Thursday, September 27, 2012
domed house update
Before going further I have to admit that I expect this example of the 3PDH to fail in that I think this bull market has much further to go. Any drop from a clearly identified point 23 is likely to stop well above the normal target represented by point 10. But I know that many people disagree with me and I have to admit that so far the market's action is fitting the schematic very well.
My interpretation right now is that point 21 occurred at the September 14 high and that in all likelihood point 22 was yesterday's low. The market is now likely to rally to point 23 which I expect to develop during the October 10-15 time frame if this is indeed a domed house (point 23 on the chart is much later than I expect - the label was put there to make the labeling more readable). The top should not be too far above point 21 which was roughly 13650. So point 23 might occur in the 13800-14000 range.
It is possible that point 21 is still ahead of us and this would extend the life of the domed house - I don't think this is likely.
Once possible scenario for a failed (or only partially successful) formation which is more consistent with my bull market prognosis would be a drop from point 23 only to the point 20 low or a little lower.