Good Sunday Evening All,
THROUGH MY ROSE TINTED GLASSES
The DOW INDUSTRIALS closed down .26 points on Friday, and down 54.59 points for the week, or .58%. TRANSPORTS, one of the few positives last week, closed up.52 and up 45.29 points, or 1.41% for the week. UTILITIES closed up 2.31 points or .79% but down 9.20 points, or 3.04% for the week. The S&P 500 closed down 9.09 points on Friday and down 27.78 points, or 2.17% for the week. The NAZ took it on the chin and closed down 36.45 points or 1.51% and down 132.27 points or 5.28% for the week.
TONIGHT'S P&F CHART
From my previous post, here's the Dow Jones Utilities:
322 X
320 X O
318 X O
316 X O X *
314 X O X O X *
312 X O X O X X O *
310 X O X O X O C O * < Unofficial Bearish Res Line
308 A O X O X O X 1 X
306 X O X O X O X O X O
304 X O X O X B O O X O
302 X O X O X O X * O O
300 X O O X O X * O < Double Bottom Sell Signal
298 X * O O * 2
296 X * * O
294 X * O
292 X * O * < Bearish Support Line
290 X * + < Official Bullish Support Line
288 X * +
286 X * +
284 X + *
282 X + *
280 X + *
278 X + * < Bearish Support Line
276 X +
274 X +
272 X +
270 +
Two double bottom sell signals in a row and no support from the Bearish Support Line at 294. Could also be considered a descending triple bottom sell signal (the bottom O at 304, the next bottom O at 302 and then last column when it hit 300).
This chart is long term bullish (trading above the Bullish Support Line) and short term bearish (on a sell signal). Today's action placed an O right on the Bullish Support Line at 292. If it drops to 290, then it will penetrate the "Official" Bullish Support Line, and the "Unofficial" Bearish Resistance Line will become "Official". This would change the chart to long term bearish. (Fact is, the Bearish Resistance Line is clearly in charge right now.) Of more importance, this Bullish Support Line has not been penetrated in years.
The first vertical price objective is 314-((6*2)*2)=290, and the second vertical price objective is 314-((6*3)*2)=278.
Tonight, I'll add the Dow Jones Industrial Average using a 50 box and 150 box reversal set up.
9650 * < Unoffical Bearish
9600 X * Resistance Line
9550 X O *
9500 X O *
9450 X O X *
9400 X O X O 2 *
9350 X 1 X O X O X O X
9300 X O X O X O X O X O X *
9250 X O X O X O X O X O X
9200 X O X O O X O X O
9150 X O X * O X O X
9100 X O X * O O
9050 X O X X *
9000 X C X O X * < Bearish Support Line
8950 X X O X O X *
8900 X O X O O X *
8850 X O X O X *
8800 X O O X *
8750 X O X
8700 B O
8650 X X
8600 X O X
8550 X O X
8500 X O X
8450 X O X
8400 X O X +
8350 X O +
8300 X +
8250 X +
8200 X +
8150 X +
8100 X +
8050 X X +
8000 X O X +
7950 X O X +
7900 X O +
7850 X +
7800 O X +
7750 O X +
7700 O X +
7650 O X +
7600 O X +
7550 O X + < Official Bullish Support Line
7500 O X +
7450 O +
+
Long term bullish (trading above the Bullish Support Line) and short term bearish (on a sell signal). It's first vertical bearish price objective is 9600-((10*2)*50)= 8600. The "Unoffical" Bearish Resistance Line is in control at this time. See how the tops are getting lower. A case could be made that this is a triangle and it would be broken to the upside if two more X's are added.
A few of our most important indicators as follows:
02/02/99 01/26/99
% NYSE > 10 Week MA 39.81 42.48 Bear Confirmed
% OPTs > 10 Week MA 43.1 43.8 Bear Confirmed
% NYSE > 30 Week MA 43.33 44.85 Bear Confirmed
NYSE Bullish % 50.0 52.0 Bear Confirmed
OPT Stks Bullish % 56.0 59.1 Bear Confirmed
NYSE High Low Index 46.1 49.2
BOTTOM LINE
Breadth for all three indexes are on P&F sell signals and lower than 10 days ago. Our Dow Jones 20 Bond Average, which has an outstanding record, gave a sell signal on Friday. That can only happen when bond prices are dropping and interest is rising.
With permission from CHARTCRAFT/INVESTORS INTELLIGENCE", here's a few words from the master, Mike Burke:
"This suggest some defensive actions be taken. This would include getting off margin, reducing invested position, as we have been doing in our fund position. You can also do some short sales, place stops in some of your more vulnerable stocks and reduce up side targets a bit. Increase the quality of your portfolio, and perhaps consider writing deep in the money calls in some of your long term holdings that appear to be overpriced. Some OEX puts are a good idea as well. The fact that the bond indicators are bearish as well as the stock market ones means things could be worse than the drops seen in April and August when bonds were bullish."
As I have surrendered to the peace of mind of following my P&F charts, I'm long term bearish and short term bearish, and trade/invest accordingly.
Take care,
Eric |
