Stock Market Highlight #20
Market rallies on President's "contrition" speech.
(COMMENT # 671)
UPDATED 19980911
COMMENT 1998-671
1. The following chart of 16 minute bars for the Dow Jones Industrial Average (DJIA) are
shown as of about 09:15 Friday morning for the last couple of weeks or so.
2. The President delivered his most recent contrition speech this morning and the market
has rallied on the NEWS.
3. We have discussed recently how the S&P 500 chart on page 295 of "The 1998-99
$upertrader's Almanac" appears to be showing us the way.
4. Can you see the "Linear Cycle Index" presented in the chart at the bottom of
page 295?
5. The index is represented by the solid line in the chart.
6. Note how both the index and the stock market peaked in July which is in accordance with
the expectation and projection.
7. Since the action of the market itself is in accordance with the projection after the
July peak, we have to assume that the projection will continue to show us the way UNTIL
such time as the market itself proves otherwise.
8. We thus look for short term trading techniques which fit this expectation.
9. One is the Elliott Wave.
10. Are the "III"/"IV" shown in the chart in accordance with the
expectation on page 295 of "The 1998-99 $upertrader's Almanac" or not?
11. If labeled correctly, then the next most likely scenario which is in accordance with
our larger expectation on page 295 of the "Cycles Book" is that the DJIA has
begun "Wave V" down.
12. The probable first of an expected 5 waves down is shown in the chart.
13. This decline covered 440.2 DJIA intraday points (SQ FIBONACCI # 21 = 441).
14. PHI X 440.2 = 712.2 (100 X LUCAS # 7 = 700, FIBONACCI # 8 X FIBONACCI # 89 = 712).
15. The low of "Wave 1 of V" = 7549.6.
16. 7549.6 - 712.2 = 6837.4 (200 X FIBONACCI # 34 = 6800).
17. The horizontal line in the chart shows a .618 RETRACEMENT of "Wave 1 of V".
18. As you can see, this retracement level has, so far, halted the upside rally to the
President's speech.
19. "Wave IV" required 120 16 minute bars.
20. "Wave 1 of V" required 40 16 minute bars.
21. 120 / 40 = 3.000.
22. Is it possible that the market bottomed this morning instead of yesterday afternoon?
23. Absolutely, in which case more time and, possibly, a higher price will be required to
complete the "2" wave.
24. Is it possible that the "1 Wave" shown in the chart completes a very
abbreviated "Wave V" and the entire move down since the July high?
25. Yes, but not high probability that this is the case.
26. The suggestion is thus that the market is most likely, as this is written, to continue
lower.
27. The next stopping point, so long as the "Point 2" high shown in the chart is
not broken to the upside, should be around the 6800 level.
28. Final targets were stated in COMMENT # 633 of 980901 and remain as stated.
29. You may recall in COMMENT # 633 where we discussed the likely peaking of the
"Wave IV" CORRECTION (see the chart) in Point #s 22, 23, and 24.
30. The correction was expected in that COMMENT to ALIGN WITH the next Astro Point.
31. The morning of the next Astro Point occurred just a handful of trading periods after
the "Wave IV" high shown in the chart and, thus, ALIGNED WITH the anticipated
end of the correction.
32. If the "Wave 2" high is later broken in the day, we'll have to reassess.
33. Such entry techniques as that shown on pages 236-7 of "The $upertrader's
Reference Manual" entitled "Entering and Exiting Positions" is appropriate.
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