To: StockOperator who wrote (5534 ) 2/7/1999 3:19:00 PM From: StockOperator Read Replies (3) | Respond to
The DOW a few weeks ago broke through a triple top formation only to give back that gain a week later. This was one of Joes Granville's key points for turning bearish. Since that time this index has come down and bottomed at the 8990 range and is assaulting 9500 on the upside. The fact that we failed to hold the triple top is obviously negative. The action of the last few weeks in the DOW is setting itself up for another attempt to push through this formation. Failure this time would, imo, not bode well for the market. On a weekly basis the downtrend over the past couple of weeks from that failed attempt is STILL intact. However, the key thing to realize is that the longer term trend for the NAZ, DOW, Trannies and even the Russell, which is holding on by just a thread, are still positive. Even after the damage done this week, the WEEKLY lows for the NAZ, S&P, DOW, and Trannies are higher than last week. But because the downtrend in the DOW for the past three weeks is still intact, we are at the crossroad where uptrend meets downtrend, and only one direction can win out. The action in the trannies this week, on the other hand, was very positive. They broke out of a weekly chart formation that looks very similar to the one that has developed on the DOW the past couple of weeks. Here are just a few more reasons that make this call an incredibly difficult one - Based on the charts: interest rates appear ready to jump; the VIX ready to pop, the dollar ready to pop through four month consolidation, gold looks ready to break the downtrend that starting in early 96. But yet you have stocks like GM, DELL, CSCO, RNWK, T that have only corrected modestly after making huge moves since early January. The same thing applies to the NAZ and S&P which have gone parabolic since October. So many of their chart patterns are indicating that this is a normal pull back after making huge gains. Besides, their charts don't appear to be set for a huge bear move. But yet a failed attempt at breaking for the DOW, would surely be negative.
