Thursday, November 15, 2012
three peaks and a domed house
for more than a year now.
The drop in the Dow since the election has violated the green trend line and also brought the average well below its 200 day moving average (wavy red line). I think this is pretty convincing evidence that point 23 was the early October high and thus that the peak of the domed house has been seen.
The next point of significance is the low at point 26. I think this will occur a little above the June 2012 low but it may come in a little big lower than the June low too. In any case the rally from point 26 should be bigger than any rally we have seen since August in the Dow. My guess is that it will bring the average back up to an maybe a little higher than its 50 day moving average which I have extrapolated with the wavy blue line.
A top, point 27, at that level would give the entire pattern since April 2012 the appearance of a big, head and shoulders top. This top should in turn be resolved by a downside breakout subsequent to point 27. The standard technical measurement for a head and shoulders top would then project a minimum drop in the Dow to around 10800, the general vicinity of the October 2011 low. That low is also Lindsay's standard target for the drop which starts from point 23.