02/04/12 Update - Stock Market Trends & Observations

Stock Market Trends & Observations
Stock Market Update 02/04/12

P os ted February 5 , 2 0 1 2 by Bob Categories: D A I L Y U P D A T E
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************************************************************************************ CY CLES Prev iously I said: Its alway s possible that we could see nothing more
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than 1 -3 day corrections with a resumption of the rally . Thats really great market action if it continues. And thats ex actly whats been happening. The nex t possibility for a cy cle bottom is late February or early March per the 1 950 dataset. The best possible outcome for the late January cy cle bottom is that it is inv isible because the larger 1 8 month cy cle is ex erting strong upward influence and ov erriding the shorter term cy cles. Hopefully this is true but we wont know for sure until later. The 1 950 dataset shows:.
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DAILY UPDATE (79) EDSON GOULD (21) GLOSSARY (1) SELL/BUY ACTION UPDATE (15) WEEKLY UPDATE (19) WORDS OF WISDOM (9)
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Stock Market Update 02/04/12 Elder Impulse System 01/30/12 Stock Market Update 01/29/12 Stock Market Update 01/26/12 Stock Market Update 01/25/12
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February 2012 (1) January 2012 (7) December 2011 (11)
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November 2011 (17) October 2011 (19) September 2011 (17) August 2011 (32)
WHAT S HAPPENING? Although we hav e not made new recov ery highs in most of the index es
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(Industrials and Nasdaq Composite hav e a new closing high on Friday ), we are in large step 3 dating from the March 2009 bottom. The first chart shows the fav ored wav e count. If we are in large step 3 up, we will hav e new recov ery highs before too long. Its a bit early to begin speaking about all-time highs but it does reside in the back of my mind. Again this is fav ored because of my v iewpoint on the long term megaphone formation (blue lines top chart). A massiv e head and shoulders and megaphone formation hav e been forming since 2000. The head and shoulders is not believ ed to be v iable.
July 2011 (17) June 2011 (10)
February 2012 M T W T F 1 6 7 8 2 9 3 S S 4 5
10 11 12
13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Jan
Wall Street Quotes

The essence of investment management is the management of risks, not the management of returns. Wellmanaged portfolios start with this precept. Benjamin Graham The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell. John Templeton Buy on the cannons, sell on the trumpets. Old French Proverb
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The last large megaphone formation was 1 965 to 1 97 4. I believ e we are doing the same as 1 965-1 97 4 only the timeline is doubled. The ex pectation is that we will finish the megaphone in 201 8.
Rule #1: Never lose money. Rule #2: Never forget rule #1 Warren Buffett The four most dangerous words in investing are "This time it's different". John Templeton "This time it's different" was prevalent during the bubble of 2000. In 1929 it was called "New Economics". Bob History always repeats, only the details change. Edson Gould If you have trouble imagining a 20% loss in the stock market, you shouldn't be in stocks. John (Jack) Bogle Stock are bought on expectations, not facts. Gerald Loeb
1 9 6 5 -1 9 7 4 MEGA PHONE
Since December 1 9th we hav e been in a single step upward. At worst, the v ery short term count is step 3. At best, the count is the beginning of step 2.
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Emotions are your worst enemy in the stock market. Don Hays
P/E ratio - The percentage of investors wetting their pants as the market keeps crashing. Facebook Albums To PDF pdfcrowd.com
It will be interesting to see what ty pe of resistance the prior highs of May 201 1 will prov ide. V ery little resistance could prompt a continuing run. Stiff resistance would likely indicate the end of 2nd step since the late Nov ember bottom. The Industrials and Nasdaq Composite had no resistance and punched through easily on Friday s closing high. The market continues to remain ov erbought but this is ty pical of a strong bull run, ov erbought with a refusal to correct. I remain in an ov erall uptrend theme as per prev ious updates.
crashing. Anonymous Herd Mentality Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one. Extraordinary Popular Delusions and the Madness of Crowds Herd Mentality Cases such as Tulipomania in 1624--when Tulip bulbs traded at a higher price than gold--suggest the existence of what I would dub "Mackay's Law of Mass Action:" when it comes to the effect of social behavior on the intelligence of individuals, 1+1 is often less than 2, and sometimes considerably less than 0. Extraordinary Popular Delusions and the Madness of Crowds I made money by selling too soon. Bernard Baruch
2 0 1 2 -0 2 -0 4 IND DA ILY LONG T ERM
Weekly candlestick charts since 2008 with Fibonacci speed lines.
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Bernard Baruch If all you have is a hammer, everything looks like a nail. Bernard Baruch The main purpose of the stock market is to make fools of as many people as possible. Bernard Baruch The hardest part of a bull market is staying on. A bubble is a bull market in which you don't have a position. A buy and hold strategy is a short term trade that went wrong. October, this is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, June, December, August and February. Mark Twain Economists have predicted 14 of the last 3 recessions. Market Correction - The day after you buy stocks.
