Thanks to Bearola for this update from Carl Futia on the 3 Peaks and domed House Pattern
Carl's site is linked on the second blog list on this site (below the posts)
This is Carl Futia's take on the 3PDH pattern posted today:
"Those of you who are Lindsay fans will recall that there is a minor example of the three peaks and a domed house pattern developing in the Dow. The three peaks are the May, August, and September highs which developed within a 4 month span as opposed to the 6-10 month span required for a major 3PDH pattern. The separating decline ended at point 10, the October 9 low. Since then the Dow has made new highs above the three peaks as required within the domed house part of the pattern. If you look carefully at the Dow's action since mid-November you will see the left shoulder and the head of a potential head and shoulders top with a declining neckline. A (possibly mishapen) H&S top is often associated with the top of the domed house and the past three weeks' action in the Dow are warning that the peak of the domed house may have been seen. Once the domed house is complete the prognosis is for a drop below the level of the October low and probably below the June low as well.
The bottom two charts are warning of an imminent top as well. The NYSE advance-decline line made its high on October 28 and since has been trending lower. This has created a bearish divergence between the AD line and the major stock market averages.This divergence is emphasized by the bottom chart which shows the 10 day moving average of the daily count of advancing issues traded on the NYSE. You can see that this oscillator's December high was very much below its October high, thus creating what I think is a very significant bearish divergence.
These considerations tell us that while the bull market trend is still intact it is hanging by a thread. That thread right now is the position of the 50 day moving average of the Dow. Should the Dow drop below that level I would conclude that the December top is an important one, the top of the domed house in the Dow, and that the averages are headed below their October low points and possibly below their June lows as well."
Carl's site is linked on the second blog list on this site (below the posts)
This is Carl Futia's take on the 3PDH pattern posted today:
"Those of you who are Lindsay fans will recall that there is a minor example of the three peaks and a domed house pattern developing in the Dow. The three peaks are the May, August, and September highs which developed within a 4 month span as opposed to the 6-10 month span required for a major 3PDH pattern. The separating decline ended at point 10, the October 9 low. Since then the Dow has made new highs above the three peaks as required within the domed house part of the pattern. If you look carefully at the Dow's action since mid-November you will see the left shoulder and the head of a potential head and shoulders top with a declining neckline. A (possibly mishapen) H&S top is often associated with the top of the domed house and the past three weeks' action in the Dow are warning that the peak of the domed house may have been seen. Once the domed house is complete the prognosis is for a drop below the level of the October low and probably below the June low as well.
The bottom two charts are warning of an imminent top as well. The NYSE advance-decline line made its high on October 28 and since has been trending lower. This has created a bearish divergence between the AD line and the major stock market averages.This divergence is emphasized by the bottom chart which shows the 10 day moving average of the daily count of advancing issues traded on the NYSE. You can see that this oscillator's December high was very much below its October high, thus creating what I think is a very significant bearish divergence.
These considerations tell us that while the bull market trend is still intact it is hanging by a thread. That thread right now is the position of the 50 day moving average of the Dow. Should the Dow drop below that level I would conclude that the December top is an important one, the top of the domed house in the Dow, and that the averages are headed below their October low points and possibly below their June lows as well."
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Have you been following Futia at all???
ReplyDeleteI have.
Futia has had a terrible track record interpreting 3PDH.
He's been totally chopped up by this pattern for the last two years. Sold the lows when he thought that the market had peaked, only to reverse and admit that he was wrong at much higher prices.
No I am not a huge fan but there seems to be a lot of interest in 3PDH so thought Id post oit
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