Monday, July 27, 2009
Lots more upside
I think we now have information which permits a reasonable projection for the next intermediate term top - one which will be followed by a break lasting a couple of months and dropping the S&P 100-150 points.
The first chart above this post shows the 10 day moving average of the daily count of advancing issues on the New York Stock Exchange. In a bull market my rule of thumb for this indicator works like this: expect an intermediate term top sometime between two and four months after the peak value the 10 day moving average reaches during an intermediate term uptrend. Since I think the latest such uptrend began from the 865 level, the peak last week in this moving average projects an intermediate term top sometime between September 24 and November 24 of 2009.
Where might this top develop? I drawn a trend channel of the weekly chart you see above. Note how the upper dash line of the channel meets the descending trend line from the 2007 top in late September near the 1120 level. That is also where we find the midpoint of the entire drop from 1576 to 666.
So I think the next intermediate term top will probably develop sometime between late September and late November near the S&P 1120 level.