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Strategies & Market Trends : The 56 Point TA; Charts With an Attitude
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To: Densiebj who wrote (41497)9/19/2002 9:42:30 PM
From: Doug R  Read Replies (2) of 79432
 
D,

The Dow is again below the ACT. So far the ACT has been a regression line since July. The Dow has been above it half the time and below it half the time.
The ACT has been rising 2.4742424242... points per day since it was established in Dec '94 when it was 3691. At 250 trading days/year and 7.75 yrs it's risen 4794 points to 8485.
To maintain the ACT as a regression line the Dow has to contend with the fact that the ACT is rising while the Dow is under pressure to go down. It does seem that, at some point, the Dow will not be able to continue reaching back over the ACT. This may be happenning now since the regression behavior since July produced a head and shoulders with a neckline that appears to have given way Tuesday. The high on the Dow Tuesday, 8482, was also equal to the value of the ACT. That's probably not a good sign that the ACT was resistance followed immediately by the break below the neckline on the same day.
When the current downdraft becomes oversold enough for a bounce back up, it will be important to observe whether or not it can get back over the ACT...which will be a bit higher by then. If the ACT has been "lost", I would expect the Dow to work its way below 7000 with a quite possible visit below 6000 too. Since last year's Sept low (which was followed by a "by the book" RR) the Dow has been influenced by the ACT for a year now. That's enough time for enough pressure to build up that can send the Dow significantly lower if the ACT no longer has any influence.

thanks for asking,
Doug R
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