Tuesday, May 24, 2005

Guest Blogger: Jack Cory

My friend Jack Cory contributed the following market analysis last night, posted in the Comments of my "On Success" blog. I thought it deserved a blog onto itself, so here it is, republished in it's entirety:

5/23/05 (after the close)

Monday's strength indicates that the DJIA might well reach into the range of 10800-10900. Today's indication was an upward breakout move from a small flag formation. Such moves normally provide a measured move that will be accomplished in subsequent days.

There are several indicators that point to an intermediate uptrend of significant strength:
The McClellan Oscillator actually gave a buy signal I call "The Tick" almost 8 weeks ago. It happens that the market drifted a somewhat lower after that signal. This was followed by a series of slightly lower lows in the DJIA but by higher lows in the McClellan Oscillator. This sets up a positive variance from which the market has shot upward. ("The Tick" is a pattern which I noticed in the Oscillator several years ago. I do not know that anyone else has ever named the phenomenon.)

The McClellan Summation Index, which operates at a slower pace than the Oscillator, created a positive variance against the last two DJIA lows; one at the end of April and the other at the end of the second week of May. Then, and this is wonderful news for bulls, the Summation Index created a very fast rise; what is termed a series of upward Breakaway Gaps by analysts who study the Index. The Index itself is almost always regarded as an indicator of Intermediate Trend movements.

New Highs/New Lows offer a number of possible indications. I will discuss only two major ones at this time. First, the number of new lows outnumbered the new highs in mid-March and again in mid-April. This was a bearish indication. However, new highs then began to outnumber new lows; a positive indication which has continued. Secondly, as the DJIA made three successive lows in the range of 6950, the number of new lows diminished in each of the three occasions. Once again, this is a positive variance that usually points to higher market prices.

The Bond Yield Curve has been inclining upward (I suspect that is a redundant use of two words with a single meaning.) An inclining Yield Curve is almost always a positive indication for the general stock market indices. I use it as a validation of my synopsis of other indicators, not as an indicator itself.

I actually review over 40 indicators each week or two; sometimes only monthly. Many of the individually named indicators are developed for each of the market indices, DJIA, NYSE, SP500, NASDAQ and others derived from those indices, such as the SP400 and SP600, etc. This makes a total of well over 100 indicators to peruse.

No single indicator ever gives methodical valid signals. There is, however, a body of work that was defined by a market analyst of great merit. I refer to the late George Lindsay. Unfortunately he did not write much about his methods but those methods about which he did write are incredibly valuable. In my work I find that his deliniations of patterns for major market tops are almost magical. Patterns of major market bottoms vary more greatly, but his work regarding bottoms is also extremely valuable.

1 comment:

Greg Reiman said...

Hi Jack:

It's been a while, hope all is well with you. Thanks for your interim assessment, it tracks well with Tim villano's. I also went to 90% cash early in the year and have scaled back in during the past two weeks, still 25% cash waiting for a nugget.

Shoot me an email if you care to, lets catch up. pieks2@earthlink.net

Greg Reiman