2 0 1 2 -0 2 -0 4 T SX W EEKLY
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after you buy stocks. In 2008 stocks were a good buy . . . . . Goodbye Mercedes, goodbye yacht, goodbye vacation home, goodbye . . . Markets can remain irrational longer than you can remain solvent. John Maynard Keynes Money talks, but all mine ever says is "goodbye" Don't gamble. Take all of your savings and buy some good stock and hold it until it goes up, then sell it. If it don't go up, don't buy it. Will Rogers Return of principal is more important than the return on principal. Hope is your worst enemy in the market. Don't catch a falling knife. Spend at least as much time researching a stock as you would choosing a refrigerator. Peter Lynch When you realize that you
2 0 1 2 -0 2 -0 4 IND W EEKLY
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When you realize that you are riding a dead horse the best strategy is to dismount. Sioux Indian Proverb Dont ever make the mistake of telling the market it is wrong. James Dines Wall Street never changes, the pockets change, the suckers change, the stocks change, but Wall Street never changes, because human nature never changes. Jesse Livermore Let Wall Street have a nightmare and the whole country has to help get them back in bed again Will Rogers Bulls makes money, bears makes money, pigs get slaughtered. My Grandfather Never buy a stock that won't go up in a bull market. Never sell a stock that won't go down in a bear market. Wall Street is a street with a river at one end and a graveyard at the other.
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Never check stock prices on a Friday, it could spoil your weekend. Nobody is more bearish than a sold-out bull.
2 0 1 2 -0 2 -0 4 COMP & V LE W EEKLY
The public is right during the trends but wrong at both
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trends but wrong at both ends. Humphrey Neill Those who can, do. Those who cant, teach. Those who cant teach, work for the government. Never sell a dull market short. I sell euphoria and buy panic. The way he determines that is to wait until prices start gapping in the charts. Gapping on the upside is euphoria, while gapping on the downside is panic. Jimmy Rogers courtesy of Jeff Saut "Cut your losses and let your profits run." Don't marry a stock. Every stock must be sold. Often times WHEN you take a position can be more important than WHAT you take a position in.
2 0 1 2 -0 2 -0 4 SPX W EEKLY
"If Santa fails to call the bears will roam on Broad and Wall!"
Daily candlestick charts since May 2009

About T his Blog

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Observations of Stock Market Trends uses several proprietary technical indicators discovered by the author. The object of this blog is to notify you (preferably in advance) of the important tops and bottoms in the stock market. We know that's impossible, but nevertheless, it's attempted in this blog. "Observations of Stock Market Trends" is published on an irregular schedule but a daily update is likely when we are near a stock market inflection point. If you find the blog interesting, please become a follower by entering your email address in the section "Email Subscription" (top of this column). You must also confirm your email subscription by clicking on a link in the confirmation email, otherwise you ain't subscribed.
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2 0 1 2 -0 2 -0 4 IND DA ILY
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2 0 1 2 -0 2 -0 4 IND DA ILY
The Nasdaq composite on Friday also ex ceeded its May 201 1 high. There was no resistance, it gapped right through the old highs. Its almost alway s good market action to see the Nasdaq leading the adv ance. When this index begins lagging well know that a correction is near. The V alue Line Index mov ed through its 2007 all-time highs in April 201 0. Currently the index is drawing in on the May 201 1 highs.
information and should not be construed as investment advice. No statement by the blog's author should be interpreted as a recommendation to buy or sell any security, financial instrument, or to participate in a trading or investment strategy. Any investment decision by anyone that results in losses or gains based on information from this blog is not the responsibility of the blog's author. The blog's author will make statements about certain investment vehicles and strategies, but It's simply the author expressing his opinion, or action, regarding his own investments. These opinions are never to be construed as investment advice.
