Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
How to Trade Binance Vanilla Options for the First Time on Bitcoin Crypto's - 2nd Aug 21
From vaccine inequality to economic apartheid - 2nd Aug 21
Stock Market Intermediate Top Reached - 2nd Aug 21
Gold at a Crossroads of Hawkish Fed and High Inflation - 2nd Aug 21
Bitcoin, Crypto Market Black Swans from Google to Obsolescence - 1st Aug 21
Gold Stocks Autumn Rally - 1st Aug 21
Earn Upto 6% Interest Rate on USD Cash Deposits with Binance Crypto Exchange USDC amd BUSD - 1st Aug 21
Vuze XR VR 3D Camera Takes Near 2 Minutes to Turn On, Buggy Firmware - 1st Aug 21
Sun EXPLODES! Goes SuperNova! Will Any planets Survive? Jupiter? Pluto? - 1st Aug 21
USDT is 9-11 for Central Banks the Bitcoin Black Swan - Tether Un-Stable Coin Ponzi Schemes! - 30th Jul 21
Behavior of Inflation and US Treasury Bond Yields Seems… Contradictory - 30th Jul 21
Gold and Silver Precious Metals Technical Analysis - 30th Jul 21
The Inadvertent Debt/Inflation Trap – Is It Time for the Stock Market To Face The Music? - 30th Jul 21
Fed Stocks Nothingburger, Dollar Lower, Focus on GDP, PCE - 30th Jul 21
Reverse REPO Market Brewing Financial Crisis Black Swan Danger - 29th Jul 21
Next Time You See "4 Times as Many Stock Market Bulls as There Are Bears," Remember This - 29th Jul 21
USDX: More Sideways Trading Ahead? - 29th Jul 21
WEALTH INEQUALITY WASN'T BY HAPPENSTANCE! - 29th Jul 21
Waiting On Silver - 29th Jul 21
Showdown: Paper vs. Physical Markets - 29th Jul 21
New set of Priorities needed for Unstoppable Global Warming - 29th Jul 21
The US Dollar is the Driver of the Gold & Silver Sectors - 28th Jul 21
Fed: Murderer of Markets and the Middle Class - 28th Jul 21
Gold And Silver – Which Will Have An Explosive Price Rally And Which Will Have A Sustained One? - 28th Jul 21
I Guess The Stock Market Does Not Fear Covid - So Should You? - 28th Jul 21
Eight Do’s and Don’ts For Options Traders - 28th Jul 21
Chasing Value in Unloved by Markets Small Cap Biotech Stocks for the Long-run - 27th Jul 21
Inflation Pressures Persist Despite Biden Propaganda - 27th Jul 21
Gold Investors Wavering - 27th Jul 21
Bogdance - How Binance Scams Futures Traders With Fake Bitcoin Prices to Run Limits and Margin Calls - 27th Jul 21
SPX Going for the Major Stock Market Top? - 27th Jul 21
What Is HND and How It Will Help Your Career Growth? - 27th Jul 21
5 Mobile Apps Day Traders Should Know About - 27th Jul 21
Global Stock Market Investing: Here's the Message of Consumer "Overconfidence" - 25th Jul 21
Gold’s Behavior in Various Parallel Inflation Universes - 25th Jul 21
Indian Delta Variant INFECTED! How infectious, Deadly, Do Vaccines Work? Avoid the PCR Test? - 25th Jul 21
Bitcoin Stock to Flow Model to Infinity and Beyond Price Forecasts - 25th Jul 21
Bitcoin Black Swan - GOOGLE! - 24th Jul 21
Stock Market Stalling Signs? Taking a Look Under the Hood of US Equities - 24th Jul 21
Biden’s Dangerous Inflation Denials - 24th Jul 21
How does CFD trading work - 24th Jul 21
Junior Gold Miners: New Yearly Lows! Will We See a Further Drop? - 23rd Jul 21
Best Forex Strategy for Consistent Profits - 23rd Jul 21
Popular Forex Brokers That You Might Want to Check Out - 22nd Jul 21
Bitcoin Black Swan - Will Crypto Currencies Get Banned? - 22nd Jul 21
Bitcoin Price Enters Stage #4 Excess Phase Peak Breakdown – Where To Next? - 22nd Jul 21
Powell Gave Congress Dovish Signs. Will It Help Gold Price? - 22nd Jul 21
What’s Next For Gold Is Always About The US Dollar - 22nd Jul 21
URGENT! ALL Windows 10 Users Must Do this NOW! Windows Image Backup Before it is Too Late! - 22nd Jul 21
Bitcoin Price CRASH, How to SELL BTC at $40k! Real Analysis vs Shill Coin Pumper's and Clueless Newbs - 21st Jul 21
Emotional Stock Traders React To Recent Market Rotation – Are You Ready For What’s Next? - 21st Jul 21
Killing Driveway Weeds FAST with a Pressure Washer - 8 months Later - Did it work?- Block Paving Weeds - 21st Jul 21
Post-Covid Stimulus Payouts & The US Fed Push Global Investors Deeper Into US Value Bubble - 21st Jul 21
What is Social Trading - 21st Jul 21
Would Transparency Help Crypto? - 21st Jul 21
AI Predicts US Tech Stocks Price Valuations Three Years Ahead (ASVF) - 20th Jul 21
Gold Asks: Has Inflation Already Peaked? - 20th Jul 21
FREE PASS to Analysis and Trend forecasts of 50+ Global Markets by Elliott Wave International - 20th Jul 21
Nissan to Create 1000s of jobs with electric vehicle investment in UK - 20th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

