Noel
Campbell 		It has been an interesting couple of weeks on the SPI200 since the market topped out around the 3250's. There were some interesting numbers coming out around the level. This week I'm going to share some insights into the success that the Tubbs Swing Rule has had on the SPI200 throughout this rally from March and its influence on the recent tops.
The Tubbs Swing Rule in its basic form, quoting from Volume 2 of the Tubbs Courses, states that...when an aggregate group or an individual stock passes above a previous high of movement it is due to swing as much above that former high as it has since been below it. In simple terms, watch for the market to move the same number of points above a top, as it moved below the top.

In Chart 1, we have the Tubbs Swing Rule applied to the 30 April 2003 top (3020) where the market had its first decent sell-off after the March low. The low after the top was on 20 May (2910) giving a range of 110 points to swing. 3020 + 110 gives us a price target of 3130 using the Swing Rule. The market topped again on 17 June at 3127, 3 points shy of the target.

Chart 1


click chart for more detail
The low of the dip from the 17 June top came in at 3006 on 1 July, giving us a down swing of 121 points. This is where the Swing Rule has struck again just recently. By adding 121 points onto the June top the price target is 3248 (3127 + 121). In Chart 2 you can see the spectacular success of the Swing Rule once again. The Double tops of 9 September and 19 September, 3247 and 3250 respectively are virtually right on the money.

Chart 2


click chart for more detail

I personally want more than just the Swing Rule going for me when taking a trade, however on both of these occasions, it has proved excellent back-up evidence. Closer inspection of the chart reveals how the 20 May low (3006) sat on the old top of 3020. History repeating would indicate that the old top of 3127 would be an area to watch for support. The old top becomes a balance point to watch for future vibrations. The key question for now, will the September tops hold? You could guarantee a range of opinions on that one.

Until next week......

Noel Campbell