City of Vancouver Permit Update for 2010

I have been producing some graphs starting in early 2009 showing the trend of permits in the City of Vancouver (here and here). Here is an update to December, 2010.

Residential dwelling permits graphed since 2007:


Permits parsed for 1-2 dwelling units only (i.e. SFHs):Multi-unit building permits:

All permits' value, residential and commercial:


Analysis:

1. There was a significant, though not full, rebound in multi-unit permits in late 2009 and into 2010. This is commensurate with the rebound in construction employment coming out of the recession.
2. The detached market is extremely hot right now. This is evident through significant price appreciation of detached-zoned lots in the City, notably (but not exclusive to) the west side.
3. Detached permits have been falling significantly since mid-2010. Seasonality in permit applications cannot be discounted; I would not be surprised to see detached permit applications rebound going into the first half of 2011. A builder friend of mine claims the City's permit office has a backlog it's working through.
4. The building recession in late 2008 through mid-2009 is now bookended.
5. The data presented here show what a severe housing recession looks like and hint at how dependent the City is on sustained permit revenue to fund its operations.
6. The permit data are coincidental with faltering sales, however the permit data are released with about a month's delay; sales are available with virtually no delay thanks to paulb over at vancouvercondo.info. It's worth remembering that with housing markets, prices are a lagging indicator.
7. Laneway housing continued its upward trend. Builders and the permit department are likely becoming more familiar with the process and relevant codes (and likely fine-tuning it as they go). I would expect to see a continued increase in laneway housing permits, barring any major pullbacks in the availability of credit.

Teranet Index: September 2010

NOVEMBER 2010

Price declines in all six markets in September Canadian home prices in September were down 1.1% from the previous month, according to the Teranet-National Bank National Composite House Price Index™. The monthly decline ended a string of 16 consecutive increases in the composite index since the last monthly deflation in April 2009. For the first time since February 2009, prices fell in all six of the metropolitan markets surveyed. The declines were 2.4% in Halifax, 2.2% in Calgary, 1.6% in Toronto, 0.5% in Ottawa and 0.3% in Montreal and Vancouver. For Vancouver it was the third consecutive monthly decrease and for Calgary it was the second. This result was reflected in a further deceleration of the 12-month price increase in September, to 7.9% for the composite index. It was the third consecutive month of deceleration, leaving the 12-month rise the smallest since last January. The 12-month increases range quite widely from market to market: 9.2% in Vancouver and Ottawa, 9.0% in Toronto, 7.6% in Montreal, 3.6% in Halifax and 1.7% in Calgary. 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

In October, according to our calculations based on data from the Canadian Real Estate Association, market conditions were balanced in Canada as a whole, with Calgary presenting a buyer's market. 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 September % change m/m % change y/y Calgary 156.89 -2.2 % 1.7 % Halifax 128.07 -2.4 % 3.6 % Montreal 135.67 -0.3 % 7.6 % Ottawa 132.64 -0.5 % 9.2 % Toronto 125.98 -1.6 % 9.0 % Vancouver 154.84 -0.3 % 9.2 % National Composite 137.94 -1.1 % 7.9 % 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.

Reiterate Bearish Outlook

Hello BBTL Blog readership,

It is late evening and my time is short. Nonetheless, I simply wanted to repeat the bearish theme I have developed recently.

Although seasonally and statistically, we are now within the normally optimistic and positive equity biased USA Thanksgiving holiday week, the equity markets looked extremely vulnerable today.

A late day equity rally was equally suspicious, and yet we must also assume a sell-off this week could be halted by the USA PPT, or even the aftermarket stabilization team from Wall Street dealers, as they attempt to prevent the massive GM from heading south too soon.

One thing however is very clear. There are many troubling global events at present. After my analysis today, I again concluded that this is a global equity market that is living on borrowed time.

The only thing missing now is the financial catalyst event and media spin to explain any sell-off. Be warned, even a watershed sell-off would not be surprising to see. Indicators are VERY WEAK.

Along with the charts here are a few analysis thoughts......

Logical Analysis = SELL

1. With the global debt crisis in the Euro Zone resurfacing, the USA dollar could rally (against a weaker Euro). This would set-off a renewed deflationary sell-off in both stocks and commodities.

2. China spends vast amounts on currency wars and maintaining their low Yuan rate. Since Japan and China are the two largest foreign owners of USA debt, they have a large vested interest to see the USA currency rise. The recent QE2 events suggest currency wars too are heating up. Most agree the USA dollar is in trouble with the FED excessive money printing, but on the flip side, few realize the FED also has massive dollar swaps with foreign central banks abroad, that must be eventually repatriated. These are both causes for a higher USA dollar. Again, a higher USA dollar even if temporary, would have a potential negative impact on prices of commodities and equities.

3. Wall Street scandals continue and frankly, the public is on the verge of revolt and anger, if banks and brokers that break laws are not prosecuted. It is long overdue a time to level the playing field for market participants and instill a sense of law and order on Wall Street. Read the latest USA financial scandal by clicking the link. Insider Trading Scandal

Technical Analysis = SELL

1. Check out the technical indicators in the SP500 chart below. They remain weak and suggest that a the down trend must soon resume.

2. Then, add some advanced analysis and market logic of Natural Law in the way of W.D. Gann (Gann Box) and Elliott Wave. Note, that both of these market wizard mindsets would now also likely agree that this is an equity market to sell; now.

3. Finally, we said it before and will say it again for the record. We hinted about the coming Fibonacci event in recent past blogs. We suggest you go back and check that former post and look carefully at the chart. We have also stated that Fibonacci math is both universally systemic, and it is amongst the most important to heed in the Financial markets. In early December there is a coming Fibonacci hot-spot.

Exhibits

 
Sincerely,

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

SP500 Trend remains Down

Hello BBTL blog followers,

Although I do not place a great deal of emphasis on a single trading session, especially on a low volume holiday Black Friday, the SP500 Index trend this week was as forecast.

As it is Friday and I am short of time, I am updating today via two technical analysis charts that remain negative. My overall analysis conclusion now suggest that a renewed thrust down in the index will likely commence early next week in a Wave C corrective pattern.

If I get more time over the weekend I may write something in further detail, but suffice is to say that my view is down, with immediate risk to at least the 90 day moving average on a daily chart.

See the two exhibits below with mark-up educational comments. Enjoy your weekend and follow the trend.

Sincerely,

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

Jiggery - Poker - No Major Changes

Hello BBTL Blog followers,

The USA and Canadian equity markets probably surprised many participants both professional and amateur today, given the highly unusual U-Turn in market direction late in the day.

After a sharp early morning sell-off in indices like the SP500 and Dow Jones, which many attributed either to nervousness regarding the events in the Korean Peninsula, or the overnight strength of the USA dollar, all of a sudden, with about an hour and half of trading left in the session, the market rallied sharply to close little changed.

Frankly, other than a few rare large man-made events such as QE2, it is usually a complete waste of time for an investor or trader to try and explain-away or justify all of the market gyrations. Again, this only adds to the financial noise factor, and a source of distraction and financial confusion. Analysis of the so-called news or media spin-of-the-day does noting to add profit to your account.

That stated and just for fun, my own personal interpretation of the sudden U-turn event today, relates to some suspicious jiggery-pokery being carried out. It could be the PPT, or even some large hedge funds whom are engaged in month-end window dressing. It is noteworthy that tomorrow is month end.

