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SeattleTA provides investment managers with

technical analysis of the equity, fixed-income,


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An Introduction to Lindsay

Seattle Technical Advisors
The leading authority in Lindsay Market Analysis

Special Report
April 28, 2014
Ed Carlson, CMT
ed@seattletechnicaladvisors.com
Seattle Technical Advisors website, PO Box 2415, North Bend, WA 98045, is published as an informational service for subscribers, and it includes opinions as to buying,
selling, and holding various securities. However, the publishers of Seattle Technical Advisors are not investment advisers and do not provide investment advice or
recommendations directed to any particular subscriber or in view of the particular circumstances of any particular person. Information provided by Seattle Technical Advisors
is expressed in good faith but is not guaranteed.
.
This report, while not exhaustive, is meant to be
a thorough introduction to the work of George
Lindsay.
The work of George Lindsay served to forecast
the highs and lows of the basic cycles (cyclical
bull and bear markets) and long cycles (secular
bull and bear markets).
The Hybrid Lindsay model is an adaption and
modification, by Ed Carlson, of Lindsays Middle
Section approach to enable forecasts of the
highs and lows within the basic cycles.

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Traditional Lindsay
From what we know of the work of George
Lindsay, he was primarily concerned with
forecasting the highs and lows of bull and bear
markets as opposed to intermediate highs and
lows within the larger trends. While a forecast
of the inflection points of bull and bear
markets is of obvious interest to all market
participants, the application of these forecasts
is limited to buy-and-hold investors who,
despite all labels, would prefer to hold their
assets in cash during bear markets.
To identify highs and lows Lindsays work starts
with the broadest possible outlook and
progressively narrows down that estimate
using his various models until arriving at a
single-date point forecast.
Lindsay cautioned that his methods were
meant to be applied only to the Dow
industrials index or an even narrower index.
Lindsay Models
The forecasting approach used by George Lindsay can be divided into the
following models.
Long Cycles
Long cycles are analogous to what are commonly referred to today as
secular bull and bear market cycles. Unlike the modern, muddled approach
to identifying secular market cycles, Lindsay had a disciplined approach for
identifying the beginning and ending dates of these cycles.
Long Term intervals are the first step in forecasting the highs of cyclical bull
markets and lows of a cyclical bear markets. Bull market highs are found
with 15year intervals. Bear market lows are found using 12year intervals.
Basic Movements are basic advances and basic declines (bull markets and
bear markets). These movements are timed using Lindsays standard time
spans which use calendar days, not trading days. While they often stretch
between the same highs and lows as the basic cycles (below), Lindsays work
enables us to know when they do not. It is this imbalance that opens the
next door to forecasting the random walk of the markets.
Basic Cycles are those time periods most people think of when identifying
the highs and lows of bull and bear markets.
Middle Sections were described by Lindsay as my prize way of calculating
time in the market. A Middle Section is that period in a bull market when
the rate of ascent (slope) of the Dow is less than what comes both before
and after it. Lindsay labeled the points in a Middle Section and explained
how to count to turning points in the market employing a knowledge of the
basic cycles.



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Long Cycles
Lindsay explained his concept of the long cycle in his
seminal paper An Aid to Timing, published in 1950. In it he
included the chart at left showing his long cycles from
1798 to 1949.
Each long cycle is approximately 20years in duration and is
composed of two multiple cycles; A-E and E-M (bottom
left). The first multiple cycle, A-E, is typically 7years in
length. The second multiple is more variable but the time
span from A to J is typically very close to 15years in length.
Note the symmetry of the long cycles during our modern
age of central banking (bottom).
Each multiple cycle is composed of 2-4 basic cycles.

