Jerry Favors Analysis Friday May 20 8 pm
In our May newsletter to subscribers,which was written the week-end of
May 13 to May 15,we stated that despite the sharp decline in stock prices we
had seen into May 13,we were not convinced the market was ready for a
sustainable decline to new lows for the year. We stated that as of May 13 we thought
the probable maximum target for any further decline in that time frame would be
down near 10050,plus or minus 25 points or so.
In terms of our Lindsay 3-Peaks and Domed House,one of our most
important intermediate to long term indicators,we stated here too we did not believe
we would see much lower prices than we saw on May 13,and that we thought the
odds favored a rise up near 10500,plus or minus 50 points in the Dow,which
technically was due this week.
In fact,the Dow reached a print low of 10075 on May 13,and closed at
10140. The Dow then rose 353 points to a closing high of 10493 on Friday,May
19,within just a few points of our initial target.
It's a bit too early to tell if we have seen any significant high in
the Dow and the Nasdaq just yet. Unless the Dow breaks down significantly early
next week,we have 2 new upside projections calling for a rise up near
10625,plus or minus 57 points intraday,and 10595,plus or minus 52 points on a print
basis. Those are at this point just preliminary projections,not really confirmed
as reliable just yet. However,if the Dow fails to turn down strongly within
the first few days of next week,the above projections would become our next
target. If we do see a rally into that area,the resistance up there would be
formidable,and it should prove difficult for the Dow to sustain any rally beyond
those projections.
The above are short term concerns. Our intermediate and long term
forecast for stock prices remains unchanged.Our most important long term indicator
is our Lindsay Long Sequence. As we have illustrated to subscribers several
times over the last year,this indicator has had a very impressive record of
forecasting the probable time frames for bull market highs and bear market lows.
This indicator called for a low in 2002 and then a new bull market,which should
peak in the year 2005. From there a new bear market should begin,which should
bottom sometime in early 2006,and that low will present the next great buying
opportunity in stocks,as the bull market which follows will be a major
one,lasting many years.
So far the bull market high from the 2002 bear market lows was seen in
March of this year. If we did not see the final high in March,it should still
be seen by late June of this year.