Essentially, stated slightly different, someone with deep pockets does not want the market to go down right now - near month end. This begs the question; what will December bring?

So as to the very-short term trend - "considerable emphasis on very short" - this could potentially fake-out market participants into becoming overly bullish. In my analysis, this is the exact move jiggery-poker is being staged for.

Far more scientific and intelligent is applying a little technical analysis and statistical theory, to rare inter-day U-Turns such as that witnessed. Usually, these are indicative of a short-term bottom. This means tomorrow could see some early equity strength in the morning, or even for a few short days.

A better way to look at current SP-500 index in my opinion as example, is to consider the significant price overlap that we have been discussing lately in recent trading sessions. The market is thus in an overall holding pattern waiting for the cycle to expire.

Remember the great W.D. Gann and too many others to list have taught that TIME (and thus cycles) are the MASTER CONTROL FACTOR.

Add to that, the bigger picture indicators on the weekly charts, as I have been discussing lately, and it should provide ample evidence to keep any bullish horns hidden in your closet for now, unless you are a very good trader and using stops.

Overall, the equity market has entered a final period of a very large distributed top, after a near two year run-up, whereby smart money is now selling to weaker or less sophisticated hands. As we have already stated by hinting at cycles and time, this should continue until Q1 of 2011.

In short, today's missive regarding the current trend forecast, still suggests ignoring the jiggery-poker rules, as at least in my view there are far too many other indicators which still suggest that the trend will resume a southerly direction in an overall Wave C in the current Elliott Wave Four down trend.

This too suggests that traders and investors prepare for a coming wild ride.

Further, hinting at KRTT's more sophisticated short-term cycles applications that we normally do not disclose here, they too also suggests that over the very short term, we may have to wait until about December 03, 2010 for the fireworks to really begin to heat up.

Go back and review the coming Fibonacci event post that was done a while back.

In conclusion, the only valuable financial truth is in following the trend.

It is only the trend that makes a profit by going with it, or in creating a loss if you fail to understand the true market direction. This is why technical analysis software, placed in the hands of a well trained analyst is invaluable.

Technical analysis trend determination, is essentially the one weapon that will cut through all of the chaos and jiggery-poker, being frequently played by Wall Street, Bay Street and global magnates.

So having reiterated the golden trend following rule here on this blog a hundred times or so, we need to consider the charts in detail.

As usual, I have placed mark-up educational comments on the two exhibits below. Don't be fooled by those whom play jiggery-poker, hoping to gain control over your money.

The wise trading maxim regarding risk of: "if in doubt - get out" seems quite appropriate at present, especially for anyone who is at all conservative minded, or less than a highly experienced trader, and one who has the discipline to use rigid stops.

Spot the trend and go with it.

Sincerely,

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

Sell Signal

Hello BBTL Blog readership,

My review of the latest two trading days is brief this evening, and mainly by way of two charts as found below that speak clearly. In a nutshell if anything, my previous forecast of a new emerging trend down is being reinforced.

As for any financial news, yesterday's FED announcement was largely a non-event, and Mr. Bernanke had no new monetary inflationary rabbits to pull our of his magical FED hat. The news release can be found here.

Perhaps more important from a financial news perspective, is to watch the USA dollar versus the Euro. The fragile sovereign debt situation in the Euro zone is ongoing. These financial flair ups can create further short term volatility, and significantly impact currencies and global bond yields which have been rising faster than most expected.

As for the trend truth and the most important technical perspective, the record high in the SP 500 at about the 1246 price level was set Monday December 13, 2010. Thus, it is still too soon for a change in trend (CIT) to suggest a fully confirmed down trend is in place. Trend traders usually wait a few days for the trend to get established and be visually confirmed using technical clues.

After all the high was just two days ago and therefore still to early for technical confirmation. Although frankly, today's bearish trend reinforced and followed along nicely with my previous cycles forecast (CIT December 13 - 15), the Fibonacci event demonstrated weeks ago, and even the planetary Gann Astrology set-up found in the Astro-sky challenge.

Of paramount importance, this is one of the rarest of financial blogs that also forecast with the benefit of considerable and powerful cycles knowledge. As the great W.D. Gann pointed out approximately 100 years ago, time (not price) - is the master control factor, and the financial markets including equities follow exact rules of science, or as Gann then expressed - Natural Law.

In summary, all of the cumulative evidence I have reviewed recently, including powerful cycles data, suggest that a change in trend (CIT) to down has already taken place. As one chart below shows, a mechanical method of trading using the Net New Highs of the NYSE also confirmed a short-term down signal today.

However, I should advise that possibly working opposite and against my short-term bearish forecast, of an immediate downtrend getting underway now, I observed that the marginal sell-off in the SP 500 today looked very controlled.

This could suggest that Wall Street traders, and highly influential powers including large hedge funds, or even the PPT, have very large bull-side bets placed on the recent bull trend until triple witching expires this Friday.

As one additional item, I was surprised to see that very few blog readers actually took the time to watch the video web link posted in my last blog. I believe this highly important video speaks volumes and is essential viewing to understand some of the coming events now besieging America, and perhaps becoming even more important in 2011.

Again, that video which I titled as Wall Street Crooks can be found by clicking here.

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

Interesting Statistics - Millionaires

Here are some interesting statistics about millionaires:

• 14% of millionaires say their parents were wealthy.
• 42% say they don't feel wealthy.
• 95% say hard work is how they made their million. 83% say smart investing, 81% frugality, 67% say risk taking, and 41% say luck is how they made their million.

• 90% of millionaires are college graduates.
• The median price of a millionaires car is $31,400.

• States with the highest amount of millionaires includes: Alaska, California, Connecticut, Hawaii, Maine, Maryland, New Hampshire, New Jersey, Washington D.C., and Virginia. Hey, Jaime Tardy lives in Maine.
• Millionaires invest on average $39,300 a year.
• 61% say they still have a great deal to learn about investing.
• 1 in 6 millionaires are single.
• Millionaires give up to $13,000 annually to charity.

Bernanke's Rally

Hello BBTL readership,

Is it Time for Plan B - B is for Bullish?

After today's sharp SP500 rally, the obvious question as a comment below asked is; "Have I changed my former bearish stance?" It is indeed a timely topic that requires a well thought out answer. I will do my best to provide that answer giving both sides of the equation.

In a nutshell, my short answer is no. I am maintaining my formerly bearish outlook - at least for now. However, this simple answer requires more explanation. Read on.

Previously, and if you have been reading this blog recently, I was looking for part two of a counter-trend decline, or expressed for Elliotticians; a Wave C down within an Elliott Wave Four trend.

This bearish view was therefore my plan A - or my primary market forecast. However, as I also educate on this blog, all expert traders and investors must keep an open mind. In doing so they should also have a what if plan. Often I call this - a plan B. Likewise, good Elliott Wave (EW) analysts usually have a preferred EW count as well as a secondary count (in the event their primary EW count is wrong).

Although, it is conceivable and even possible to force an unorthodox Elliott Wave C count as now being complete, there remain several significant technical clues that dictate suspicion and better EW counts.

