362 Gulf Breeze Pkwy Gulf Breeze, FL 32561 www.InsiderCapital.

l.com Tel 1-888-423-4950 1-850-677-1966 Fax: 1-850-677-3521 Publisher: Jeannette Briese

Issue No. 845

Insider Capital Group

June 6, 2011

But what if instead of making new highs, prices GOLD SPECIAL SITUATION: In last week's broke to new lows following the sell signal. Sell issue, we posted a COT-Fisher buy signal, noting: signals are typically only effective in a bear market, so a breakdown would be the initial sign of a maGiven our cycle indicators, which are all in up jor trend change. modes, we can expect gold to proceed smartly Obviously major trend changes are relatively rare to new highs. This is the established pattern, and events. Following the March 2008 peak, a COTit would require a break in this pattern to warFisher sell signal marked a double top that was folrant any bearish expectation. lowed by a 31% decline. In all, it took 18 months The pattern I referred to is a bullish response to a for gold prices to establish new highs. COT buy signal triggered by commercial buying during a correction. Also, besides the rebound, visGOLD Weekly 2008 ible following previous buy signals is a minor COT sell early in each recovery. As we expect in bull trends, these sell signals were ignored by the market, which quickly moved into new high territory.

GOLD Weekly

The relatively small price range between the COT-Fisher sell and buy signals occurring at the May high and low, respectively, create a special situation. We reserve this designation for clearcut COT signals, where the price chart provides a potential low risk entry opportunity.
All information has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. Statements and recommendations are subject to the limitations inherent in market analysis and may be changed without notice. No claim is made that future recommendations will be as profitable as past performance or that they will not result in losses. All trade references should be considered hypothetical. THERE IS RISK OF LOSS IN FUTURES TRADING. Those using this information are responsible for their own actions. 2011 by Insider Capital Group 362 Gulf Breeze Pkwy Gulf Breeze, FL 32561 www.InsiderCapital.com Tel 1-888-423-4950 1-850-677-1966 Fax: 1-850-677-3521 Re transmittal or duplication in any form is illegal and strictly prohibited.

In this case, a break of the May low of 1473 is both the special situation trigger and the chart pattern entry point (completion of a failure swing top). Using a stop-loss just above the 1553 May high keeps this entry relatively low-risk. (Your account size would determine whether a full-sized or E-mini contract would be the appropriate vehicle.) A temporary new spike high would not necessarily invalidate a failure swing top, but a weekly close in new high territory would likely take this out of the special situation category. You are not limited to using chart patterns in trading a special situation. Any approach that provides a fixed maximum risk is suitable. As it happens, our Insider Futures daily trading letter (which has been long gold since February 11) has a trade set-up with a similar entry, but a potentially closer stop-loss, which could reduce initial trade risk. The current entry point is 1474 with a 1546 stop and reverse point (subject to change). This is one example from myriad trading systems that can be employed to implement a COT-suggested trade.

viewed as license to short the peso. COT sell signals are often premature in bull markets. Notice that the current COT reading is part of a bearish COT histogram pattern that began within a few weeks of our original buy signal. This is the textbook bull market pattern. There is no telling how far a bull market may extend once it enters the speculative blow-off phase (distinguished by an extreme CTA net long position). We recommend a trailing stop-loss, which may allow longs to accumulate and bank significant profits after the initial COT sell signal. The COT Index histogram continues to trace out a textbook bull market pattern of continuous bearish readings (circled), and trailing stop-loss protection on longs remains the preferred market position.

MEXICAN PESO Weekly

INSIDER FUTURES GOLD Daily

MEXICAN PESO: The COT Index has dipped back into major COT sell signal territory, at 5% COT. As I pointed out in the February 28 issue, this 5-YEAR T-NOTES: Commercial selling has pushed their net short total to its highest (most is not a signal to sell the Peso. bearish) level since March 2008. In 2008, commercial' joy was short-lived as the T-note price decline This [major COT sell] signal warns traders who lasted just three months before rebounding with went long on our recommendation last Septemconviction, eventually forcing commercials to buy ber to protect accumulated profits against a potheir shorts back on a scale up. tential pullback. However, this should not be
June 6, 2011 Bullish Review
Page 2

But this was a aberration in an otherwise enviable commercial record in 5-Years, and I would not expect to see commercials forced to run from their shorts a second time so soon. The major COT sell signal is accompanied by a four-week-old COT-Fisher sell signal still in effect, and comes with a perfect cycle setup. Both our intermediate- and long-term cycle indicators are in down phases, while the short-term indicator is in an up phase. This is a bear market reaction pattern. For aggressive traders, when combined with last week's key reversal bar, this COT sell signal could be used to make a short entry near the current price with limited risk. Key resistance is the November 2010 peak, where a timely combination of COT-Fisher and major COT sell signals marked a the market top. A breakout above this high would constitute a sell signal failure, terminating all bearish bets.

