How Much Time to Invest in Market Study?

IT LOOKS LIKE ALL THE BLOGGERS ARE TRYING TO CALL THE BOTTOM OF THIS BEAR MARKET--I THINK IT IS GOING MUCH LOWER THAN MANY ARE PREDICTING. I ALSO THINK GOLD AND GOLD STOCKS ARE GOING TO SELL OFF SOON.

"If you are ready and able to give up everything else, to study the whole history and background of the market and all the principal companies whose stocks are on the board as carefully as a medical student studies anatomy, to glue your nose at the tape at the opening of every day of the year and never take it off till night. If you can do all that and in addition you have the cool nerves of a great gambler, the sixth sense of a kind of clairvoyant, and the courage of a lion, then you’ve got a chance." Bernard Baruch, legendary investor and advisor to presidents.

I continue to want to make things simple. One or two trades each week. Good money management. I spent several hours trying to decide if end of day Esignal would benefit my trading style.

Palisades Research gives a 70% probability for an up S&P day tomorrow.

Deflation, Inflation or Stagflation???

Remember FCX as leading indicator?



Gold rallied 31 percent in 2007 as inflation rose at the fastest rate in almost two decades. Consumer prices dropped 1.7 percent in November, the most on record, as energy costs plunged. Crude-oil futures have plunged 74 percent from a record in July.

Will copper and oil and CRX drag gold down again? Gold: "The 885 level should prove to be resistance and the market should soon resume its move down into the 550-600 range." Carl Futia:

"Inflation Coming, But Not in Time
We expect that to change, but not in time to rescue debtors with a flood of cheapened money. We have told you for years to tune out the inflationists because they do not know their butt from a hole in the ground. That is still true. The inflation/stagflation they have been blathering about, and which materialized only fleetingly in the form of a speculative blowoff in commodities, was just a head-fake, a seduction whose purpose was to screw any investor who thought he could outsmart the first deflation ever to occur in the midst, paradoxically, of a global credit explosion.

It goes without saying that you should also tune out the self-aggrandizing charlatans who are saying the housing market and the economy will bottom “sometime next year.” These are the same unmitigated bozos who were insisting just six months ago that the economy would avoid a recession. Deflation will run its course no matter what the puny central banks attempt to throw at it next. It will take years to play out, and the price declines we have seen so far in the housing market are not even halfway to their bottom. As for gold, we will reiterate something we said here earlier: Even if it should fall to $200 an ounce, it is all but guaranteed to be do better, much as it has been, compared to nearly every other investment asset you could conceivably have chosen." Rick Ackerman
Dec 22 2008


I for one am very uncertain about the future.

Here is another opinion:

For the first time since 1940, the yield on the three-month Treasury bill went negative this month. Investors eagerly bought up a negative 0.01% yield. That means that they would rather lock in a certain 90-day loss than risk anything in the stock market.

Probability 72% for S&P up market tomorrow. Very light volume for trading until the end of the year.

My thoughts? First deflation, next inflation and then stagflation. Best assets when I get "buy" signals: Oil and gas stocks , gold bullion and gold producing mining stocks.

Watching a 2 year old girl and her 7 year old sister 24-7 for the last 4 days is like being on night call and going to the Emergency Department every night past midnight to stop a nose bleeds for 4 nights in a row. Our Horseshoe Bay home needs an expansion. Tonight we house 5 grandchildren ages 4 days to age 12 yrs, 6 adults, and 2 small dogs. The happiest I get is when I am with my 2 sons and their families.

Wealth and Happiness

Wealth is the parent of luxury and indolence, and poverty of meanness and viciousness, and both of discontent. Plato (427 BC - 347 BC)

Today I experienced what I call the joy of true happiness. The birth of my second grandson:Fisher Andrew Wills.

My life experience tells me that there seems to be no correlation of wealth and happiness.
http://www.eurekalert.org/pub_releases/2004-09/aps-wdn092404.php

NEW GOLD AND GOLD SHARES BUY SIGNAL, 86% probability down S&P tomorrow

WEEKLY $GOLD,$HUI,$XAU,RGLD, GIVE BUY SIGNALS. Negative is crude oil delationary and $INDU has not bettered November high. I remain 95% in T bills except for my small trading acount. I am accumulating data for probability forecast for next day broad market direction. Also as noted below a number of medical, personal and professional distractions during this holiday Season. I chair the patient safety committee at my hospital and operate 3 days a week and see patients 5 half days a week. My very early Parkinsons disease is in excellent control but I plan to move to a clinic only practice soon.
I have been busy with family and work--I still take ENT surgery call every other night thru the week and every third weekend. Tomorrow I travel to Horseshoe Bay for holidays and grandson #2 is scheduled for delivery Friday (grandchild #5).
I look for a sell off of the broad market to elevate the VIX and then a good rally over several months--of course this rally may have already started. Until inflation is firmly established via home prices stable, oil and gold prices rising I will remain in the safety of treasuries. I will trade some gold options both long and short--I prefer RGLD as a trading vehicle. My UBB most recent trade is blowing up.

