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

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To: Judy who wrote (17131)	10/28/1998 7:09:00 PM
From: dennis michael patterson	Read Replies (4) of 42787

Favors! Jerry Favors Analysis - Wednesday, October 28, 1998 8 p.m. Firstly because of a doctors appointment tomorrow our regular 8 pm update will be put on at 9 pm EST Thursday. Please keep that in mind for tomorrow evening. The Dow was on a mild rollar coaster today, first up 25 points in the first 5 minutes of trading then down as much as 37 points near 10:00 EST. The Dow then rose to a high of 8432.73 near 12:42 EST ,at which we were up 66 points,then fell to a low of 8357.55 near 2:15 EST at which we were down 8.49. We then rallied all the way back to 8428.61 near 3:09 EST at which we were back up 62 points. We closed up just 5.93. We have stated that we were looking for a short term low in this time frame and that remains our position tonight. The Cycles,which have been so right for so long,call for a short term low near October 28 plus or minus a day or two. Now let's discuss the Cycle forecast in alittle more detail here because we believe it is important. The Cycles called for a high near Oct. 22 and of course the closing high for the rally off the Oct. 8 lows was on October 22 exactly. The Cycles call for a low near Oct. 28 but the first rally according to the Cycles will be strong but fairly short lived.If we do see a bottom in this time frame the first short term high could come in as soon as early next week. The Cycles then call for another short term low near Friday November 6,plus or minus 1 day.It is after the low due near November 6 that the Cycles turn up most strongly into November 25.The strongest phase of the next rally should begin after the low due near November 6. The question is whether the low due near November 6 is higher or lower than the low due near October 28 plus or minus 1 or 2 days. We cannot answer that with absolute certainty quite yet. We can say that the Bradley calls for a low near October 28 plus or minus 2 trading days and then turns up, calling for a rally into November 25. Once we see the amplitude of the expected rally from the low due this week we should be better able to determine hether the low due near Nov. 6 should be higher or lower than this week's low. If in fact it is lower than this week's low we do not believe it will be dramatically below this week's low.Despite the possibility of lower prices very short term we still believe the main trend on stocks will continue up into November 25. A decline in the Dow below 8084 on a print basis could mean we are wrong and a more important top has already been seen. But as long as we hold above 8084 the benefit of the doubt should be given to the upside until late November. As far as the low due this week is concerned we still have not seen the daily indicators reach any sort of true oversold levels. It may not be necessary for the Dow to reach true oversold levels on a closing basis this week for the next rally to truly take hold. But we would be more confident that are are indeed near some sort of low if the Dow were to sell off more strongly tomorrow on a closing basis. Any rally above 8429 on a print basis in the Dow tomorrow morning will give a short term positive signal from the hourly charts but that signal would only remain valid as long as the Dow held above the print low for the week. So far the print low this week has been 8328.71. A decline below 8328.71 tomorrow would be a signal of lower prices before the Cycle low occurs. Since this time frame is so important short term we are going to put on another interim update Thursday at 2:30 EST, just in case we decide to give a Buy Signal.

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