About Me
With 55 years of studying and investing in the stock market, I am sharing these experiences and knowledge
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by writing a stock market blog. This blog relies on several unique and proprietary indicators. I have been correct at some of the biggest market turns in the last 40 years. I was short for most of 1973-1974, reversed course and became a buyer during the week before Christmas 1974. I was also short for most of the first half of 1982 but became a buyer on August 4, 1982. This was five days before the August 9, 1982 blast off on the historic bull market run of the 1980s and 1990s. In 1999 I began tolling the bell on the stock market knowing that the end was near (no one listened). In March 2003, prior to the beginning of the Iraq war I became very bullish when it was obvious that there was not one good reason to own stocks (contrary opinion) and we had also achieved a double bottom. Shortly after the
2 0 1 2 -0 2 -0 4 COMP & V LE DA ILY
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bottom. Shortly after the October 2007 peak I became a seller and bear. Days prior to the March 2009 bottom, I bought stocks in anticipation of a very good rally that turned into a bull run. In the later stages of the FebruaryMay 2011 topping process, I began warning of an important market correction. Since then my record is in this blog. To illustrate how things don't go perfectly for any analyst (such is life). My key indicator began changing in character during 1987 and led to some large losses based on excessive leverage, arrogance (I could do no wrong - or so I thought) and incorrect market interpretations. When I had enough, I bailed out of the market on October 6, 1987, just days before the 1987 crash. But I had been severely damaged before the crash. It took me several years to begin a recovery and restore my faith in my key indicator with a modified interpretation. Since then, using the new method, the Facebook Albums To PDF pdfcrowd.com
2 0 1 2 -0 2 -0 4 SPX DA ILY
Price limiting bands on daily charts since 2009
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key indicator has worked correctly. One man was responsible for my education, Edson Gould, the greatest technician that ever lived. After reading many of the books on stock market technical analysis, I found that all of these methods had high failure rates. I searched for a formula that worked consistently and in 1973 I subscribed to Edson Gould's "Findings & Forecasts". Here I struck gold with the master technician of the 20th century. Extending his methods I discovered several indicators that I use today. If you find my observations of interest please add your email address to the section, "Email Subscription".
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201 2-02-04 INDEXES DAILY LIMITING BANDS 60 minute charts since June 201 1
2 0 1 2 -0 2 -0 4 T SX 6 0 MINUT E
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2 0 1 2 -0 2 -0 4 IND 6 0 MINUT E
2 0 1 2 -0 2 -0 4 COMP 6 0 MINUT E
Internal Indicators
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The nex t chart is the new highs and it is ex panding as the market mov es up. Obv iously this is good market action.
2 0 1 2 -0 2 -0 4 NET NEW HIGHS
The adv ance decline line (cumulativ e) is at an all-time high
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2 0 1 2 -0 2 -0 4 A DV A NCE DECLINE CUMULA T IV E
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The cumulativ e net v olume line is not at a new high but it is showing a strong uptrend.
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2 0 1 2 -0 2 -0 4 NET V OLUME CUMMULA T IV E
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The Dow Theory continues to hav e confirming recov ery highs. The Industrials ex ceeded the May 201 1 closing high without a confirmation from the Transportations. Well keep an ey e on a confirmation by the Transports.
2 0 1 2 -0 2 -0 4 DOW T HEORY
This is my super secret buy /sell indicator (Series #1 ) in red. The chart
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show the Industrials and series #1 since May 201 0. The decline from May to October 201 1 was not reflected in the series #1 indicator. I would interpret this as inv estors continuing to ex ert a continuous buy ing influence on the market.
2 0 1 1 -0 2 -0 4 DJ IND & SERIES #1 INDICA T OR
2 0 1 1 -0 2 -0 4 DJ T RN & SERIES #1 INDICA T OR
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The following chart is the Tranportations av erage and the series #1 indicator since January 2007 . There was ample warning in this indicator that the market was in trouble prior to the peak in October 2007 . The Transports made a subsequent high after Oct 2007 but the series #1 indicator was far below its high early in 2007 .
2 0 1 1 -0 2 -0 4 T RN & SERIES #1 INDICA T OR
All of the abov e charts (ex cept the series #1 charts) are av ailable on my chart link below. CHART S MY CHART LINK (updated constantly ) These are my personal charts and my play ground for doodling trend lines, wav e counts and other ideas. I draw the trend lines and wav e counts on a daily basis (sometimes more often). Y ou can find these doodles from 1 minute to
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monthly charts. I usually restrict my trend lines and wav e counts to the first three charts on each page, TSX, DJI & COMPQ. The other charts on the page are usually for confirmation of the trend and wav e structure. Page 1 Buy /Sell Signals & Misc Charts Page 2 Index es With 1 Minute Bars Page 3 Index es With 5 Minute Bars Page 4 Index es With 1 5 Minute Bars Page 5 Index es With 30 Minute Bars Page 6 Index es With 60 Minute Bars Page 7 Index es With Daily Bars Page 8 Index es With Weekly Bars (since 1 981 ) Page 9 Index es With Monthly Bars (since 1 981 ) Page 1 0 Index es With 60 Minute Bars, Candlestick Page 1 1 Index es With Daily Bars, Candlesticks Page 1 2 Index es With Weekly Bars, Candlestick Pages 1 3 through 1 4 are shorter term indicators. The indicators are used to simply look for some ty pe of leading action before a turn or confirm ing action of the wav e count. Page 1 3 is a lookev ery day indicator page. The other indicator pages are less frequently v isited. Page 1 5 Hurst FLD Projections Page 1 6 Indicators, Long Term Page 1 7 International Index es Page 1 8 through 30 are sector ETFs. They represent most of the activ e sector ETFs and are alway s a good hunting ground when looking for something that is breaking in a new direction. Page 31 through 46 are growth stocks with indicators. These are
