Go to Jeff Salisbury LWGate Home Page.From: "Hill, Ernie" <Ernie.Hill@ElPaso.com>
Subject: [CANSLIM] M where now?
Date: Mon, 29 Apr 2002 22:16:11 -0500
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Hi Group,
When I made my first market forecast to the group back in March part of the
reason I chose to make a forecast then was because I had a very reliable
forecast to make. Because of the high probability that I saw occurring in
the market I chose to make a very precise forecast for maximum effect. At
that time I said the market would bottom in the 1070 to 1075 range on the
S&P on 4-17-02. I had a high degree of confidence that the market would turn
within two days of that date and very close to my projected price range.
First the market gave me a head fake with a false turn confirmation, now it
has blown up my forecast with today's price action. First the S&P has set a
new low for the move, which will now put the eventual turning point outside
the maximum range predicted by my model. In addition to that it has
surpassed the lowest price level that I had projected for the move.
So what does it all mean? For some of you it proves that I am an idiot that
got his just due for being arrogant enough to think that he could predict
the market. I can accept that criticism; however, from my point of view my
missed forecast gives hints to the longer term picture for the rest of the
year. For those of you who are still reading here is what I see as the most
likely scenario going forward and the implications of the market dropping
through and past my projected turning point.
First of all the S&P will likely drop to an even lower support level before
the turn is eventually made. This support level will continue to drop
slightly with each passing day. For tomorrow that level will be 1035.5, if
the S&P drops to that level by tomorrow then the market will likely turn
from there. Going back to the market low on 9-21-01 the S&P put in a low of
944.75 it then rose to a high of 1176.97 on 1-7-02. 61.8% of that move would
be 143.51 points. 61.8% is a key Fibonacci ratio where corrections often
find support. Subtracting 143.51 points from the market high of 1176.97
yields a price level of 1033.46. On May 2, 2002 my projected support level
for the S&P is 1033.5. Will 5-2-02 be the day this market actually changes
trend at least briefly? We'll see.
The longer term implications are that the ensuing rally will likely be
briefer than previously expected and certainly have a lower price target,
maybe even below 1176.97 the current high for the year. If the rally that
follows this current decline fails to exceed the current high for the year
then we may be looking at a retest of the September lows later in the year.
E
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<p class=3DMsoNormal><font size=3D3 face=3D"Times New Roman"><span style=3D=
'font-size:
12.0pt'>Hi Group,<o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D3 face=3D"Times New Roman"><span style=3D=
'font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal><font size=3D3 face=3D"Times New Roman"><span style=3D=
'font-size:
12.0pt'>When I made my first market forecast to the group back in March par=
t of
the reason I chose to make a forecast then was because I had a very reliable
forecast to make. Because of the high probability that I saw occurring in t=
he
market I chose to make a very precise forecast for maximum effect. At that =
time
I said the market would bottom in the 1070 to 1075 range on the S&P on =
</span></font><st1:date
Month=3D"4" Day=3D"17" Year=3D"2002">4-17-02</st1:date>. I had a high degre=
e of
confidence that the market would turn within two days of that date and very
close to my projected price range.<o:p></o:p></p>
<p class=3DMsoNormal><font size=3D3 face=3D"Times New Roman"><span style=3D=
'font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal><font size=3D3 face=3D"Times New Roman"><span style=3D=
'font-size:
12.0pt'>First the market gave me a head fake with a false turn confirmation,
now it has blown up my forecast with today's price action. First the
S&P has set a new low for the move, which will now put the eventual tur=
ning
point outside the maximum range predicted by my model. In addition to that =
it
has surpassed the lowest price level that I had projected for the move.<o:p=
></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D3 face=3D"Times New Roman"><span style=3D=
'font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal><font size=3D3 face=3D"Times New Roman"><span style=3D=
'font-size:
12.0pt'>So what does it all mean? For some of you it proves that I am an id=
iot
that got his just due for being arrogant enough to think that he could pred=
ict
the market. I can accept that criticism; however, from my point of view my
missed forecast gives hints to the longer term picture for the rest of the
year. For those of you who are still reading here is what I see as the most
likely scenario going forward and the implications of the market dropping
through and past my projected turning point.<o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D3 face=3D"Times New Roman"><span style=3D=
'font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal><font size=3D3 face=3D"Times New Roman"><span style=3D=
'font-size:
12.0pt'>First of all the S&P will likely drop to an even lower support
level before the turn is eventually made. This support level will continue =
to
drop slightly with each passing day. For tomorrow that level will be 1035.5=
, if
the S&P drops to that level by tomorrow then the market will likely turn
from there. Going back to the market low on </span></font><st1:date Month=
=3D"9"
Day=3D"21" Year=3D"2001">9-21-01</st1:date> the S&P put in a low of 944=
.75 it
then rose to a high of 1176.97 on <st1:date Month=3D"1" Day=3D"7" Year=3D"2=
002">1-7-02</st1:date>.
61.8% of that move would be 143.51 points. 61.8% is a key Fibonacci ratio w=
here
corrections often find support. Subtracting 143.51 points from the market h=
igh
of 1176.97 yields a price level of 1033.46. On <st1:date Month=3D"5" Day=3D=
"2"
Year=3D"2002">May 2, 2002</st1:date> my projected support level for the S&a=
mp;P
is 1033.5. Will <st1:date Month=3D"5" Day=3D"2" Year=3D"2002">5-2-02</st1:d=
ate> be
the day this market actually changes trend at least briefly? We'll see.<o:p=
></o:p></p>
<p class=3DMsoNormal><font size=3D3 face=3D"Times New Roman"><span style=3D=
'font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal><font size=3D3 face=3D"Times New Roman"><span style=3D=
'font-size:
12.0pt'>The longer term implications are that the ensuing rally will likely=
be
briefer than previously expected and certainly have a lower price target, m=
aybe
even below 1176.97 the current high for the year. If the rally that follows
this current decline fails to exceed the current high for the year then we =
may
be looking at a retest of the September lows later in the year.<o:p></o:p><=
/span></font></p>
<p class=3DMsoNormal><font size=3D3 face=3D"Times New Roman"><span style=3D=
'font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=3DMsoNormal><font size=3D3 face=3D"Times New Roman"><span style=3D=
'font-size:
12.0pt'>E<o:p></o:p></span></font></p>
<p class=3DMsoNormal><font size=3D2 face=3DArial><span style=3D'font-size:1=
0.0pt;
font-family:Arial'><o:p> </o:p></span></font></p>
</div>
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Next Article (by Date): Re: [CANSLIM] M where now? "Tom Worley"
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