 One More Rollercoaster Ride
Don Delavan
Market Waves Newsletter
Email: marketwaves@adelphia.net
August 9, 2004
The 2004 stock market has felt like three different rollercoaster
rides so far, and the fourth one should start next week with
a new multi-week cycle. However, the fourth ride might make the
first three look like a kid's ride.
On Friday, SPX probably completed its black wave 4 down
right at its 50% retracement of its black wave 3 up and at its
322-day moving average. The 322-day moving average is interesting
in that it is a Fibonacci number and it provided support for
SPX in April and May 2000 before the big decline in the second
half of the previous 4-year cycle.
Black wave 4 down lasted exactly 22 weeks or 5 months for SPX.
Also notice that the 4-year moving average has crossed below
the 8-year moving average.
The next rollercoaster ride will likely be black wave 5 of C
up to a lower high in September, which would complete green Wave
B up that started on October 10, 2002. Then the downhill portion
of the ride would be the start of green Wave C down into the
fall of 2006, which will be the second half of the current 4-year
cycle. Green Wave C down will be a stronger decline than green
Wave A was in 2000-2002.
The DJ Industrials looks more like SPX, but the DJ Transports
is unique in that it is completing an ascending ending diagonal
as its black wave 5 of C up. So DJT might make a new high for
2004 while DJIA makes a lower high.
HUI and XAU rose strongly Friday despite the strong market sell-off
in all the other indexes. That is because HUI and XAU already
started a new multi-week cycle on July 27.
I originally thought HUI might make a lower low in late July
than its May 10th low, but it made a higher low on July 27 to
complete the previous multi-week cycle by touching its 2-year
moving average for the second time.
Thus, HUI, XAU, DJT, DJU, XOI, and XNG will probably be the only
stock indexes to make new highs for 2004 by late September. Obviously,
new highs in gold, silver, crude oil, and natural gas will explain
why.
7 August 2004
Don Delavan
Market Waves Newsletter
Email: marketwaves@adelphia.net
Don Delavan
is the editor of the Market Waves newsletter.
For subscriptions, contact marketwaves@adelphia.net
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