the Dow and the Nasdaq Closed higher than the previous day's
Closes, the bars were, as predicted by EWA (Elliot Wave
Analysis), lower for both. The Dow slipped quickly
down into the EWA Sez area, and closed just below the ceiling.
The loss of upward pressure on the COMPX was evident, and
the bar fell toward the floor area EWA predicted on 5/21/00.
Volumes for the week have been declining - an unusual distribution.
Alan spoke this evening, but we have not been treated to
the market's interpretation of what he said, or what he
meant, or what we're supposed to think, or . . . whatever.
The two line report I heard suggested that there's still
downside risk to the economy. Words instead of preemptive
actions - still way behind the curve in my estimation.
I have pointed out on many occasions that, particularly
on the Dow, EWA patterns can be quite ephemeral, but when
caught, they can provide quite good long term predictions
as much as 4 to 8 weeks into the future. This is part
of the art of interpreting the varied statistical results
EWA provides based upon various trading forces that have
been working on prices, or indices, over past weeks or months.
The rather elaborate rough graphic on the Dow chart is another
of those examples. Here today, gone tomorrow. so to speak.
The EWA long term prediction on the COMPX similarly has
suddenly again evaporated. This is not surprising to
me, in that we have two very strong scenarios competing
to drive the markets euphorically upward, and disappointingly
downward. The latter scenario appears to be the more powerful
at this watershed point, with both indices rolling over.
A physicist would define this situation as being in
unstable equilibrium. Like balancing an inverted broom on
it's handle, and two people blowing on it from opposite
sides to try to keep it upright. Eventually, the broom is
going to fall one way or the other. I expect that if we
continue downward, the older EWA prediction for the COMPX,
for example, will return, and we'll be looking at a floor
level back at my 1,600 to 1,500 level as a target. If we
head up, we probably will never see that trading area pattern
for the Dow again.
I've not shown %R for the Dow, but shot downward through
it's -20 level last Tue. It's no surprise, therefore, that
the index continued to fall on Wednesday and Thursday, and
%R is still headed downward.
- Charlie Miller
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