Did you Panic, give into Fear and sell right at the Bottom When you should have been buying. While everyone was panicking, we were busy warning our subscribers that a trend change was going to occur and that the markets were getting ready to mount a potentially very strong rally. Posted below are excerpts from market updates that were sent out during this turbulent period. Now another trend change is in the works, will you be ready for it when it strikes?

We issued the following targets almost a month before the market bottomed and then went to suggest the market could still mount a very strong rally at a time when most experts were busy predicting the end of the world.

The depth of the next correction will be determined by the height of the current rally. In other words, a stronger rally decreases the likelihood of the market going on to put in a series of new 52 week lows.  Right now our primary downside target on the Dow is 7200, but if it does not mount a decent rally, the primary downside target would move to 6500.  The Dow still has time to mount a decent rally; this prolonged sideways action has bought it some more time.  We need to move from the trying to stabilise phase to the trying to break out phase.

The trying to stabilise phase deals with the following levels  

8300 = to neutralise the down trend

8650= A close above this level to turn the trend bullish

9090-9200= Needs to trade above these ranges for 7 days in a row; this would should then lead to a test of the 9600 ranges.   

The breaking out phase deals with the following levels  

In this phase, it should not trade below 9000 for more than 6 days and the battle should now be to break past the 9600 price point level. Thus the new zone of congestion should be restricted to the 9000-9600 ranges (ideally 9200-9600 ranges).  The final part of the break out phase would be for the Dow to trade past 9600 for 9 days in a row and thus set up a pattern that should drive the Dow to 10500-10600 ranges.  If the pattern remains strong after the Dow rallies to 10500, it could potentially rally much higher, but getting to 10,500 could go a long way in reducing the intensity of the next major correction.  Market update Feb 17, 2009

To turn the trend bullish, it (Dow) will need to trade above 7800 on a weekly basis or trade above 7500 for 4-6 days in a row. Irrational behaviour never stands the test of time; it will always end just as abruptly as it manifested itself. Tuesday’s move could be the beginning of a short squeeze that potentially could drag the Dow upwards all the way to the 8600-9000 ranges before it pulls back again and goes on to put in what we believe will now be a higher low instead of a new 52 week low, sometime in the summer.   In the last 9 years, the Dow has only traded twice bellows its 99 day EMA (exponential moving average), and each time it did, it mounted a very strong rally.  It is now trading at the furthest point it has ever traded from its 99 EMA in the last 9 years; this Monday (9th of March ) it was 3453 points away from its 99 EMA, think of this a rubber band stretched to the limit. 

From Oct 1973 to 0ct 1974, the Dow traded 34% below its 99 EMA and 9 months later it rallied over 50% from its lows and eventually went to trade well above its 99 EMA.  Is it just a coincidence that as of the 9th the Dow is now trading 34.5% below its 99 EMA, will the Dow mount a rally in the same way it did back in 1974?. After bottoming in Oct 1974, the Dow traded sideways for awhile and then suddenly exploded upwards.  We would call this a major psychological development and an indication that the Dow might have put in an intermediate to long term bottom this Monday.   Market update March 10, 2009.

Our smart money indicator has flashed a full fledged buy signal for the first time in almost 3 years; another very powerful development. According to the pattern generated from the Dow’s 99 day moving exponential average, the minimum upside target for the Dow is 8200; usually when an index has initially traded over 34% below this average as was the case until last week (actual value was 34.5% below its 99 EMA), the resulting move is much stronger and one can add up to 1000 points to the minimum upside target; thus based on this projection, the Dow could trade up to 9200 before mounting a stronger correction. Market Update March 24, 2009

Additional Calls from the Market Update Service.              

