Market Turning Points | Andre Gratian | 2011-05-15


After reaching its 1370 projection, the SPX started a consolidation process — which is normal. The stock market progresses through a process of accumulation-uptrends, distribution-downtrends, which repeats itself continuously in various degrees over various time frames. Elliott came to the same conclusion when he identified corrective and impulse patterns as the basic frame work of the market. Point & Figure charts give us a much clearer picture of this process than bar charts. In addition, they have the capacity to tell us how much energy is stored in these accumulation and distribution phases, and how far the following move is likely to carry.

Based on a conservative count taken across the 2009 base, the top of the bull market could be as low as 1365, or substantially higher if the liberal count prevails.

Since the index has already reached 1370, we know that the conservative count has been filled, and that we could be at a bull market top. Are we done? Probably not! As the trend develops, there are periods of consolidation which are known as re-accumulation or re-distribution phases that are very helpful at projecting the extent of the next move. Several of these past patterns point to another push higher before we get to the end of the current intermediate trend. I am going to assume that they are correct and that the consolidation which is underway is only a precursor of the next uptrend.

Let’s go to the charts and see if we can find some justification for this premise.



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