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Past 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 11th and on the 17th
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 2nd 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 29th,
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
19th, 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.
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 8th (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 (3rd of December) to its high of 9026
on the 8th of December the Dow rallied almost 800 points.
Currencies
In the April 8th,
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 8th, 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 3rd,
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 8th, 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 3rd, 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 8th,
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 3rd,
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 8th, 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 3rd,
2008
For an extensive list of past calls click the link below
Extensive List of
Past Calls
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