Would my readers please comment --some have complained that the charts are too difficult for them

FCX fails to confirm GOLD STOCKS SELL SIGNAL

The charts tell the story. I remain short via RGLD puts.

RGLD AND CONFIRMATION BY FCX??? at a Crossroads

If FCX will confirm and RGLD breakout to new highs on heavy volume it will be off to the races. For the time being I am short with a tight stop RGLD dec puts.

HAPPY THANKSGIVING

My Presbyterian roots are showing up in my posts: This morning I awoke singng the Doxology.


Praise God, from Whom all blessings flow;
Praise Him, all creatures here below;
Praise Him above, ye heavenly host;
Praise Father, Son, and Holy Ghost.

Click on the link below and give praise to our Father God and Creator.

http://www.cyberhymnal.org/htm/p/r/praisegf.htm

Has an up leg of new bull market started???

The Long Tail Up pattern forms when the price rises twenty boxes or more. It is the reverse of the Long Tail Down pattern but with less chance of a being profitable. I am not convinced that new bull market for $indu has started but when the facts change I will change my opinion. My work shows a 75% probability for a down market on Friday. Airline traffic is down 7% this thanksgiving season.
My wife Margaret and I are with my older son Alan and his wife's family in Tyler Texa for Thanksgiving. On to horseshoe bay Friday.

Wishing you and yours a blessed Thanksgiving day.

Gold Buy Signal

Today I took $6000 profit on RGLD option play. I am still short the market with UBB put. I see this 2 day rally in $indu as a bear market rally and will aggressively short it. If RGLD breaks out to new highs will also take a 10% position of gold producers RGLD AEM NM AUY etc. in my pension profit sharing plan.

"In this respect the present crisis in the West will ultimately end up discrediting mechanical monetarism -- and with it the fiat paper-money system in general -- as the U.S. paper-dollar standard, in place since Richard Nixon broke the link with gold in 1971, finally disintegrates.

The catalyst will be foreign creditors fleeing the dollar for gold. That will in turn lead to global recognition of the need for a vastly more disciplined global financial system and one where gold, the "barbarous relic" scorned by most modern central bankers, may well play a part." Chris Wood WSJ 11/24/08

Market forecast: continue down $indu and $tran this week

Dow theory last week confirmed a continuing bear market with new lows for both averages. Gold stocks $HUI gave a buy signal Friday. We need a strong follow thru day to confirm this buy signal. So Citibank is too big to fail but Lehman Brothers got the Ax.

This week I travel to Tyler Texas and later on to Horseshoe Bay. I hope to soon move this blog to a new site and a new name: Counterculturaltrader.com

May mercy, peace and love be yours in abundance.

Paul Wills, M.D.,F.A.C.S.

BUY SIGNAL FOR GOLD & GOLD STOCKS

Today, 30 minutes after the open, I bought RGLD Dec 35 calls (I have high hopes for this trade as it immediatedly was in the "green" a +$5000 by the afternoon close). I also hold Dec UBB puts. My IMCL calls expired worthless today. I am excited by the early results of my "next day $indu forecaster"--I am backtesting and assigning probability statistics to this new tool.

A huge move up in gold today. Yesterday a very unusual movement in interest rates as the markets made new lows--The long bond futures -- if you include the day session AND the after-hours session -- were up 7 9/32 points in price. The cash 30-year bonds were up 8 31/32 points. The yield on the 10-year Treasury was down 33 basis points to 2.99%, while the yield on the 2-year Note wasdown just under 10 basis points to 0.96%. These are not typos. These are, however, the biggest price increases I have ever seen, and the lowest yields in the history of each bond maturity.

In 10 months my small trading account is now plus $63,000. I am enjoying the teaching aspect and mentoring of my junior associate, Shannon Gram. The first book I gave her to read before starting to trade was on self discipline. The second lesson I taught her was on money management and position or bet sizing. The next lessons were review of my 3 trading rules. (the fewer rules you have the better--when my sons were growing up I had only one rule for them--they were not to get married until they were age 26--they both later married at age 26)
Also I am really big on positive mental images and positive self talk. I told Shannon, "great traders have ice water running thru their veins. You must treat your trading account as a small business. Only 5% of traders survive long term."