Consider that to judge and suggest the Elliott Wave Four as now fully complete, and therefore to imply that today's rally is the start of a final wave five up and a likely breakout day, also must imply that after months of recent bullish upside in August to November, and after about a 220 SP500 point rally (a huge 22% rally in stocks in mere months), it is all completely worked off and now consolidated by a mere 25% retracement that lasted a few days and the correction was totally finished in just three weeks.

Given how close we are to a major terminating top (see - the big picture weekly chart) after almost two years of trend run-up - all based on global bailouts and liquidity injections, this type of exuberant bullish action is at least highly suspicious.

Has Ben Bernanke's constant monetary manipulation created a runaway market that will lead to an eventual crash? Perhaps.

So essentially, the only way I can see and verify an immediate new bullish trend up from here - is by another manufactured cycle inversion created by excessive Fed liquidity. To reach such a remarkable conclusion at present, I need more evidence - than a mere one day rally.

Therefore without doubt, or at least for now, I am maintaining my former bearish outlook until the evidence suggest I must change my view. This means I am not attempting to second guess the market. Rather, I am just closely watching the trend now to determine if indeed it has changed or something is happening that I did not anticipate.

I will therefore defer my ultimate and final trend thoughts for another day, or possibly even two days, if there is very little trading action (in a narrow range) tomorrow. Detecting a cycle inversion and thus a new wave five up is indeed possible, but currently I still view it as a low probability. However, ask what is going directly against my forecast? Look at the recent actions and statements of Bernanke.

Further, given the time for today's rally, the current scenario is also cyclically confusing (assuming another inversion) and yes, I rely heavily on cycle calculations, yet I do not disclose them in great detail here on the blog.

Nonetheless. as I have included cycle hints lately (December 03 and the coming Fibonacci event), I do expect we are now very near the best weekly period or cusp of the most significant December 2010 cycle hot-spot. These periods of cycle summation can and do cause changes in trend to occur.

As to the ultimate risk side of the equation, at present, anyone doing a forensic audit of longer term market internals should conclude there are very significant risks here. This is a dangerous manipulated market to err on the side of caution unless you use stops and can afford to have losses.

Stocks and much of the financial world of securities, including commodities and even bonds, are truly reacting in a knee-jerk short-term fashion to Sovereign debt problems, currency wars, and mainly to the massive artificial liquidity creation of Ben Bernanke.

Clearly, the strength of today's rally - essentially coming out of nowhere - was somewhat of a surprise and smacks of suspicion of more Ben Bernanke antics. After all, without any doubt Mr. Bernanke wants to inflate USA stocks even higher. He has stated that fact very clearly.

So in conclusion, let's face and admit one important Federal Reserve fact.

No one, unless they have privileged inside information from Bernanke and the Federal Reserve, can determine just how far the FED will go over the short term to prop USA stocks up in price via using FED and the USA Treasury liquidity and buy programs. Year end would seem logical for a critical period whereby the FED and USA Treasury do not want panic and market sell-offs.

However, fast forward about two weeks from now, and December will look substantially less appealing than it does right now. December is famous for low liquidity and also tax loss selling. So that so called Santa Claus rally that occurs seasonally in some years in early December, is equally often followed by the lows of a New Years hangover.

In summary, unless Ben Bernanke is your personal source for USA stock market information, this morning's early rally was anyone's guess. Essentially, seventy-five percent of today's SP500 Index gain was over in less than five minutes as I watched multiple SP 500 stocks gap up at the open.

Is this just another hint that the USA FED will further prop up the market in December? I will probably know by tomorrow.

In the meantime - spot the trend and go with it (on the technical charts provided).

I have posted two very different SP500 charts this evening. The first being an hourly chart that provides the micro short term picture of the SP500 Index. As my mark-up comments suggest - for now, I still believe the trend is down and we are very near Wave B termination, thus expecting a C wave down no later than early next week.

The second chart as a weekly chart, clearly depicts the far more important bigger picture or primary trend (Terminating Wave Five Up) and the potential for considerable downside risk after this wave terminates (projected in Q1 2011).

Recommended Reading

I have personally portrayed the unaudited USA Fed, Ben Bernanke, and global Central Bankers as being incredibly incompetent and monetarily dangerous far too many times to count in recent years. Yet here, in an interesting feature editorial from the Canadian Globe and Mail newspaper, others are starting to discuss what I have been saying for years.

Here is an excerpt from the recommended reading feature...

"Mr. Bernanke's policies among them, the creation of an artificial stock market boom are short-sighted and arrogant...." to read more click here

Sincerely,

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

On Time - On Target

Hello BBTL Blog Readers,

W. D. Gann Theory versus KRTT Modernized Natural Law Theory

I remain on a demanding time schedule and will post updates as time permits, or as extremely important technical events occur.

I begin today's weekend blog as I have taught here before, by stating that financial markets are dynamic and important new events or information may need to be closely analyzed each day to allow for adjustments to our previous viewpoints.

Therefore keeping an open mind, (and being prepared to change our mind) while trading or investing is indeed a highly valuable principle.

Having stated this concept of new information being added possibly each day, I also want to emphasize that the financial markets predominately follow Natural Law.

This is exactly as the great W. D. Gann first taught us over 100 years ago.

However, going beyond a fixed or rigid 100% viewpoint of Natural Law, what my personal analysis and discoveries have added - beyond the amazing Gann theory, is that Man himself also attempts to intervene and interfere with Natural Cycles and Natural Law.

In essence, the financial markets are thus dictated by both Man and Nature.  

For example, Ben Bernanke by his unlimited money printing and essentially zero interest rate policy is deliberately attempting to intervene, or engineer an economic cycle distortion, by extending or stimulating the basic business cycle (or even a weak economy) past it's normal termination point or normal cycle based on Natural Law.

In a nutshell, Central Bankers with their constant deliberate intervention techniques, deliberately distort otherwise perfect Natural Law and Natural Cycle events. This is one reason why in our more modern financial world we now see more boom and bust cycles and even financial crashes.

This is simply Nature - resetting the cycle to where it should have been.

The IMPORTANT KEY TO ALWAYS REMEMBER is that Nature, Cycles and Natural Law will ultimately prevail, - as they always have - and always will.

In essence, if Man deliberately intervenes and carries the natural financial market past one predetermined cycle point, whereby the trend should have changed, when a future cycle or Natural Law hot-spot is eventually hit - the change in trend becomes far more likely and potentially more violent or abrupt.

Essentially, the more Man interferes - the greater the boom and bust cycles and the risk of an all out market crash.

Without doubt, even an amateur should see, that based on the deliberate near zero interest rate policy, that has been prolonged - time and time again, Central Bank policy (even globally) could easily be nearing the  precipice of a complete Bond Market Revolt, whereby global investors unanimously refuse to accept extremely low interest rates any longer, in a higher risk and higher inflation environment.

Most of you have now heard of the new age term - bond vigilantes.  

It seems that the world has now been perfectly set-up by Central Bankers such as Bernanke, for an interest rate (Bond Market) revolt and show-down ,as well as a possible rising interest rate shock.

What might Mother Nature and Natural Law do, when this potential for an interest rate Tsunami cycle to hit and reach a tipping point?  What chaos could be created in currencies?

My own analysis and observation, is that if the global economies of the world now have too much debt as a problem (based on past leverage and speculation from excessively prolonged low interest rates) , imagine the potential for an escalation and new focus on debt problems,  - if interest rates were to suddenly rise.