New Stock Market High - S&P and Dow Following Separate Paths

Stock-Markets / Stocks Bear Market Oct 23, 2013 - 10:20 AM GMT

By: Ed_Carlson

Stock-Markets

The methods of George Lindsay were meant to be applied to the Dow Industrials index and he warned against using these methods on broader indices (S&P 500, Wilshire 5,000, etc.) because of the constant rotation of stocks in and out of the indices and the inclusion of, what he called, "unseasoned issues". But with all major equity indices (DJIA, SPX, and NASDAQ) setting highs on or near 9/18/13 it looked as if the Lindsay forecast for a high in the Dow at that point in time was complete; game-set-match. So what are we to make of new highs in the S&P and NASDAQ since that time?


While the major indices typically make their highs and lows together (i.e. 10/11/07 high, 10/4/11 low) the millennium high in the Dow was set on January 14, 2000 but the SPX did not make its final top until March 24 of that year. The methods of Lindsay are not required to see that the Dow and SPX are once again on their own individual trajectories. During the September decline the DJIA violated its August low to print the first lower low since 2011 but SPX continued in its series of higher lows (and now, higher highs).

So why not think the Dow will catch up with the other indices to print new highs, too?

The case for a September top in the Dow was made with the full arsenal of Lindsay tools. It began with a 15year interval (10/28/97) which forecast a top between October 2012 and September 2013.

The Principle of Alternation led us to expect a short basic advance (630-718 days) from the 10/4/11 low as the previous basic advance had been long. The time span of a short basic advance was to expire three days after the 9/18/13 high and seven days before the expiration of the 15year interval. So far, so good.

Any uncertainty is in identifying the beginning of the basic advance. Is the low on 10/4/11 the correct origin? Normally, this would be a simple exercise but in this case the process is complicated by the presence of a Sideways Movement which began on 2/18/11. Without going into an in-depth explanation of Sideways Movements, the best known example is the period from 2/11/26 to 1/25/27 (see George Lindsay Training Course, SeattleTA Press, 2013). Sideways Movements are normally topping formations but in the 1926-1927 instance, the Dow advanced out of the pattern. Lindsay wrote that an advance from a Sideways Movement always leads to a horrific decline in the Dow and that was certainly the case once the basic advance from 1/25/27 concluded on 9/3/29. Lindsay counted the basic advance, not from the ultimate low on 3/30/26 but from the higher low on 1/25/27 using the rationale that it was from the 1927 low that the Dow advanced to higher highs out of the Sideways Movement.

Given that precedent, should we be counting the advance from the 2011 Sideways Movement, not from the ultimate low on 10/4/11, but from the higher low on 11/25/11? One of the most beautiful aspects of Lindsay's work is the fact that his counts often work from various points in time. Taking the count from the 11/25/11 low to the 9/18/13 high is 664 days; a short basic advance (630-718 days). Taking the count from 10/4/11 is 715 days; a short basic advance. Both counts terminate prior to the expiration of the 15year interval on 9/28/13. Given the Dow is still almost 300 points below its September 18 high, I'm inclined to stick to the forecast that the high (in the Dow) of the 2009 bull market was seen on 9/18/13 regardless of what path the other major indices find themselves upon.

It's fair to ask how we will know the forecast was incorrect and what should we expect then. Risk management is one of the advantages of the Lindsay method. Obviously an advance by the Dow to a point higher than the high on 9/18/13 will tell us the forecast was wrong. At that point both the count from the 10/4/11 low and the 15year interval from 1997 will have expired and are of no use. The next 15year interval (9/1/98) won't expire until August 2014 but a basic advance from 11/25/11 gets no such leeway.

Again, the Principle of Alternation tells us to expect (this Principle is a guideline, not a rule) the advance to be short (630-718 days). A short basic advance from 11/25/11 expires on November 12 of this year so an alternative count to a high to the 2009 bull market will expire no later than then.

Request your free copy of the October Lindsay Report at Seattle Technical Advisors.

Ed Carlson, author of George Lindsay and the Art of Technical Analysis, and his new book, George Lindsay's An Aid to Timing is an independent trader, consultant, and Chartered Market Technician (CMT) based in Seattle. Carlson manages the website Seattle Technical Advisors.com, where he publishes daily and weekly commentary. He spent twenty years as a stockbroker and holds an M.B.A. from Wichita State University.

© 2013 Copyright Ed Carlson - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in