Currently we are developing entry and exit strategy for our swing trading. We use fibonacci retracement levels to pick support and resistaance levels. I tell Shannon that these are the most dangerous and volatile markets of my lifetime. However with the volatility comes great opportunity. Shannon is studying the biotech sector--I want her to get to know these stocks well. I have some knowledge of the gold mining stocks but have learned that I am not a gold bug and I am not married to any sector. We use Zacks and Investor Business Daily to "grade" each of our stock trades---we use a check sheet prior to entry of each trade and do a postmortem check after each trade--win, lose, or draw.



The stock market is telling us that something terribly bad is awaiting us in the future. Cash and treasuries remain king and now a small holding of gold shares or a gold ETF make sense. Yesterday both $Trans and $INDU made new lows--I have revised my near term low forecast for $indu to 7100. I now think that gold will rally and we may even see up to $1000 smash up in a day if a short squeeze happens in December.

Sunday I will post my market forecast for Monday. For those of us of Judeo-Christian beliefs our trust is in a personal God who created us, sustains us and cares for us now and into the future. Your 401K may be a 101K but we still have so much to be thankful for this Thanksgiving season. No amount of money will buy good health, productive happy children and grandchildren or the love and support of a lifetime spouse. This holiday season give a special prayer and say thank you to our servicemen who guard and protect our U.S.A.

Short UBB Dec 45 puts

Palisades Research forecast 63% probability up market for Friday. IBD market in correction. I remain bearish in my long term and short term forecast. Gold point and figure chart is now bullish.
How low do you think this $INDU market will fall?

Taking the contrarian position to the blog sentiment readings would be highly profitable recently.

U.S. stocks slammed to five-year lows as financials fall

Today the $indu confirmed the $tran with new lows--the bear market continues.


$indu may correct to as low as 7100 on this leg of the bear market. $Gold may correct to as low as $550. Can you spell DEFLATION??? Once this bear market is over we can look forward to hyperinflation. Watch the price of gold and the price of oil.
I covered my UBB put option at a nice profit today.

Forecast S&P up Tuesday

Palisades Research gives an 80% probability for an up S&P market tomorrrow. IBD shows market in correction. I have been mentoring a research associate and helping her learn to trade. She is working on our spreadsheet to give a probability forecast for the market direction for the next day trade. Her first trade was a loser but her second trade was a 100% gainer. Her MHK put hit her limit order target today. I patiently wait for the signal to go long gold stocks and will also purchase a gold and a silver ETF.

Market Forecast Down For Monday

IBD shows market in correction and Palasades Research predicts a 72% probability for a down Market Monday.

I find I am not the only one critical of Paulson. This observation comes from former Republican majority leader Dick Armey, "Paulson's very public and frantic panic of a few short weeks ago, along with his current state of bewilderment and indecisiveness, is most likely the single greatest explanation for the persistent doldrums in the markets..."

WHIPLASH REVERSAL DAY

One day after IBD signaled "market in correction" the broad markets reversed and handed anyone who was "short" a severe nosebleed. I escaped with a profit on my mhk trade but my ubb trade is in the red. The up probability for the S&P is 65% tomorrow.
Given the severity of this bear market I don't think many traders will go home "long the market" over the weekend and I predict another wild ride for tomorrow. So how many of my readers think the bottom is now in for this bear market?
Before you get too excited about today's market upsurge consider this:
On Oct. 10 the Russell 2000 made a new low for the move before closing with a bullish reversal. Then, 12 sessions later on Oct. 28, the index made another new low for the move, once again with a bullish reversal. Today, 12 sessions later--another low, another bullish reversal.
Such action is actually part of a bearish pattern. Lower lows and lower highs are classic bear market behavior or to use a very old cliche, til the Fat Lady Sneezes (or do they sing at the start of a new Bull market?)

HOLD ON TO YOUR PARACHUTE: THE BIG DROP ARRIVES

It's not the strongest of the species that survive; nor the most
intelligent, but the one most responsive to change.
---Charles Darwin
Only 1 new high with 542 new lows on NYSE today. IBD whipsawed again--market in correction--their euphemism for the BEAR MARKET FROM HELL


After hours:
Intel Corp. whacked more than $1 billion from its fourth-quarter revenue forecast and ratcheted down its profit expectations because a clampdown on spending is reducing demand for its chips.
I look for new market lows tomorrow. I remain short the market with ubb and mhk puts.
Ticker Sense Blogger Sentiment Poll reports 21.74% Bearish and 65.22% Bullish. Looks like every blogger out there is trying to call the bottom. Hmmm--I think I will let the market call the bottom.

