First I want to thank respected Ed Carlson, a frequent poster here and the leader of the Lindsay Revival. I quote Ed below and benefit from his years of research and careful work deciphering the sometimes opaque Lindsay system. I have no connection to him in any way and he has not authorized or reviewed this scenario.
Ed Carlson's site is here: http://seattletechnicaladvisors.com/
George Lindsay's model, Three Peaks and a Domed House, has a fantastic track record of calling bull market tops for over 100 years--often to the exact date and usually to within three days.
The ability to create such an exact forecast requires the integration of Lindsay's other models. However, the attraction of the 3PDh model is that just by being acquainted with the basic form and a few simple guidelines the user can become alerted to a pending top in a bull market several months in advance.
FIND THE PEAKS
The first step in identifying the formation is labeling the three peaks and the ensuing deep decline Lindsay called the "separating decline." During the separating decline the market must reach a level which is lower than at least one of the reactions following peaks one or two.The sell-off is followed by a period of base-building called, appropriately, the "base."
We're looking for an interval (roughly seven months and ten days [222 days]) from either the bottom of the base or the separating decline to the top of the bull market. Typically, a base is horizontal and we count from the second test of the low in the base.
Using Ed's guidelines, now observe the DJI chart below and note the following:
* three peaks following the 10/15/14 low at 15,855. the third peak is at 18,351 on 5/19/15
* a separating decline into 7/24/15 at 15,370
* a horizontal base from 7/24/15 to 2/11/16
* the required two tests of the low within the base on 1/20/16 and 2/11/16
* the expected "vertical wall" after the second test of the low is exactly what has occurred
This pattern takes us to a very interesting place in time. The ideal Lindsay interval of 222/223 days lands exactly on 9/20/16 and 9/21/16, the first and second day of the critical two-day FOMC meeting in September! This would make a lot of sense as a pivot high. There is not much chance that there will be a hike just a few weeks before the election. Also, September has a recent history of high water marks. Remember 9/19/14?
Also, just after this FOMC meeting anticipation for a December hike will begin. The election will be out of the way and the FOMC will not have to worry about being a scapegoat.
