our Peerless Forecasts' Thrice Weekly Hotline.
Ocober 2004 Bottom to March 2005
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of these comments at important market turning points. Many say, however, you're
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you can see the comments and then see a little lower what actually happened.
Here is a chart as of 3/4/2005 of the DJIA with Peerless signals.
|HOTLINE -- DJIA=9757.81
10/22/2004 ... Friday's data.
The DJI'S WEAKNESS HAS BROUGHT IT CLOSE
TO LOWER BAND AT 9700. THERE IS ALSO A DECLINING
SUPPORT LINE AT 9622. A FALL BELOW THIS WOULD
BE SCARY! AND A DECLINE BELOW 9600 WOULD HAVE
TO BE TREATED AS A SELL S10. BUT UNTIL THAT HAPPENS,
I THINK WE HAVE TO TAKE A CONSTRUCTIVE VIEW OF THE
The DJI has now got two (new Peerless) Buy B8's. This year at the lower
band this has always been a good BUY signal. The NYSE A/D
Line is very strong still. nd the number of NYSE + NASDAQ new
highs is 215, while their number of new lows is 98. Seasonality
is quite bullish...
|HOTLINE - DJIA=10027
- 10/29/2004 ... Friday's data.
(At what proved to be an intermediate-term bottom.)
The DJI, NASDAQ, QQQ HAVE EACH RALLIED TO
THE RESISTANCE OF THEIR 10 MONTH PRICE DOWN-TRENDLINES.
THESE ARE WELL-TESTED AND A BREAKOUT WOULD
BE QUITE BULLISH. I THINK WE HAVE TO GIVE
THE MARKET A CHANCE TO SCORE A BREAKOUT HERE,
MOST LIKELY AFTER A SLIGHT PAUSE.
HOWEVER, A DECLINE ON RISING VOLUME WOULD
Bullishly, we have BUY B8's on the DJI chart, short-term Buys on
the QQQ as well as the OEX (540.66, 545 is resistance). However,
the BBH (Biotech Index) has just given a new short-term SELL. .
And the SOX and SPX are also on SELLs. But breadth has been very
good and seasonality is clearly bullish after the election is over...
Arthur Merrill's study of the Presidential Election years shows Novembers
like Octobers between 1886 and 1983 have nearly a 68% probability of a rally.
Since 1984, 3 of the 4 Presidential Election Year Octobers brought DJI rallies.
Since 1984, the DJI rallied 13 times in October and fell only 6 times.
|HOTLINE -- DJIA=10387.54
-- 11/05/2004 ... Friday
The Bush Victory Is Boosting The Market Short-Term. The DJI
Has Reached Its Upper Band with The V-Indicator Negative.
So We Had an Sell S9V on Thursday.
There have been 5 cases of November S9 signals after a bull market:
1967 - DJI decline delayed until January and then the drop took DJI below lower band.
1980 - DJI immediately fell below the lower band.
1983 - DJI immediately fell half way to lower band from 21-day ma and then
in Janauary peaked and declined way below the lower band.
1999 - DJI peaked in January and the fell below the lower band.
2000 - DJI immediately fell to lower band, rallied until January and then declined
way below from a January peak.
So, only in two of the five cases did the DJI drop to the lower band immediately
after a November S9. In all 5 cases the Nov-S9 presaged of a bigger decline that
would typically occur only after a January, or in 1980 a March, peak.
For now I would still give the market more room to advance, and look for a peak
in December or January. Do not underestimate the power of a Republican victory in
bringing money off the sidelines. In 1972, when Nixon was re-elected the DJI made
a classic B10 breakout on November 9th. It's true that Bush's 2000 November victory
coincided with a short-term top, but that was in a period when the NYSE A/D LIne
was near its 12-month lows.
|HOTLINE -- DJIA=10386
--11/09/2004 ... Tuesday
Seasonality and the Buy B18 Should Propel the Market Higher.
Partisians typically boost the market a lot now. The DJI is at
the upper band and seems to be consolidating its gains well.
The V-Indicator is, however, only barely positive. And the Hourly
DISI is not confirming. Watch the 10-day NYSE-Up Volume.
It will need to start expanding to let the market take out the resistance
at 10400, then 10500 and then at 10700. The NYSE A/D Line
remains strong and is making new highs.
|HOTLINE -- DJIA=10470 --
11/11/2004 ... Thursday
Seasonality and the Buy B18 Should Continue to Propel the Market Higher.
Partisians are boosting the market a lot now and the DJI is at
the upper band and consolidating well. A challenge of 10700 seems likely.
