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

To: Electric who wrote (17473)	11/6/1998 12:34:00 PM
From: dennis michael patterson	Read Replies (4) \| Respond to of 42787

FAVORS update Jerry Favors Analysis Friday November 6 12:30 At the highs this morning the Dow has been up over 47 points. Strongest resistance for the Dow today will be up near the top of its 10-Week 7% Exponential Trading Band. This is one of the strongest trading bands we keep and we have traced it back over 70 years. The top of that band this week should be near 8981 plus or minus 50 points or so. The Dow has a long history of reaching some sort of top when it rallies up near or just above the top of this band,just as it has a long history of reaching bottoms when it falls down near the bottom of the band. The fact that we are approaching the top of the band here along with the 5-Day RSI above 91 is significant. Remember the 5-Day RSI cannot go above 100 so yesterday's 91.93 reading strongly suggests we are near some of high,even it is just a short term high. An up close today would merely push the RSI even further into the extreme danger zone. For now though the Dow to this point has done nothing wrong. The 3-Day Chart could not turn down today unless the Dow falls below 8714 on a print basis and 8676 intraday. Both levels would have to be broken for an actual downturn in that chart. While that is certainly not impossible it does appear improbable today.If the 3-Day Chart did turn down today it would suggest that some sort of top has been seen. If it does not turn down then we could still see somewhat higher prices next week before we start a correction. We are going to be pouring over all the charts in detail this weekend,looking for proof that we are wrong and this is more than just a Bear Market rally. To this point the market has done nothing to disprove the Bear Market rally scenario. Throughout history there have been numerous Bear Market rallies every bit as strong as this one. In fact it has done its job well of turning most of the street bullish again and causing most of the bears to throw in the towel. This is what normally occurs when Bear Market rallies peak. But if we see any evidence at all that we are wrong and the mearket is going much higher we will tell you just that Sunday evening and go long on the first correction early next week.We believe a sharp correction early next week is inevitable, even if we close up strongly again today. On the otherhand if all the evidence continues to point to the fact that this is indeed a Bear Market rally which is peaking here instead of near our original target of November 25 we will also tell you just that,along with our reasons for that conclusion. If so we will give a Sell Signal for next week. This Sunday's update should be an important one,one way or the other.