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Long Term Intervals
The long term intervals are the first step in
forecasting a bull market top or bear market low.
The 15year interval is a time span of 15years to
15years+11months counted from an important
low. It is this 11month period that has proven to
have the highest probability of containing the
top of a bull market. This forecast period is then
narrowed using Lindsays other models.
The bull market high on 10/11/07 fell within the
15year interval counted from the low of a basic
cycle on 10/5/92.
The 12year interval is a time span of
12years+2months to 12years+8months counted
from an important high. It is within this 6month
period that has proven to have the highest
probability of containing the low of a bear
market. This forecast period is then narrowed
using Lindsays other models.
The bear market low on 3/6/09, counted from
the high on 5/23/96, was slightly more than one
month late at 12years, 9months but within the
expected margin of error. This error would be
eliminated as fine-tuning occurs using Lindsays
other models.
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Basic Movements
Lindsay discovered that all advances and declines
are contained within, what he referred to as, the
standard time spans (top).
Basic Advances
The basic advance which terminated at the closing
high on 10/09/07 is counted from the closing low of
the previous basic decline on 10/21/05. It counts
718 days making it a short basic advance.
Basic Declines
The low of the basic cycle on 3/6/09 is an example of
a basic movement and basic cycle not being in
agreement. To count the basic decline from the
intra-day high on 10/11/07 would have been 512
days and longer than any of the standard time
spans.
The low on 11/21/08 fell within the 12year interval
and counted 407 days a long basic decline. Given
that the previous basic decline from the intra-day
high on 3/7/05 to the intra-day low on 10/13/05 was
subnormal (220 days), Lindsays Principle of
Alternation guided us to expect the current decline
to be long. Lindsays Principle of Continuity demands
that the next basic advance be counted from the
secondary low on 11/21/08 (and not the low of the
basic cycle on 3/6/09).
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Middle Sections
2007 High
Deriving a forecast for a high or low requires
the use of two separate Middle Section
counts. One comes from the basic cycle and
the other from the multiple cycle.
Basic Cycle
A Middle Section forecast is centered on the
low of the basic cycle on 10/13/05 (top). The
high of a flattened top on 10/15/03 is 729
days prior to 10/13/05. The intra-day high of
the bull market on 10/11/07 was 728 days
later.
Multiple Cycle
The 1982-2003 long cycle was followed by a
shift, or early start by the next long cycle.
As a result the old long cycle ended at the
secondary low in March 2003 and not the
ultimate low in 2002. This was seen
previously when the 1914 long cycle ended
at the low in 1933, not the low in 1932.
A Middle Section is centered on the low of
the 1982-2003 long cycle on 3/12/03. Point E
of a descending Middle Section falls 1,678
days earlier on 8/7/98. The high on 10/11/07
was 1,674 days later confirming the
forecast from the basic cycle.
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Middle Sections
2009 Low
At this point, the obvious question should be
how would it have been known that March
2009 was to be the final low of the bear market
and not November 2008? The answer is found
in Lindsays rule that the low of a terminal
decline (the final decline in a long cycle) is
found using a Middle Section centered on the
final high of the long cycle.
Terminal Decline
The high of the long cycle occurred on
10/11/07. No Middle Section centered on this
high counted to the low on 11/21/08.
Point C (5/17/06) of a descending Middle
Section counts 512 days to the high on
10/11/07. Exactly 512 days beyond the turning
point (10/11/07) is the bear market low on
3/6/09.
The same approach was used to identify the
3/12/03 low.
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Basic Cycle Lows
Multiple Cycle/ Middle Sections
Middle Sections are used for more than just
counting to the highs and lows of major bull and
bear markets. The highs and lows of the basic
movements can be forecast using this approach,
too (Remember: we would first isolate a time
frame for a high or low using the standard time
spans).
Lindsay wrote that to forecast the low of a basic
cycle a Middle Section is centered on the high of
the final basic cycle in the previous long cycle. To
forecast basic cycle lows in the 2002 long cycle
we must center the counts on 1/14/2000 as that
is the high of the final basic cycle in the 1982-
2002 long cycle (basic cycles are marked in black
below the price data).
Notice that the first Middle Section counts to the
secondary low in 2003 and not 2002. This is due
to a shift in the long cycle (last seen at the
1932/33 lows). This phenomenon is fully
described in the book George Lindsay Training
Course; 1921-1942 Long Cycle.
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Basic Cycle Highs
Basic Cycle/ Middle Sections
Lindsay outlined, in detail, his rules for
forecasting basic cycle lows as well as the high
of the second multiple cycle of a long cycle in
his paper An Aid to Timing. The preserved work
of Lindsay has a gaping hole in it, however.
Other than using the long term intervals and
standard time spans there is no mention of
forecasting the highs of basic cycles with Middle
Sections.
Fortunately, the record shows that when
forecasting highs during the first multiple cycle,
the origin of the final basic cycle in the previous
long cycle is the correct turning point. In the
chart it is seen that the final basic cycle of the
1982-2003 long cycle begins on 4/14/97 and
forecasts the highs during the first multiple
cycle (2003-2009).
When forecasting highs during the second
multiple cycle, the end of the first basic cycle in
the current long cycle is the correct turning
point. In the chart it is seen that the first basic
cycle of the 2002 long cycle ends on 10/13/05
but the actual low is on 10/25/04. Centering
forecasts on this low is successful in identifying
the highs on 5/2/11 and 4/4/14.

