James,
I use trendlines and exponential moving averages... For this analysis I looked at the last three corrections in the Dow, S&P-500, and the NYSE for 1997, 1998, and 1999, using a 200 day moving average on the weekly chart... In each instance, the correction ended between 18% to 25% above the 200 day moving average on the weekly chart... Because it's a weekly chart we are really looking at a 200 week moving average... That's four year's worth of average... It has all the peaks and valleys in it... It tends to give a more reliable and smoother picture than the shorter term charts when analyzing market turns... With the exception of the S&P-500, it looks like we are getting ready to resume the uptrend in all indices soon...
I'm not disputing anything you say but would like to point out that your analysis only takes into account the last few years. There have been plenty of corrections that moved right to, or below the 200 Week moving average. My data for the INDU goes back to th 20's - scanning through this I can hardly find a period in time except the recent bull market *where it has not touched the 200 week EMA*.
Also, and just playing around with this mind you, there has not been ** a single other occurance ** of the following happening (weekly bars) in the entire 1990's:
(High < High[1] and Low < Low[1]) AND
(High[1] < High[2] and Low[1] < Low[2]) AND
(High[2] < High[3] and Low[2] < Low[3]) AND
(High[3] < High[4] and Low[3] < Low[4]) AND
(High[4] < High[5] and Low[4] < Low[5])
Basically an unprecedented string of down weeks (regardless of closing price being up in the week, lower highs, lower lows) for the past 10 years.
Doing some more look seeing here... there appears to be a correlation to what happens next if this happens above the 200 week EMA. Basically regardless of rally, the market goes much lower shortly.
Just playing. |
