 Rollercoaster Ride #4
Don Delavan
Market Waves Newsletter
Email: marketwaves@adelphia.net
13 September, 2004
The 2004 stock market has felt like three different rollercoaster
rides so far, and we are on the 4th one right now still going
up to the top. The first 3 rides ended lower than they started,
which means that we have seen 3 bearish multi-week cycles so
far. However, the fourth ride might make the first three look
like kiddie rides with the next decline coming in October.
S&P500 completed it black wave 4 down right at its 50% retracement
of its black wave 3 up on August 13, and it is now in its black
wave 5 of C up to a lower high below its March high of 1163.23,
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.
Also notice that the 4-year moving average has crossed below
the 8-year moving average, which is very bearish sign for the
remainder of the 4-year cycle.
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. DJT
made a new high for 2004 today and will probably reach 3300+
while DJIA makes a lower high below its February high of 10753.63.
HUI and XAU started a new multi-week
cycle on July 27. I originally thought inflation fears might
cause gold stocks to skyrocket into late September like they
did before the 1987 crash when NEM skyrocketed 122% in 12 weeks.
But now it might be terrorist fears that might cause gold and
gold stocks to rally after SPX starts its decline in October.
For example, HUI rose 17.7% during the week after the 9/11/01
terrorist attack while SPX dropped -13.5%. However, HUI was oscillating
between its 2-year and 4-year mas in 2001, and its 1-week rally
did not continue because of its 4-year ma resistance. But now
HUI is above its 2-year and 4-year mas, and gold and gold stocks
may continue a strong rally after a possible terrorist attack.
So the current multi-week HUI cycle may peak sometime in December
around HUI 300-330 and XAU 140-150, maybe near the same time
that gold reaches $500+.
Thus, the only stock indexes
that will likely make new highs for 2004 are DJT, DJU, HUI, XAU,
XOI, and XNG. DJT and DJU already have, and XOI and XNG are very
close to making new highs this week. HUI and XAU will probably
make new highs later this year. Obviously, new highs in gold,
silver, crude oil, and natural gas will explain why. The lower
highs by the other indexes will create a bearish divergence in
tops.
10 September 2004
Don Delavan
Market Waves Newsletter
Email: marketwaves@adelphia.net
Charts
by TradeStation
Don Delavan
is the editor of the Market Waves newsletter.
For subscriptions, contact marketwaves@adelphia.net
321gold Inc
|
