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CHARTWORKS - OCTOBER 6, 2008
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June 8th to 21st 1962 | Aug 26th to Sept 2nd 1966 | May 22, 1970 |
Sept 13, 1974 | March 23, 2001 | Sept 21, 2001 |
July 19th & 26th 2002 |
The action around the signals has been fairly consistent. Seven of the twelve Capitulation alerts resulted in a bottom that week or the following week. Three bottomed within the second or third week. The conclusion is that if next week is down then the likelihood of an upside reversal in the second half of the month is quite good.
Sequential Buy Setups occurred around eight of the Capitulation lows (see following charts). In six of those instances it only required a count of seven weeks rather than the normal nine weeks of development to reach a bottom. (It took nine weeks in 2002 and thirteen weeks in 1974). We are currently at week number five in the count. If the next two Friday’s closes are below those of September 12th & 19th then a seven week count will be in place and an upside reversal becomes likely.
Another tool has been the often-seen 37 to 55-day plunge to market capitulation. Depending on which market average one uses it is now 35 to 39 weekdays since the market topped in August so a climactic low could be in place by October 27th. There is also the seasonal component whereby most of the great fall liquidations have ended in late October.
As we move through this month we will update as more pieces of the puzzle become apparent.
-Bob Hoye
Institutional Advisors
email: bobhoye@institutionaladvisors.com
website: www.institutionaladvisors.com
CHARTWORKS - OCTOBER 6, 2008
Hoye Archives
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