Market Brief: Monday, November 8, 2010

Back in that July to August correction, we sent you a market comment entitled something like "A Bull Market Correction that Edwards and Magge Would Have Loved."  That report cited an amazing look-a-like "head-and-shoulders" consolidation that, if fully completed, would project a huge future target for the typical American stock, as measured by the S&P Mid-Cap Index.

So, here we are on November 8, 2010, a few days after an amazing election, and even though we have no idea of the way the future will be executed, the best barometer in the world to read tomorrow's headlines has just broken out of that consolidation to the upside.  This "breakout" projects a future target approach that legendary Edwards and Magee told me of in their book from 50 years ago, and that this was the most dependable of all chart patterns to predict the future.

The target projection says to take the distance between the bottom of the reverse head and the shoulder level (475 points) and add it to the shoulder level at breatout (836), which gives a target of 1311.

The target level from Edwards and Magee simply says that America is going to get back in the amazing long-term trend it has been in sinche that days of 1982 when this country emerged from the ashes and started getting back on the pathway of Capitalism.  It go off track in 2008, but this best barometer in the world says that the best thing (wake-up call) for America has been enhanced (not detracted) from the long-term trend.

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Don Hays

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