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Hi
This is the third try; maybe I have the gif down to a passable size now.
Sorry for the postage stamp view.
The market exhibits a fairly consistent 4 to 4 1/2 month cycle. Some cycle
folks like to combine two of these into one 9 month cycle. I believe
combining three 4 month cycles into one 12 month cycle fits the current
market well. My view is that the present 4 month cycle represents the
beginning of a new 12 month cycle. This 12 month cycle appears to be the
third in a larger 4 year cycle. The low in this 4 year cycle should coincide
with the low of the subsequent 12 month cycle.
Each box on the attached gif identifies one 4 month cycle. The first three
boxes show the previous 12 month cycle for context. The fourth box
identifies the present 4 month cycle. This cycle should play itself out by
the end of February. A low in around 10,500 would keep a neutral to bullish
outlook in tact. A low around 10,000 would suggest a neutral to bearish
outlook. March should see an advance in the DJIA as the new 4 month cycle
takes hold.
The blue box represents my best guess for the new 4 month cycle. This cycle
should complete in early July. My bullish scenario calls for a high above
12,000 followed by a low around 11,000. My neutral scenario calls for a
range between 11,300 and 10,500. My bearish scenario calls for a high around
11,000 followed by a low around 9,500. The crash scenario calls for a failed
test of recent highs preceding a mad rush for the exit.
I realize many of you will feel this far to nebulous be of any use. I do
suggest the possibility for a low by the end of February, a rally into March
(at the least), and a low early in July. I expect the new 4 month cycle to
exhibit an 'M' pattern (similar to the first or third box in the gif.)
This is NOT presented as a trading plan. It is presented as a context within
which market action may be interpreted as it unfolds over the next several
months.
Stan
Attachment Converted: "f:\eudora\attach\DJIA#B1.gif"
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