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To: Cactus Jack who wrote (4505)	12/7/2003 10:15:03 PM
From: Jim Willie CB	Read Replies (2) \| Respond to of 108683

THE DOW REPORT, by Tim Wood (Financial Times Online) "Is It Just Too Big To See?" financialsense.com (if 12/5/2003 wrapup does not appear, click on Friday link) The chart below is a daily chart of the DJIA. If we just look at the price action since January 2003 and take it at face value, obviously we see that price is advancing and that all looks well. Now if we back away from the daily chart and look at the weekly chart of the DJIA, the picture is quite different. We can equate this to looking at crop circles. When you are standing on the ground they are just too big to see. All we can see at ground level is that the crop has been mashed to the ground. However, when we can back away from this mashed crop by looking down on the field from above, the picture then becomes clear. To illustrate this phenomenon, I have included a second chart below. This is a weekly chart of the DJIA. I have drawn on it what is known as a Rising Wedge. This Rising Wedge encompasses the same time frame as the daily chart above. However, when backing away from the day to day price action, the picture is much different. In Martin J. Pring’s book, Technical Analysis Explained, he describes a rising wedge as follows: “Rising Wedges are fairly common as bear market rallies. Following their completion, prices usually break very sharply, especially if volume picks up noticeably on the downside.” From the book, Technical Analysis of Stock Trends by Edwards & Magee, rising wedges are described this way, “…the Rising Wedge is a quite characteristic pattern for Bear Market Rallies. It is so typical, in fact, that frequent appearance of Wedges at a time when, after an extensive decline, there is some question as to whether a new Bull Trend is in the making, may be taken as evidence that the Primary Trend is still down. A Rising Wedge on an arithmetically scaled weekly chart is almost invariably a Bear Market phenomenon, expressing, as it does, the diminishing vigor which is the normal property of any reaction against a prevailing Primary Trend.” “…Prices advance, but each new up wave is feebler than the last.” Now look at the indicator that I have included at the top of the weekly chart. This is a moving average of advancing volume. Look at the divergences between price and volume. Advancing issues are diverging in the same way. Now, I have to ask, is this not clearly a sign that the internal strength of this market is growing weaker and weaker just as explained by Edwards & Magee? Have the talking heads on TV not been saying that we are in a “New Bull Market” just as explained by Edwards & Magee? Have Sir John Templeton and Warren Buffett not warned about the economy? Yet, we sit with sentiment readings at the highest levels in over 10 years and the average investor continues to believe that all is well. This is just simply nuts! If you are in doubt LOOK AT THE WEEKLY CHART! It does not take a rocket scientist to see that price has been advancing on less positive volume and that this has happened in the context of a historically bearish chart formation. Denying this is like going to the doctor and he x-rays your leg. He shows you the x-ray and explains that you have broken your leg. Because it really doesn’t hurt that bad and you can still walk on it, you tell your doctor. “Nah, everything is ok. That’s not really a break you see there doc that’s just a bad x-ray. See? I can still walk. Your little x-ray machine must not work any more.” Now that would be nuts and the situation with this market is now to that point. Please, step back away from the day to day hope and hype of TV crowd and look at this picture from a distance. It’s just like the crop circles or the x-ray. When you back off and look at reality the picture is quite different. The many technical indicators that I follow, my study of market history, as well as my cycles work, also confirms that papa bear is cooking up “something big.” This will offer a wonderful opportunity for those who understand these developments and who have the patience to take advantage of them. It is through my newsletter that I am working to help my subscribers gain a more thorough understanding of the market conditions that we now face. For more information on my newsletter please visit www.cyclesman.com or call me at 318-342-9038. Tim W. Wood Copyright © 2003 All rights reserved. Tim W. Wood, CPA Editor, Cycles News & Views www.cyclesman.com