$INDU REVERSES -- NEW LOWS AHEAD SOON

"Bear Market - A 6 to 18-month period when the kids get no allowance, the wife gets no jewelry and the husband gets none."

Forecast for Monday

We should see continuing rally Monday and then a sharp selloff Tuesday -Friday. I will enter another short trade of UBB if 75 is achieved.

$HUI is bullish. There is talk of a squeeze coming in December at the Comex and that gold could rise as much as $1000 in one day. I look for a full stock market crash before this happens.

REVENGE OF THE REPUBLICANS CONTINUES

Today I closed my UBB put position. My small trading account begun in Feb is now plus $48,432. The bulk of the profits have come from the short side trading puts on UBB--3 trades all very profitable. I am working on a spreadsheet with a proprietary market direction indicator that will give next day market direction with probability forecasts. Today my prior projctions for 1500 point decline in $indu was completed. I look for a rally tomorrow and Friday and continuing into early next week. At this time I am "Flat and Nervous" except for an IMCL nov 70 call position.

"If you had an average investor standing in front of you, what would you say to him/her to ease concerns and raise confidence in the economy and markets?

I would say develop or stick to a valid trading plan and have the discipline to execute it correctly. In my opinion, "buy and hold" is a dangerous concept in today's world. That's because investors who have lost 30% in this bear market now need to make 50% to get back to breakeven and so have put themselves years in the hole. The S&P 500 has generated negative returns for eight years, but with an actively managed portfolio, investors still have the opportunity to make gains and move toward their financial goals". 11/06/08 by John Nyaradi.

Fibonacci Retracement

I will affectionately refer to this Obama selloff as the "Revenge of the Republicans".
So far I have left politics out of this blog. I prefer for the markets to do their own talking. There are plenty of idiots on both side of the aisle.

SHORT UBB

Today's forecast: Negative market forecast for Thursday. Tim Knight is bearish and looks for Spy to trade as low as 86. Palisades Research give Down market S&P at 74%. I will add to short position on any rally tomorrow.
I am thankful that the Obama selloff saved my UBB put option and I will exit if the target is hit tomorrow or Friday.

OBAMA RALLY

I plan to fade this current rally--I think the bear market is still in position. Does anyone know of time price software using fibonacci relationships? Gold was strong today. I'm taking heat on my UBB put--if stop is hit I will exit this trade tomorrow.

UBB rises on merger news. S&P Lower

No selloff yet. S&P lower as predicted.





http://www.marketwatch.com/news/story/brazils-banco-ita-unibanco-merge/story.aspx?guid=%7B4B7B124A%2D522A%2D48C3%2D812A%2D2C30A04303DE%7D&siteid=yhoof

Prediction: Market Corrects Again Next Week

56% probability down market for S&P tomorrow. IBD is on a buy signal--will they be whipsawed again???
I use Dow theory to confirm IBD timing signals and like to see blogger sentiment fail to confirm. I also like P&F charts for $INDU, S&P, NDX and NYSE Bullish percent indicator ($BPNYSE) to confirm market trends. I was wrong about selloff I predicted for Friday--I remain short this market with tight stop for my UBB put.

Look for big selloff again tomorrow

I punted my AEM put today at a small loss. $Gold failed to rally and confirm this trade. In after hours trading stocks are sharply lower. Probability of NDX bearish tomorrow is 71%.

I AM TRADING THIS WITH A UBB PUT OPTION.

Please send this site on to your friends if the correct timing and market direction are helpful to you. Using optionone service and my own timing signals I have made a lot of money trading these very volatile markets.

This site is now McAfee Secure.

LONG AEM DEC CALLS

Palisades Research give 53% probability for S&P UP DAY tomorrow. Tim Knight remains bullish. AEM and FCX P&F turn Bullish.

Forecast for a big plunge in $Indu was wrong--only got 750 points down and then todays huge reversal

The low pole reversal is seen when a chart falls below a previous low by at least 3 boxes but then reverses to rise by at least 50 percent of the fall. The reversal implies that the supply that was making the prices fall has been absorbed and demand is taking over. The pattern is an alert that higher prices could be seen in the future. The ideal buy point would be on another reversal back down to be closer to the stop loss point. This would also set up a double top breakout if the prices reverse up and break over the current column's high.

Tim Knight has a very near term accurate record in calling this market---bullish, Palisades Research gives only 47% probability for rising S&P tomorrow.