Mr. Bernanke has a very big ego, and a seemingly unlimited supply of money. So far he has hoodwinked politicians and most of America into believing the FED is acting prudently and in their interest. Yet, if he truly believes that he, the FED or any policy of monetary expansion can control and intervene in natural cycles, or in any and all global economic situations he is mistaken.

To those whom understand not-interventionist economics (often called Laissez-Faire of Austrian School Economics) and the boom-bust bubbles the Fed is deliberately engineering, an otherwise respected man becomes delusional, if not outright dangerous.

It is my assertion, that Bernanke and the FED have not been able to grasp the dangerous risks of their own policies.

So what will prevail Man (Bernanke) or Nature?

CYCLES, ASTRONOMY and MARKET GEOMETRY

Normally, I do not reveal much about cycles and market geometry here on the blog. However, I have decided to make some exceptions now, due to the potential importance of nearing future Natural Law hot-spots.

Assuming I and my greatest teacher W. D. Gann, are indeed correct about our assertions of Natural Law ruling our planet - and also the financial markets, there are some fairly easy to spot guidelines or additional hypothesis.

For instance, Natural Law was been found almost everywhere in Nature. It is seen in yearly seasonal weather and farming (Growing) cycles, our calendar and time cycles, a woman's menstrual cycle, migration cycles of animals, or even in the aging process of our own species, or the obvious cyclical nature of the tides and moon cycles.

In essence, Natural Law does not show up just some places or in some sciences - it shows up on our planet and even the universe - everywhere. As Einstein once remarked, it looks like a God, or the creator of such a vast system, did not merely roll the dice in randomness.

Einstein by example, was able to write highly complicated observations about our universe and quantum mechanics using in the end - a relatively simple math formula.

Benoit Mandelbrot, did the same thing when he established fractal geometry.

So now what about the financial markets? Can we look at them using more than one version of Natural Law?

The answer is yes.

MARKET GEOMETRY

Some of you may have possibly heard of, or studied - market geometry.

Market geometry is largely self-explanatory (about financial markets, charts, and geometry) but moreover, is about the fabric of geometry woven between financial time and price.

The key belief is that changes in trend will occur when time and price are equal or at least in a harmonic proportion.

This is far too complex of a topic to teach here on the blog, but I will say that the current market geometry of the SP500 index is now rapidly approaching a near perfect state - and could even be spotted by an amateur at present. Why?

The time cycle from the last major cycle low (in early March 2009) is soon to be, - two years.

For instance, assuming you use Earth Calendar years of 365 days and assume the cycle low was March 6, 2009, then the two year point will be exactly on March 05, 2011.

Equally switching to the price topic, the closing price value of the SP500 on Friday February 04, 2011 was about the 1310 price level.

If we go back and look at the March 2009 price cycle bottom and use an approximate 667 price level for the SP500 at the cycle lo , and now consider the current 1310 level; the SP500 Index will also soon be at two times the low price level if it continues rising or, if and when it reaches 1334.

In summary, the SP500 Index is nearing two times price (1334) and two annual Earth years (March 05, 2011).

Those whom follow the Natural Law theory of Market Geometry should likely be using a time and price target of 1334 on March 05, 2011.

CYCLES

Deviating slightly from the above market geometry theory, which again was a form of Natural Law, the Great W.D. Gann was keenly focused on pure cycles and Natural Law as derived from the circle of 360 degrees.

Most of you have probably heard of the most significant Gann angle of 45 degrees, which is one-eighth of a circle, and also the Gann angle where time and price will meet on a chart (since one unit of time will equal one unit of price).

Assuming we were using Gann cycles based on the 360 degree theory, and not Earth Cycles, then the time target for the SP500 high would likely be 720 days (equal to 2 times 360).

This simply means we back up the cycle time target by ten days and use 720 days from the March 2009 low in the SP500.

Please note that there are other cycles involved beyond what is simply mentioned above.

ASTRONOMY - ASTROLOGY

Although using astrology (or astronomy) is indeed the most esoteric or difficult form of Natural Law to apply to financial markets, without a doubt it was indeed used and studied to verify and predict financial turning points by the Great W. D. Gann.

Since the early Gann teachings in this area of Natural Law surfaced over many decades (some which were hard to verify), a great deal of modern-day progress has been made.

As a result financial astrology software like Galactic Trader, Cycle Timer, Market Warrior and others are becoming cheaper, better, and more abundant. Better yet, many excellent books on this esoteric topic of Astro-Finance have been written.

Although it is far too difficult a topic to even attempt on this blog and further our KRTT theories are mainly proprietary, I will suggest that turning points in many financial markets often come on (or within a few days) of a new or full moon.

This means looking for a change in trend to occur around such days, may assist an advanced analyst to verify or even predict such changes in trend.

Finally, one of the biggest Astro events of every calendar year are the solstices and equinoxes.

Please note that I do not endorse trading or investing using Astro-Finance as a stand alone tool. It is however extremely important to study this area as many associated learning benefits can occur.

SUMMARY and TECHNICAL CHARTS

Several months ago on this blog, I forecast that I expected a major significant top to occur in the SP500 Index in the first quarter of 2011.  Hopefully, today's blog will provide an insightful glimpse into some of the important reasons why I still hold this viewpoint as valid.

The 720 - 730 day harmonic cycle target and market geometry hot-spot ahead is in late February to early March. After that we approach the Spring equinox.

Keep in mind that markets can also fail or terminate early if a man-made upset occurs.

I continue to see this market as very high risk and advise caution, raising cash, and using tight stops.

As usual, a couple of technical analysis chart (that speak the trend truth ) are below with my usual mark-up comments. Enjoy.

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

Too Soon

Hello BBTL blog readership,

Although the market sold off in the last two days in line with my bearish-in-nature blog recently, and directly hit a January 19, 2011 cycle target, it is still too soon to declare any significant victory or trend - in either way.

Clearly, the short-term trend has become more difficult for the bulls. That much is certain. Yet equally, instead of the aggressive or panic selling one might expect in such an overbought market, the nature of the selling in the last two days was more akin to mild profit taking with some exceptions in individual stocks.

Can we conclude the top is in? No, not yet - at least assuming one is focusing on trends.

Shorter term swing trading on the other hand, involves a form of market gambling or placing calculated portfolio bets against an existing trend while controlling risks and usually with a superior understanding and experience level of financial markets.

Some, might pull the trigger here in such an overbought market, in a short side SP500 trade. Yet, clearly, even by today's technical analysis (as below) the upside risks remain. Consider alone what Ben Bernanke wants. Remember the market maxim, which once was a near biblical financial rule to never fight the FED. At least until a little more short side evidence rolls in, one should conclude that a sell short swing trade is still less than an ideal trade entry (risk) in the case of the SP500 index.

For the bulls, the NYSE market internals were actually mildly positive today. For instance, there were still almost 150 new highs and only 31 new lows on the NYSE; nothing the bears could write home about. Also, although the SP500 finished the day in slight negative territory, the upside volume eclipsed selling volume.

In short, the morning selling was fully washed out by an afternoon rally, even though commodities like gold have taken a significant hit today and recently. Hello overvalued commodities; has anyone told you about - deflation? Is no one watching the recent gold sell-off? It has been a leading indicator for some time, and yet lately, is looking outright bearish. By the way, the gold sell-off is very much in line with our expectation and gold forecast made months ago.

