[1/6/13 edit: I noticed there are two typos in annotations on the first Valueline chart. It should say "4392 is where DE=FG" and "4361 is where DG = 2*BC"]
Well, the markets wasted no time in ignoring the confluence of price projections on DJIA noted in the last post.
With some sentiment readings like Investors Intelligence with bull/bear spreads at all-time highs, I don't think breaking above price projection points is a reason to turn bullish at this point. Rather, I think one has to look for the next compelling price and time projections that may mark a turn.
I did some analysis on the Valueline Arithmetic index and found some very compelling price symmetry and Fib expansions in log and arithmetic scale that point to an area not far above the close of 4357.63 on 12/27/13. The range of projections is from 4360 to 4560 with the majority pointing to 4440 area. If we trade up into this range on or near 1/10/14, I would think the odds of some sort of top forming increase significantly.
As annotated on the S&P chart posted below, I sniffed out what appears to be important timing which would ideally hit on 1/10/14 (+ or - a couple tds). However, based on timing noted in the previous blog post, I think a top could reasonably be expected anytime in the first few weeks of Jan 2014.
Even if we do get a top in this early Jan area, based on other analysis not shown, I still expect a retest of the top (higher, lower or double top) around 3/27/14 area.
Lastly, I think the pattern in the RUT looks particularly compelling as an expanding rising wedge. If so, it should be completely retraced when the market finally does roll over. It doesn't always happen, but these patterns frequently have a throw-over of the upper trendline when completing. The vertical blue lines are a potential target range (if a throw-over occurs) based on some price projections from prior swings in RUT.
Kim Rice 12/29/13
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