FOR SUBSCRIBERS TO HOTLINE ONLY            Characteristics of Market Tops since 1928                        9/11/2010 (C) William Schmidt, Ph.D.       There have been 25 major market tops that led to DJI declines of more than 15%               since 1929.   What signals and conditions most called them?  Most common               are NYSE A/D Line non-confirmations of a new high, Sell S9s, a DJI at least 2.5%               over the 21-day ma with the V-Indicator negative, the Accumulation Index under               .06 and the P<70. But we still have to watch for other signals: S10 (1946 and 1962),               S1 (1948 and 1969), S8 (1977), S4 (2001 and 2007) and S15(2008).                         20 A/D Line NC (The NYSE A/D Line did not confirm the high by making a corresponding                                         high of its own.)           16  P<70           15 S9s + 1 special varierty S9           15 V<0           16 DJI more than 2.5% over 21-dma           15 AI<.06           14 DJI Head/Shoulders           13 S10s           10 P<0 (P-Indicator)           9  S12s           7  S15s           5 Current AI<0           4  S4s           5  S8s           1  S7 Extreme Bearish Mode           1  S5 Extreme Bearish Mode           1  S6          1  S1 (1948)           1  Repeated failure to get past round number resistance. (1976)           The cases where the A/D Line remained strong despite the top were:                 5/29/46   Earlier S9 and H&S               12/2/69    S1...later S9                9/21/76   Later S8                5/21/01   Earlier S9 and earlier S12. H&S

Characteristics of Final Market Tops since 1928             8efore A Steep Bear Market                                        Date          S9     S12   A/D-NC  V-Ind.     Head/Shoulders       Other Signals   LA/MA   P-I    IP21         OP21 --------------------------------------------------------------------------------------------------------------------------- #1 9/3/29    Y       Y     Y-lengthy    -351     Y - 6 wks later       S7 and S8  1.051    -14      -.126         .139 There were at least 10 sets of major Sells in the 5 months before the final top                                                                                                  S9/S12/S7 --------------------------------------------------------------------------------------------------------------------------- #2 4/17/30                     E-Y             Y-10day     -322     Y - two months later also E-S4           1.024     -2        .084        .524 There were at least 4 sets of major Sells in the 5 months before the final top using normal mode. Using Extreme Bearish Mode, Peerless gave a Sell S5 (Extreme Mode) on 4/2/1930                                        Yes              -19                                                                  1.025      54       .016          .342 --------------------------------------------------------------------------------------------------------------------------- 9/7/32                    Y                         464       Y - month later              S8 S6  1.118   129       ,056        .233     The NYSE A/D Line trend-break cliched the S8 and S12 sell signals quite well.                                                                                                   S8/S12/S6     Extreme Bearish Mode shows a Sell S7 on 9/19/1932.                S7(EBM)               .897    The trend-break of A/D Line, Sell S7 and head and shoulders were clear warnings of this top..                                                                                                         S7(EBM) --------------------------------------------------------------------------------------------------------------------------- 3/5/37          Y               Y-30 day     -231     Y - month later                 S15          1.028     -15       .037        .094          There were 3 clusters of major Sells before the final top in March 1937.                                                                                                 S9/S15 --------------------------------------------------------------------------------------------------------------------------- 8/13/37        Y               Y-15 day       -43                                                              1.024       -2       .042        .242     There had been  earlier 3 sets of major Sells in the previous 6 months, though they are not shown in this chart.     See the previous chart.                                                                                              S9 --------------------------------------------------------------------------------------------------------------------------- 9/13/39        Y               Y-6 wks        56                                      also S8               1.181     -43     .138          .317           The top here did not produce a significant decline here until May 1940.                                                                      1939                           S9/S8                                                                     1939-1940                                    S9 ---------------------------------------------------------------------------------------------------------------------------        5/29/46       E-Y                                  43     Y - month later                    S10          1.029      64      .269         .355                                                        Classic Head and Shoulders                      When a head and shoulders develops, using the turning down of the A/D Line after                      the apex of the right shoulder has been reached works well here and generally. --------------------------------------------------------------------------------------------------------------------------- 6/14/48                          Y-10day        62    Y - 3 weeks later       also S1               1.012       55      .106         .143                                                                                                                                                S1 --------------------------------------------------------------------------------------------------------------------------- 7/15/57       Y                Y-6 wks     -217                                                               1.02       -41      .063        .107   Perfect Sell S9 occurred on 7/8/1957, a week earlier.  Note the clear way the A/D Line did not confirm the last highs.                                                                                