The Hourly DISI, however, is not confirming. This suggests to me the bulls
will not have the ammunition to move the market past the 10700 level.
We have to recognize that the NYSE volume is not rising like it should
if this were the start of a new runaway advance. So, watch the daily volume.
It will need to pick up to allow much higher prices. On the plus side,
the NYSE A/D Line remains very strong and is making new highs. Most
new reversals occur when a new high is made by the DJI and the A/D Line
starts to lag. ..Arthur Merrill's study shows Presidential Election year Octobers
and Novembers tend to rally at a 67% clip.
|HOTLINE -- DJIA=10457 --
11/19/2004 ... Friday
Bullish Seasonality and the Buy B18 Should Continue to Propel
the Market Higher.
|HOTLINE -- DJIA=10522 --
11/26/2004 ... Friday
Bullish Seasonality and the Buy B18 Should Continue to Propel
the Market Higher. But Volume Signs Suggest A Market Pause as the DJI
approaches 10700 (180 points higher) and the NASDAQ gets closer to
its 12 month high at 2150 (48 points higher.) Though, the
Hourly DISI is lagging by a bearish margin, breadth (advances-declines,
(new highs - new lows) is so good, we have to look for higher prices.
Usually, the DJI tops out after the NYSE A/D Line. Since the
A/D Line is making new recovery highs, it pays to be bullish.
Let your profits run some more.
|HOTLINE -- DJIA=10592 --
12/3/2004 ... Friday
The significant Bearish Hourly Volume Divergence Continues.
That a price correction is very likely is also suggested
by the weak seasonlity for the next two weeks...After that
the probability of a Santa Claus rally is very high through
end of year. At this point the ratio of new highs to new lows
of the NYSE and the NASDAQ remains more than 10:1.
Big declines usually start after new highs are made (and that
would require a DJI move past 10750) with the NYSE A/D
Line failing to confirm the new highs. The operative Peerless
signals remain BUYs. ..The NASDAQ stands at 2147.96.
It is now back to its January peak. That is where resistance should come in.
|HOTLINE -- DJIA=10542
-- 12/10/2004 ... Friday
The Bearish Hourly Volume Divergence does not seem able
to bring a market break. The DJI is locked in a narrow trading
range defined by hourly support at 10420 and hourly resistance
at 10600. A break of that support would be bearish. But
the NYSE A/D Line is in a steady uptrend. An upside breakout
would be bullish enough, I think to take the DJI to 10800...
Any price correction of the advance of the last 6 weeks is very
likely to be shallow. Decembers just do not have a history of
producing deep declines. Since 1965, the only occasions when
December produced drops below the lower band were in early
Decembers 1969, 1974 and 1987, plus briefly in early December 1980.
|HOTLINE -- DJIA=10650 --
12/17/2004 ... Friday
Friday brought more bearish revelations about undesirable
side effects of popular drugs. PFE and MRK are both
in DJI-30. It looks like the weakness in PFE will have
the same depressing effect that MRK did on the DJI
in October. The overall market still looks strong.
And Peerless gave a new B13. It's time for the Santa Claus
rally. There are still 4 more DJI stocks on optimized Red
Buys than Sells. There are 3 more on MACD buys than sells.
There are 11 more with rising Closing Power than with
falling Closing Power.
The very bullish seasonality of December and the operative B4 and B18
signals are not close to being reversed by major Sell signals. ...
Seasonality for the DJI is very bullish now. Looking out 10
trading days, the DJI has risen in this period 77.1% of the time!...
The NASDAQ's seasonality since 1988 is even more bullish. If the
period since 1988 is relevant or a large enough sample, then the odds of the
NASDAQ rising after 10 trading days is 93.3% and the average gain is 3.4%
|HOTLINE -- DJIA=10827 --
12/23/2004 ... Thursday
The overall market still looks quite strong. Peerless has given its
Buy B13; it's time for the Santa Claus rally. Arthur Merrill's study
shows a 72.4% probability that the| day before Christmas will see
the DJI up, using the data from 1897-1983. But the odds of it rallying
the day afterward are only 52.9%.
There are 11 more DJI stocks on MACD buys than sells.
There are 18 more DJI 30 stocks that have rising Closing Powers
than declining Closing Powers. The NYSE A/D Line remains in a
strong uptrend as the DJI made another 3 year closing high today,
despite the awful news background for MRK, PFE and now PG!
A market that can shrug off this type of news wants to go higher!
|Hotline 12/31/2004 -- DJIA=10783
(At what proved to be short-term top.)
