Monday, April 03, 2006

Update on Top-to-Top Counts

Here is another daily chart of the Dow Jones industrial average. I last commented on this chart here.

Lindsay's top-to-top count was his most reliable method for predicting short term market tops in advance. The technique is described in his 1965 article "A Timing Method for Traders" which is contained in the booklet "Selected Articles by the Late George Lindsay".

The basic idea is to identify a tight or compact top formation, find the "key date" within that formation, and then count forward 105 calendar days. The date that results should be very close to a short term top in the Dow.

There seven such top-to-top counts visible on the chart above. The purple lettering and lines identify the ideal timing of the projected tops while the notes in red give the exact dates of the ideal tops. There is a top projected for April 5, in close agreement with an April 7 low-low-high count. I think that this will be only a very minor top.

The second projected top is April 25, vs. the April 29 projection for a low-low-high count. I think this will be a more significant high and a very visible reaction will start then. Finally, there is a top projected for June 9, vs. the June 5 top projection via the low-low-high method. This I think is now the most likely date for the bull market top.

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