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extrapolation of the curve to the predicted top

Each TOPFINDER curve terminates in a backward "L" representing the extrapolation of the curve to the predicted top. The   horizontal line shows how much cumulative volume is left until the top, while the vertical line terminates in a price projection   determined by a simple linear extrapolation of the tangent to the topfinder curve at the endpoint of the data set. Recalling that   TOPFINDER actually predicts the cumulative volume at which the price should top out, rather than the price itself, it should be   borne in mind that the predicted topping price is only an extrapolated estimate, whereas the cum vol is the firm prediction.

I have included two topfinder curves in order to explore the sensitivity of the predicted top to choice of launch point. In each case,   I did an independent eyeball fit to the pullbacks subsequent to launch. Thus, T2 tries to fit the minor pullbacks around cumvol=3.5   million, whereas T1 tries to fit the main pullback points starting at cumvol=3 million. It is quite remarkable that a single value of   D can do so well in each case, and it is gratifying that the two agree so closely in their predictions of the top. (By dividing the   predicted cumulative volume left to go by the average daily volume during the past fifty days, we arrive at an estimate of 36   trading days to the top).

While the LSI Midas graph was generated by a Lotus 123 spreadsheet macro, the second figure – for EMC Corp - was produced   by a Windows application called WINMIDAS. This software, written by my colleague Dr. Stokes Fishburne, performs the   topfinder and S/R computations "on the fly" in C++, so that one is able to move the launch points and adjust D by simply clicking   and dragging the mouse - with the S and T curves instantly adjusting to these changes!

We have seen EMC before in article #5, which was written just after the launch of S2 in the current figure (labelled S3 in the   earlier article). The failure of the price to pullback to S2 was the clue to try TOPFINDER and it is seen that T2 fits all the   pullbacks quite well. As indicated in the lower left hand corner of the figure, the cumulative volume left to go is predicted to be   984, 674 round lots or 98,467,400 shares – about 62 trading days worth at the current level of activity. The extrapolated price at   the top is 31 3/8. If EMC follows this script, then we would expect a pullback to S2 which, at that point would be in the 22-23   range. Having thus ventured into the future on a few individual stocks, in the article to follow we see what happens when we apply   TOPFINDER to broad market indices like the S&P 500 and the Dow 30 - a topic of particular interest since the predicted tops are imminent!