Those crazy bulls, which I recently renamed as pigs, have clearly not lost their all too-brave and too-stupid buying-the-top nature - yet. Also, the NYSE TICK chart (as below) is still in strong territory and there is no negative divergence in TICK. This implies the bears may need to remain patient a while longer. A few more short-term pigs may need to be taught a market lesson the hard way.

Despite the ominous onset of a longer-term bear EW count which this blog has been depicting for months,  the minor fifth wave may not yet be fully completed. Time will tell, yet such bullish markets as we have seen in December and January are statistically the exact types where Elliott extensions occur.

In cycles language, these are commonly referred to as cycle extensions. Therefore, a key forensic is to now watch and see - if key SP500 support levels are taken out. Later, bearish charts become more obvious with a series of lower lows and lower highs - if the downtrend is authentic.

On the other hand, and especially considering risk and money management issues as I have been discussing for some time, we can now firmly conclude that the market nature is slowly changing and becoming more bearish.

Essentially, social mood may even suddenly wake up here, and realize that there are many potential negatives in the economy, and especially one of the biggest potential shocks in 2011- higher interest rates - which I and most others believe will eventually come later in 2011. After such a prolonged period of abnormal near zero rates (engineered by the FED), the potential for a real interest rate shock in both equities and commodities is not to be overlooked - not to mention the economy.

You will recall, assuming you have been reading this blog, for many months now my overall market forecast and prediction for the SP500 was for significant top sometime in the first quarter. This predication still holds and is looking even more accurate given the last two days.

Given the irrational bullish exuberance and exceptional early-year rally so far in January, a more likely scenario now, is first to witness a bearish thrust down (initial shock), followed by one last bullish wave up, whereby the ignorant pigs bring the market back one last time as they line up to go to the financial slaughter.

This scenario, is also very much in line with some the strongest cycle targets I have in early March (or very late February), where a more major and final bearish change-in-trend (CIT) could occur. My final cycle target in the first quarter comes on march 19-20, 2011. How good is that, to have key cycle dates to watch for a CIT - in advance?

Further, as one of our astute blog readers and comments recently remarked, in a few more months the pressures will gradually build in 2011 on Central Banks to raise interest rates.

Then, as stated, the bond vigilantes will increasingly refuse to buy low rate bonds in a higher risk environments.  Also, there is an emerging inflation risk in bonds in 2011. With all of the global bailouts and accumulated government debt in the financial crisis, one inflation certainty for sure - is higher future taxes - which will really hit already constrained consumers hard.

But, to add another wild card, what about the potential of a USA dollar crisis if Bernanke holds rates at near zero too long?

Recently, as example, the USA dollar index has been relatively stable or even subdued in trading sessions. The focus is still on the Euro zone. Bernanke surely feels safe.

This currency scenario however, could easily and quickly change for the worse, as debt issues cross the Atlantic westbound, or as further competitive devaluations for trade purposes between the USA (and mainly China) are scrutinized by nations now being adversely affected.

Their tempers are clearly rising. Trade wars too are a reality. Just ask Brazil, which recently had some not nice words to say about the USA, and Mr. Bernanke's monetary policy which constantly competitively devalues the USA currency and causes other currencies to inflate in comparison.

On a purely cycle analysis basis, I did have a very strong cycle target in January and frankly about the 19th, 2011. So far, the change in trend now in January therefore is - on time. But I constantly ask myself, will the all-too-easy FED money and FED moral suasion of higher stock prices once again invert another cycle?

What I want to now see in order to legitimize being bearish about the current trend, and for all future trend determination, is for the two key support levels of 1261 and 1251 to be taken out on the SP 500 Index. Support levels near a major high when taken out are key forensic clues. Consider the gold chart, which has successfully already taken out several support levels.

I expect the next highest support level of SP500 at about 1261 must be tested soon (by Feb 04 latest) or else, we could see a 1300 - 1335 level before any final SP500 implosion or capitulation. Remember, pigs are greedy.

For now, perhaps the best advice for short-term traders is to be patient, and let the charts tell us the eventual short-term trend. My current guess is clearly down with sporadic ABC pattern rallies. Again, watch for any sharp upside reversal (more wave five to a recent higher high) or alternatively, any downside support levels being taken out (confirming the top is thus in).

Keep in mind that we are solely focusing on the SP500 Index. Individual charts are a completely different story and need individual analysis.

By example, the pigs recently buying F5 Networks were already slaughtered with about a 23% loss in just the last two days. In essence, some individual charts have already turned down from their major or significant tops. The highs for those charts for all of 2011 may well be in the past. Others stocks near record highs may still have room for final rallies. Again, I want to emphasize that every chart must be analyzed on it's own merit.

In summary, although I believe the very short term trend is now down, and that we will at least test the SP500 1261 - 1262 level soon, it is clearly too early to call a significant trend victory on either bullish or bearish side. We need more evidence.

However, one thing which I have been preaching a lot recently, still holds as true.

Overall this market is expensive, and we are absolutely near a major equity top in my viewpoint. Therefore, the basis of risks versus reward, I say raise cash, sell, or use tight stops.

Two charts are included below with my usual mark-up comments. Follow the trend, or if you consider yourself an expert, go ahead and swing trade. Both types of traders when proactive and savvy, use stops to protect capital to ensure their long term survival.

A lot of blogs close on the words "good luck" but frankly, earning a profit is a lot more about achieving and mastering market intelligence, financial education, discipline, and experience.

Spot the trend and go with it and forget what you read or hear. If you find yourself relying on hope or luck in your trading or investing, consider calling me personally for some needed one-on-one financial education, or personal financial tutoring. Consider it an investment in yourself.  


Financial education by the way, works far better than luck.

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

Gaps - Stock Market Manipulation ?

Hello BBTL Blog readership,

My posting is late this evening, and therefore my missive will be short.

However, do not be fooled or rush off as the three chart exhibits below are worth far more than any words could describe. I have said it before and will say it again; the only trend truth is in the charts. Spot the trend and go with it.

Moreover, financial markets work by Science and Natural Law; not by what any man says will happen.

Be Very Careful or Get Out

Also, my current position is well known and clearly stated. If you need to question my current equity market viewpoint, go back and read some of my recent postings.

However in a nutshell, my position is that until a more realistic equity correction is allowed to happen the markets are extremely dangerous. My message would include that if you are long and cannot take on considerable risk and losses, use tight stops. If you are smart you should avoid exposure to the considerably overbought indices - as the risks are simply far too high.

Likewise, on the flip side, with zero interest rates and the fact that Bernanke has added so much liquidity recently, he, as one of the most powerful financial men in the world is attempting to melt the US stock market - up.

Essentially, this is also a hidden message to warn anyone who dares to short stocks or the index. Another stock market implosion is not what Mr. Bernanke wants right now. He sees the world, and particularly the USA in rose colored inflation glasses.

So currently, the only way to be short stocks at present is with a dangerous swing trade (since the trend is still up and has not reversed - yet). Again, this makes the equity markets even more precarious, given that Mr. Bernanke and his close friends on Wall Street appear to be intervening in the markets. Today's sharp gap up at the open of trading, was another clue that market intervention by the PPT is alive and well. Yet, if they keep this up much longer, investors may soon have to rename Wall Street to Fraud Street.