Markets  

For a day that produced one of the largest one day rallies since July of 2002 the moving averages hardly budged but then again we need to remember these are moving averages and not daily averages. Over the last few weeks they have been beaten down pretty heavily so it will take a bit more of upside action to move things into the positive arena. We feel that the market has put in a bottom or is now very close to putting in a bottom. The confirmation will come when we see all 3 moving averages of new highs start to lead the new lows for several weeks in a row.   Risk takers can also go long the next time the Dow trades in the 11900-12000 ranges. As stated before we will measure the gains in terms of points gained from our suggested entry points. However traders can go long via options on the DOW, QQQQ’s, OEX and futures traders can simply go long Dow futures contracts.  Market update March 11, 2008  

The Dow traded as low as 11741 on the 11^th and on the 17^th it traded as low as 11756, thus traders had several opportunities to open up new long positions. One week later the Dow was trading at 12600 and by May it was trading well past 13,000.

Thus given the fact that so many individuals are proclaiming a bottom is in the smart money might purposely push the indices down one more time. If this happens we would view this as a buying opportunity. Market Update March 25, 2008

 Once again lady luck smiled on us and our prediction came true within days of making it. From a high of 12530 last Tuesday, the Dow dropped to a low of roughly 12180 before mounting one of the largest one day rallies ever.  Last week was a perfect example of mass psychology in action; the smart money drove the indices lower and the masses panicked and then a few days later the markets miraculously recovered.

 The fixation on the March lows by so many so called experts including Russell and Prechter have now turned these potential support zones into target zones. Mass psychology dictates that if too much attention is paid to a given event then the outcome that is least desired ends up becoming reality.  Large speculators, some of the largest hedge funds out there all seemed to have also drawn a line in the sand around the March lows. As a result of this fixation we feel now that there is a chance (the key word being chance) that these lows could be taken out and this is based on two reasons 

1)      The over fixation on the importance of the March lows; as we have already dealt with this above lets move to the 2^nd reason.  

2)      The second has to do with the fact that a huge amount of stop loss orders are sitting at or around these levels and the smart money always loves to drive the market through zones up or down where a large number of traders have placed their stops. It’s almost like printing money for the big guys as when these stops are hit the market is driven lower and lower as all the stops are triggered and once they are triggered the smart guys come out and snap as many shares as they can.  They will only drive the market to or below the March lows if the stops there exceed those placed by the bears in the 13600-13800 ranges and finally the 14200 ranges.   Market update May 28, 2008

  It appears that the markets have discounted the worst of the worst news in the financial sector for they hardly reacted to the bad new from Merrill lynch. Given that oil prices have pulled back significantly from their highs and demand continues to drop we feel that there is a good chance that oil could soon be trading well below 120. Oil below 120 should turn a lot of neutral investors into bulls and result in some of the trillions of dollars sitting in money market accounts into being deployed into the markets. Risk takers can start to nibble at some index options (6 months or longer) when and if the Dow is able to trade past 11700 for 9 days in a row.  Market update July 29^th, 2008.

 The Dow is having an incredibly hard time of trading past 11700; the last few recent attempts have failed completely and unless it trades past 11700 for at least 12 days in a row it is not going to be in a position to advance past the 12000 and then the 12350 ranges.  The Dow has already broken past the 11400 mark and to illustrate that the short term trend is still up it cannot remain below this level for more than 6-9 days in a row.  Failure to trade past the 11400 mark in 6-9 days means that it will most likely at the very least test its lows and possibly go on to put in a new low.   Market update August 19^th, 2008.  

A possible scenario is that the Dow starts to rally anywhere from now to the beginning of October; then during the month of October the volatility spikes (crazy up and down action), towards the middle to end of October the markets stabilize and start to rally. This rally could last till Jan, then the Dow would probably correct and possibly go on to put in new lows; this would then provide the base for a monster rally of several thousand points.  As more data emerges we will be able to fine tune this picture.  Market update Sept 16, 2008.  

