From PC Moneyclub;
Long Term Trend: Bullish
ACTS= HOLD
Price Target: N/A
Comment: 1 week down. After an 8-week upward trend, the market achieved a
20-week cycle High. That high was then followed by a key bearish reversal
this week after encountering strong Resistance.
Weekly Market Stats
Week Close 9016.14 down -316.94
High: 9333.08
Low: 8871.45
Range: 461.63
Breadth (NYSE): Positive
Advancers: 1939
Decliners: 1041
Net A/D: +890 (last week +231)
52week Low-High: Low= 6936.45, High= 9380.20
Previous stats; week closing 11-27-98
(9333.08 up +173.55, ACTS= Buy-3)
Long Term Cycle: High due on 12-13-98 (plus or minus 2-3 days)
The cycle indication called for a High due in between Nov. 30th and Dec.
3rd. As it turned out the High came in on the 30th. The market then put in
a short-term cycle Low on Dec 3rd. Its very possible the market will now
rally into that time frame.
Current Long-term Position: Long
Buy-1 triggered week ending: 10-9-98
Buy-1 price: 7899.52
Current Buy Series Net: +1116.62
(Series high net to date: +1433.56, last week)
Next Long Term Resistance: 9380
Next Long Term Support: 8675
10-week RSI: 59.32 (falling)
10-week Momentum: +987.37 (less positive)
14-week Percent R: 81.61 (turned down slightly from a max reading)
21-week Moving Average: 8503 (increasing)
34-week Moving Average: 8695 (increasing)
55-week Moving Average: 8498 (increasing)
Long Term Percentage Retracement
Current Percentage Retraced: downward 19.25%
* 38.2%: 8652, * 50%: 8425, * 61.8%: 8200
(38.2% retracement is possible)
Based on July 20th High of 9367
Based on Oct 8th Low of 7467.49
Fast MA (dual value)
Indication: Bullish
(Value 1) Fast MA: 9155
(Value 1) Slow MA: 8400
Comment: The market continues to be indicated Bullish. Recently, it had
been indicated as extremely bullish, but the market has currently lost some
if its Bullishness because its price is now below the fast moving average.
Overall, our Fast MA indicator is suggesting some lower prices, however a
continued pullback may be providing a good long entry opportunity should
the market rally into its next cycle.
Stochastic Slow:
Indication: Bullish
SlowK value: 88.61 (just turned down)
SlowD value: 84.06 (still rising)
Comment: The Stochastic still indicates the market bullish because the
SlowK value (line) is still above the SlowD value (line). And, although
the SlowK is turned down, its still above the 80 value, which also
indicates the market is still overbought for the long-term. However,
Stochastic is not an accurate indicator for identifying tops in bullish
market trends, which is currently the case. Both the long-term and
short-term trends are indicated up. Its very possible for the market to
continue higher, back into extremely overbought territory. We'll be very
cautious this coming week and continue to consult our other indicators
MACD:
Indication: Bullish
MACD value: +128.35 (continues to rise)
MACD MA value: +8.61 (rising into positive territory)
MACD Diff: 119.74 (beginning to decrease)
MACD long-term trend based on a 45-week MACD MA: Up
MACD short-term trend based on a 9-week MACD MA: Up
Comment: In our last weekly analysis, the MACD had been indicating the
market in a strong long-term upward trend. However, the upward momentum has
weakened as is evidenced by the decrease in the MACD Diff. Overall, the
MACD indicator is still bullish, but it is now somewhat less bullish. The
MACD is an excellent long-term trend/momentum indicator and it generates a
signal when the MACD crosses above or below the MACD MA.
DMI
Indication: Bullish
DMI+: 25.51 (beginning to fall)
DMI-: 22.66 (beginning to rise)
ADX: 20.43 (still falling)
Comment: The ADX value continues to decline which indicates a weakening or
non-trending market. The DMI+ has turned down at the same time the DMI- has
turned up, which indicates a decrease in buying and an increase in selling
pressure. Somewhat surprisingly, the ADX has not turned up in the entire
time the market has rallied from the Oct 8th lows. Before the market the
market begins to make significant new Highs, we must 1st see an upturn in
the ADX following a rising DMI+. Without that occurring, we'll not become
overly bullish.
The Market's Overbought/Oversold Condition
(This indication analyzes a shorter time frame, 5-10 weeks)
5-week RSI: 60.45 (falling dramatically)
5-week Momentum: +424.04 (significantly less positive)
10-week Percent R: 80.97 (down sharply)
TD REI= 0.00 (unchanged)
TD Channel II: high= 9338.00, low= 8938.95
In last week's analysis we stated that the TD REI had identified a "Valid
Nine Count Up, and that count is usually soon followed by a significant
decline. This past week the market experienced the decline we were looking
for. Prior to this past week, the market's close had exceeded the upper
channel boundary for 2 consecutive weeks. Once the DOW had declined back
inside the channel, we said we'd look for a continued downward move toward
the lower band, and that's exactly what occurred. Currently the market is
just above the lower channel band, and it's possible the market will
continue Friday's upward move back toward the upper channel band, before
any further declines are seen.
