Three Peaks and a Domed House Revisited

By: Ed Carlson | Tue, Jan 24, 2017
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The 3PDh pattern of 2014-2016 appears to have failed. After a textbook, five-wave pullback (first floor roof/points 15-20) in April-June 2016, the Dow shot up in a vertical fashion fulfilling Lindsay's description of the 2nd floor wall (points 20-21). That was followed by a small cupola or head-and-shoulders top with the supposed bull market top arriving on 8/15/16. The following sell-off should have reached the bottom of the Separating Decline (February lows) at a minimum. As we all know, rather than experiencing a bear market, the Dow found a low on Election Day and the rally to new bull market highs has been named the "Trump Bump". But appearances can be deceiving...

The minor sell-off following the August high also played out as a five wave reversal and the subsequent rally since the election is the definition of a 2nd floor wall. Since mid-December, the Dow has moved sideways which is necessary to the formation of a cupola.

The standard time spans tell us not to expect a significant high until the period April-August 2017 but it never hurts to keep one eye focused on what isn't expected...

Dow Industrials Three Peaks and a Domed House Chart
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Idealized Three Peaks and a Domed House Chart

 


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Ed Carlson

Author: Ed Carlson

Ed Carlson
Seattle Technical Advisors.com

Ed Carlson

Ed Carlson, author of George Lindsay and the Art of Technical Analysis, and his new book, George Lindsay's An Aid to Timing is an independent trader, consultant, and Chartered Market Technician (CMT) based in Seattle. Carlson manages the website Seattle Technical Advisors.com, where he publishes daily and weekly commentary. He spent twenty years as a stockbroker and holds an M.B.A. from Wichita State University.

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