Reply #2: WrapUp by Tim W. Wood [View All]

THE DOW REPORT
Retailers Lagging

In October I told my subscribers that we should expect the 10-week and possibly even the 22-week cycle lows in late October. As it turned out, the October lows marked both the 10 and 22-week cycle lows. As of this writing, these cycles are still positive. But, there are signs that this advance may not be quite as healthy as some believe.

One such sign is the non-confirmation between the Industrials and the Retail Holders. Understand that such divergences or non-confirmations are not timing tools. For that, we use the Cycle Turn Indicator. However, these non-confirmations are important to monitor as they do provide important clues. The first non-confirmation shown in this chart occurred in February/March 2004. Again, this is not a timing tool, but it was telling us to be careful. It was when the Cycle Turn Indicator turned in conjunction with this non-confirmation that ultimately produced a signal. Next we had the short-term non-confirmation in June 2004, and it too was followed by a sell off. Then, between November 2004 and March 2005 an intermediate term non-confirmation developed between these two indexes. In this case the decline into the April lows followed.

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