TACTICAL INVESTOR NEWSLETTER

March 24,2004.  The Edge you need to be on the right side of the market

  The market is going through a healthy and necessary consolidation.  Let step aside and take things into perspective.  March 2003 the low was approx 7200 and the high in Feb 2004 was approx 10,800, that is a move of 3600 points.  So a 1/3 retracement is nothing but normal and actually very healthy for this market. A 1200 decline therefore would be perfectly healthy. That would take us to 9600 area or so. We do not need to get to that level but the long trend would still be up even if we tested that area. 

Let me stop one second here and state this, I have never believed this is a so called true bull market, we began to get bullish in the 7600 area or so, only because of proprietary Psychological indicators and our new tool esoteric cycles.  

Our subscribers have been nicely playing the palladium rally,  and since we took positions in the actual metal itself we are comfortably sitting on 30% plus profits.  We also publicly stated our bias as far as palladium was concerned in the following article http://www.financialsense.com/fsu/editorials/ti/2004/0128.html.  We think the palladium story is going to be something big. In the interim we see some profit taking, and when our indicators give the second buy signal we will be ready take new additional positions.

Silver and especially Platinum  are most likely in the process of making a final high, after which there should be a slow protracted correction. Platinum is in the process of topping and once it breaks its up trend, there should be a  rather sharp correction. 

Lets look at some sentiment indicators

www.lowrisk.com

It looks like the crowd is starting to get decidedly nervous and the number of bears are rising. We see fast movements from the bullish camp to the bearish camp, this indicates that there is still going to be a lot of volatility in these markets, and that possibly this summer could turn out to be a very grueling time indeed.

www.wallstreetcourier.com

  If you notice the number of new lows for the first time in a very long long time has passed the 20 mark. A few more days like this and it will indicate the intermediate trend is firmly down. This will re enforce our take that the summer is going to be one tough time for all traders whether they are bullish or bearish.  

Our simple advice for the conservative trader is to sit out this period of volatility that could last for several weeks to months and then look to take new positions once the market starts to trend sideways. Once this consolidation is over the NASDAQ is going to roar back to life, but only certain sectors will benefit from this power up move. This will be the last up ward thrust movement in this so-called bull market for a long time. After this move, the market will become a bear’s paradise.  

We are going to host one of  the Rare Tactical Investor Seminars; this will be done sometime between August and September of this year. We do not have the final dates yet. We will open a few slots to the public as these seminars are done for subscribers mainly and we like to keep them small so we can actually talk to everyone and take personal questions. This is something that cannot be done if one has to deal with more than 60 people.  

You can view a partial archive of our past newsletters, by clicking on the link below  

Past newsletters

Some comments from John Tyler

TA PEP TALK

If you're new to technical analysis (TA) , it will be a daunting process at the start. There are literally 100s of technical indicators, all with their adherents, guru promoters and disciples. I shall tell you the method by which you can become an expert:

Start with one indicator to master 

Do this before learning anything else new. Apply this to your own trading. Play with it. Think about it. Read all you can on it. Get hopelessly lost and then find your way out of the jungle and realize that that you had a great adventure! If you are like me, you learn something and a week later  are onto something else and before too long have forgotten what you learnt. Hence revise: 1 week, 1 month and then 6 months later. Write summaries, keep a note book.

All these are basic study techniques, but few apply them to building knowledge, and would rather be entertained by other's demonstrating their knowledge.

Lack of confidence, lack of goals and poor follow- through are causes. Add to this that you are time pressured and you have a great recipe for doing nothing and joining the crowd of babes lost in the wood of the investment world. A tender meal for any BIG BAD WOLF cruising the patch.

Is a goal to achieve intellectual dependence worth while?

This question summarizes what we are talking about. Financial gain is just a by-product! Until you are convinced that it's worth the trouble, no goal setting and plan is worth the effort. There is financial gain if you pursue this course, but you will also discover other treasures along the way. The joy of achievement, growing confidence, and a clearer mind all result from becoming a motivated learner with intellectual dependence. Lots talk about wanting to gain financial independence, and then go looking for a fairy godmother.

We know that "a fool and his money is easily parted", so if you aim for intellectual independence, financial independence will follow.

Intellectual independence is thinking and learning for yourself.

Set a small goal at the start

This is where many can get lost. You start of with an admirable goal, but soon get lost in the woods. Many have read the book "Trading for a Living" by James Elder. It is essential reading for any serious trader, but for a beginner there is just too much information even after several readings. You need to be applying something soon after you've read it etc.

Thus let's start with moving averages. Make these your goal to master this month. Read everything you can about them. You don't need anything fancy. YAHOO! has moving averages available on their charts. Start looking at your stocks and applying your knowledge. At the early stages, don't try and invent the world's best trading system, but concentrate on the behaviour of stocks in relation to moving averages in various time frames.

Before long you'll realize that you could spend months studying moving averages. And why not? Worthwhile knowledge takes time to assimilate and grow within us. We live in a culture of high expectation demanding instant results. A culture that has forgotten the joy of learning and instead replaced it with a dollar driven time value. Knowledge is a more ethereal substance of infinitely greater value that must be coaxed and encouraged to stay.

Build on your knowledge

You will be amazed to see the way that you can build knowledge and skills once you start small and thoroughly understand before moving on. Let me give you an actual example. In "The Highlander" we have been following the precious metals. Week after week we did the" impossible" and picked moves and reversals in Silver, often within cents of the actual move. We did this using moving averages, and anyone who who reads this and makes a study of moving average  could do the same!

Believe, Achieve

The two biggest forces in the world are fear and belief. Of these belief is the greater. If you fear that you may fail, & that you can't do this because it's beyond your abilities , your fears will come true. Overcome your fear with a tiny bit of belief and take the first step with a small goal. Then experience the power of achievement

THE World's GREATEST TRADING GAME

We know what a boring time meals can be for an active trader. Sitting around cracking bottles of Bollinger with the odd dozen oysters is so droll after the markets. So this is why The World's Greatest Trading Game (c) is being released here, in The Infognome News.

• The rules are easy to learn.
• Any number of players can join in
• Suitable for ages 3 and upwards
• Will entertain you for hours (play before meal if you forgot to turn the oven on, but after the meal is usual as once started, players just don't want to leave)
• can be expanded to any level of complexity
• warning: this game is addictive!

OK here's what to do. Players are seated around a table, and two points on the table are selected. Use the salt and pepper shakers  to mark them, or even use a black marker against white lace looks rather dramatic.

Get three straws and a pair of scissors- that's all you need to start! Place the straws with their ends touching, joining the 2 points( hence don't draw on the lace until you have the straws). The scissors are passed around the table and each player cuts 1 straw in 1 place and and rearranges the straws so that 

1. all the pieces still reach between the two points and keep touching
2. all pieces point from left to right (just like a line trading chart)-they can point up and down, depending where you are seated at the table.
3. every cut makes a "dog's leg"- that is, can't remain in line.
4. anyone who recognizes an Elliot Wave Pattern gets another turn with the scissors.

The winner is the first to recognize a Fibonacci count (that's if you want a quick game with the well educated), or the first to build an extended fifth wave, a double flat or whatever.

As you see, this will bring your meal times alive. It's highly educational and will confirm in the mind of all that you must be the greatest trader alive. Please note that if you have an Elliot Wave disciple at the table, the game may turn violent. They may demand that all players attend the Elliot wave certification course before playing!

The fund doesn't stop here friends. Next newsletter I'll show you how this game can be used to predict the next GREAT CRASH.  I am looking forward to receiving your pictures, so  have fun!