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Hybrid Lindsay
As the previous pages illustrate, the work of George Lindsay served
to forecast the highs and lows of the basic cycles. The Hybrid Lindsay
model is an adaption and modification, by Ed Carlson, of Lindsays
Middle Section approach to forecast the highs and lows within the
basic cycles.
Forecasting Highs
When forecasting highs within a basic cycle (rather than its origin,
high, and ending points) the Middle Section forecast from the basic
cycle is centered on origin/low of the current basic cycle and not one
of the two basic cycles encircling the origin/low of the long cycle (as
shown on the previous pages).
Similar to the traditional Lindsay approach, a forecast from the basic
cycle needs to be confirmed by a forecast from the multiple cycle.
Forecasting Lows
When forecasting lows within a basic cycle the Middle Section
forecast from the basic cycle is centered on the high of the previous
basic cycle rather than the high of the final basic cycle in the previous
long cycle as was shown by Lindsay.
Similar to the traditional Lindsay approach, a forecast from the basic
cycle needs to be confirmed by a forecast from the multiple cycle.

The pages that follow show forecasts from the Hybrid Lindsay model
for intermediate peaks and troughs during the 10/4/11 basic cycle.





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Hybrid Lindsay
May 28, 2013 High
Basic Cycle
Using the low of the basic cycle on 10/4/11 a
low-low-high (LLH) interval targets the high
on 5/28/13. The low on 2/8/10 is 603 days
before 10/4/11. The high on 5/28/13 is 602
days later.



Multiple Cycle
To confirm the forecast from the basic cycle
we turn to the multiple cycle. The high of a
flattened top is on 3/14/92 and lies 3,872
days before the low of the multiple cycle on
10/10/02. The 5/28/13 high is 3,883 days
later.



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Hybrid Lindsay
June 24, 2013 Low
Basic Cycle
Lindsay wrote that when forecasting the low of
a basic cycle, the turning point in a Middle
Section forecast is the high of the final basic
cycle in the previous long cycle. In this
example, were not trying to find the low of a
basic cycle, rather a low within a basic advance.
Centering the Middle Section forecast on the
high of the previous basic cycle in the current
long cycle worked remarkably well. The high of
the previous basic cycle fell on 5/2/11 784
days after the closing low on 3/9/09. 784 days
after the high on 5/2/11 is the low on 6/24/13.
Lindsay referred to this as a mirror image
pattern.

Multiple Cycle
A forecast for a low must be centered on the
high of the multiple cycle, 10/11/07. The
closing low on 1/29/02 is 2,081 days prior to
10/11/07. The low on 6/24/13 is 2,083 days
beyond 10/11/07.


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Hybrid Lindsay
August 2, 2013 High
Basic Cycle
Using the low of the basic cycle on 10/4/11,
the intra-day high of a flattened top on
12/4/09 is 669 days prior. The high on 8/2/13
is 668 days beyond 10/4/11.




Multiple Cycle
The low on 12/11/91 counts 3,956 days to the
low of the multiple cycle on 10/10/02. The
high on 8/2/13 is 3,949 days beyond 10/10/02
creating, what Lindsay called, a low-low-high
pattern.



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Hybrid Lindsay
August 27, 2013 Low
Basic Cycle
Using the final high of the previous basic cycle on
5/2/11, the high on 1/6/09 is found 846 days
prior. This high would be labeled as point G in a
descending Middle Section but counts from this
pattern are taken from point E. However,
Lindsay showed numerous counts from point G
(unfortunately without explanation) in his paper
An Aid to Timing. Here we find yet another
example of it working successfully. The low on
8/27/13 is 848 days after 5/2/11.

Multiple Cycle
The high of a flattened top (point E in an
ascending Middle Section on 11/26/01) counts
2,145 days to the high of the multiple cycle on
10/11/07. The low on 8/27/13 is 2,147 days past
10/11/07.




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Hybrid Lindsay
September 18, 2013 High
Basic Cycle
Centering the Middle Section forecast on the low
of the basic cycle on 10/4/11, point E of a large
ascending Middle Section is found on 10/19/09
715 days prior to the turning point. Exactly 715
days after the turning point the Dow printed a
high on 9/18/13.

Multiple Cycle
Centering the Middle Section forecast on the low
of the multiple cycle on 10/10/02, the high of a
flattened top (and point E of a Middle Section)
on 11/1/91 is 3,996 days prior. Exactly 3,996
days after the turning point the Dow printed a
high on 9/18/13.




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Hybrid Lindsay
October 9, 2013 Low
Basic Cycle
Centering the Middle Section forecast on the
high of the basic cycle on 5/2/11 we find the low
on 11/21/08 (the secondary low from which the
first basic advance of the bull market is counted)
892 days prior. The low on 10/9/13 falls 891 days
after the turning point on 5/2/11.



Multiple Cycle
Centering the Middle Section forecast on the
high of the multiple cycle (10/11/07) we find one
of the highs (not the highest high) of a flattened
top falls 2,185 days earlier on 10/17/01. The low
on 10/9/13 is 2,187 days beyond the turning
point (10/11/07).