The Dow should not trade below 10500 for more than few days in a row; if it does it could indicate much lower prices. Market update Sept 23, 2008. What we do know is that those that yield to this negative force always regret their decision down the line; it can take a few days to a few months for this to occur, but it always occurs and the realisation is terrible, for the individual realises that they had absolutely no control of their lives or their actions for a specific period of time. It is one thing to lose money, it is one thing to feel the pangs of panic and fear in you, but the most vilest and terrible thing one can do is to allow such a force to dominate ones entire essence; in other words when it takes over, you are reduced to the level of an animal and the only thought in your mind is to escape from a disastrous situation. VIP Update Oct 11, 2008

Risk takers should also be on stand by for a new trade into Dow options, when and if the Dow tests its October lows.  Traders can purchase the same options they sold off; in other words if you purchased the Jan 105 DIA call options, then if a trade is triggered these same options can be purchased once again.  An interim update will be sent out with the necessary instructions.

 The lower volume indicates that there is a decent chance that the Dow could go on to put in a double bottom formation (this would be very bullish only if the volume continues to come in towards the low end) that could lead to another 1000 point plus rally the Dow experienced the last time this zone was tested. Market update Nov 12, 2008

The Dow came within striking distance of testing its Oct lows; it traded as low as 7965 only a few points away from the Oct lows of 7882.  From high to low the Dow rallied 914 points in just two days before it pulled back.

Divide the money to be deployed into this trade into 3 lots and deploy one lot now. Go long the Jan 105 or better DIA call options (traders can also purchase riskier OEX options or options on the QQQQ) only when and if the Dow tests its October lows (currently at 7882). Ideal entry range would be in the 7830-7860 ranges; if filled place a stop at 7740.   Market update Nov 18, 2008.  

It was easy to get filled at the suggested entry points as the Dow traded well below this range. Our instruction to ignore the stop that was triggered when the Dow closed below 7740 also appears to be paying off.  More money can be deployed into the markets if and when the Dow is able to trade above certain key price points.  Market update Nov 25, 2008

From its low of 7449 to its high on Dec 8^th (9026), it rallied almost 1600 points in a matter of days before it started to pull back. Thus traders who took part in the option plays recommended in the Nov 18 and Nov 25 market update were able to bank handsome profits in just a few short days.  

As long as the Dow does not trade below its Nov lows, the pattern indicates that it should at the very least mount another 2 week rally.  A break below its November lows will almost guarantee a test of 7200.  Interim update sent out via email on December 3, 2008

From its low of 8234 (3^rd of December) to its high of 9026 on the 8^th of December the Dow rallied almost 800 points.

Currencies

In the April 8^th, 2008 issue of the market update we closed our long positions in the Yen and Swiss Franc as we felt that the time to open up new positions in the dollar was close; both positions were closed out with a profit. Our exact instructions were

 Put in orders to sell the Japanese Yen in the 100.50 to 101 ranges and  place a profit stop at 96.00.  Our entry point here was 83.10. Sell FXY in the 101 to 102 ranges and also place a profit stop at 96.00. Our entry point here was 84.00

Place an order to close this position in the 101.18 to 101.40 ranges. Place a profit stop at 96. We got in at 76.80. Sell FXF in the 100.40-102 ranges. Place a profit stop at 96. We opened positions at 81.20

 Dollar

We have to however state that the dollars ability to break past 74.40 and its main down trend line with such ease is an extremely bullish development.  If one combines this with the fact that the Euro zone is going through a period of anemic growth and that weak economic conditions there are going to prevent the ECB from raising rates for quite sometime; the dollar then suddenly becomes very attractive. The logic is simple the dollar was hit simply too hard and fell way too much while the Euros ride up was simply too euphoric and hence it stands that from a simple risk to reward ratio it makes more sense to jump into the dollar than the Euro. Market update August 12, 2008

Dollar needs to trade above the 78.00-78.60 ranges for 12 days in a row and then past the next zone of resistance at 78.90 for 9 day in a row to trade to the 81 mark.   Market Update August 26, 2008

We had stated in several past updates that the dollar needed to trade past 74.40 for 18-21 days in a row; it achieved this and as envisioned went on to put in a series of new 52 week highs.

