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
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