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Strategies & Market Trends : Stock Attack -- A Complete Analysis
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To: The Perfect Hedge who wrote (15377)9/2/1998 7:23:00 PM
From: dennis michael patterson  Read Replies (2) of 42787
 
Beebs: parse this will you?

Subject:
Nightly Update - September 2, 1998
Date:
Wed, 02 Sep 1998 19:09:32 -0400
From:
<info@jerryfavors.com>
Reply-To:
jerryfavors@worldnet.att.net
To:
update@jerryfavors.com

Jerry Favors Analysis - Wednesday, Sept. 2, 1998 8 p.m.

The Dow at the highs today was up as much as 125 points.The
Dow then turned down and gave it all back, closing down 45
points for the day.While the Dow was down the breadth was
actually positive, showing an unofficial 1839 advances to 1268
declines. That is normally a positive signal. But we did not
like the way the Dow closed. What we mean by that is that the
Dow closed too close to its lows for the day. The Gann
Trendline will turn back down tomorrow on any decline below
today's intraday low. A downturn in that Trendline would
bother us as it could lead to a test of Tuesday's lows of
7400 on a print basis and 7379 intraday. If the Dow breaks
below those 2 levels it could be in some real trouble. A down
turn in the Trendline does not necessarily mean a test of
7400 again. The decline could hold well above 7400 and turn
back up above today's high of 7952.56 on a print basis.But
with the main trend so clearly down a downturn in the
Trendline would disturb us. Today's print low was 7767.44 but
the Trendline is actually based on the intraday or so called
"theoretical" highs and lows. Today's theoretical low is not
available as of this writing. It is probably safe to assume
that if the Dow falls more than 20 to 30 points below today's
print low of 7767.44 the Trendline has turned down. Also
watch the S&P futures. If the September S&P futures fall
below 987 there is a good chance the Trendline will turn down
on the Dow.
The fact that the Dow turned up so strongly Tuesday on
record volume is one of the reasons we would expect some
further rally. The fact that it turned up so strongly after
meeting the minimum downside target of 7390 we gave you back
in July is another reason. But we will be very cautious about
any long postions here as in this environment all surprises
will be to the downside.
If the Trendline turns down tomorrow but the Dow holds
above 7400 then fine, we would look for higher prices.
The 7400 area in the Dow is important since the only
really important support below it is the critical level of
6933 intraday. That level is of major importance to this
market as a break below it would give the kind of bearish
signal we have not seen for the last 16 years,when this Bull
Market began.
Short term traders we went long on the decline below 7800
today. We will not accept too much risk on the long side as
in this environment all surprises will be to the downside.
Stock traders and mutual fund switchers covered half of
your short positions.Hold the other half just in case this
rally fails and we break below 7400.

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