Ask When and Why an Opening GAP Should Occur?

Back in the old days when equity markets were actually honest, not manipulated by our governments, and it was a far more level playing field, it was extremely rare that one ever saw an opening gap in a stock. Now there are hundreds - daily.

Generally, in the past, in order for the pro, or market maker, to GAP a stock up at the open of trading in the morning, there had to be something very significant happening - over night.

After all, if there was no corporate news overnight that was of a material nature, and thus no significant news or order imbalance, by deliberately opening a stock higher than the previous closing price, the pro could technically carry out and cause an act of illicit stock market manipulation.

Below, is a brief sample of the exact legal words used by one Canadian Securities Regulator (BCSC) regarding this manipulative act. The words used by the SEC, or any other regulatory authority should not be substantially different, assuming of course that the spirit and intent of the Rule of Law - for all - is being upheld.

By the way, this is not a unique problem in the USA, as these legal words and equivalent acts of manipulation are equally laughable in Canada, whereby when it comes to white-collar stock market crime and stock manipulation, Canadian regulation and enforcement are for all intensive purposes, non-existent.

Manipulation and Fraud

A person must not, directly or indirectly, engage in or participate in conduct relating to securities or exchange contracts if the person knows, or reasonably should know, that the conduct

(a) results in or contributes to a misleading appearance of trading activity in, or an artificial price for, a security or exchange contract, or (b) perpetrates a fraud on any person.

Yet, today at the opening of trading there were a huge number of US stocks, including many of those in the SP 500 Index - that gapped sharply higher - all on no overnight material news. Equally, there was absolutely no proof or any evidence that there was so much demand that a huge order imbalance existed to justify the opening gaps. In fact, trading volume today in most stocks was well below normal.

If stocks are thus deliberately allowed to gap up at the open of trading, without overnight news of a material nature, and without any order imbalance - than technically, it could constitute an intentional act of stock market manipulation - which essentially as a result - could perpetrate a fraud on society, and especially all those whom invest and believe markets are freely and fairly traded. 

Now imagine, what would it could say or imply, if that same fraud and manipulation was in fact being carried out or conducted by a fiduciary body - who was charged to oversee and protect the general public?

The logical conclusion is yours to choose. Possibly write to your local politician and demand a truthful answer that begins with auditing the large trades at investment bankers. 


Chart Truth - Spot The Trend

Stock Market Challenge - Are you a Market Wizard?

1. Astro-Sky Traders (Gann Astrology) - One of the most famous days in stock market history, was on October 19, 1987 when the stock market crashed. Is there any similarity in the Astro-Sky between October 19, 1987, and next Monday December 13, 2010. If so what is the similarity?

2. Market Geometry Traders - The Gann Box shown on the last chart today (SP 500 Index daily) suggests a near completion. Given the SP 500 Index April 26, 2010 high was about 225 days ago (time); what is the significance now, of a market move of (about) 225 SP 500 Index points (price) down, and essentially, then back up again in (about) 225 days?

Please note that there will be no formal answers given on our blog. However, it would be a nice idea to share your thoughts with each other via comments.

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

Hoodwinking America Versus Chart Truth

Hello BBTL Blog Readership,

Bernanke Weekend Review

In a rare unprecedented action, the Federal Reserve Chairman Ben Bernanke took to the television airwaves over the weekend, in a deliberate attempt to defend the ongoing US Federal Reserve actions.

But, was Mr. Bernanke's intention this weekend sincere? Or alternatively, was this just a desperate attempt by the FED Chairman to hoodwink and calm angered Americans, to ensure the FED chairman will retain independent control over the secretive FED?

It is well known that in recent weeks Mr. Bernanke and the USA FED have come under increased scrutiny, criticism, and pressure, especially after the highly controversial additional $600 billion quantitative easing phase two (QE2) announcement. Mr. Bernanke has also suggested that his policies are raising the value of the US stock market, and that QE2 is not necessarily limited to just a $600 billion program.

The unprecedented amount of ongoing monetary stimulus created in the USA, is viewed by many critics domestic and international as unnecessary, and a dangerous gambit to decrease the USA currency further. Ultimately, critics say it is a highly inflationary move that will only ensure prolonged economic pain and even higher inflated prices into the future. Clearly, higher food and commodity prices are distinctly noticeable in recent weeks and months.

Worse and more recently, the US FED was forced by court order to reveal the fact that they had secretly given out over 21,000 loans all totaling over 3.3 trillion dollars since the sub-prime financial panic began.

The prime controversy over these loans was the very large amounts of loans given in hundreds of billions of dollars directed to foreign banks, and sources that would benefit foreign and USA competitors.Who gives such extraordinary power and discretion to a single man, or to a USA body that has been secret for decades and never audited?

My personal take on the television appearance having watched Bernanke this weekend, was essentially overall neutral. In other words, I did not substantially change any of my former views.

On one hand, Mr. Bernanke sounded sincere, and came across as an intelligent and patriotic American. Yet, he strongly hinted time and time again, that the unprecedented FED action was highly necessary, and that if the FED failed to act - it would be far more negligent and risky. Forensically, this comment of acknowledging high risk in his policies immediately acknowledges that the FED is deeply worried about the overall state of the USA economy.

Being a Keynesian intervening economist (versus Laissez Faire economics), Bernanke's central explanation seemed to be that the USA economy was borderline to a second or prolonged recession, and that the FED was compelled to act. He cited employment which up-ticked as recently as last Friday to 9.8% as a particularly troubling sign.

However, in my opinion having watched the Fed articulate their position closely for about two decades, most of the interview this weekend sounded much like the traditional perplexing and distracting FED speak that Greenspan and Bernanke are all too famous for.

From a pure economic perspective, anyone reading between the Bernanke lines this weekend would probably be alarmed about Bernanke's economic statements alluding to an economy that is potentially riding the cusp of another downturn. This could lead economically sensitive money managers whom were watching the interview, to commence selling stocks, or at minimum to lighten up portfolios.

My suggestion that Mr. Bernanke is hoodwinking America and my equal criticism of US politicians whom endorse such FED actions, is that monetary policy has been deceptively misused for decades. Why? Let me explain further.

Clearly, the FED has a primary fiduciary duty to protect the value of the monetary unit - above all else. To do otherwise, has obvious dire consequences for the entire nation. Both Mr. Greenspan and Mr. Bernanke have clearly failed this fiduciary duty to protect the US monetary unit.

Worse, the past easy money and prolonged sub-par interest rate policies of the FED have been foundational in discouraging savings, while at the same time allowing the gradual build up of excessive speculation, high inflation, and excessive systemic leverage on Wall Street and elsewhere.

Both the USA housing collapse and the Wall Street sub-prime collapse would have never happened in the first place, had the speculation and sub-par interest been checked by the FED raising interest rates and tightening monetary policy years ago.

Instead, the FED deliberately ignored monetary warnings, placed the USA monetary unit at massive risk, and deliberately acted to keep interest rates low. Therefore,  Mr. Bernanke's suggestion that the two back-to-back economic crises were caused by poor USA regulation, is misleading, abdicates FED responsibility for irresponsible monetary policy, and is at least convoluted logic that deliberately distracts attention away Mr. Bernanke's and Greenspan's fiduciary duty to lead the FED in a responsible manner.

