Analysis - Sunday, July 22, 2001 7 pm
The Dow began a rally last week as we expected. The
performance in the Nasdaq was not as strong as the action in
the Dow last week.
First we should report to you that the Gann 3-Day Chart
on the Dow did in fact turn down on Friday. That is a problem
for the Dow short term. It does not mean that we cannot see a
stronger rally Monday, but until the 3-Day Chart turns back
up, we cannot have much confidence in the sustainability of
any rally this week. This is especially true given that the
Cycles call for a high near Monday, July 23, plus or minus 1
day, and then a decline into July 25, plus or minus 1 day.
The Gann Weekly Chart on the Dow will turn down this week
on any decline below 10363 intraday and 10439 on a print
basis this week. Of the two,the intraday number is the more
important. If this occurs, it will be an even stronger signal
that a stronger correction is coming this week in the Dow.
Now if this occurs, it will not necessarily turn us bearish.
As long as any correction from here holds above the July 11
low of 10049 intraday, no actual sell signal will be given, and
another rise to even higher highs will follow into August.
The 2-Day Rate of Change is still technically on a short-
term buy signal, but a close below 10616 in the Dow on Monday
would give a short-term sell signal.
The Nasdaq, because of its poor performance last week, is
even more vulnerable than the Dow. The Gann Weekly Chart on
the Nasdaq did not turn up as it did with the Dow. That chart
on the Nasdaq is still pointing down, and a rise above 2092
this week is necessary to turn this chart back up and prove
higher prices are coming short term. The 3-Day Chart on the
Nasdaq had a chance to turn up on Friday, but failed to do so.
A decline below 2003 in the Nasdaq from here will give a
short-term bearish signal off the Gann Daily Trendline. If
that occurs the next important short-term support will be
1934. If 1934 is also broken an even stronger decline will
follow short term, with initial support down near or just
under 1900.
Getting back to the Dow, any decline below 10566 on a print
basis Monday morning will signal that lower prices are coming
and a potential test of 10529. If 10529 on a print basis is
broken a repeat sell signal off the Hourly Charts will be
given, signaling that an even stronger decline is coming at
some point Monday. Any rally above 10648 on a print basis
will signal that a stronger rise is coming at some point
Monday, but given the Cycles forecast and the downturn in the
3-Day Chart, we still doubt any rally will last for more than
1 or 2 days.
Jerry Favors |
