Definitely in Topping Mode

I remain very concerned that we are coming to a final top, leading to some awful, awful economic times. I continue to hope I look like an idiot on this. First we have the incredibly horrible looking head-and-shoulders pattern that we have traced out over the last ten years. (See below.)




Just from I've learned about charting from Jerry Favors and others, if we start shooting down, we're probably going at least down to that row of up-and-down moves that happened around the '70s, when the Dow was anywhere from 575 to 1000.

So with that in mind, I'm watching out for a major top, mainly by watching my Nasdaq 100 fund numbers. And unfortunately, that major top is forming, pretty much no doubt about it. Remember, the numbers I will be talking about here is taking the larger number and dividing it by the smaller number to get a quotient. There is almost always more money on the up side than the down side with the Nasdaq 100 funds, so this number is almost always positive. When it gets above 2.0, you're into the danger zone short term, where you are likely to get some down action in the markets, the number will drop, and you can continue up. When it gets above 2.0 and stays there, you are building to an important top.

The Nasdaq 100 number has been above 2.0 now every day since September 21 except for two brief drops below 2.0.

The numbers for this past week in the Nasdaq 100:

1.88, 2.30, 2.54, 2.05, 2.46

2.46 is very high, and it came on a day when the Nasdaq 100 shot up a huge amount when the rest of the market was flat or down a little. The Nasdaq 100 itself was up 2-1/2 %, meaning this fund was up 5% on Friday. Definitely topping behavior.

So the question is, how far up will this number go before we reach that final high? This number topped out at 2.69 at the highs in 2007. But the bar has since been raised so that it got above 4.0 at the last two important highs. So I'm speculating that that's where we're headed here.

I can say we are reaching an important high that will lead to some sort of substantial pullback. I can't say for sure this will be a final high before all hell breaks loose to the down side in the markets. But since we do have a head-and-shoulders like we've never seen before, stretching for an entire decade, and we are right on the edge of the right shoulder, coming to some sort of important top, this could be it. God, I hope I look stupid on this.

Rob