In October 13 we presented the above chart ( http://www.edwards-magee.com/?p=4463) (link below next chart)  which  made a daring analysis based on the rule of seven.  We didn’t make a big thing out of it, and said, correctly that it was just the application of an old technical analyst’s tool.  As you can see it was written when the market was around 1634 and foresaw targets of  1634, 1955 and 2602 and change.  We have surpassed the first target and are knocking at the door of the second and who knows about the third.

http://stockcharts.com/h-sc/ui?s=$SPX&p=W&yr=6&mn=0&dy=0&id=p65830780283&a=321281297

(top chart from October 13.  bottom chart current)

Who knows why the rule of seven works — it’s just one of those things we cook up in our alchemist’s shop.  On the other hand who knows how (or why) pi works– much less phi? Just as the Pythagoreans exorcised from their  society  any mathematician who disclosed these mysterious numbers to the unwashed we will rub our crystal ball and make the unworthy disappear if they question our mysteries.

Please read the old letter as it disavows prediction and certainty.