Hi David,
In my opinion, the effect of the March-April triple declining summation is over, because we made a new high in the averages after
2 months had passed from the signal, after we made the June lows.
It was a "mini" signal, because the third peak was at 3000 on the summation, an unusually high reading. In addition, the third peak was within the 200 day cycle from the initial July, 1997 first peak (175 days).
In order to indicate the beginning of a bear market, at least from this indicator, we want to see the third peak in the 1200-2000 range on the summation index, and have it occur after the 200 day cycle
bottom period.
Since the 80's, we have had a third peak approx. 302 days after the initial first peak of 3380 on 11/11/82, 360 days after the 3226 first peak on 3/14/86, and 360 days after the 3127 peak on 3/8/91.
This would put the third peak somewhere between mid September and the end of the year.
In fact, if you draw a trendline from the July 1997 first peak to the
March 1998 third peak, thereby making it the second peak, and extend the trendline, and go 360 trading days from the first peak, you arrive at mid December, at a summation reading of approx 1700.
If it were to happen, maybe having something to do with the deadline for converting IRA's into Roth plans at a tax advantage being the end of this year, it could make for a beautiful January, 1999.
A fly in the soup is that we theoretically "slipped" into a bear market
last week, by virtue of the summation having taken out its three year bull market low.
As far as that goes, we are way oversold by almost any measure,
and the NYSE over 200% average has stopped in the 30% area,
which contained the first downleg of the early 1990 and 1994
downmoves.
An interesting thing to look at is the mini triple declining summation in
late 1928-early 1929. There was a rally in April-May 1929 that reached new highs afterward and then aborted, just like our recent June-July rally. Then another rally, where the summation put in "the real third" declining summation peak.
Vitas |
