FAVORS!! I get whiplash reading this
Jerry Favors Analysis - Tuesday, October 27, 1998 8 p.m.
At the highs this morning the Dow was up almost 100
points,reaching a print high of 8533.14 .But the Dow could
not hold onto the gains and at the lows this afternoon the
Dow was down as much as 85 points. We closed down 66.17.
The Cycles called for a short term high in the Dow near
October 22 plus or minus a day or so and then a decline into
October 28 plus or minus a day or so,when a short term low is
due. The Dow reached its closing high of 8533.14
for the rally off the October 8 lows exactly on October 22.
We are now into the October 28 plus or minus 1 day time frame
when a low is due. The Bradley still calls for a low near
October 28 plus or minus 2 days,so we have two different
techniques both calling for a low in the same time frame.
The wave structure suggested that we could see a rally
above last week's highs early this week before a stronger
decline into October 28 to October 30. It was for this reason
we told short term traders,by which we mean option traders to
go long for a rally up near last week's high in the Dow of
8652.86 on a print basis. At the highs today the NYSE cash
index,the S&P 500 cash,the OEX,the Nasdaq,the Dec. S&P
futures all exceeded last week's highs as we expected. But
the Dow Jones did not exceed last week's print high of
8652.86 .The Dow itself only reached 8533.14 on a print
basis. If it had performed in line with the other major
indicies mentioned above it too should have gone above last
week's high of 8652.86 before turning down into a stronger
decline. But the Dow failed to follow these other important
indicies above last week's highs today. That failure in the
Dow was followed by a decline below our stop for short term
traders of 8388 on a print basis. We reached a print low
today of 8346.22 .
Despite the fact that our stop for short term traders was
taken out today we still believe we are in the time frame for
some sort of low. We stated over a month ago that the Dow
should see a short term low near October 28 plus or minus 2
days. We are into that time frame now.
While the Dow was down today the breadth showed only
alittle over 100 more declines for the day versus advances.
That breadth should have been much weaker given a 66 point
Dow decline. This too argues for some sort of short term low
in this time frame. When the Dow declines sharply but the
closing breadth is only neutral it is normally a signal that
you are near at least a short term low.
Tomorrow is October 28,which is the exact day that the
Cycles call for a low. Keep in mind the normal margin of
error for the Cycles is plus or minus 1 day so the low may
not come in until Thursday.Any decline below today's lows in
the Dow will signal lower prices tomorrow. Today's print low
again was 8346.22. Watch the Dec S&P futures as any decline
below 1067.50 will suggest a probable decline below 8346.22
in the Dow.
Stock traders,mutual fund switchers and short term
traders, by which we mean option traders, we still look for a
low this week and a rally above 8653 in the Dow. From there
another pullback is likely into November 6 plus or minus 1
day,when the next short term low is due. As long as that
early November low is above 7400 we would look for a final
rally from that low into a more important top near November
25. From there the Bear Market should resume and ultimately
carry the Dow below 7400.
Since we do look for a short term low near October 28 we
will put on a special 3:00 EST update tomorrow just in case
we want to give you a Buy Signal. |
