by David G. Hawkins

This is my first posting on my new semi-monthly schedule.  And since this is also right after the end of a quarter, I’m going to take the time here to review all four of the timeframes I follow – Very Long Term (quarterly bars chart), Long Term (monthly bars), Intermediate Term (weekly bars) and Short Term (daily bars).  At the mid month blog post, I’ll just update the daily and weekly bars charts, and at the beginning of each month I’ll also show the monthly bars chart updated.

First Chart – THE VERY LONG TERM TIMEFRAME, Quarterly Bars

This chart below here is time based instead of being EquiVolume as most of my charts are, and the Midas support curve (green) and TopFinder (purple) are calculated with constant volume instead of real volume data.  These choices were driven by the properties of the very long term timeframe, a subject that I devote considerable printers ink to in our forthcoming book.

Last quarter showed a definitive break through and close above the two primary resistance curves (red), implying near term strength in the market.  If this trend continues as it has been, in one to three more quarters price will reach the next significant resistance, the horizontal line (black) across the market tops of 2000 and 2007, at 1553.  Since 2000, in this timeframe the market has been in a wide trading range defined by the 2000 top and the S1 Midas support curve on the bottom.

Look at the upper pane of this chart, the RSI, an indicator which is known to be amenable to trend line analysis, and which on this chart is showing that capability so nicely.  The first red trend line follows the descending tops from the early 1950s through the late 1970s.  When it was breached to the upside, at the red arrow, that was a most timely signal that the bear market of the 1970s was over and it was time to get back into the market.  The green trend line followed the ascending lows from 1974 through 1999.  Its breakdown at the green arrow was right exactly at the market top in early 2000, an incredibly timely signal to get out.  Now we have a new red trend line connecting the descending tops from mid 1998 through the present.  The way things are going now, the RSI will probably get to that red line at about the same time that price gets to its horizontal resistance, in one to three more quarters.  And that will be a major decision point for the market.  If price and the RSI turn down at those lines, then the market will still be in the wide malaise that it’s been in since 2000.  But if they break out above their lines, then that will mark the start of a new major very long term secular bull market.

Second Chart – THE LONG TERM TIMEFRAME, Monthly bars

Now we’re back to my usual EquiVolume charts, and calculating the Midas curves with real volume data.

As I’ve noted before on this timeframe, price since early 2009 has been turning at major Fibonacci retracement levels.  Price has been in virtually a straight line advance since last July, and is now hovering just below the next Fib level.  A break above that level would be near term very bullish, with clear sailing on up to the 2007 top.  But a turn down from that Fib level would mark the end of this uptrend.

Third Chart – THE INTERMEDIATE TERM TIMEFRAME, Weekly bars

Here we see that in mid March, price pulled sharply down to and bounced strongly up from S2, and has gone on to close above the new R1.  This tells us that the uptrend that started last September is still alive and well.  Notice that the mid March low, which is the launching point for S3, the third curve in this hierarchy of Midas support curve following this uptrend, is still far above S1.  This means this uptrend continues to be highly accelerated, and thus we may fit a TopFinder (TF) to the mid March low, which I’ve done here.  The TF’s fit shows that it’s 42% done now, giving the projected horizontal location of its completion at the dashed purple vertical line.

If average trading volume continues about as it has been going, this tells us that in about three more quarters this TF will end, signaling the end of this uptrend.  Now look back at the first two charts here and their discussions.  Both of them are looking for a major market decision point in one to three quarters from now, and this TF is supporting that outlook.  This intermediate term TF is giving us the measuring tool for the extent of the run up to the major resistance at around the mid 1550s.

Fourth Chart – THE SHORT TERM TIMEFRAME, Daily bars

Here we see a very strong, essentially straight line rise from the mid March low, with no pullback from which to launch a new Midas S curve or to which to fit a TopFinder.  This means we are in the early phase of a very strong up trend.  There isn’t anything more to say about this chart.

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