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

To: Judy who wrote (17850)	11/18/1998 7:18:00 PM
From: dennis michael patterson	Read Replies (2) \| Respond to of 42787

Favors--- soon to be cancelled. Jerry Favors Analysis - Wednesday, November 18, 1998 8 p.m. At the lows this morning the Dow was down as much as 29 points, reaching a low of 8957.18. The Dow then turned and rallied, reaching a print high of 9039.57, at which the Dow was up 53.29. We closed up 52 points at 9038.28. The cut in rates by the Fed yesterday appears to have had a delayed effect. While the Dow closed down on the news yesterday we managed to rally to a new recovery high today. Once again the breadth was a problem.Throughout the last several days the Dow has been rallying but the breadth each day has been weak. Even today,with a 52 point Dow gain the breadth showed an unofficial 1546 declines to 1474 advances,so there were more stocks moving down today that up despite the up close in the Dow.That is a problem which will ultimately have to be dealt with or this rally will fail miserably.No rally can sustain itself if the breadth refuses to confirm. We should be seeing very strong breadth if this rally is to continue.Each day that the Dow closes up and the breadth is weak increases the probability that the rally will eventually fail. We are still showing potentially bearish nonconfirmations in our momentum indicators as the Dow moves higher.If this situation is not rectified soon it will be followed by a sharp decline in stock prices. The divergences are already strong enough to suggest a decline very soon if they are not corrected almost immediately. From the bullish standpoint the Dow has as yet done nothing wrong.A rally above 9104 would signal higher prices,at least very short term.If the Dow falls below 8957 on a print basis tomorrow the hourly charts would give a short term sell signal.A decline below 8997.86 on a print basis in the first full hour of trading tomorrow would be a caution flag and could lead to a test of 8957. For now though the Fed is on the side of the Bulls and it is normally a mistake to fight the Fed,at least short term. We do not want to go short until and unless there is clear evidence this rally is over. There is not convincing evidence of that just yet.So for now we want you to continue to give the upside the benefit of the doubt until we tell you otherwise. Remember our cycles call for rising prices until November 25 plus or minus 1 day. Now we could see a fairly sharp decline before then but the cycles remain up until then. So any decline will probably be fairly short lived. Until we reach the November 25 plus or minus 1 day time frame we want to give the upside the benefit of all doubt until and unless the Dow does something wrong,which it has not as yet.This does not mean we cannot see a sharp but brief decline soon,but it will probably not last more than a few days before we turn back up again into next week. Once we enter the November 25 plus or mnus 1 day time frame we will take short term traders back to the short side,at least temporarily. Stock traders and mutual fund switchers if the decline after the top due near Nov. 25 is only a mild one we will move you all back to the long side of the market.For now though we want you to remain on the sidelines.