MDA - Market Direction Analysis Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : MDA - Market Direction Analysis

SPY 671.91

0.0%

Nov 14 4:00 PM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: StockOperator who wrote (2763)	12/23/1998 10:34:00 PM
From: dennis michael patterson	Read Replies (2) of 99985

Jerry Favors Analysis - Wednesday, Dec. 23, 1998 8 p.m. Firstly the market closes early tomorrow and because of the holiday there will be no 8 pm update Thursday evening. Our next update will be our regular Sunday evening update at 7 p.m. The Dow today closed up 157.83 points, at 9202.29. So far the Dow has risen over 506 points from the 8695.60 closing low of December 14. While the Dow did not close at a new high today the S&P 500 cash index did close at a new high,as did the Nasdaq. While it did not close at a new high the NYSE cash index closed at its highest level since the October 1998 lows. With the exception of the Dow Industrials and the Transports most of the major indicies have exceeded their November highs. The Dow may do likewise but to do so it would have to close above 9374.27,171.98 points above today's close. We cannot rule that out. However the Dow normally encounters resistance when it rallies up near or just above the top of its 21-Day 3 1/2% Exponential Trading Band. The top of that band today was 9271.78,and tomorrow the top of the band should be near 9298 plus or minus 20 points or so,depending on where we close. There will be resistance to any further rally in that area. The Dow has an upside projection calling for 9293 plus or minus 68 points intraday. A new projection given today calls for 9418 plus or minus 81 points intraday. However that projection was not given or confirmed by our most reliable price projection technique. When our most reliable price projection technique gives an upside or downside projection there is over a 90% probability that projection will be reached. The other projection techniques we have tested and still use have in general proven quite good but they do not have that same 90% accuracy. So we want to be aware that the projections are out there but they do not represent extremely high confidence targets yet. We still believe we are near at least a short term high. The Cycles call for a high near December 22 plus or minus 2 days,so there is one more day to go there. Our cycles on the Gann Trendline show that there is an extremely high probability of some sort of short term high in a day or two. >From there it suggests 2 possibilities. The first is that we will see a very sharp decline beginning in 1 or 2 days and lasting into January 4 plus or minus 2 days,or we will see a strong but brief decline for a day or two and then 1 more rally to a new high into January 4 plus or minus 2 days. If the second scenario proves correct the decline which follows will be quite severe and could carry the Dow back below 8600. The 5-Day RSI closed at 80.54 today,now back into extreme overbought territory. This makes the market vulnerable to a sharp correction,whether it starts tomorrow or Monday. The major indicies are in the process of completing 5 waves up from the October lows under Elliott,which also suggests that the decline which follows the high of this rally will be a sharp one. We believe there is a chance this rally could carry the Dow back up to a new high but stock traders and mutual fund switchers we are going to cut back to just 50% tomorrow. If the Dow rallies to a new high before the decline begins we will still be at least 50% long and will participate. If the Dow rallies to new highs from here we will sell remaining long positions at that new high. Short term traders since we believe there is an extremely high probabilty of at least a short term high tomorrow or Monday we do want to go short in the next 1 or 2 days. However the short term hourly charts have not given a sell signal all week. They could do so tomorrow but for now we want to give the upside the benefit of the doubt for 1 more day.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next