Thursday, January 25, 2007
Domed House Update
Here is a daily chart of the Dow Jones Industrial average. On it I have labeled the turning points of an evolving example of the domed house portion of an instance of George Lindsay's Three Peaks and a Domed House formation. I last commented on this here.
As I said in the last post I believe that the market completed the "five reversals" phase of the domed house by putting in its point 20 low as illustrated on the chart. We are now in the rally phase which will lead to the dome of the domed house, points 21 - 25. This should look a little like the standard "head and shoulders" chart formation. I estimate that the top of the rally at point 23 will occur in late March and the "right shoulder', point 25, in mid-May.
Once the dome of the domed house is complete an extended, muli-month decline should begin. I estimate that it will drop the average a little less than 20 % from its high, carrying it down to 10,700 or so, the level at which the entire three peaks and a domed house formation began.