Path For The US Week Of 23 June 2003


Established member
The chart of the weekly Dow reveals that we are at a major cross-road. The Dow retraced 61.8% of the high/low in 2002. This also coincided with hitting a major downsloping trendline which admittedly had to take into consideration the rolling top in March 2002. All in all this is just observations and does not in itself imply a change in trend. However, if you attach a basic RSI(8) you will see that we are setting up for a reversal based on the previous behaviour of the RSI(8).

There are however a couple of things, as always, that warrents s degree of caution in my mind. First of all the Bradley model calls for change in trend on the second of july. This model has had phenominal success over the last 24 months that it pays at least to keep an eye on it. However, of far more importance is the fact that the RSI(8) back in April 1999 hit the same level on the RSI(8) as where we are now. The Dow continued to rally for another 900 points before making a modest retracement. Furthermore the Dow has managed to print a higher low on the weekly chart, indicated by the red lines. This has not happened since the beginning of the bear market back in 2000.

The conclusion for me is to be bearish against the 61.8% retracement at 9344, but to realise that this index does not have to stop here. If the 61.8% is taken out, I will look for 9654 and 9623. 9654 is a 1:1 of the larger degree retracement of the September 2001 lows. The 9623 is a 100% extension of the first impulse move up from the March lows this year. After that you have got the 61.8% retracement of the entire bear market move. This comes in at 9770.

As I see it the top could already be in.

Near term the Dow will print a 1:1 at 9083. This would tie in with a 1.382 downward extension of the correction lower. The fact that the Dow printed a perfect 61.8% retracement of the correction suggest to me that it will at least try to test the 9155 area at some point in the week. If this does not hold I will look for test of 9083, which comes very close to the last swing low around 9077. If these two levels are taken out, I got confirmation of weakness in the Dow, as the charts are now overbalancing to the downside.

The momentum indicators suggest that we are oversold enough to warrant a bounce and the 72 period MA, which has held retracements in this rally very well was tested several times over the week and held. Therefore 9215 will be the first obstacle for the Dow. This should lead to choppy trading between 9215 and 9276.

The NASDAQ COMP has rallied 250% of the first impulse wave up. Now it needs to hold 1638 and print a positive day on Monday, as the near term trend has already changed to down. Above 1684 the next target will be 1705. If the NASDAQ begins to fall below 1624 there it should be followed by more liquidation.

Important Time considerations this week:

Friday: Dow has turned 1260 days since ATH, which is 3.5 around the circle
Thursday: Dow has turned 1170 days since 12th April 2002 high, which 3.25 around the circle
Friday: 32 squared in days since high 6th september 2000

I cant post charts. it says they are too big. Can someone help?

Go to my Chart thread and download
a utility which will reduce the size of your chart.
Hi Sun,

How big are the charts? At present you can only attach a single image to a post, but I suspect you've zipped them up, let me know how big they are - and I'll find out what the current size limit is, it's not a problem as I can always increase it if need by. It's only set to what it is so we don't run out of disk space!

I am just completing my "expected Path", but I am not sure I will be able to post it tonight. I essentially want to double check the figures and run another test. Besides, my girlfriend has just informed me that it would be nice if I looked her way just once this weekend.....

"Wycliff, honey, momma needs lovin'"

In the middle of cooking dinner will do others later :)
Cooking and charting just don't mix. :(
Tom, You got a Wycliffe too? :cheesy:
I did speak to my Missus once this weekend, I think, but I forgot what she said.... :(
The Dow has seen resistance against downward pressure during the latter part of last week.

I see the Dow making new highs this week before sinking again to lower levels.

Points wise - I see the Dow going over 100pts for the day and remaining there for the rest of the day.
Nice slot on Bloomberg Tom, it take B@ll's to openly discuss stellar movements, I imagine you'll take alot of flack, but we will see how accurate are.

Cheers a320
the path for today is complete. I would like to post it on a chart that I have made. This way there is no second guessing what I mean. Who can I email the chart to?

Here's the chart in question..


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    daily path dow 23 june.gif
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Tom, I missed your slot on Bloomberg earlier (new housemate in BB!). Do you know if it will be repeated today?

Nah, I dont think so Tim....

Well, it was mostly due to your (rightly) criticism that I put the path on chart form...that way there is no second guessing.....

Thanks Tim