Volume is disappearing and volume is needed to eat up
the overhead supply. It will have to pick up as the new
year starts, or the DJI uptrend will broken. The Buy B15
tells us the uptrend has gone long enough to build up
a force of buyers who will likely turn up the next decline below
the 21-day ma, now at 10566.35.
The NASDAQ looks like it is ready to breakout above
the upper boundary in its bullish ascending triangle. Volume
has dimminished greatly. The NASDAQ OBV Line may
not confirm. This is a sign that the uptrend is losing its power.
There are only 3 more DJI stocks on MACD buys than sells, down 5
from this Thursday...The upside potential
is becoming more limited. Looking at the individual DJI stocks, it's not
clear which ones, apart from KO, DIS, DD, JNJ, MCD, MO,
and UTX, still have a lot of upside potential. Now PFE has bounced
back to its declining 21-day ma. and 50-day ma and MRK is nearly back to the
edge of its gap down in September. IBM is making a
recovery high but shows a very negative Accumulation Index.
|HOTLINE 1/7/2005 - DJIA=10603
The DJI fell another 18. It is now 100 points below its 21-day ma
at 10702. Its lower band is at 10327. The P-Indicator remains
positive (+156), but the V-Indicator dropped to -52 and the
Accumulation Index dropped ot -.027. This still looks like a shakeout
in a rising market. The operative Peerless major signal is a Buy B15.
This tells us that there should be a lot of buyers to boost prices on the first decline
below the 21-day ma.
Sharp sell offs in the first few days of January are rare without
an S9 or an S12 signal. If we look at the 5 cases since 1966
when the DJI fall the first or the first two weeks of January when
the market trend was up or sidewise, and not a bear market,
we see 5 cases. In 3, the DJI retreated to a point about half way
between the moving average and the lower band and then rallied
strongly (1986, 1993 and 1996). In one it fell to the lower band then rallied (1998)
and in one case it fell below the lower band and started a bear market (1977).
From this, I conclude the odds are 4:1 that this decline now is not
the start of a bear market and that a rally is likely soon. It's true that
1977 was a year of sharply rising oil prices and inflation. But then
the Treasury Secretary (Volker) was unfriendly to the Democratic President.
This still looks like a shakeout in a rising market. The operative
Peerless major signal is a Buy B15. This tells us that there should
be a lot of buyers to boost prices on the first decline below the 21-day ma.
and half way to the lower band. That is nearly where we are now.
Except for 1977, bear markets have not started without
an S9 or an S12 and suddenly swooned at the beginnning of a new year.
The QQQQ has a completed head and shoulders pattern. This is apt to scare traders
away from NASDAQ stocks for a while. The NDX is on a Red Sell, this from its 21-
day Tiger Traders' Tool. Its head and shoulders pattern looks scary. In general,
it is better to wait for such a pattern to play itself out, rather than insist it is
misleading and can be ignored. Blue chips stocks will probably be the first to turn
Seasonality for the DJI now is bearish short term... Looking out
1-10 trading days, the DJI has risen in this period less than 47.1% of the time.
But for 21 trading days and longer the DJI rises more than 55.9% of the
time. Over the next 21 trading days, the odds of the DJI rallying are 55.9%.
The average rise is 1% looking out a month.
|HOTLINE - 1/21/2005
Lower Band Is Being Approached with new B11 Buys.
The Buy B15 tells us to expect the first dip for the DJI after the B15 to be
treated as a buying opportunity. In addition, the now present B11 are signals are
usually powerful and reliable. The 20-day Stochastic-Pct-D for the DJI has now
reached 11. This is very close to the levels that have brought rallies, going back
over the last 12-months.
A Bottom Seems To Be Forming..Buy B11's work out
nearly 80% of the time. Cover More of Short Sales ...
I think we have to respect the recent B11 signals, given their
historic track record. New software to review the history of
Peerless singals since 1965 should be ready soon. It shows
that the previous 84 B11's showed a profit 77.4% of the time
at the next Peerless sell signal of any type... Better would have
been to just hold until the next major Sell. The odds of a profit
then rise to 79.8% and the average gain jumps to 4.4%.
The DJI Exploded Past 10650 To Negate Potential Head
and Shoulders Pattern. Breadth and Rising NYSE Up Volume
Are Bullish Signs, but Februaries are a Problem in The Year
After A Presidential Election. And NASDAQ Up Volume
Is Low and The Rally is Being Led by Defensive Issues and Oil
and Gas Stocks. I Would Expect A Top Near 11000.
