Wednesday, November 28, 2012
I think the market is at a critical juncture. The drop into the November 16 low was shorter than the drop into the June 2012 low (blue dash rectangles). This is potentially a sign of strength if the S&P can show some definite sign that the drop from the September high is over.
As you can see the average has rallied to the midpoint of the drop (red dash line) and has been hesitating there for the past several days. If the S&P can make new highs for the rally from the November 16 low and stays above the midpoint for a day I will conclude that this average is headed higher and will probably make new bull market highs.
For you Lindsay fans strength above the midpoint would probably mean that the November low was point 26 of the domed house and the current rally will end at point 27. There have been several instances of three peaks and a domed house formation in which point 27 was the bull market high, not point 23.