Date:1/30/2003 10:52:36 AM
Post #of
4565
Analysis - Wednesday, January 29, 2003 8 p.m.
At the lows this morning the Dow was down 134 points points,
reaching its lowest level on a print basis since the current decline began
from the January 13 print high of 8869. The Dow then bounced back to
close
up 21.87 for the day, with the Nasdaq up 15.93.
As most subscribers are aware, the Bear Market low for the Dow last
year fell on 10/10/02. That day the Dow reached an intraday low of
7165.94.
On our update that evening we stated the following: "Today's action in the
Dow can be classified as a key reversal day. This is defined as a day
when
the Dow makes a new intraday low then rises above the prior intraday
high
for the day, and closing above the prior day's close. This is normally a
bullish pattern, suggesting that some sort of low has been seen. This
pattern unfolded today. Unless the Dow falls below 7197 on a print basis
and more importantly 7165 intraday, it must be considered as possible
that
some sort of bottom was seen today." That day did in fact mark the
bottom,
and the Dow then rose 1911 points to an intraday high of 9076 on
12/02/02.
On our update of 12/2/02 we stated that the Dow had completed
another key reversal day; this time a bearish one, suggesting that some
sort of high had been seen. December 2 did in fact mark an important
high,
and the Dow subsequently fell 862 points to an intraday low of 8214 on
December 30.
The Dow today completed another "key reversal day," this time a
bullish one. This suggests that we may well have seen some sort of
bottom
today. Like anything in this business, this pattern is not infallible. If
the Dow falls below 7945 on a print basis, and more importantly, 7916.89
intraday from here, the bullish signal from today's key reversal day will
be cancelled. However, at this point, we believe this is a reason to
suspect that some sort of low has been seen.
There are a couple of short-term issues which concern us somewhat
here, primarily the status of some of our short-term Gann Cycles. Those
short-term cycles suggest that if we do see a further rally from here, it
probably will not last for more than a day or two, before another brief
pullback comes in. As long as that pullback holds above 7916.79 intraday
in
the Dow, we would look for still higher prices to follow.
While today's key reversal day suggests there are reasons to be
somewhat optimistic from here, officially we will continue to hold at 70%
cash for now.
Jerry Favors
AI
