Analysis - Thursday, January 2, 2003 8 p.m.
Last evening we stated: "Today was such a slow day, it was hardly
worth paying any attention to the market at all. In fact, the last few days
have been very slow. This is a common occurrence near this time of year.
However, we believe the market volatility will begin to increase for here
from the first trading day of January 2003 onward."
That was an apt forecast for today's action, as the Dow shot
upwards over 265 points at the highs today, and the Nasdaq was up over 49
points.
On December 30 we discussed the Trin-5 reading which was near
9.00. We stated that over the last year, readings of between 8.00 and 9.00
have normally occurred relatively close to at least a short-term low, if
not a very important intermediate-term low. If today's rally proves to be
the real thing, that reading of 8.87 occurred within two trading days of
the closing low.
We have heard much talk in the press about the failure of the so
called "Santa Claus rally" in this time frame. In fact, the rules for the
Santa Claus rally, according to Yale Hirsch, are as follows: "Santa Claus
used to come to Wall Street nearly ever year, bringing a short, sweet,
respectable rally within the last 5 trading days of the year, and the first
2 days in January." So we are still within the time units for the Santa
Claus rally. The other rule from the Santa Claus is as follows: "If Santa
Claus should fail to call, the Bears may come to Broad and Wall.
Another rule of importance in this time frame is the January early
warning system. If the Dow and the S&P 500 close up in the first 5 days of
January a bullish signal be will be given. If we close down in the first 5
days of January, a bearish signal for the year will be given by this system.
The Gann Weekly Chart on the Dow turned up today. That is normally
a signal that even higher prices are coming, at least over the short term,
and possibly even over the intermediate term. The 3-Day Chart will not only
turn up if the Dow holds above 8372 intraday, and also exceeds 8633.02
intraday, it also give an actual short-term buy signal.
The Weekly Chart on the Nasdaq will turn up tomorrow if the Nasdaq
exceeds 1393. That is normally a signal that higher prices are coming at
least short term.
For now, we must be at least short-term bullish, as long as the Dow
holds above 8242 on a print basis. A decline below 8242 on a print basis
would generate a new short-term bearish signal.
For now we will hold current positions.
Source: www.jerryfavors.com (hotline service)
AI
