Donald: I know you can not comment on my cycle indicators, but I would appreciate your comments regarding the converging trend lines. The descending upper trend line projection for Monday is only approximately 100 points above Friday's close!
NOTE: Since I last posted this view, I have given it further analysis and have changed the descending trend line slightly and the lower horizontal trend line!
Cycle Indicator Signal Descriptions
A = Sell/Buy Alert
B = Short/Medium Term Sell/Buy Signal
C = Medium/Long Term Sell/Buy Signal
D = Long Term Confirmation
As of Friday's close (10/9) my cycle indicators are giving “A” buy alerts on the Dow Composite, Industrials, NYSE Composite and SPX. Also, moving toward giving the same signal on Dow Transports, NASDQ Composite and Russell 2000. (The above mentioned Indices are currently in "BCD" sell signals!)
Of course, I must mention that the Dow Utilities have received an “A” sell alert! With the overall market, moving counter to the norm with regards to interest rates, (IE: Interest rate drops normally help the market!) coupled with the Utilities being much more sensitive to interest rates, a divergence between the Dow Utilities and the rest of the Market is occurring. (The Dow Utilities are currently in “BCD” buy signals!)
Conclusion: I believe the Market may have begun a rally or at least started a sideways period. This pause in the downturn started at the reverse off the intra day lows on Thursday 10/8. Duration and or price point I do not predict.
Dow Industrials End of Day Theoretical Semi-Log Chart
*Long term triangle formation: I have been watching this convergence for some time, but thought a decision would be made by the market before these trends lines came into play!
Draw the upper descending trend line by using the highs of 7/20 and 9/29. For the lower horizontal trend line I find 7380 is closest. The upper descending trend line projected forward one-day for Monday is approximately 8050 to 8075.
I previously stated that I expected next week to be a decision week, but I posted to soon and upon further analysis, I think that may be too tight of a time line. Most likely next week, but surely by 10/23.
Conslusion: This triangle formation could be viewed as a very large descending triangle at the beginning of a down turn! In any case, the market as measured by the Dow Industrials is closing in on a decision point. The above converging trend lines, I believe, will require a decision from the Market, soon!
A significant break above 8075 will at least portend a considerable bear rally. The next upside resistance at approximately 8250 then 8350.
A significant break below should confirm the continuation of the bear market. The next support areas at approximately 7000 and 6500.
COMMENTS?
BWDIK
Regards,
LG |
