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Strategies & Market Trends : Stock Attack -- A Complete Analysis

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To: Electric who wrote (16022)	9/28/1998 11:13:00 PM
From: dennis michael patterson	Read Replies (2) of 42787

FAVORS! Jerry Favors Analysis - Monday, September 28, 1998 8 p.m. Last evening we stated that we should see some further rally in this time frame. At the highs today the Dow was up 130 points. We closed up 80 points. Today was a fair day for the Dow but not so great for the market as a whole. The breadth at the close showed only 484 more advances for the day than declines. That is not strong action. The Nasdaq at the highs was up 26 pts, the equivalent of a 120 point rally in the Dow. However the Nasdaq closed down 4.37. Once again there were significantly more new lows for the day than new highs. However the dominant factor in the market this week will be whether or not the Fed decides to lower interest rates tomorrow. We have no crystal ball when it comes to the Fed. If the Fed does decide to lower rates that could spark a strong rally,at least short term. We still have a short term projection calling for 8345 plus or minus 91 points intraday. The top of the 21-Day 3 1/2% Exponential Trading Band today was 8319 intraday. The top of the band tomorrow should be in the area of 8339 intraday. That is where the Dow will encounter significant resistance to any rally. There are still a few technical considerations which could support the case for higher prices short term. The Trin-5 today closed at 5.79,still close to an oversold reading. When the Trin-5 is near or above 6.00 you will normally soon see some further rally in the Dow. Today's 5.79 reading is still close enough to 6.00 that it could support some further rally. The 5-Day RSI on the Dow closed at 61.79. The RSI does not reach overbought territory until it exceeds 70 so this too would allow for some further rally short term. Any rally tomorrow morning above 8154 on a print basis will give a short term buy signal off the hourly charts. However if so that signal would only be good for tomorrow only and would be cancelled entirely if the Dow falls below 8026 on a print basis. Our bottom line is that we do not want to go short ahead of any possible Fed easing tomorrow. We want the Fed news to be totally behind us before we go short. We believe it is now just a matter of days before the time comes for us to go short. Stock traders we will give you a list of candidates over the next couple of days. Mutual fund switchers will be going long the Rydex Ursa Fund. We will also be shorting the Dow Diamonds.

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