Wednesday, August 07, 2013

Carlson on Lindsay

Lindsay expert Ed Carlson has identified an example of George Lindsay's three peaks and a domed house formation which I missed. Here is the link to his commentary. Thanks to blog reader John Doe for bringing this to my attention.

This 3PDH is currently in the process of forming the dome of the domed house - points 21-25 in the schematic you can find here. This particular 3PDH formation is unusual in two respects.

First of all, point 10 does not fall below both points 4 and 6 as it typically does. Instead it only falls below point 4. Lindsay required that point 10 be lower than one of points 4 or 6 but not necessarily below both so this formation qualifies by his criterion.

Second, points 15-20, the "five reversals" part of the domed house, stands out among the fluctuations making up the domed house rally. It is more common for this portion of the domed house to be hard to see.

But in all other respects this is a legitimate 3PDH. In particular 6 months separate points 3 and 7, making this a major formation. Moreover, the 7 month, 10 day count from point 14 on December 28 ends on August7. In principle this should mean that point 23, the top of the domed house, occurred on August 2-5 and that the market is now on its way to or below point 10.

As you know I have been thinking it terms of a bull market top this fall or early in 2014 because that is when Lindsay's 15 year time period from the 1998 bear market low to a prospective bull market top expires. In addition the basic advance which began from the October 4, 2011 low seems more likely to end in October or later than in August of this year.

One way these two forecasts could be reconciled would be for point 27 of the domed house to be above point 23. This does happen occasionally but is not typical. We will just have to see how things develop. I will say that I don't see the sort of technical weakness right now which would lead me to expect a drop in the Dow right now of as much as 400 points from its recent top.


Adsense said...

Hi carl
an interesting chart ill admit
yet im not convinced it is labeled
correctly . point 4 stands out
as very short in duration and very shallow and just does not have the
" right look " to it . point 10 as you noted failed . that said the timing appears to have some merit
yet pts 15 through 20 is a bit creative . taken as a whole i have serious doubts to the labels .
i mentioned a while back that the may highs appeared to be a point 21 top . if so then the June lows would be pt 22 and that is where
ill keep my focus.
reasons to consider and early January 2014 high .
calculations in trading days
yet not hard to figure in
calendar days
low to high ( 255 trade days )
april 22 2009 to april 23 2010
low to high ( 255 trade days )
july 2 2010 to july 6 2011
low to high ( 255 trade days )
oct 4 2011 to oct 5 2012
dec 31 2012 plus 255 trade days
= jan 4 2014.
Oct 4 2011 Low
Nov 16 2012 Low
next date ? 410 calendar days
from nov 16 2012 = dec 31 2013.
summary , DEC 31 2013-Jan 5th 2014
is an important time period which would be ideal for a high .
weather it is labeled as point 23 as im thinking ( which implies a blow off move upwards then a drop )
or point 27 as you suggest ( which
does not negate my labeling at this juncture ) remains to be seen
lastly , very short term we may have already bottomed as of today
august 7th 2013 . under this situation the peak would have been back around July 11-15th . the 10 day advance decline line peaked on july 9th and today it turned up even though the market fell ( bullish divergence ) the 5 day adv decline line is now into its lower range . yes i can make the bearish call yet i think you will be more correct in the end with your thoughts about top later in the year.
thanks for the post

Unknown said...

I've nted that the 410 days that you calculated are from low to low, so 12/31/2013 should be a low and not high )low-low-low. Am I right?

HAOQI said...

Yes, I think it's just a summer retreat then rise into 2014

John Doe said...

Another update from Ed Carlson:

John Doe said...

Expanding on the Work of George Lindsay

Ed said...

This is an unusual version of 3PDh which Lindsay called "Model 3". It also occurred in 1951-1952 and is explained on pg. 84 of my book "George Lindsay and the Art of Technical Analysis".

Anyone should feel free to contact me through my website (Seattle Technical and I am happy to email you the September Lindsay Report.