This is in keeping with the bullishness of the Buy B11. The NYSE
Adv-Decl Line has now made a new 12 month high. The P-Indicator
rose to +328. However, the V-Indicator remains slightly negative
as does the Accum. Index. The DJI is now 180 points over its 21-day ma.
Expect resistance at 10900. The weekly DJI chart suggests a target of
at least 11100.
The DJI is now challenging the resistance between 10800 and 10900
from the late December rally. The internal strength indicators
are still rising. The P-Indicator and Accum.Index are positive.
The V-Indicator is still negative. Februaries the year after a
Presidential Election rise less than 40% of the time. But the weakest
part of them is almost over.
The NYSE A/D Line has been very strong. Such good breadth argues
against a big decline. We have no Peerless DJI Sell signal. So we must
give the market a chance to move higher. A typical B11 gain here
would take the DJI above 10900.. The weekly DJI chart suggests a target of
at least 11100. . I am also impressed that the DJI found support after declining
only a little more than 33% of what it had gained in the October-December rally.
That is typical of a strong market environment.
THE SELL S13 WEAKNESS IS PROBABLY MINOR GIVEN
THE OPERATIVE MAJOR BUY B15. THE DJI SHOULD
FIND AMPLE SUPPORT AT 10400.
The DJI has been turned back by the resistance above 10800.
S13 Sell signals have worked well this past year... as long as the
V-Indicator stays negative. It is now -2. The seasonality is bearish for
the next few trading days. But after that, seasonality turns bullish.
The P-, V- and Accum. Indicators improved Friday. Many times
the market is leery of rallying when the President is out of the country.
The market may want to wait this week out before rallying.
I did notice in doing the Elite report that two bullish stocks turned
up nicely on Friday with their OBV making new highs ahread of price.
WSTM is a high Accum.Index (AI/200=198) stock that is challenging
its 12-month high of 4.02. I would Buy it for a good breakout move.
TKP (AI/200=183) just rose above its 50-day ma on high volume.
If its Acc.Index stays positive for the next 6 weeks, its AI/200 score
will become a perfect 200. Buy TKP.
THE OPERATIVE MAJOR PEERLESS SYSTEM IS STILL ON A BUY.
ALL 3 KEY PEERLESS DJI INDICATORS ARE NOW POSITIVE.
MARCH IS TYPICALLY A MUCH BETTER MONTH
FOR THE MARKET THAN FEBRUARY. A CHALLENGE OF 10900
IS IN THE MAKING. A MOVE PAST THAT WOULD BE VERY BULLISH,
AS LONG AS VOLUME RISES TO CONFIRM THE MOVE.
The DJI is testing the resistance at 10900 created by its highs in
December and early February. The operative major Peerless BUY
signals are B18 (`11/8/2004), B4 (11/15/2004) and B15 (12/30/2004).
Intermediate-Long Term investors and traders should also take heart
from the market's good breadth: the NYSE A/D Line is within a hair
of another new high in a steady uptrend that goes back to May last year.
The way the market disposed of the normally bearish month of
February was impressive and is bullish. Our stock screening
of 7000 stocks found lots of bullish stocks, but only a few
that meet strict bearish conditions...It is significantly bullish that the
V-Indicator has turned positive. (The S13 is weakened or nullified.)
DJIA=10912...NYSE VOLUME IS NOT
CONSIDERED HIGH ENOUGH
TO TACKLE THE OVERHEAD SUPPLY WITHOUT LOTS OF
HUFFING AND POUGHING, RALLIES AND PULLBACKS.
THE RISE IN OIL PRICES AND THE COMMODITY
INDEX IS BEARISH, BECAUSE INTEREST RATES
ARE APT TO RATCHET UP SOONER THAN LATER...
3/8/2005 ... The DJI (10912.47) pullled back towards the previous
resistance-now support at 10900 created by its highs in December
and early February....
The failure of the NASDAQ to get above even its 50-day ma as
the DJI rose to a 12-month high shows that the market is not
firing on all engines. A pullback by the DJI or a catch-up by the NASDAQ
usually occurs next. The DJI is trying to eat up overhead resistance.
The weekly DJI chart shows that. NYSE volume is (only) flat...
The V-Indicator is negative despite the DJI's move over 10900.
The P-Indicator weakened to +148. The Accumulation Index (+.023)
weakened considerably. Note the bearish OBV (DISI) divergence on the
Hourly DJI chart. These are short-term warnings. The NASDAQ-Peerless
remains on a Sell. The "NASDJI" has now been negative for 10 weeks.
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