Jerry Favors Analysis Friday May 6th, 2005
Now we told subscribers earlier this week that we looked for another rally attempt at some point this week. We actually thought that rally could carry the Dow up near or just above the 10450 or so area, however, the Dow reached a high on Thursday of only 10405 before beginning to pull back. At this point we still allow for a further rise up near the 10450 to 10500 area or so in the Dow next week, however, this in no way alters our intermediate and longer term forecast for this year.
It has been our position all year that the bull market which began in October of 2002 would reach its bull market high in the year 2005.,and a new bear market should begin which should bottom by fairly early 2006,most likely between April and May of 2006,if not sometime before. That remains our position tonight.
On a best case basis our George Lindsay Standard Time Spans could allow for a final new high between here and late June of this year before the true bear market begins, but as we have stressed in prior newsletters this year, the greater probability is that the bull market highs in the Dow were seen in March of this year.
Our primary tool when it comes to identifying the years when important bull market highs and bear market lows should be seen is from our Lindsay Long Sequence, which is a very long term cycle of approximately 20 years from one major low to another major low. In between this 20 year cycle from one major low to another the Long Sequence also identifies the years when bull market highs and bear market lows should be seen. We have back tested this technique for over 200 years, and we are quite convinced of its efficacy. We have illustrated this technique several times in prior newsletters over the past year. Our research has revealed that there is absolutely no way this remarkable cycle has been repeating all these years just by chance. This cycle cannot be explained in a brief discourse here, but we have illustrated this remarkable cycle to subscribers over the last year. It is however, a technique we reserve only for our subscribers.
For now we cannot rule out some further rally early next week, however, the odds still strongly favor much lower prices between here and the end of the year, and probably into early 2006.The bear market low in 2006 should represent the greatest buying opportunity for long term investors since the 1982 bear market lows. However, just as was the case at the 2002 bear market lows the question will be whether we have the will, the courage, and the capital to long when the time comes ? It will prove difficult. However ,the first requirement will be that you are prepared for what should come between here and the next major bear market low between here and early 2006.We will attempt to help guide you as best we can over this period.
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