BP, is overall looking for a top soon with fairly modest new highs in the DJIA and the spx....
SPX may get to 1345 since it just broke out of the 1280-1215 trading range and if you add that range to 1280 you get 1345.
This has been an idiot's delight market that has serviced those doing the least work...It's like slavishly follow the Bradley ,( look up the Bradley top for year, APril 6th,)
Then count 2/3 of the way through the dominant 9 month time cycle, also due to arrive in early late march early april, do a 2nd grade price projection and viola .....run off to the bank with the money.
This market has not held a high regard for anyone who tries to think more deeply then that...I know cause I have some poots that I would not have using the above formula...but luckily I have some that are second halfers.
Here is some of his 3-6-99 letter
THE STOCK MARKET
The January and February issues went into great detail
to outline all the reasons for expressing a specific stock
market opinion, which can be summarized as follows:
The average stock (as represented by the Value Line
index, Russell 2000, etc.) topped in April 1998, which is
eleven months ago. Blue chip stocks were projected to
end their 17-year bull market in February-July 1999,
with a very high probability that it will be over no later
than April. Targeting for the Dow Jones Industrial
Average projects a final daily closing high in the 9638-
9670 range, ideally within a point of 9651.41. It
reached this area on January 8 at 9643 but could do so
again.
Minor Degree Pattern Nearing a Resolution
The December issue of EWT made this forecast: "We
should be on the lookout for a downturn before mid-January
in the broad market and before mid-April in
the blue chips." Last month, EWT labeled the broad
The Elliott Wave Theorist -- March 5, 1999
3 © 1999 770-536-0309
customerservice@elliottwave.com
averages as having finished their wave 2 advances on
January 8. They have consistently fallen since then
(see chart above), so this interpretation remains in
effect.
Blue chips have held up, keeping their outlook intact as
well. From January 8, the S&P 500 cash and futures
indexes may have just completed ascending triangles
for wave 4. Triangles (see text, p.49) precede final
moves, thus forecasting one last new high for the S&P.
Since wave 3 in a five-wave pattern cannot be the
shortest wave among waves 1, 3 and 5, wave 5 in the
S&P should be brief and short. This fits nicely with our
nearby target for the Dow. A drop below 1211.89 will
negate the triangle and imply that the bear market is in
force.
Momentum Considerations
It has now been 17 months since the number of new
52-week highs peaked. There were more new 52-
week lows in September after a few down weeks than
there were new highs at the all-time high in July. Study
the chart at right to get a feel for what is happening in
this regard. Did you know that 70% of the trading days
so far in 1999 have seen more stocks hit new lows
than new highs? This is not happening in an obvious
bear market, but with the blue-chip averages near all-time
high levels. Individual stocks have been mostly
edging lower day after day while a few big names
keep the averages up. The daily advance-decline line
for the NYSE has fallen so far this year that it is near
a break of its October 1998 low. This is what old
timers call "distribution."
Despite (and in some cases because of) years of
underperformance, secondary stocks remain a favorite
for upside leadership. Articles on their soon-to-develop
relative strength have appeared monthly throughout this
time. However, fifth waves never sport strong
secondary stock performance, and the bear market
that follows usually decimates this sector. With Elliott The Elliott Wave Theorist -- March 5, 1999
4 © 1999 770-536-0309
customerservice@elliottwave.com
waves revealing a top in most stocks a year ago, with
time cycles peaking and pointing lower into July and
with the brief relative strength of last year's fourth
quarter having ended on January 8, secondary stocks
are a developing disaster. Anyone, including money
managers, who are weighted in this area should
distribute these stocks as fast as possible while they
are still liquid.
Holding up the blue chip averages is requiring immense
fuel in the form of heavy volume in the stocks that are
rising. Proof is the level of the Arms index, which by
one calculation has reached its most overbought level
in nearly two years and by another its most overbought
level since May 1990! These readings from February
24 occurred against a lower peak in the Dow, which is
similar to the position of this indicator in late September
1987.
Time Cycles
The 9-month cycle is still due to bottom in July, so May
and June should be months of strong and persistent
decline in stock prices. March and April are likely to
complete the topping action that has run throughout
January and February.
Investor Psychology
Through mid-February, the percentage of bullish
advisors stayed above 56% for a third full month. This
was the longest period that the percentage of bulls
stayed above 56% in the 35-year history of the Inves-tors'
Intelligence survey. Since advisors reached that
consensus, the average stock has lost ground. In
January, the 30-day average of the daily put/call ratio
reached its lowest level in two years, reflecting ex-treme
bullishness among traders. It has since recov-ered
as the market has trended sideways, but the long-
term sentiment picture continues to reflect mania-level
bullishness. One key measure of psychology, the price
of stock exchange memberships, is surging. A seat on
the American Exchange sold for $660,000 on February
16, a 15% increase from the record high of January 6.
On February 11, the price for a Chicago Stock Ex-change
seat eclipsed a record that had stood since
1929. The New York Stock Exchange also surpassed
its record with a $2.6 million sale on March 1. The
sale, which does not include options trading rights, was
a 23% increase from the record for a full membership,
set in March 1998. "It's a resounding vote of confi-dence
in the future of the New York Stock Exchange,"
said an economist. As the chart above shows, how-ever,
such resounding votes have proven excellent
sentiment signals at all the great speculative climaxes
of this century. Peak prices for NYSE seats signaled
the turns of 1906, 1929, 1968 and 1987.
The "world's most prestigious" exchange made several
other moves to accommodate the public's seemingly
unquenchable thirst for equities. With the help of nearly
$1 billion in city and state funding, the Big Board will
expand its trading floor into a nearby building. It is the
NYSE's first major expansion since 1987, when plans
for the New Blue Room were put in motion. Construc-tion
of the original Blue Room began near the peak of
1968. These two previous expansions were initiated at
the zeniths of the last two great speculative binges and
opened for business in the far more subdued trading
environments of 1988 and 1969. In an unparalleled
action, the NYSE also announced a tripling in the
length of its trading day. "The growth of global invest-ing
will not allow markets to be competitive if they
Data courtesy David Toth, NYSE |
