Jerry Favors
Jerry is not certain that we’ve seen the highs for this market cycle – yet. But he believes that there will be an important high set in the Dow between now and the end of the year. The most recent highs – October 15th – were within the expected high range (9862 +/- 66 points – as determined by the 15 day 3 ½ % exponential trading bands). They also were within the two week period that the George Lindsey indicators had established as a likely window for the important market high.
When asked about trading volume, Jerry made two points. First his work is based – exclusively—on intraday numbers – not volume. Secondarily, Jerry points out that even with less specific use of technical analysis, volume is not as important of a confirmation when stocks are selling off.** Jerry believes that more sellers and higher volume are required to drive prices higher, but that when buyers dry up … prices will fall under their own weight.
Jerry is still very concerned about the bearish/bullish ratio among market analysts. Research done for Investors Intelligence shows Jerry an important contrarian indicator. The record low bearish ratings, signal an important that an important market top is establishing.
Jerry believes that the highs to be set between now and the end of the year will be the top of a bull leg in a continued long-term bear market. BUT , if the market goes even one tick above the 2003 high after January 1st… Jerry will have to re-examine his position.
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