In this chart here, as of last Friday’s close, we see that during last week, price edged somewhat higher, and on Wednesday it spiked down and bounce up off S3, so the uptrend is still in progress.

The object lesson here now is to see what’s happening with TF2, the TopFinder.  In last week’s chart, you see that TF2 was fit to the pullback of Oct. 4th, at the large arrow.  Now in this week’s chart, we see there have been two more significant pullbacks, at Oct. 19th and Oct. 27th, marked by the 2nd and 3rd large arrows here.  Those later two pullbacks don’t quite fit TF2, but are close.  In accordance with the directions for using TopFinders that I’ve written in our forthcoming book, what I’ve done on this week’s chart is to adjust D, the duration of the TopFinder, so that it fits the three pullbacks as closely as possible.  I found that raising D from the original 20.2 million shares to 22.4 million makes the Topfinder slightly undershoot the first pullback, slightly overshoot the second one, and exactly fit the third one.  This is a very good readjustment for the TopFinder, and likely to work well to its end.  The far right vertical purple line is at the horizontal location of the expected end of this TopFinder, which is several days later that the first fit we had.

This procedure of readjusting the TopFinder works well when the pullbacks are close enough to get one fit that works for all of them.  Here, the first two miss the readjusted TF by only about 1.5 out of about 1150 on the S&P 500.  However, if these later pullbacks were at such different levels that such a close compromise fit couldn’t be found, then we would have to put on a new TopFinder fitted to the later pullbacks, while keeping the old one on the chart, and watch how price evolves.

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