McHugh wrote..

Stocks rose sharply Friday, the Dow gaining the 100 plus points we noted should come, per Thursday evening's newsletter.

That rally completed wave "a" up of an a-up, b-down, c-up move for Minor degree b. Wave "a" was powerful, fast, and furious, gaining 742 points in less than a week. Minuette wave b-down started Friday afternoon.

While it could be complete, as we see a nice a-b-c move in place, our suspicion is it is merely Micro wave a-down, and there remains a small up-down move to the 13,200ish area before a short-term bottom. Then, on the hopes and dreams of a Fed rate cut on December 11th, we should see a rally, wave c-up of b-up, that lasts until around the Fed meeting.

This is the way the short-term looks to us at this time.

This weekend we present our Primary Trend Indicator as of November 30th. This is a terrific long-term trend identifier, just as a Dow Theory Primary Trend signal also is, however the two are completely independent analytical tools.

Dow Theory signals can be early, and our PTI indicator tends to be late. However, both produce excellent forecasting results, as the majority of moves occur after they have been triggered. The last Bear Market occurred from January 2000 to October 2002 based upon the tops and bottoms of the Dow Industrials. Dow Theory saw this Bear market coming about four months early, on September 23rd, 1999. Our PTI identified it in March of 2001. One signal said batten down the hatches, get ready. The other said, we have a long way down to go, over a long period of time, so do not expect a bottom any time soon.

Which has us wondering, what if Dow Theory's latest Bear Market Signal is early again? What if the top based upon the Dow Industrial's price is coming in a few months?

At this point, we believe our take on the wave count is correct, however, should prices move to a new all-time high over the next month or two, we have to keep in the back of our minds that the Dow Theory Sell signal can be early, in which case a huge decline could occur in 2008.

We chart this possibility on page 21. Again, no predictions here, just risk analysis.

https://www.technicalindicatorindex.com/....

Last modified: 2007-12-02 00:22:39 by etz3l