LG... I see the lower line of the rising '74 megaphone as the trend that the index deviated from as economic conditions and capitol spending dictated, beginning in 1995... the beginning of the true credit bubble imo.; financed in large part through new stock offering as well, explaining in part the excessive increase in volume shown on the chart.
As I look back to the hard left edge of your chart, I notice that the COMPX fell through the rising megaphone line to determine the adjusted 74 support line in 1990-'91, coincidentally this was the last time there was recession in the economy. I feel the beginning a new recession we are embarking on now will come into play in the same regard.
35-40% bear rallies notwithstanding, I believe that this adj. 74 support line will come back into play as the COMPX eventually finds true suppport in the 1100 area. If the excesses of the 90's take more time to wear off due to micro...and macro considerations, the next true level of support will be found in the 750 range...and the strong support from 1993-94. I believe
It will take years for these excesses to be worn off.
I also believe a large H/S formation is setting up on the compx with the left shoulder as the 98 highs...and the right shoulder being put in now. A break below the neckline (which for all intents and purposes is the lower line of the rising 74 megaphone ) will put the formation in play.
A break above the right shoulder highs at 2250 will negate the formation.
Of course I defer to your experience at all times...especially in regards to accumulation and distribution, but that's my story...and I'm sticking to it until proven otherwise<gg>
Best,
JM
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