I'm still thinking aloud here.
This fine chart from
Smallinvestors (1/04/04 "Nose Bleed" territory) helps support the notion of a trading range (that includes lower prices) ahead.
Excerpt:
"In addition, what if this is just like all the other instances from 2005, and that this is just another intermediate market low. (Following emphasis is mine): It implies that prices will be chaotic for the next 3 months. If you study the chart carefully, you'll see that when the IM P/C ratio rises above 4 for the first time, and summarize the price action for the subsequent 3 months, prices are generally lower not higher. So while a bounce is expected, it should be short lived as lower prices will follow."
Of course, consolidations and tops can look alot alike, so one could arguably use this information to also suggest that a top is being built here. My own topping bias could easily be wrong, and I certainly recognize that the benefit of the doubt remains with the bulls until the May top is taken out to the downside and becomes a sealed border to the upside. Nevertheless, lower prices ahead are looking more likely, and that May top looks like a good downside candidate to me (as per my symmetrical range argument posted above). At the very least, perhaps that information alone will prove useful.
If and when I find more relevant ideas supporting my attempt to quantify the meaningful boundaries for a consolidation range, I will add them to this thread.
