Cycle Alert

Hello BBTL Blog readership,

Market Mavens and Financial News are Often Wrong

The update tonight is straight forward, short, and largely reiterating my ongoing short-term equity market caution, in spite of the nominal advance in USA stocks today.

Again, I caution that it is futile to follow the daily financial news, or to put too much emphasis or faith into the stock market action of a single day. This is truer when the price move is small (an inside day) and on low volume (which suggest mere volatility).

On the other hand, when prices breakout strongly from a previous trading range, and do it on massive volume such as in the case of Eastman Kodak today, there could be a lot more happening in the forensic price and volume clues.

What I am suggesting is that by watching for high volume large price increases, it has far more trend significance than the financial news. Ask yourself, what was the huge financial news in Kodak today that caused the huge price move in Kodak on multiples of normal volume?

By example of useless and distracting media noise, the recent Obama announcement of the ongoing tax haven hiatus, or more handouts to the unemployed, have led some USA economists and many media sources (including financial behemoth PIMCO) to suggest this is a very welcome stimulus beyond a mere monetary carrot, that potentially is a game changer for the economy, indicating more robust growth ahead.

The financial media while looking for the hot story daily, instead of understanding the real trend truth of Natural Law, or being alert to tired trends and cycles, immediately determined the Obama announcement is why USA bonds fell so sharply in price this week. Bond prices always go down (and yields up) on strong economic news, or particularly higher inflation, - right?

Yet frankly with US bond prices falling this week due to a story of a better coming economy, or  possible higher inflation down the road as a result is convoluted and far from guaranteed. Has the past trillion dollar stimulus moves helped unemployment?

Or ask why, at the exact same time this week, (which is supposedly inflation sensitive) did gold get hammered and also fall sharply? So essentially gold and US bonds were strongly at odds. Which one is telling the inflation or deflation truth? 

In summary the daily financial media hype, although newsworthy and potentially interesting to some, is not indicative of the trend truth (except in rare cases we have described in the past).

The road to profit is always by determining the current trend.

This can only be properly accomplished by technical analysis - or as I call it; the new and emerging science of trends and cycles using advanced technical analysis.

Remember the old financial maxim that the trend if your friend. Spot the trend and go with it.

Cycle Alert

Having updated several cycles this week, I have slightly extended the previous discussed cycle hot-spot or time window for a possible change in trend (CIT). The current cycle hot spot for a CIT is amended to Monday December 13, 2010 until Wednesday December 15, 2010.

Chart Truth

Two technical charts exhibits below relating to the SP 500 Index and the NYSE new High Low Ratio are largely self-explanatory and reiterate caution.

Astro-Sky Exhibits Below

A few of our blog readers have sent me their personal responses to the Astro-Sky Challenge in our last blog. At present, no one is close to what I was hoping to demonstrate. As a result, I have posted the two Astro-sky dates as below using a geocentric layout, to ensure that everyone is using the same tools.

If you wish to comment, rather than writing me directly, why not help others by posting your answers in the comments area. There is no wrong answer as you are only sharing your observations.

James Kelly Sr.,
Editor in Chief, BBTL Blog
www.KRTT.com
www.Facebook.com/KRTTcom
www.twitter.com/KRTTcom

SP 500 Chart Update

Hello BBTL Blog Readers,

As my time is very limited this evening, I am simply updating with three charts of the SP 500 Index in different time frames.

By far the most important chart is the weekly chart shown first, since it updates the bigger equity outlook picture.

By the way, this chart format is the exact same chart format last posted here on December 01, 2010, on the blog and also posted earlier in November. As you may recall, we used this format to discuss and forecast the Fibonacci event, which now in hindsight was a bullish market acceleration up after a truncated wave four correction. That event was on time as scheduled about December 01, 2010.

Notice on this weekly chart a NEW ELLIOTT WAVE COUNT.

To err on the side of safety, the weekly chart now depicts a more conservative and far more bearish count of now being in the fifth of the terminating fifth.

The alternate count (also still valid) is that we are currently in the third of the fifth (with the logic that the third wave has now extended - also called an EW extension).

