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Long Term Trend: Bullish
ACTS= Sell-1
Price Target: 8650
Comment: 2 weeks down. The market fell below a couple of important
long-term Support/trendlines this past week. Overall the market appears to
be heading lower.
Weekly Market Stats
Week Close (12-11-98) 8821.76 down 194.38
High: 9088.75
Low: 8730.10
Range: 461.63
Breadth (NYSE): negative
Advancers: 1124
Decliners: 1911
Net A/D: -787 (last week +898)
52week Low-High: Low= 6936.45, High= 9380.20
Previous stats; week closing 12-4-98
(9016.14 down -316.94, ACTS= HOLD)
Long Term Cycle: 16-week cycle Low due Jan 29th, 1999.
Current Long-term Position: short
Sell-1 triggered week ending: 12-4-98
Sell-1 price: 9130.00
Current Buy Series Net: +309.00
(Series high net to date: +309.00 this week)
13-week Momentum: 53.71 (falling sharply)
10-week Momentum: +1037.07 (slightly more positive)
14-week Percent R: 70.80 (falling sharply)
21-week Moving Average: 8486 (turned down slightly)
34-week Moving Average: 8684 (turned down)
55-week Moving Average: 8521 (still rising)
Long Term Percentage Retracement
Current Percentage Retraced: downward 29.25%
* 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: 9051 (falling slightly)
(Value 1) Slow MA: 8496 (turned down)
Comment: The market continues to be indicated Bullish because the fast
moving average remains above the slow moving average. Recently, the market
had been indicated as extremely bullish, however, it continues to lose much
of its bullishness as both the fast and the slow moving averages are turned
down from last week's values, and the price is below the fast moving average.
Stochastic Slow:
Indication: Bullish
SlowK value: 79.65 (falling sharply)
SlowD value: 83.24 (just turned down)
Comment: The Stochastic has triggered a bearish signal as the SlowK has
crossed below the SlowD. Also the SlowK has crossed below the 80 level
which indicates a strong bearish signal. If the SlowD crosses below the 80
level as well, we'll then interpret the indication as extremely bearish.
MACD:
Indication: Bullish
MACD value: +153.71 (turned down slightly)
MACD MA value: +64.77 (still rising)
MACD Diff: 88.93 (declining)
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: Our MACD indicator is beginning to show the recent strong upward
trend is weakening significantly as is evidenced by declining MACD & MACD
Diff values. However, the MACD is still clearly in bullish territory, so
we'll use it as a cautionary indication at this point. 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+: 24.07 (falling sharply)
DMI-: 23.95 (rising)
ADX: 19.63 (continues to fall)
Comment: The ADX value continues to steadily decline indicating a
weakening or non-trending market. Also, the DMI+ is very close to crossing
under the DMI-, which would trigger a bearish signal. Buying pressure
continues to decline as selling pressure continues to increase. Regardless
of the current indication, we'll look for the ADX to follow a rising DMI+
or DMI- before interpreting any signal with too much confidence. However,
it does appear the DMI is telling us something here.
The Market's Overbought/Oversold Condition
(This indication analyzes a shorter time frame, 5-10 weeks)
5-week RSI: 49.66 (falling dramatically)
5-week Momentum: -153.70 (dramatically turning negative)
10-week Percent R: 70.80 (down sharply)
TD REI= -24.11 (falling)
TD Channel II: high= 9313.68, low= 8875.68
The REI continues to indicate the market is dropping out of overbought
levels. A couple of weeks ago we stated that the TD REI had identified a
"Valid Nine Count Up, and that count is usually soon followed by a
significant decline.
Since then, the market has dropped nearly 500 points. Also, in last week's
analysis we stated the DOW had closed 2 consecutive weeks above the upper
channel band and that a decline back inside the upper band would likely
lead to a continued decline toward the lower channel band. As we've stated
before, this is the reason it's so important to record and monitor the
upper and lower channel band values, and then monitor the market against
them. Overall, the TD REI indicates the market will likely continue lower,
although the market closed the week below the lower channel band. When the
market rallies back up inside the band, we'll look for prices to continue
up toward the upper channel band.
Comments: The market is no longer indicated in overbought territory,
however, it may continue to move lower as a significant further declines
are very possible before the market becomes oversold.
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:
Go to: <http://www.pcmoneyclub.com/charts/dowweekly.pdf> for this week's
technical chart.
This past week the market continued the sell-off we've called for in our
Daily Technical Market Analysis. The market has dropped nearly 560 points
from its recent Highs. We have consistently brought attention to the fact
that volume has been on a decline as the market reached new Highs in Nov.
Also, the breadth has provided a good indication of a bearish divergence as
well. When the market reaches new Highs on less than strong volume and
extremely positive market breadth, it's a good indication the new Highs
will be followed by a sharp sell-off, and that's exactly what has taken
place. Our downside projections have been for a possible low to the 8735
level, and at its lows Friday, the Dow was down to the 8730 level (just
about exactly to our projection).
For this coming week, it appears the market is prepared to move lower,
although it will likely bounce off Support at either its 34-week moving
average or even possibly as low as the 8650 Support level we've identified
in the weekly technical chart. The bottom line is that our bias is
currently to the downside, but we're also fully prepared for a short-term
rally off Support. Currently, our maximum upside projection for any rally
attempt is the 9130 Resistance level. That can change from day to day, so
it's very important to consult our daily analysis to maintain a current
perspective.
Any decline this coming week that carries the DOW below the 8730 (last
Friday's trading low) will indicate lower prices are likely to follow,
possibly to the 8650 level. Any decline that carries the Dow below 8650
(major Support) would be a likely indication of significantly lower prices
to follow, especially if that comes on fairly heavy volume and negative
market breadth.
Any rally this coming week that lifts the DOW above 9030 (next Resistance),
would likely indicate at least a short-term rally attempt, possibly to our
current short-term upside potential price projection of 9130. Any rally
that lifts the DOW above 9160 (major Resistance), would likely indicate
another test of the recent highs. Also keep in mind, ACTS currently has a
Sell-3 signal in place for the Major-trend, but ACTS short-term signal
based on its Hourly charts is a BUY.
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. |