Comments: The market continues to be indicated overbought long-term.
However, on a short-term basis the market is becoming oversold, which was
evidenced by Friday's strong rebound rally. On a more intermediate basis,
the market is still falling toward more oversold levels, but is not yet
indicated extremely oversold. Last week we stated that for the short-term
we strongly believed the market was much overdue for a significant
pullback, especially considering it had been rallying in very overbought
conditions for a few weeks prior to that.
Note: The primary purpose of communicating the market's
overbought/oversold condition in this time frame, is to allow Long Term
Position Traders the opportunity to look for possible overbought/oversold
market conditions that may develop throughout the coming week. Since
market conditions can change quite rapidly, by looking for these changes in
advance, we're prepared to interpret those changes, as they become evident.
This can often dramatically improve entries & exits, and our ability to
increase trading profits. However, its best to consult the Daily Technical
Analysis to better determine overbought/oversold market conditions,
especially on a short-term basis.
Weekly Technical Analysis Summary:
At the end of the analysis is one of our weekly charts for you to view!
As we called for in last week's analysis, the market experienced a fairly
significant pullback this past week, falling 508.75 points off its recent
Nov.24th High. Thursday, the market completed a short-term 3wave corrective
decline after a strong 5-wave advance from the low set on Oct. 8th. Given
the lack of significant negative breadth during last week's sell-off,
Friday's rebound rally wasn't much of a surprise. Last week, many market
mavens called Monday's pullback the short-term low and that an ensuing
rally would follow. We strongly stated our disagreement with that opinion
and fortunately we were right. Late in the week, many of the same market
mavens were then calling for a strong sell-off, ultimately continuing and
late Friday. Once again, we disagreed with that opinion as we called for a
likely rebound rally for Friday, and fortunately our call was right again.
In last week's analysis we stated that we'd likely exit our long positions
and look for entry opportunities for new short positions. We ended up
liquidating our long positions almost immediately following the open on
Monday and we reversed those positions with shorts. We then exited our
short positions Thursday before the close as to not push the market for
further declines on Friday as we had expected some kind of rebound rally.
Our projections last week for the short-term downside potential were in the
area of 9000 down to the 8800 level. The market met those projections with
a great degree of accuracy.
For this coming week, there isn't as clear an outlook, as is often the
case. There is a key trend change date for Dec. 5th. The unanswered
question is; was Friday's trend change the one due for the 5th, or will the
market turn downward again following Friday's rally? From a technical
standpoint on an intermediate basis, most momentum and overbought/oversold
indicators are still pointing down. The market may very well continue into
a 2nd corrective wave structure. However, there is also indication for
follow-through through from Friday's rally, possible right through the next
cycle due in on Dec 13th, plus or minus 1-2 days. At this point there
really isn't a solid indication either way.
There are always those times when we need the market to dictate its next
immediate direction. That's why it's so important to consult the Daily
Technical Analysis we provide. Regardless, we'll have to approach the week
with caution and let the Support & Resistance levels we've identified guide
our trading. Currently, we're neutrally positioned as we've liquidated the
short-term long positions entered Thursday before the close, before
Friday's close.
Any decline this coming week that carries the DOW below the 8950 (minor
Support) will indicate lower prices are likely to follow. Any decline this
coming week that carries the DOW below 8871.45 (this past week's trading
low), on fairly heavy volume and negative market breadth, would likely
indicate significantly lower prices to follow, possibly to the levels of
our downside projection, which is a maximum of 8800 down to 8675.
Any rally this coming week that lifts the DOW above 9082.57 (last
Thursday's trading High), would likely indicate higher prices at least
short-term. Any rally that would carry the DOW above 9250 (next
Resistance), would likely indicate another test of the recent highs. Also
keep in mind, ACTS Major Trend status for the market is currently a Sell-3
signal, in which case we will give the downside the benefit of the doubt
until that signal is reversed.
Overall, our technical work has indicated the market would experience some
retracement of the gains made in this recent strong Bull Run, as it
certainly has. Also, that a correction would likely to be a shorter-term 3
wave corrective cycle, followed by a sideways/choppy-trading pattern over
the next several weeks, if not the next 2-3 months. The market has
experienced at least the first wave structure of a corrective cycle, it
just unclear whether or not the corrective cycle is complete at this time,
likely not. It most likely the market will experience the
sideways/choppy-trading pattern for awhile. The trading range we're looking
for the market to maintain is between the mid/high 8000's to low/mid 9000's.
Be sure to pay close attention to our Daily Technical Analysis on the DOW
this coming week to maintain a more accurate short-term perspective of the
market's next immediate direction.
Always keep in mind:
The 3 Steps to approach trading on a weekly & daily basis should be as
follows:
Step 1: Identify underlying conditions of the overall market using the 3
major indices (DOW, NASDAQ, and/or S&P 500).
Step 2: Identify the current cycle/trend of the sector in which you're
considering a trade.
Step 3: Identify the current cycle/trend of the specific stock for which
you're considering a trade.
<http://www.pcmoneyclub.com>
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Best,Dave |
