FEATURED EXPERT: Jack Schannep
09-JULY-04
We are now half-way through 2004, and
perhaps half-way through the bull market as well. While much will still
rest on the outcome of Iraq and the election, Jack Schannep, editor
of the Schannep's Timing Indicator and the Dow Theory newsletter,
believes that the second half of the year will see even more highs. In
this featured expert, Schannep offers several pieces of data to back-up his
claims.
From Saving the Day to Leading the Way
Jack Schannep likes to think the above
describes our Armed Forces in Iraq and Afghanistan, but what it
certainly describes is the Dow Jones Transportation Average. The market
did indeed push through on the upside and surpass each of the ‘Recent
Bounce Highs’, except for the NYSE Composite. The Transports had already
taken out the ‘1st Bounce Highs’ and have since surpassed not only the
‘Recent Bounce Highs’ but also the ‘2004 Highs’!! Now that’s leadership!
And it’s not doing it alone, if you will look at the 29 ‘Major Stock
Indexes’ shown daily in the Wall Street Journal you will see that 27 of
them are in plus territory for 2004. Only the Dow Jones Industrials and
the NASDAQ Computer index show losses this year.
Consumer Confidence just came roaring in to a reading above 100 for
the first time in this cycle, and a new high for this year. As you know
from the ‘Special Report’ it usually tops out well before the market
does and usually well above the 100 level. Imagine what a successful
outcome in Iraq and Afghanistan would do for it and the market!
The BOTTOM LINE:
With the year half over, and probably the Bull market as well, let’s
look at some of the reasons to think each will continue to higher levels
in the latter half of each. First of all, when Schannep’s Indicators
give Buy signals as each have, advances invariably follow. The average
gain after a Dow Theory, Schannep Timing Indicator, or COMPOSITE
Indicator Buy signal has been between 41% and 47% which equates to
11,770-12,440 as shown a year ago in the 7/1/03 Letter “Target
Practice”. Hence Schannep’s comment on the Subscriber’s Page of ‘Goodbye
Dow 10,000, Hello 12,000’.
In addition to his primary Indicators, Schannep, who deals in
Spiders (AMEX: SPY ) and Diamonds (AMEX: DIA ), has mentioned
other indications, such as multiple year declines have always been
followed by multiple year advances as shown in the 9/1/03 Letter “A
Picture is Worth…Some Insight”. The 62% of Bull markets that complete
their second year grow an average of +12.7%, shown in the Special Report
“Bull Markets in the 20th-21st Centuries” which equates to 10,909 by
October of this year. The market was up in both January and February of
this year (barely) and studies show (see 4/1/04 Letter) that has
resulted in gains by year end 94% of the time by an average of 13.9%
which equates to 12,055. And who can forget this is an election year?
Over the last 100 years the average gain in election years has been
+9.3% which would equate to 11,426. Two other 100 year studies (Ned
Davis Research and Thechartstore.com) show that the final 6 months of
election years have grown over 10% which also equates to 11,418.
So, there you have it. Oh, did Schannep mention that the average Bull
market lasts 33.4 months and that this one is just 21 months old? And
that the average gain has been more than a double? But that’s a subject
for another day. What do they say about statistics don’t lie? Each of
the numbers shown above WILL occur, it’s the timing that’s in question.
A lot depends on events in the middle-East, and, heaven forbid, in the
United States. And, yes, the outcome of the election.
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& TheDowTheory.com
