Favors for you
Jerry Favors Analysis - Sunday, November 1, 1998 7 p.m.
For the last few weeks we stated that the Dow should see
some sort of cycle low near October 28 plus or minus a day or
so,and then begin another rally. Oue cycles had called for a
short term top near October 22 and a deline into a low near
October 28. The Dow reached a closing high of 8533.79 on
October 22 exactly,then fell to a closing low of 8366.04 on
October 27. The intraday low this week of 8271.60 occurred on
October 28 exactly. The Dow then turned up as the Cycles and
the Bradley forecast,so far rallying 226 points on a closing
basis,331 points on a print basis and 446 intraday from last
week's lows. We expected a low near October 28 and we got
that low on October 28 exactly at 8328.71 on a print basis.
While the Dow reached a low last week in line with our
forecast,we had to decide whether we would take subscribers
long in this time frame or not. It was really a question of
whether we believed the rally would last long enough and
carry the Dow high enough to make it worth our while to go
long . The reason we chose not to go long despite the fact
that we expected a strong rally after October 28 was that our
work suggested the rally off that low would be relatively
short lived,lasting no more than few days into early next
week.The major indicies are completing 5 waves up from the
October 8 low in this time frame. This means that even if we
see a further rally early this week,which we believe is
likely,that rally will be followed by a strong 3 wave decline
into late this week. The critical short term support for next
week will be 8271.60 intraday and 8328 on a print basis. If
both of those levels are broken next week then a much larger
decline will follow. That decline could easily take the Dow
down near 8100 if both of the above support levels are
broken.
The Cycles call for a short term high near November 2
plus or minus 1 or 2 trading days and then a stronger decline
into November 6 plus or minus 1 or 2 days. From there the
Cycles turn up strongly into November 25. We have a 23 week
Cycle high due near November 25.This Cycle has caught some of
the most important highs of the last 16 years or more. There
is also a Lindsay Top to Top Count calling for some sort of
high near November 25.
Just as the Gann Swing Chart Cycles suggested we were
near a short term low near October 28 the short term daily
charts suggest we are again near a short term high. As of
last Wednesday we were at an extreme from 1 Gann Trendline
low to the next short term low.This suggested there was a
high probability that we were near a short term low. We are
now at an extreme from one top to the next top. This suggests
the Dow should see some sort of short term high within a day
or two,if we have not seen one already.
We have been asked several times this week whether we
thought it was possible that the Bradley was inverting here
and we were reaching a top near October 28 plus or minus 2
days instead of a bottom. If this scenario proved correct the
Dow would be reaching the next important top right in this
time frame and begin a decline below 7400. We cannot totally
rule that possibility out. We just do not believe that is the
most likely scenario from here.
We believe we could see one more rally above 8660 early
this week before the corection begins.This would be in line
with the Cycles forecast. If so a sharp correction would be
expected to follow into a low near Nov. 6 plus or minus 1 or
2 trading days. If we are right about that correction and the
technical indicators support our position we will give a Buy
Signal for all subscribers at that time. If we are right the
rally from the low in that time frame should last long
enough and move high enough to make it worth our while on the
long side for all subscribers. But until then we believe
there will be a better buying opporunity near Nov. 6 plus or
minus 1 or 2 days.
Short term traders if the Dow reaches 8718 on a print
basis go short with a stop of any close above 8932 in the
Dow. Otherwise wait for new instructions Monday evening.
For all subscribers, Leslie, our office manager, will be away
on vacation for the next 2 weeks. If you need to contact our
office for any reason prior to her return please fax us at
614-868-1397. Julie and Charlotte will handle your messages. Our
business phone lines are almost always busy
these days and your questions or concerns will be most easily
answered by fax. We cannot guarantee that every fax will be
answered. We get over 50 faxes per day as well as E-Mail and
phone calls. Obviously we cannot answer all of these
questions or concerns each day. But our subscribers are most
important to us so if you have a real problem we will try to
respond ASAP. |
