Monday, March 20, 2006
Advancing Issues and the Upcoming Top
As I said in my previous post on Lindsay's Domed House pattern, there is some uncertainty about the timing of point 23 which should be the top of the bull market which began from the October 2002 lows in the major averages.
My best estimate currently is that this high will occur near April 25 plus or minus a few days. There is one thing which would change my mind about this and make me expect the top in June instead of in late April.
I have noted previously on this blog the following interesting fact. When the stock market averages make a new bull market high that is accompanied by multi-month high in the 10 day moving average of the number of advancing issues on the New York Stock Exchange then the final price top is at least one month and often two months away.
Above this post you will find a chart of the daily readings of the NYSE advancing issues number (black line) and well as the 10 day (red line) and 20 day (blue line) moving averages of this number. Notice that the 10 day moving average is still below its peak for 2006 which is depicted by the dashed red line. Should this peak be exceeded over the next few weeks I would then believe that the bull market top lies at least one month and maybe two months ahead.
Of even more potential interest is the 20 day moving average (blue line). If this moving average makes a new high for 2006 (by moving above the dotted blue line) then I would conclude that the bull market top lies at least 2 and possibly 4 months ahead.
If sometime during the next few weeks either or both of these moving averages make new highs for 2006 I would conclude that point 23 would develop in June and not in April. I might add that the ideal 7 month and 10 day time projection for the Domed house from point 14 would predict point 23 for June 5.