Also, on this weekly chart, you will further note, that I have depicted the next scheduled Fibonacci event on the FIB Ladder.

This now suggests that by applying our current overall market logic as posted on our blog, a serious correction should commence in the last two weeks of January 2010, or very early February if just one week late. This allows for a margin of error, of just one week early or late.

The daily and one minute chart posted below are self-explanatory and have my usual mark-up comments.

QUESTION and ANSWER

On the last blog a comment was asked if this so-called manipulated rally could last until March. I thought the answer might be useful to all so I am responding here on the main blog.

My answer is naturally yes. Anything could happen. Moreover, I again say that my own forecast made months ago was for a final and important top within the first quarter of 2011.

Moreover, speaking of manipulation, after all I do not have a red phone connected to Mr. Bernanke or the Plunge Protection Team. Having stated that with a degree of sarcasm, that is not what I expect to happen. As I mentioned in the weekly chart upcoming Fib event, later in January (or even very early February) there are some important cycles for the current market to overcome.

Although I generally do not discuss cycle details here in the blog, these important near-term cycles include no less than three distinctive categories of cycle events such as Astro cycles, Fib cycles (see the weekly chart included here), and even Gann time cycles that in this case fall very close to each other in time later in January.

There are also two important points that some of you may have missed or have failed to learn.

This BLOG uses a SWING TRADING FORMAT versus a TREND FOLLOWING approach. This is one of the main reasons why this blog if far more valuable and useful to the readership. That should be self-evident, but if it is not obvious, then perhaps ask me to explain later as time permits.

Secondly, the first rule of money management is not to lose capital or expressed differently, to take on stupid or excessive risk. I repeat, that in my viewpoint, the current market risk to reward at present is extremely poor, and by my estimation is at least 4:1.

In summary, trade what you see on the charts and not what you think or hear. The charts posted today have many clues and insights.

ERROR CORRECTION - The 1 minute chart above should read.....driven by futures "BUY THE OPEN PROGRAM TRADING" ....The market remains expensive, heavily overbought, and likely being manipulated by large or deep pockets - THUS SELL OR USE TIGHT STOPS


James Kelly Sr.,
Editor in Chief, BBTL Blog
www.KRTT.com
www.Facebook.com/KRTTcom
www.twitter.com/KRTTcom

TRUST NO ONE - SPOT THE TREND

Hello BBTL readership,

Today was another one of those highly suspicious trading sessions that smacked of possible market manipulation, by the PPT, the FED, or the cyberpunk buy-on-or-near-the-open-and-close lackeys of Wall Street, in conjunction with those that carry out and desire such manipulation for their own purposes.

The morning and early afternoon equity trading session on the NYSE and NASDAQ were clearly down for most of the day. Yet, just before 3:00 PM with about an hour to go - the market rallied sharply to close UP on the SP500.

So now what to do?

Well the best advice as always, is to trust no one and SPOT THE TREND on the charts. This also implies that you must match your personal time-frame for your desired trading or investing personality to the appropriate charts. While some invest for a four year time horizon, others prefer to trade every four days.

In short and frankly, I really do not have a great deal more to add than what I have already stated.

If you are new to this blog, go back and read some of my older posts. As I have been saying in clear terms, this exuberant and highly bullish market cycle is easily identifiable on longer-term weekly and daily charts - as very tired and near capitulation and a change in trend to down.

Consider that the SP500 market recovery after the justifiable sub-prime crash of 2008, is up about 100% and in less than two years. At minimum, we are overdue for a correction of at of least ten percent. That number of a ten percent correction could also be too conservative, and we could begin a far more formidable trend down. Even Tom De Mark - himself a known market wizard, and expert at statistical analysis has recently called for a similar change in trend - to down.

Therefore consider yourself warned not only by this blog, but also a well respected global market wizard.

In the very short term (a few days), the market will now be further tested tomorrow - at the key SP500 price level of 1292. This same price level has already been tested three times (all from below as a resistance level) in less than a week.

In essence, a failure tomorrow to break 1292, will imply a market capitulation and possibly abrupt change in trend to down is very near.

