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Strategies & Market Trends : MDA - Market Direction Analysis

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To: donald sew who wrote (1234)	12/10/1998 6:52:00 PM
From: dennis michael patterson	Read Replies (3) of 99985

Jerry Favors Analysis - Thursday, December 10, 8 p.m. Last evening we stated that while we still expected higher prices this month we believed the Dow could sell off further over the next couple of days. The Bradley forecast the November 24 high perfectly, and it forecast the December 3 low within 1 day. The next turning point from the Bradley was due near December 11,plus or minus 2 days. Technically the Bradley forecast a high in that time frame. However the Dow has actually declined into this Dec. 11 plus or minus 2 day time frame. We believe the Bradley is inverting in this time frame. An inversion occurs when the Bradley forecasts a high for a certain time frame and instead the Dow reaches a low in that time frame, or vice-versa. Inversions in the Bradley occur about 30% of the time. An inversion in the Bradley with a low occuring near December 11 instead of a high would agree with the Cycles. The Cycles call for a low near December 11 plus or minus 1 day and then a rally into December 23 plus or minus 1 day. We believe this is the most likely scenario from here. If we are correct we should be near some sort of low,or within a day or two of that low. We should then begin another strong rally into December 23 plus or minus 1 day. Technically the Cycles call for a rally from December 11 plus or minus 1 day into December 18 plus or minus 1 day. They then call for a brief decline into December 21 and a high near December 23 plus or minus 1 day. After the high near December 23 plus or minus 1 day the cycles call for falling prices into January 4 plus or minus 1 day. At the lows today the Dow was Dow was down as much as 185 points. We closed down 167.61. We must allow for still lower prices Friday but this does not alter our position that we are near the next short term low and that the Dow should soon begin a rally into December 23 plus or minus 1 day. The Dow may test 8700 before the low but that would not alter our position. Stock traders and mutual fund switchers remain long with the same stop. Short term option traders we will give you a signal when to return to the long side.

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