Peter Eliades' Stockmarket Cycles update for Monday, December 21, 1998. As long time subscribers know, we spend hundreds of hours each year researching prior market patterns and attempting to relate them to current market behavior. Sometimes those prior patterns show immediate benefits in our current market analysis and other times the analogies do not lead to equivalent market resolutions at all, and in still other times they do lead to those resolutions, but it takes much longer than we would have imagined at the time. Here is a pattern that we have been alluding to for several weeks now. On November 27, the S&P 500 went to a new all time closing high accompanied by a CI-NCI Ratio of .968. It was a rare occasion that spoke loudly of very poor market breadth in the face of new all time high prices. Today just over three weeks later, the S&P 500 Index closed at another new all time high, as did both the Nasdaq Composite and the Over the Counter Composite. Now listen to this, today the S&P's new all time high close was accompanied by a CI-NCI ratio reading of .957. For those of you who are not acquainted with that ratio, check your introductory material. It comes with the market newsletters. Without being overly dramatic, we will tell you that the last time prior to today, that the S&P 500 Index closed at a new all time high accompanied by a CI-NCI ratio below .96 was 18,407 market days ago. The date was September 3, 1929. No one at that time dreamed that would mark the Dow Industrials highest close for the next 25 years, the next quarter of a century.
What else happened today? Well, remember we told you both the Nasdaq 100 and the Over the Counter Composite closed at new all time highs with the Nasdaq 100 up over 3% for the day and the Over the Counter Composite up 2 ½% for the day. Here is the shocker, there were 2,027 up stocks on the Nasdaq and 2,170 down stocks. That's right. On the day when the index moved up dramatically and closed at a new all time high, the breadth was negative. It is an amazing statistic. Don't get us wrong here. All the above data tell us is that the market's internals are about as bad as they can get and about as bad as they have been at an all time S&P high going back over 70 years. The bad news for us bears is that sometimes those things go on for a few more weeks-a few more weeks than we would believe is possible and so could this one, but make no mistake now. The evidence as we noted in our last newsletter, is that no matter how crazy it all gets, it should almost surely be over by January 29. See the newsletter for the explanation of that date. It could, of course, end at any time now including today, but don't be surprised if it does not.
Mutual fund switchers, Rydex switchers are in Ursa. Fidelity Select switchers are in cash. All mutual fund switchers call after 3:20 p.m. ET and call each market evening.
Stock Index futures traders, you shorted the March S&P at 1202.90. You were stopped at 1210.60 for a 7.70 loss. Tomorrow, short the March S&P at 1228.10 market if touched with a stop at 1232.90. If you are stopped, reshort again on a move below 1223.50 with a stop at 1232.90. If none of those prices is available or if you are stopped out of your second trade, you may short a break of 1199.50 with a stop at 1211.10. There are no new projections on the XAU or bonds. Have a great day. We'll talk to you tomorrow.
for those of you in doubt, Sep 3 1929 was the top day in the DJIA
Certainly the actions in the internuts and some of the strong numbers
and cross currents being culled from a number of different sources, tell us of the tension of our times.
Regards,
John |
