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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Greg Jung who wrote (8950)	3/24/1999 12:22:00 AM
From: Casaubon	Read Replies (1) \| Respond to of 99985

I was just going back over some old posts and found this: Jerry Favors Analysis -Wednesday, December 2, 1998 8 p.m. Last evening we stated that even after yesterday's reversal from down over 128 points to up 16 at the close, we thought there would be another pullback today and that decline could carry the Dow below Monday's lows. The Dow was down over 178 points at the lows today but closed down 69, at 9064.54. The Bradley calls for a short term low near December 2 plus or minus 2 days. Today was December 2. There are some potentially positive signs beginning to show up. In the past we have discussed the Lindsay A-D Indicator. This indicator is concerned with the differance between closing advances and closing declines each day. When giving a Buy Signal the following pattern must occur: the Dow must first decline from a high and reach a short term low. We will then note the net declines,or the difference between declines minus advances,for that same day. The Dow will then rally. That rally can last as little as 1 day to several days. The Dow will then decline below the prior closing low but on this decline to a new closing low the net declines for the day are less than they were at the first low. This generates the Buy Signal. This might seem more confusing than it really is. On Nov. 30 the Dow closed at 9116.55 and on that day there were 941 more declines for the day versus advances. The Dow the next day closed up 16 points. Today the Dow closed down 69 points but if we examine the breadth we find there were an unofficial 436 more declines for the day than advances. So here we show the pattern of the Dow closing at a new low for this leg down but the net declines today are above the 941 net declines seen on Nov. 30. This generates the Lindsay A-D Indicator Buy Signal. Now we should mention that whenever the net declines exceed 1000 we do not count that day as one of the days for generating a Buy Signal. The 941 net declines of Nov. 30 was close but just got in under the wire. We really need to see tomorrow's closing action to be sure of the signal. If we close down tomorrow with more than 941 net declines for the day the signal would be invalidated. The Gann 3-Day Chart turned down today and could not turn back up before Friday. If it does turn up Friday it will go a long ways towards confirming a low this week. The Trin-5,which is our 5-Day Moving Sum of the daily Trading Index closes, closed at 5.54 yesterday. The Trin-5 normally indicates you near some sort of at least short term low when it rises up near or above 6.00. The best and most reliable signals occur above 6.00,but there have been numerous lows over the years with the Trin -5 near yesterday's 5.54 reading. That is pretty close to 6.00. The 5 Day RSI closed at 36.66 today and it will normally fall below 30 at short term lows,so we still cannot rule out some further decline Thursday. We believe Thursday will be a whippy day,with fairly wide swings in both directions. However the pivotal day this week will still be Friday,which is the earliest the 3-Day Chart could turn up. Most of our stocks are still doing well but Avnet did take a hit of 4 points today. We don't like negative surprises so we will sell Avnet tomorrow. We will give you specific stops on each stock Thursday evening,since we still want to keep our risk reasonable. Any comments on the reversal indicator (ie historical accuracy). Also, any comments on the trin-5 indicator, with regards to our current situation?