More notably, the low was within a few ticks of key support at the April low, where a COT-Fisher buy signal turned prices higher. Our cycle indicators characterize the current market position as a bull market correction, with both the intermediate- and long-term indicators in up phases, and the short-term indicator in a down phase. Aggressive bulls could use this combination to enter a low-risk long position near the current price, using a stop loss below the April low. Since a breakdown below the April low will constitute a buy signal failure, you may want to use a reversal stop that will move you short in the event of a top completion (as outlined in the May 23 issue).

COFFEE Weekly

5-YEAR T-NOTES Weekly

COFFEE: Another interesting pattern has developed in coffee, where I outlined a potential topping formation two weeks ago. On the weekly chart, last week's price bar placed a lower low, a higher high, and a higher close than the prior week's bar. This forms a key reversal week; bullish.
June 6, 2011

LEAN HOGS: We posted a timely major COT sell signal on February 14, just four days ahead of the market top. I reminded you of the impending top completion in the April 18 Bullish Review, just before the bottom fell out. The recent minor and COT-Fisher buy signals, then, must be viewed within the context of a bear market, meaning we give them no weight. And too, the fact that commercials moved into a net long position does not change the bearish outlook.
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Bullish Review

COT INDEXES (Futures + Options)

SYMBOL
INDEXES

COMMERCIAL HEDGER 31. May. 2011 CHANGE 31% 40% 22% 24% 38% 43% 70% 49% 95% 12% 39% 45% 40% 46% 53% 22% 5%
20%

LARGE SPECULATOR 31. May. 2011 CHANGE 58% 51% 72% 79% 40% 51% 35% 48% 2% 80% 57% 40% 63% 46% 49% 76% 93%
+80

SMALL TRADER 31. May. 2011 CHANGE 80% 66% 77% 54% 81% 64% 31% 55% 69% 68% 59% 90% 35% 76% 39% 70% 70%
+73

LAST COMMENT #843 #840 #840 #838 #840 #844 #842 #844 #842 #836 #844 #843 #844 #840 #842 #838 #831
#835

CRB DowInd NASDAQ NIKKEI S&P500

METAL

-10 +1 +1 -2 +8 -32 -15 -8 +5 -11 -12 -4 0 -2 +7 -6 -4

-4

+7 +3 0 0 -12 +27 +16 +5 -1 +8 +12 +6 0 +4 -11 +5 +2

+10

+15 -9 -6 +2 +2 +31 +11 +14 -8 +9 +8 -3 +2 -5 0 +7 +16

-7

- GOLD + COPPER PLATIN ++ SILVER

CURRENCY

AUSSI$ POUND + CANAD$ EUROFX $INDEX - YEN Kiwi $ -- PESO

SWISS FINANCIAL

3MO-ED -- 5YR-TN 2YR-TN 10Y-TN - 30Y-TB

GRAIN

71% 0% 7% 40% 25% 20% 8% 26% 0% 29% 31% 34% 63% 17% 66% 67% 65% 70% 65% 68% 95% 2% 89% 30% 30% 52% 37%
+ = Minor buy signal - = Minor sell signal

-7 -8 -2 -3 0 -11 -3 +2 0 -11 -3 -4 +7 -2 +6 +6 +6 +2 -9 -6 -3 +1 -9 +1 -20 -18 -12

24% 100% 93% 65% 65% 80% 81% 68% 100% 64% 65% 58% 22% 89% 59% 37% 33% 30% 38% 31% 8% 99% 21% 71% 66% 28% 61%

+9 0 +1 +5 -2 +11 +4 -4 0 +11 +1 +2 -6 +5 -10 -6 -8 -1 +11 +4 +2 0 -2 -2 +16 +1 +10

69% 70% 36% 53% 84% 61% 90% 71% 100% 88% 72% 88% 62% 51% 21% 39% 78% 28% 24% 46% 26% 74% 23% 58% 65% 100% 52%

0 +15 +1 -3 +4 +6 -3 +2 +25 +3 +1 +10 -6 -9 +7 +4 +11 -10 +3 +13 +9 -4 +21 +3 +23 +59 +12

#836 #840 #840 #840 #840 #830 #833 #774 #774 #835 #829 #814 #839 #833 #831 #831 #838 #831 #833 #843 #842 #842 #839 #844 #832 #821 #686

SB-OIL CORN KC-WHT -- MN-WHT OATS RRICE SBeans S-MEAL WHEAT

MEAT

FEEDER CATTLE + HOGS

FOOD/FIBER

COCOA COTTON + COFFEE ++ LUMBER -- OJ SUGAR

PETROLEUM

CRUDE H-OIL NATGAS Gasoli

++ = Major buy signal - - = Major sell signal

June 6, 2011

Bullish Review

Page 4