It should be obvious for any professional economist, and for that matter even amateur investors, to realize that the low interest rates of the past, in such prolonged circumstances becomes particularly harmful to seniors living on a fixed income budget, while at the same time encouraging youth and all those with low incomes, to take up extremely bad habits of acquiring assets via borrowing and debt, versus a more realistic program of saving and hard work ethic.

Essentially, the greatest virtues of America's past success, by hard work and innovation, has been effectively swapped by the FED action of easy money, and leverage.  

Moreover, if the US wants to increase their global productivity and innovation, thus leading to real wealth, they will first need to put incentive into the proper perspective, which should begin with work ethic and a proper education.

In contrast to abusing monetary policy, under the convoluted guise of a necessary action to rescue the USA economy, what ever happened to the intelligent and far more effective use of fiscal policy and tax incentives for US businesses wishing to hire and employ USA citizens?

Fiscal policy and direct employment solutions provide a high efficacy solution, versus a risky, ineffective and indirect FED action which merely condones leverage and easy money, not a lot different that a ponzy scheme of debt and leverage that implodes on termination.

In essence, US politicians too have avoided their moral duty to oversee the FED, and become famous for unethical pork-barrel politics rather than finding efficient low-cost remedies for the poor and unemployed by applying proper fiscal policy to put their own citizens back to work.

In summary, the Bernanke and political suggestion that the use of monetary policy is an efficient tool to solve unemployment issues is clearly a deliberate deception.

To date, it should be increasingly obvious that trillions of dollars in US monetary bailouts and stimulus programs have done little or nothing to solve the plight, or suffering of the poor or the unemployed in the USA. In fact, since the beginning of the sub-prime meltdown, the gap between the rich and the poor has increased.

Finally, there has been little new or increased regulation and enforcement to prevent similar USA collapses in the future, and the speculative leveraging and packaging of securities which led to the immoral Wall Street sub-prime meltdown has gone unchecked and largely unnoticed. Not a single bank executive has been indicted or arrested, suggesting the rule of law overlooks the rich and powerful.

Further, Bernanke's core argument that deflation and lower prices are dangerous to the USA , or will lead to all out depression are largely unfounded and unproven. In fact, many would argue that lower food and commodity prices are exactly what is needed in America as a first step to recovery.

Although opinions and arguments over Bernanke's economic policies are world's apart, it is my belief that more risks are created by the current FED easy-money and inflationary money-printing policies. These policies have failed to serve the USA in the past and that evidence is undeniable.

Continuing to use policies that failed in the past will only ensure future failure and more inflation, an eventual lower USA dollar, and finally a lower US standard of living.

In the end, the lower and middle class Americans will be made to suffer further, higher taxes will be inevitable, and at the same time the rich and those employed on Wall Street with their large bonuses will attempt to retain control at all cost. After all, which Wall Street investment banker would want to sell their house in the Hamptons? Who could ever think of such an idea?

Chart Truth

As for the stock market direction, I strongly suggest to our blog readers that the current risk to reward ratio largely favors being bearish. Although I believe there could easily be another 5 - 10 points of upside in the SP500 Index early this week, the equivalent downside risk is likely ten times that amount.

Although the short-term trend looks to be up after last weeks rally, according to science and natural law, prices are similar to a mathematical rubber band, and when stretched too far have a tendency to snap back into place.

I also suggest reviewing the cycle hint given in our last blog post. Serious blog readers may further wish to calculate the middle of the time window given to arrive at a more exact date for a possible CIT.

As always, the truth is only found in the technical charts, for those that can spot the forensic evidence, and in doing so - spot the correct trend.

Therefore, this may be a good week to remember the BBTL trend following rule that the current trend is always your friend - unless it is about to change direction.

The chart below is indeed clear. Study it well and it should help you decide your next move.

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

Bull Bears and Pigs

Hello BBTL Blog readership,

The markets were closed for Martin Luther King Day, and thus I took advantage of the extra holiday for further review and to post more of my most recent analysis. See the charts below.

Some of you were wondering about my fewer postings recently. The first quarter of 2011 is a very busy time for me, and therefore, I advise that my postings may be less than regular or frequent time intervals. Naturally, if something big, or a trend changing event takes place - that I have not already advised about - then, I will do my best to get a quick blog posting out.

As I begin my post today I want to point out that recently, I have received some sarcastic and ridiculing  comments posted on this blog (the offensive ones were simply deleted and now I have been forced to moderate comments) and further in recent weeks, even personal emails ridiculing cycle analysis and suggesting that I should throw in the towel, or capitulate, and become bullish as evidently some other blog or analysts have.

The emails and some blog comments thus suggest the blog postings are outright wrong, and in essence worth no more than trash. Given that this is a public and open blog, I have elected to make this topic open  for debate and further comment, as opposed to keeping anything hidden. In essence, this is a request for comments to our blog readers, especially if your have read this blog for several weeks or months.  

Yet, let me suggest to you now - that sending in such emails or posting such comments on this blog will not change my market mood anytime soon. I also believe changing my market mood (cautious if not outright bearish on certain financial instruments recently) is not even in your best interest as readership.

Assuming most blogs were outright bullish, as some have emailed and suggested to me, then this blog would provide a very good balance.

However the core or my cautionary argument, and our discussion herein this evening may be more about money management and market logic, than simple trend following . Read on.

But on the other hand, having now started this blog which can be seen by global masses and a variety of individuals, I too have learned a valuable lesson about human nature.

Therefore, as a warning and before I begin tonight's blog, let me officially go on record to say and warn to those whom see fit to send in outright hostile, or stupid criticism in an effort to waste my time, or in some vain attempt to ruin the learning experience here for others, that I may at my discretion temporarily, or permanently, ban your IP address if you get stupid.

Naturally, this warning pertains only to a small fraction of our blog readership that seem to refuse to act and write civilly.

To most of you as readers, it is probably already inherently too obvious, that some people while using the internet, believe that since they believe they are hidden, or can remain anonymous, they thus have unlimited power to feel free to say, write, or do anything at their own will.

The internet and use of this blog is a privilege to all, and I remind everyone that democracy and the internet, and this blog included, is not a right to do or say as you want - but rather as you ought.

If the hostile comments, sarcasm and ridicule issue became problematic, I might also elect to password protect the blog in the future. Worse, I would do a paid-only blog which I already know is feasible given the content I can post.

Therefore, please remember to act and write your messages to me or this blog accordingly.

This means - think carefully before sending this blog or me personally verbal attacks including sarcasm or ridicule emails, and posting stupid comments on this blog. I do not suffer fools gladly.

Back onto the more important topic of this financial blog, while acknowledging the bulls have been correct in the short term, and that the bear may need to be patient a while longer, there are several very real problems I have with being bullish at present.

Moreover, if you have followed the blog in detail over recent weeks, you would already essentially know all of the following that are highly problematic with being a bull:

1. The Elliott Wave (EW) Count of a coming fifth wave is bearish. The longer term EW count for 2011 could in fact be quite ominous, and to add complexity at present, I am working with both a primary or preferred EW count, but also, a secondary count.

The two counts were recently explained and both are near term bearish. I have already pointed out that they allow for minor amount of upside room. Assuming the market illusions of grandeur continue, and the pigs continue buying, or that the market is being manipulated higher by hidden forces, I want to acknowledge that the SP500 may even reach the 1335 level.

