Wednesday, September 21, 2005
Three Peaks and Domed House Update
For nearly two years I have been following the development of an example of George Lindsay's Three Peaks and a Domed House formation in the Dow and in the S&P 500.
The first chart you see above is a schematic showing the ideal pattern with the associated numbering of the sequence of highs and lows.
The second chart is a weekly chart of the Dow Industrials. I have put two sets of labels on this chart. Both the red labels and the black labels are possible interpretations of the Dow's action since January 2004 in terms of a three peaks and domed house.
We are now in a situation where both interpretations have converged; in other words, they both tell me that the market is now at point 20 of the domed house. Therefore, according to either interpretation, the next swing should be a fast rally upward to the top of the domed house, point 23.
As to timing, the "red" interpretation has the advantage of giving us a well defined and obvious point 14: May 13, 2005. This is Lindsay's preferred starting point for his time measurement of 7 months 10 days which then predicts point 23 for December 23, 2005. At the moment this is my best guess for the timing of the bull market top which would end the advance from the 2002 low.