 Once potential resistance points are taken out they reverse and then become support points; the stronger the former resistance the stronger the support is once these points are taken out and vice versa.  We have two scenarios now; either the dollar breaks past 81 for 18 days in a row or it pull back to the closest support point, which now falls in the 76.50-77.10 ranges.  If it pulls back, it will provide traders who did not open up long positions in the dollar with a second chance to do so now.  On the other hand if it trades past 81 for 18 days in a row, it will then be in position to test the 96-99 ranges before mounting another strong correction.  Market Update Sept 16, 2008

  It looks like the 81 price point level was simply too strong for the dollar to overcome on its first attempt. It traded as low as 76.00 before moving higher.  It has pulled back to the stated zones but there is a chance that it could briefly spike down to 74.70 before moving higher.  Those that have no long positions in the dollar should not hold out only for this point; spread your money and take several small bites instead of one huge bite.  The current consolidation could last between 9-15 days, after which the dollar should start to trend higher. 81 is the price point level that provides what we call the mother load of resistance; if it can trade above this zone for 18-21 days in a row, the dollar should be able to trade as high as 99 (96-99 ranges) before embarking on a new correction.  This could result in the Euro trading as low as 1.20.  Market update Sept 23, 2008

  During this corrective phase the Dollar should not trade below the 83.70-84.00 ranges for more than 6 days, for if it does it the next target will be 81.  After hitting 81, it should rally and at least test the 83.00 ranges before pulling back; if it is unable to do this then the next target becomes 78.  The dollar could potentially trade all the way down to 75 and there would still be a chance for it put in a new high. If however it trades below 75 for 3 days in row, then one has to seriously start considering the possibility that the dollar might have topped and is now about to resume its downward journey.   Market update, Nov 25, 2008

 The Dollar has mounted a devastating correction in a rather short period of time and it has now traded below the 84.00 price point level for approximately 3 days, if it does this for another 3 days, it will virtually guarantee a test of 81.    Market update Dec 16, 2008.

The dollar mounted a very hard correction that started towards the end of Nov and lasted till the Middle of December.  It traded below key support points and as envisioned traded down to the high 78 ranges before moving up.

Gold

This ratio is very close to testing its 3 year low and normally every time ratio has traded below 7 gold has mounted a strong rally but silver has mounted an even stronger rally. For it to hit its 3 year low it would have to trade in the 6.00-6.30 ranges.  Market update August 19, 2008

 Every time Gold bullion has traded close to its 81 day moving average it proved to be good buying opportunity in the last 6 years.  If this pattern holds true and if gold were to pull back to the 740 ranges it would make for a splendid buying opportunity. Market update April 8, 2008.

All the precious metals pulled back rather rapidly in a short period of time. If one takes a close look at this pull back it does not even come close to being called a correction; for gold to enter into a corrective phase it will need to trade below 870 for 15 days in a row. As the demand for gold is still strong and supplies are not really increasing there is a good chance that Gold might not correct as hard as it should.  On the other hand if it trades below 870 for 15 days in a row there is a decent chance it could trade in the 740-780 ranges before stabilising. If it trades in these ranges it would provide long term investors with a wonderful entry point to open up new longs.  April 8^th, 2008

Gold dipped below 870 for a few days and traded as low as 840 but did not stay below the 870 mark for 15 days in a row. It is attempting to put in a channel formation right now, the bottom of which is represented by the 840 price point level.  It has been trading sideways roughly for the last month while all the technical indicators have been moving into the oversold ranges; if it continues this pattern without breaking below 840 it could very suddenly explode towards the 999-1020 mark before pulling back.  Consequently to indicate further weakness it would now need to break below 840 for 12 days in a row. If this were to occur especially on strong volume then gold could trade as low as 740 before stabilising. At 740 it would make for a great buy but as we have continued to state in the past Silver would make for an even greater buy. June 3^rd, 2008

HUI Index to Gold Ratio

Towards the end of 2002, the ratio dropped to roughly .34 and this triggered of a short rapid rally, then around April of 03 the ratio dropped even lower to 0.33 and this triggered a massive rally that lasted till 2004, at which time the ratio had moved up all the way to 0.625.  Right now the ratio is even lower then it was in 2002 and 2003; we are just a drop away from hitting 0.325.  Thus at this point one of two things can happen; Gold bullion has to correct by a huge margin while Gold stocks essentially do nothing (highly unlikely) or gold stocks have to mount a huge rally and play catch up to bullions prices.

