MORE FUTURE TALK
Since today potentially is the validation of the 4-year H&S Bottom formation, we can make a long term guess at where things might go in the future, based upon classical H&S theory. The latter states that we potentially would expect the pattern to rise to a Dow of 12,500, then form a Return Move back to the current level of 11,000, and finally, bounce upward on a multiyear bull leg. On that time scale, the Return Move would take about a year to complete. So, for those wishing to guess today "Where will the Dow be on December 31, 2005?", "Right where we're at now" would be a reasonable answer.
On the other hand, my first guess, based upon Elliott Wave theory, is much the same, except that the Dow would climb to a substantially higher level than 12,500, before beginning a 4th wave pull back, corresponding to the above Return Move. The Dow would not return to the 11,000 level, but, at a higher level would turn up into the 5th and final upward wave.
The action at the 12,500 level should be the test to see which analysis today was more correct. In the ideal case, that peak test would likely come in the summer time. Ah, how this reminds me of my analysis of 8/8/01, entitled "Dow bottoms on 4/22/03." Long term investors just love to talk on these time scales. The rest of us are much too fidgety to think beyond next week.