On the other hand, if those same cyber-bot manipulators as mentioned above, again manipulate the open tomorrow by yet another unexplainable opening GAP UP, it implies the SP500 could set another new marginal high and then test the key psychological level of 1300.

I close today's blog by saying again that this is not a market to trust. It is not a time for complacent or passive investing.

For traders, or those more short term focused, we still do not have an ideal entry or perfect set-up, given the sideways trend of recent days. That stated looking out shorter and medium term, I remain of the opinion that the current risk is high and the next big move or coming trend is down.

Those that are more aggressive swing traders, and whom can take on higher risks and enter trades before a trend fully emerges, should probably acknowledge and see this equity market has many sell-setups.

Spot the trend on the chart and go with it. Two chart exhibits are found below with my usual mark-up comments.

James Kelly Sr.,
Editor in Chief, BBTL Blog
www.KRTT.com
www.Facebook.com/KRTTcom
www.twitter.com/KRTTcom

Teranet Index - November 2010

JANUARY 2011

Third consecutive monthly price decline in November Canadian home prices in November were down 0.2% from the previous month, according to the Teranet-National Bank National Composite House Price Index™. This retreat followed monthly declines of 0.4% in October and 1.1% in September after a run of 16 consecutive increases. November prices were down from the previous month in four of the six metropolitan markets surveyed. Declines of 0.9% in Ottawa and 0.5% in Toronto were each the third in a row. The Calgary decline of 0.7% was the fourth in a row. Halifax prices were down 0.8%. Montreal prices were again flat from the month before. Prices in Vancouver were up 0.6%. After three consecutive months of decline in the composite index, Canadian home prices are still 4.8% above the pre-recession peak of August 2008. Teranet – National Bank National Composite House Price Index™ Contact Us For general enquiries: info@housepriceindex.ca For licenses covering all index-linked products, please contact: Simon Côté 514 879-5379 Website www.housepriceindex.ca

The November result was reflected in a further deceleration of the 12-month rise of the composite index, to 4.9%. It was the fifth consecutive month of deceleration, leaving the 12-month increase the smallest since December 2009. Market by market, the 12-month changes range quite widely: increases of 7.2% in Ottawa, 7.1% Montreal, 5.9% in Vancouver, 5.1% in Toronto and 2.7% in Halifax, with a decrease of 1.5% in Calgary. Data from the Canadian Real Estate Association show generally balanced conditions in major urban markets in December. Toronto and Vancouver could even be considered sellers' markets. Teranet – National Bank House Price Index™ The historical data of the Teranet – National Bank House Price Index™ is available at www.housepriceindex.ca. Metropolitan area Index level November % change m/m % change y/y Calgary 154.21 -0.7 % -1.5 % Halifax 127.91 -0.8 % 2.7 % Montreal 135.56 0.0 % 7.1 % Ottawa 131.07 -0.9 % 7.2 % Toronto 124.21 -0.5 % 5.1 % Vancouver 155.90 0.6 % 5.9 % National Composite 137.07 -0.2 % 4.9 % The Teranet–National Bank House Price Index™ is estimated by tracking observed or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation of the index. This is known as the repeat sales method; a complete description of the method is given at www.housepriceindex.ca The Teranet–National Bank House Price Index™ is an independently developed representation of average home price changes in six metropolitan areas: Ottawa, Toronto, Calgary, Vancouver, Montreal and Halifax. The national composite index is the weighted average of the six metropolitan areas. The weights are based on aggregate value of dwellings as retrieved from the 2006 Statistics Canada Census. According to that census1, the aggregate value of occupied dwellings in the metropolitan areas covered by the indices was $1.168 trillion, or 53% of the Canadian aggregate value of $2.207 trillion. All indices have a base value of 100 in June 2005. For example, an index value of 130 means that home prices have increased 30% since June 2005. By: Marc Pinsonneault Senior Economist Economy & Strategy Group National Bank Financial Group Teranet - National Bank House Price Index™ thanks the author for their special collaboration on this report. 1 Value of Dwelling for the Owner-occupied Non-farm, Non-reserve Private Dwellings of Canada.