(C) 2012 Wm. Schmidt, Ph.D.
6/8/2012
Judged Sell S10s have to be recognized by traders.
The computer can spot only a small percentage of these.
Study these and see if you can get a good working
understanding of these bearish signals.
Shown below as JS10s, are Closing Price Penetrations
of 3x Tested (or more) Horizontal Support made up of
Closing Prices or
Closing Violations of a Head/Shoulders closing price
formations. .
The yearly Peerless charts are used for convenience.
There may be some JS10s that occur in the first quarter
that will have to be added later.
Only closing price charts are used on DJI. The DJI had to
close clearly below the support level. A minor violation
for one day was not considered a clear violation of support.
Where either the OPct or IP21 was positive, the breakdown
was more apt to fail. Where the DJI did not keep falling when
support failed, it was more likely to be a "false breakdown"..
There were only 9 Failures to reach minimum downside objective
where support was broken by more than one day from 1929-2012
Requiring that the OPct and IP21 be positive would have eliminated
3 of the 9 cases failures.
March 1935 - OPct was +.031 on breakdown IP21= -.042
April 1947 - Almost reached minimum objective, but better support stopped it.
July 1951 - - marginal violation for 2 days.
Jan 1960 - Almost reached minimum objective.
June 1976 - marginal violation for 2 days.
Oct 1984 - Adjusted P = only - 60
Oct 1989 - OPct was +.1361 on breakdown IP21= +.007
Nov 1991 - on breakdown IP21= +.061
July 2009 - marginal violation for 3 days.
In 26 cases there were DJI declines down to the minimum price objective.
There were about as many pullbacks to the broken support. There
were only 7 failures, where the DJI failed to reach the minimum downside
objective
Immediate Declines Down the Minimum Price Objective
1929 - 2 cases;
1930 - 2 cases;
1931 - 2 cases;
April 1936,
May 1940,
Oct 1941,
Feb 1946,
Feb 1947,
Feb 1949,
June 1950,
April 1952
Sept 1961
Jan 1962
April 1962
May 1965
Oct 1971
March 1974
Jan 1978
May 1979
Feb 1980
June 1981
Oct 1981
Aug 1990
March 2001
June 2001
Aug 2001
May 2010
May 2012
28 Pullbacks to the broken suppor-turned-into-resistance
If we consider the judged S10s since 1929, we see 28 cases
where there was a pullback to the broken support level that
was expected to be resistance. The DJI fell back significantly
in 21 of these cases. But in 11 of them, it was able to make it
up past the flat resistance on the next, the second, rally within 2 months.
Well-Tested Support Turned into Resistance Stopped the Next Rally.
Sept. 1920
June 1928 - the second rally got past the flat resistance.
November 1932
March 1934 - resistance turned back 2 rallies.
May 1936 - the second rally in June got past the flat resistance.
Sept 1938 - the second rally in Sept got past the flat resistance.
August 1946
March 1949
Sept 1952 - the second rally in June got past the flat resistance.
Oct 1960 - the second rally in November got past the flat resistance.
July 1963 - the second rally in August got past the flat resistance.
July 1971
April 1971
July 1979 - the second rally in August got past the flat resistance.
October 1989 - the second rally in November got past the flat resistance.
November 1991 - the second rally in December got past the flat resistance.
September 1999 - the second rally in November got past the flat resistance.
February 2000 - the second rally in March got past the flat resistance.
May 2005 - the second rally in March got past the flat resistance.
February 2008 - the fourth rally in April got past the flat resistance.
May 2010
Well-Tested Support Turned into Resistance Failed to
Stop the Next Rally.
March
1935
July
1951
November
1963
June
1976
October
1984
(Jan
1986 - one day support violation)
(May
1996 - one day support violation)
July
2009
DJI 2012