Nobody can identify the exact time this will occur but historically gold stocks have always mounted some sort of rally when the ratio has dropped to such drastic levels.  Market Update Sept 16, 2008.

OIL

Oil did not pull back to the 93-96 ranges however after pulling back to the 99 ranges it tested the 108 price point before pulling back.  Oil appears to be putting in a topping formation though this topping action could go on for quite sometime and the ensuing correction might not be as steep as it should be simply because the possible drop in demand for oil in the US is being made up for by new demand from Asia.  Either oil needs to trade above 111 for 12 days in a row to be in a position to put in a new series of highs or it needs to break below 92 for 12 days in a row to indicate that its going to enter into a corrective phase. April 8^th, 2008

Oil traded past 111 for 12 days in a row and in doing so went on to put in yet another new series of highs. However we think the last spurt up was almost a sure sign that a top is near at hand for while oil surged to new highs so did the Dow transports.  Normally the transports would never do this; so one of these markets has to be either lying or the transports are predicting that oil could possibly be in for a rather strong correction.  Note to that many of the air line stocks are flashings positive divergence signals whilst they are putting in double bottom formations.  We suspect that the oil market will take a bit of time to correct and the correction when it begins will probably begin very suddenly.  No market can trade upwards forever.  If oil cracks below the 114 level for more than 12 days in a row there is a very good chance it could end up testing the 96-99 rangers before bouncing higher. June 3^rd, 2008

However in the intermediate time frame oil needed to correct and correct it has.   The 120 price point level should have offered some resistance but it was taken out with ease and now the next target appears to be the 102-105 ranges; if an oil trade below these levels for 12-15 days in a row then the next target is 90 dollars.   Given the fact that markets tend to overshoot there is a decent chance that oil could pull back all the way down to its 6 year main up trend line which now falls roughly in the 75-78 ranges. Market update August 12, 2008.

Oil has now pulled to within the ranges of our initial targets and if oil now trades below (102-105) these ranges for the stated 12-15 days, then there is a really good chance of oil trading to 90 dollars or lower.  Oil could go on to trade all the way down to its main 6 year up trend line which currently comes in the 63-70 ranges.  Market update Sept 9, 2008 

 Natural gas

 Natural gas pulled all the way back to the 8.80 ranges before trading as high as 10.20. Traders who went long as per our suggestions locked in profits of 6000 to 9000 dollars per contract.  There is a decent chance that Natural gas if it fails to trade past 10.20 for 15 days in a row could test the 7.50 to 7.75 ranges; if this transpires risk takers should look into opening up new long positions. April 8^th, 2008

 Well natural gas went on to trade past 10.20 for 15 days in a row and in doing so has put in a series of new 52 week highs.  It has two choices now; a break below 10.20 for more than 12 days could take it down to the 8.70-9.00 ranges or it needs to trade above 12 dollars for 12 days in a row. If it can do this it will have a very good chance of trading all the way up to 13.70-14.50 ranges before pulling back. June 3^rd, 2008

 Copper 

Copper appears to be putting in a topping formation; to invalidate this formation it would need to trade above 393 for 15 days in a row; if it does this it will indicate that copper is going to put in another series of new highs and the correction will be put for another day. April 8^th, 2008

 Though copper traded several times past the 393 mark it was never able to do so for 15 days in a row and after briefly spiking to the 420 ranges it started to correct.  A break below 345 for more than 12 days in a row could drag copper all the way down to the 300 ranges. June 3^rd, 2008

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