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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: dennis michael patterson who wrote (16757)	10/18/1998 4:03:00 PM
From: Gabor	Respond to of 42787

Very interesting. Thanks for posting it. Regards Gabor

To: dennis michael patterson who wrote (16757)	10/18/1998 4:09:00 PM
From: dennis michael patterson	Read Replies (1) \| Respond to of 42787

Favors w/o the error: Paragraph 3 contained a message error. Here is the complete update. Jerry Favors Analysis - Sunday, October 18, 1998 7 p.m. Last week we expected the Dow to rally but we frankly expected that rally to peak near 8200. The Dow reached a print high of 8108 Thursday prior to the Fed's surprise move to lower the Fed Funds Rate and the Discount Rate by another 1/4%. The Dow then skyrocketed after the Fed news,closing up over 300 points. The Dow closed up another 116 points on Friday,closing above 8400. There are several reasons to believe we are near some sort of short term high. The 5-Day RSI on the Dow Friday closed at 85.58. Keep in mind the RSI reaches overbought above 70 and readings above 80 mean the Dow is extremely overbought. On October 7,1997 the 5-Day RSI reached 84.05 ,with the Dow at 8178. This was followed by a decline of over 1017 points to the October 27 closing low. On Dec. 5,1997 the 5-Day RSI reached 88.32,with the Dow at 8149. The Dow then fell 489 points to a closing low of 7660 on Dec. 24. On Feb. 18,1998 the 5-Day RSI reached 91.86. This was during the extremely strong Bull Market surge from January to July 1998,so the declines were only mild. In this case the Dow fell only 76 points on a closing basis the next day. On March 20,1998 the 5-Day RSI reached 87.24,again during the supersurge from January to July 1998. In this case the Dow then fell only 90 points in 1 day on a closing basis.Finally on 7/17/98 the 5-Day RSI reached 82.93. This was the exact day of the Bull Market closing high and the Dow then fell 1,798 points to the August 31 closing low of 7539.07. Last Friday's reading of 85.58 places the Dow again in the danger zone short term. The 10-Day Trading Index closed at 0.80 on Thursday,one of the most overbought readings of the entire year. The Trin- 5 again fell below 4.00 on 10/15,suggesting we are near some sort of at least short term high.The McClellan Oscillator closed at +189,an extremely overbought reading. While we believe the Dow could see a short term high and decline Monday we do not believe this rally has seen any final top yet.The NYSE cash index should exceed 527 at a minimum before any short term high,and it closed at 522.24. Our work suggests that if we did not see a short term high Friday we should see one by Monday and then a brief decline. >From there the Cycles still suggest a more important top is likely near October 22 plus or minus 1 day and then a sharp decline into late October. The Bradley calls for a low near October 28 plus or minus 2 days. The Cycles also call for a low near October 28 but they call for another low near November 6. That low may be higher or lower that the low near October 28. Now if the low in that time frame is above 7400 we will take all subscribers back to the long side. Short term traders may benefit from a rally this week but even it it approaches the 8700 area it will be a short lived affair,lasting perhaps 3 to 4 days,and at least 1 and maybe 2 of those days will be a fairly sharp decline. Any decline below 8341 on a print basis in the Dow Monday morning will signal lower prices short term. Any decline below 1055.50 in the Dec. S&P futures will signal a probable decline below 8300 on a print basis and 8244 intraday in the Dow. Short term traders if the Dow sells off strongly Monday we will want you to take a long position by Tuesday,but wait for specific instructions. Stock traders and mutual fund switchers,if the Dow holds above 7400 by late October we will want you to go long.But again we want you to wait for specific instructions.