Yet frankly, that would not make me necessarily wrong (assuming you follow my market logic) but only serve to make me more bearish using the EW and other theory involved in that same market logic.

2. Consider that at present and for some time, there are considerable negative divergences in technical indicators (the new high-low ratio posted below is yet another example). Although negative divergences do not tell exactly when a correction might occur, and markets can tend to stay overbought for prolonged periods (as they are now), my experience has taught me not to ignore these negative divergences.

3. Additionally, I have repeatedly discussed the ongoing possibility of outright market manipulation. This was made even more obvious (as a matter of fact) given the FED 's aggressive monetary policy and moral suasion even to the point of a Bernanke December TV appearance.

Expressed using cycles - and as I have also taught here of man-made upset mechanisms (which temporarily change or invert natural cycle trends), a cycle inversion has now likely taken place due to this Bernanke FED policy of QE2 - and the current highly abnormal FED monetary policy of near zero interest rates for a prolonged time, which eventually I believe will pose more problems than solutions.

4. Finally, after going bullish on this blog at the beginning of September, and for several months now I have stated on the blog that I expected a significant market top in the first quarter of 2011.

So far, that same forecast made months ago continues to look and potentially be very accurate. The first quarter is not over and time will tell.

Yet frankly, some of you have asked or prodded already that I should capitulate and change based solely on greed or what I see as buying close to a top. It would be extremely foolish, if not outright stupid, to tell everyone to get bullish just a few days, or even a few weeks - from a major market top.

My caution in recent weeks is in essence, to prepare our readers of my views in advance of that potential major top, as opposed to telling you all - after the fact.

Although I do not usually talk of specific cycle details, KRTT has in it's possession and applies considerable advanced cycle work in making many of our market projections. This included the projection of a top in Q1 or 2011. Our blog has already featured some interesting and educational cycle education in both Fibonacci and even Astro Cycles.

This cycle inclusion in that regard makes this blog absolutely unique and far more valuable.

At present, there are several prominent cycle targets within the first quarter, that I am now looking at.

For instance, one important cycle target comes later this week about January 19-20th, 2011. Another comes in early February.

Last but not least, and for the record, I was there advising friends and clients to buy when the SP500 was 666 in March of 2009, and was also there advising this blog to buy the SP 5090 1010 low of late August, and early September. Moreover, I was getting bullish using an analytical swing trading approach in advance.

Again, the idea to make and generate a profit is by beginning with a lower risk entry point, and therefore in essence to buy the lows, and not to revert or be forced to buy the highs or even adopt a higher risk entry point - solely based on greed.

So, for you persistent bulls that those that believe all trees grow to heaven, and to all those that wish to aggressively say in emails or sarcastic comments and whom want me to now capitulate, I say to you; go ahead and buy here.

Equally, let me also suggest to you that you may wish to consider learning the old market maxim about bulls, bears and pigs.

Bulls and bears have a far longer life span on Wall Street and Bay Street. Yet they are frequently wrong, but nonetheless have some basic market intelligence. Their wounds over time will teach them to increase their market knowledge and education. As a result the best animal on Wall Street is the hybrid bull-bear.

On the other hand, the greedy pigs whom usually laugh at both bulls and bears, appear to be very stupid financial creatures, and often aggressively buy the tops (or sell the bottoms). Usually, as a result the pigs soon go to the slaughter.

Expressed more simply, the equity market as measured by the SP 500 has statistically outperformed dramatically since late August 2010, (when I turned bullish after the summer correction) and done so in the middle of a highly questionable economy.

Longer term fundamental analysis such as PE ratios (an excellent tool used by value buyers) also now suggest that the current North American equity market is extremely expensive and thus highly vulnerable - especially if the market mood or the economy should reverse or worsen.

I believe that more than anything, the major explanation for all of the the most recent bullish events is solely being fueled - not by sound market logic - but rather is being driven by a highly risky US FED policy that will someday probably cause considerable angst.

There should be no secret that the Central Bankers globally, and especially the Bernanke led FED, are intent on monetary policy intervention tactics that have created and fueled a boom-bust economic cycle - time and time again.

After all now months later, there has been NO realistic equity market correction for some time.

This is now statistically abnormal. Therefore at the very minimum, I would want to see some form of more realistic sell-off before I became anything even close to bullish. Again, market entry points are made on lows - not highs.

Finally and perhaps most important, this commentary relates and applies only to the SP500 index, although as I have pointed out several times, there is also a high correlation to certain other global stocks and indices. Frankly, on certain equities and asset classes and even selected economic sectors, I am outright bullish.

Lessons Learned

The entire concept of money making and profit, in any investment or trading forum, is generally to buy low and later - to then sell the high. Unfortunately, human emotion (especially fear and greed) and usually a distinctive lack of financial education, make this very hard for some to achieve.This is exactly what this blog attempts to educate on.

Also keep in mind for you own capital protection, that there is no 100% accurate market advisory in existence.

Some of the sarcasm and ridicule comments mentioned above, and that I have reviewed look extremely foolish, or depict a highly amateur or unskilled nature.

Moreover, as I have taught before on this blog, it is only a matter of time and experience, when one day a trader or investor wakes up and realizes and fully comes to understand, that to be a savvy financial professional, or even a good amateur trader, will requires placing risk management and risk determination, first and foremost.

This means risk and overall market risk, as well as trade or investment risk must be assessed well ahead of any feelings of greed or a desire to profit. Once in a trade or investment, the market dynamics will also require ongoing risk management. In that regard, what some of you may see as wrong, is essentially my personal views towards pro-active risk management.

Those however still wishing to convert or change this blog, or those whom believe or want a 100% percent accurate financial blog written while using simple trend following - is also not a problem. Actually it would be very easy for me to generate.

After all, a trend following approach is simply generated after the fact.

I know of one such paid sight that has thousands of paying subscribers. Is that what you really want? Trend following is also one of the first tools and most basic technical tools and market techniques taught by me (and KRTT).

So if you wish, go ahead and cast your votes. Speech now or forever hold your peace. Frankly and again, it will also be a lot less time consuming for me to generate and publish such a simple trend following blog.

Here is what a simple yet 100% accurate trend following blog might look like given 100% after the fact accuracy. Is this what you really want?

5 day trend - up
14 day trend - up
60 day trend - up
200 day trend - up

This is easily set-up even by an amateur investor with little experience, using the most basic form of spread sheets, moving average, or more accurately by applying mathematical regression analysis.

What this blog attempts to teach and educate on is a great deal more.

In my own personal opinion, this blog takes you as a reader, or as a financial student or hobbyists, or even as a financial professional (we have a few pros and even portfolio managers that read this blog) far beyond the obvious real time trend-following market advisory service as provided here on the SP500 Index.

Yes, this blog uses and has adopted a swing trading and far more difficult - forecast in advance - approach. Then going much further, it attempts to generate and create the highest quality financial education on a wide number and range of topics that I have decided to teach the public .

Is it valuable? That is up to you the readership to decide? Naturally, I would enjoy receiving every readers feedback.

Finally, for the vast majority of our silent readers whom usually do not post on this blog, perhaps more of you should join into the comments section, and if you wish, make positive or realistic suggestions for change.

As I promised more of our ongoing analysis - here are three updated charts which have my usual mark up comments. They are self-explanatory.

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