S9 --------------------------------------------------------------------------------------------------------------------------- 1/5/60         Y                Y-lengthy     -186                                      also S15         1.018        4     -.038          .09                                        divergence                                                                                   S9/S15 --------------------------------------------------------------------------------------------------------------------------- Peak on 11/15/1961  showed LA/MA= 1.034  ROC= .522  P=20    OP21=.108  V=53  OP=.408                   Selling just after peak of right shoulder when NYSE A/D Line uptrend was broken                   would have been advised. --------------------------------------------------------------------------------------------------------------------------- 2/9/66                E-Y       Y-15 day       4       Y - 2 months later     Also E-S4        1.007        3     -.064        .153    1/18/66               Y                            5       Y - 3 months later     Also S4            1.02          49    -.028        .481                                                                                      S4/S12 --------------------------------------------------------------------------------------------------------------------------- 12/2/69                                                12                                       S1                   1.021     114    .068          .169       5/14/69  Y                                      0                                        S8                   1.028       61    .097           .237                                                                                 S1                                             S8/S9  --------------------------------------------------------------------------------------------------------------------------- 4/28/71                          Y-1 wk          1      Y - 6 wks later          S9-variation     1.024          82    .095          .405                                                                                                                                         S9 --------------------------------------------------------------------------------------------------------------------------- 1/11/73        Y      Y       Y-1 month    -2                                       S15                 1.024       -96   .002           .059                                                                                        S9/S12/S15 --------------------------------------------------------------------------------------------------------------------------- 9/21/76                                                2                                                              1.033        178  .181           .173         12/27/77                                                                                 S8                   1.028        224  .107           .362                      A/D Line was very strong until June when DJI fell more than 12% from its Sept 1966 highs.                      It was impenetrability of the 1000 resistance that contributed mightily to the DJI decline in 1977.                                                                                                                                                    S8 ---------------------------------------------------------------------------------------------------------------------------  2/13/80      Y        Y       Y-2 weeks   -1                                       S15                 1.028        -26    -.01         .208                                                                                                    S9/S15 ---------------------------------------------------------------------------------------------------------------------------                   4/27/81                  Y       Y-2 weeks  0                                         S15                 1.02          11    .026           .21                   3 earlier major Sell-Sets  (S9s and S12s) in previous 5 months.| --------------------------------------------------------------------------------------------------------------------------- 8/25/87                           Y-1 wk      21                                                                1.034       117  .   224         .319            The August top saw an A/D Line trend-break after a 3 month advance put the DJIA into an oversold            position. The P and AI Indicators dropped quickly below their 21-day ma.  The A/D Line trend-break            should have been used to take profits, at least.           10/2/87     Y         Y                          -7    hands above head pattern          1.026        -56  -.017          .068                    2 earlier major Sell-Sets  (S9s and S12s) in previous 6 months.                                                                                                                  S9/S12 --------------------------------------------------------------------------------------------------------------------------- 7/16/90       Y                 Y-6 weeks  -3   Y - 3 wks later                                    1.033           0    .049          .426                                                                                  S9 --------------------------------------------------------------------------------------------------------------------------- 7/17/98       Y      Y        Y - 4 mo    11    Y - 2 weeks later                                1.034         141  .026          .134                                                                 S9/S12 --------------------------------------------------------------------------------------------------------------------------- 1/14/00       Y                 Y-lengthy     -28  Y - 1 month later           S15              1.03             90   -.058         .441                     6 earlier major Sell-Sets   in previous 6 months                    December is normally a bullish month.  December S9s can be premature.                                                                                 S9/S15 --------------------------------------------------------------------------------------------------------------------------- 5/21/01       E-Y   E-Y                     410   Y - 1 month later             S4               1.041           410  .151           .08                    A/D Line was very strong until August when DJI fell more than 12% from its May 2001 highs.                                                                   S4  ---------------------------------------------------------------------------------------------------------------------------  10/19/07                        Y - 4 mo    140  Y - 1 month later             S4               1.027          408  .119         .282          The multiple major Sells in 2007 set up the big decline in 2008-2009.                                                                                                                       S4 --------------------------------------------------------------------------------------------------------------------------- 5/1/08                            Y-2 weeks   -28  Y-2 weeks later            S15              1.029          178   .048         .076                                                                                                                              S15                   ===============================================================================