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Noel Campbell
The Share Price Index (SPI) and therefore the Australian market as a whole, has been rocketing up over the past six months since the intermediate low in August. We are in danger of getting an overheated market, however how long could traders have been thinking, ‘It has to top out soon!’ I moved out of the business of picking tops, following the breaking of the potential set-ups in October and November 2004. Both of these tops led to a short sell-off and anyone attempting to trade these tops suffered very little damage with proper use of stops. Well I have reopened the business of looking to pick tops.
This week I will share with you part of the analysis that forms the basis for determining the top for this month. It is immensely powerful and there is much more to the equation than I have time to mention here.
Chart 1 shows the weekly chart of the SPI since the early 1990’s to present day. You can see where I have highlighted a 2354-day time from the 16 November 1992 low (1341) to the 28 April 1999 high (3165). This time frame is a familiar number to a 2359-day time frame that Gann and David Bowden have used. I still use this time frame in the market today. The range from low to high is 1824 points (3165 – 1341 = 1824).
Chart 1
click chart for more detail
Taking the cycle and placing it on the 1 September 1998 low (2360) you get a time and price target of 10 February 2005 and 4184, right where we are now. This is an example of Gann and David Bowden’s teachings at its finest.
What is also well worth noting is that we have added this time frame to the ‘2360’ low. The price of the low is only 6 points different from our time frame and shows the power of numbers in terms of both time and price.
I have more than 3 pages of additional notes on price and time for this set-up to support what I have shown you here. ‘Tuning’ Time by Degrees gives us two dates to watch, which could equate to a window of opportunity from 7 February to 15 February 2005. The price is right, the time is right, now the market action needs to support the call. But anyone sitting on some handsome profits as a result of this run up might consider moving their profit stops up nice and tight.
Until next week......
Noel Campbell
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