For the spx the method looks for a target of 2360, the indu 19800, the Qs 5950.  Road signs on the way to Dow 36000…or Mars…

As we have continually made clear these are not predictions or forecasts.  We are reminded of our old friend Blair Hull (New Market Wizards) who remarked to an interviewer that he was able to forecast prices.  Excited out of his mind the interviewer said, For how long? 90 seconds, said Blair.

Prediction is always difficult, and above all when it involves the future, said Niels Bohr.  But we throw the data into the witches’ brew and interpret what crawls out of the pot.  But we don’t depend on it.  We depend on what the systems and analysis say right now (a bit longer than 90 seconds).  We will be addressing the mysteries of PnF over our next several letters.  Part of the mystery is that in its inchoate way PnF seems to actually give us some important information about the market — just as chart analysis gives us actionable analysis.

The “smart” money (Malkiel) regards it all as witchcraft.  Just for some reason it seems to yield better results than examining balance sheets.  (Malkiel still thinks the market prices are a random walk –not having heard of Mandelbrot and unable to practice technical analysis himself.  Shortly we will reveal the witches’ and wizards’ secrets.  In the meantime suffice it to say that these runes predict a most optimistic future — and that’s better than the alternative.