the situation is more fluid.
-- Geraldine Weiss
Financial Insights
P.O. Box 793-Z, Oakhurst, N.J. 07755
MARCH ~ Recently, there has been an upward bias in the Dow Industrials and a downward one in the Nasdaq. Yet, with the numerous 100-point daily swings in both indexes, they remain in trading ranges. I believe we are experiencing a classical distribution pattern in the Dow that accompanies all important bull market tops. The Advance/Decline Line peaked in April 1998 and has since moved sharply lower. Given the length of the decline in the A/D Line, the apparent large top is that much more ominous than usual. There is a tremendous amount of stock that would like to exit this market. This is the primary reason why each rise by the major indexes is met with a flood of shares. Unless investors can muster sufficient buying power to overcome the enormous overhead supply, the stage is being set for a severe across-the-board decline. Further, if the Dow Industrials break below their 9796.03 low, I believe both indexes will align themselves on the downside.
-- Richard. S. Appel |
