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Technology Stocks : Semi Equipment Analysis
SOXX 342.47+1.6%Jan 16 4:00 PM EST
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To: Donald Wennerstrom who wrote (54459)10/29/2011 7:00:24 PM
From: Return to Sender3 Recommendations  Read Replies (3) of 95737
 
Amateur Investor Weekend market Analysis (10/29/11)

amateur-investor.net

If the Dow closes above 12080 on Monday it will be the best performing October on record which dates back to 1896. The only other times the Dow has gained 10% or more in October was in 2002 and further back in 1982.



Naturally if a comparison is made with the 2002 and 1982 events the conclusion will be the market should continue higher for several more years like occurred from 1983 through 1987 (points A to B) and from 2003 through 2007 (points C to D).



However I would caution everyone that the overall setup this time is much different than those prior two events. Back in late 2002 the Dow had gone through a 33 month Bear Market and lost 39% of its value before bottoming in October.



Meanwhile prior to October of 1982 the Dow had been stuck in an extended trading range for nearly 7 years while developing a choppy consolidation pattern.




Finally for those that watch the Put to Call Ratio the 5 Day Moving Average (red line) remained elevated above the 1.0 level in August and September as many were shorting the market which helped lead to a bottom in early October. However we are now seeing a rapid drop but until we see the 5 Day Average drop back to around the 0.82 level the S&P 500 may continue higher. In the past tops have occurred as the 5 Day Average of the Put to Call Ratio has fallen from above the 1.1 level (green line) back to around 0.82 (points E to F).


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