This posting will cover the downside targets for the Dow Jones Utility Average using Edson Gould’s Speed Resistance Lines [SRL]. The point of downside targets is to consider buying at predefined levels when and if those targets are achieved. If the downside targets are not achieved then we patiently wait and focus our attention on other opportunities.
This posting is a follow up to our August 24, 2013 posting with SRL downside targets for the same index. As the Utility index has increased above the 2007 peak and now is in a declining trend, we need to update the numbers in case the downside targets are achieved. Below are the downside targets based on Edson Gould’s Speed Resistance Lines.
The conservative downside target is 391.31 and the extreme downside target is 217.37. We’ve noted in the chart above that since 1987 there has been a decline to conservative downside target every seven years. Below is the performance of the Utility Average from the respective peak to trough:
-
1987: –29.34%
-
1993: –32.17%
-
2000: –59.73%
-
2007: –47.41%
The average decline from the previous four periods was –42.16%. In this case, a decline to the conservative downside target would mean a drop of –40% from the peak.