Fib or Fact?

By: Ed Carlson | Tue, Apr 8, 2014
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As of last Wednesday, the Dow has printed a double top. The time span between 12/31/13 and Wednesday's closing high is 92 days. A Fibonacci 38.2% of the distance between those two dates is 35 days and 35 days past 12/31/13 marked the closing low on 2/3/14.

In the weeks and months to come, the monthly Lindsay Report will spill a lot of ink to compare the current long cycle from 2002 and the 1921-1942 long cycle. After the high on 9/3/29 the market fell to a low on 11/13/29 before a 5-month rally which topped on 4/17/30. Those who thought the drop in 1929 was horrific didn't have the imagination to comprehend what was to come after April 1930. Similar to the 2/3/14 low, the low on 11/13/29 was 38.2% of the distance between the two highs in September 1929 and April 1930.

Lindsay described the period between the highs in 1929 and 1930 as a Sideways Movement. In the Lindsay literature a Sideways Movement is normally a topping formation in a bull market with both highs at, or near, the same level. In this case, the Dow printed a double top only in theory. In our current situation a double top looks for real. Fib or Fact?

Dow: Double Top
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Ed Carlson

Author: Ed Carlson

Ed Carlson
Seattle Technical

Ed Carlson

Ed Carlson, author of George Lindsay and the Art of Technical Analysis, and his new book, George Lindsay's An Aid to Timing is an independent trader, consultant, and Chartered Market Technician (CMT) based in Seattle. Carlson manages the website Seattle Technical, where he publishes daily and weekly commentary. He spent twenty years as a stockbroker and holds an M.B.A. from Wichita State University.

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