• 483 days Will The ECB Continue To Hike Rates?
  • 483 days Forbes: Aramco Remains Largest Company In The Middle East
  • 485 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 885 days Could Crypto Overtake Traditional Investment?
  • 889 days Americans Still Quitting Jobs At Record Pace
  • 891 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 894 days Is The Dollar Too Strong?
  • 895 days Big Tech Disappoints Investors on Earnings Calls
  • 896 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 897 days China Is Quietly Trying To Distance Itself From Russia
  • 898 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 902 days Crypto Investors Won Big In 2021
  • 902 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 903 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 905 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 905 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 909 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 909 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 910 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 912 days Are NFTs About To Take Over Gaming?
What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

  1. Home
  2. Markets
  3. Other

A High To Last Week's Rally

In recent articles I have been describing a new "hybrid" forecasting model I am developing based on the work of George Lindsay. Lindsay's forecasting techniques (explained in my new book "George Lindsay Training Course; 1921-1942 Long Cycle") were used to time the beginnings and endings of both secular and cyclical markets (bull and bear) in the Dow Jones Industrial index. My Hybrid-Lindsay approach uses Lindsay's concept of Middle Sections and combines it with my own interval approach to forecast short-term highs and lows that Lindsay didn't bother with.

In last week's Commentary I wrote that this new approach was forecasting a low to the September decline on Monday, 10/7/13. As it turned out, the closing low in the Dow was on Tuesday. That was followed by a rally of over 400 points on Thursday/Friday. Now the question becomes when does the current rally end?

A flattened top (similar to the flattened tops which played a role in forecasting the highs on August 2nd and September 18th) is found in September, 2009. The high of that top (point E) occurred on 9/23/09 and counts 741 calendar day to the low of the basic cycle on 10/4/11. A Middle Section count to a low, forecasts a high, an equidistance (i.e. 741 days) into the future. Counting 741 days from the low on 10/4/11 forecasts a high on 10/14/13.

DJIA: September 2009 - Flattened Top Chart
Larger Image -
Figure 1

DJIA: Hybrid Lindsay Model
Larger Image - Figure 2

A Middle Section count can be off by a few days and should be considered a point-forecast with a surrounding window of time in which to expect a turn in the market. Narrowing down this margin of error is my own contribution and why I call this a "hybrid" Lindsay model. This approach uses regularly repeating intervals of time to forecast market turns but without the corresponding Middle Section forecast it would not tell us whether the expected turn is to be a high or a low.

An interval of 27 days can be seen in Figure 3. It points to a turn on 10/15/13 and could extend to 28 days to forecast a turn on 10/16/13. Combined with the Middle Section forecast telling us to expect a top on 10/14/13 this seems to be a good reason to expect last week's rally to peter out early this week.

DJIA: 27 Day Interval Chart
Larger Image - Figure 3

This will be the final article on the Hybrid Lindsay model for several weeks as the next signal for a bottom in the Dow isn't until 11/25/13. An expected low then matches the seasonal tendency for stocks to rally in the holiday shortened week of Thanksgiving in the U.S.A. Does that mean equities should be expected to decline throughout the 10/14/13-11/25/13 period? It seems unlikely but certainly not impossible. It is something we will all find out together.

 


Request your free copy of the October Lindsay Report at Seattle Technical Advisors.

 

Back to homepage

Leave a comment

Leave a comment