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stocks that hav e been in a lengthy uptrend. One qualification is that they must not be sev erely damaged in a bear market so they cant rise to significant new highs in the following bull market. The growth stocks show daily market action for the last 1 .5 y ears and weekly prices since 1 992. This giv es a good perspectiv e of how they hav e behav ed in the immediate past (daily charts) and how they behav ed during good and bad times (weekly charts). Page 46 Last 6 charts are trades from the mechanical sell/buy signals WAVE COUNT S SIMPLIFIED My w ave counts are not Elliott Wave! Its different, simple and functions w ithout a maze of exclusions. T here are 3 peaks (or v alley s) to a com pleted wav e count. A rev ersal of trend takes place after a completed wav e count. Often times its as simple as counting 3 bumps (or dips) on a chart . . . Other times, not so easy . In a downtrend the same rules apply ex cept y ou are counting 3 dips instead of 3 bumps. 3 steps m ust stay confined to a channel. Lay ing a pen or pencil on the chart will help y ou v isualize the channel. As the larger trend progresses, all of the steps that make up the trend will also be confined to a larger channel. Sometimes a channel is not clear until the surge phase (v ertical mov e) has ended. When the m arket breaks its channel (regardless of the perceived wav e count), the step has been term inated. (Make sure y our channel was correctly drawn before calling a
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termination). Sometimes this may be y our best indicator that a wav e count is completed. The correction following the second step is larger than the correction that followed the first step, and obv iously the correction following third step is larger than the second step correction. A single wav e m ay sub-div ide into another 3 wav es. I will call this an ex tension. When this happens (1 ) the trend is still intact, (2) the channel will widened and (3) instead of a total of 3 steps, there will be 5 steps. Sometimes I will use the terms step and wav e interchangeably . Reading the glossary helps in the understanding of this blog. There are many other important facts in the glossary . Glossary Link ABBREVIAT IONS DJI = Dow Jones Industrials DJT = Dow Jones Transportations SPX = SP 500 ES = SP 500 Futures COMPQ = Nasdaq Composite Index TSX = Toronto Stock Ex change (Canadian blue chips) SOX = Semiconductors TXX = Technology ************************************************************************************ Long T erm UP Uptrend
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Mar 2009 T o Present Step 2 Up (of 3) Com pleted Step 3 Up Has Likely Begun From the bottom in March 2009 Large step one up ended in May 201 0 Large step two up ended in May 201 1 Large step three is underway
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1 2 -2 8 -1 1 LONG T ERM
************************************************************************************ Very Long T erm DOWN Downtrend Jan 2000 T o Present Step 2 Down (of 3) Com pleted Currently In Rally Phase From Step 2 Down
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1 2 -2 8 -1 1 V ERY LONG T ERM
VERY LONG T ERM COMMENT S We hav e 3 possibilities for the future. We hav e entered a v ery wide swinging m arket (m egaphone form ation) sim ilar to that of 1965 to 197 4. During that era we had three bear markets with two interv ening
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bull market rallies. Each bear market had a lower low than the prev ious bear. The interv ening bull market rallies saw new all time highs before the nex t bear market began. We also hav e formed a huge head and shoulders formation since 1 998. If this formation is v alid, the downside measurement calls for a bottom around Dow Jones Industrials 1 ,000. We began a long term bull market in March 2009. I fav or the m egaphone form ation as the m ost likely scenario. Since 2000 we hav e had two bear markets, 2000 to 2003 and 2007 to 2009. Like 1 966 to 1 97 4, the recov ery from the first bear market saw a new all time high (2007 peak). Its possible that we may ex perience another all time high during the present recov ery period. This would support the megaphone formation. A failure to make new highs would support the head and shoulders argument. In both formations the conclusion of the present recov ery would call for a third and final bear market. An estimated time for the conclusion of the final bear market is approx imately 201 8. The lesser downside target of both formations is the megaphone formation as it likely calls for a bottom 1 ,000 to 2,000 points below the 2009 low, which would be around Dow 5,000. In the head and shoulders formation the measurement calls for a bottom around Dow Jones Industrials 1 ,000. This is almost an unimaginable ev ent regarding the possible fundamentals to create this scenario. If this did happen, ev ery thing that could go wrong would hav e to go wrong. This scenario is so dark that it doesnt seem possible but nev ertheless, the head and shoulders formation is there and will be waiting until we
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pierce the all-time highs of October 2007 . Remember these are simply possible scenarios and are not embedded in fact. Whatev er the outcome, it nev er hurts to be a little cautious with some of y our money . But in the worst case scenario, ev ery thing that we take for granted as being safe . . . . would not be safe. This is something to nev er forget in the ev ent things go v ery badly . Hopefully we will nev er hav e to think about the worst case scenario. ************************************************************************************ EDSON GOULD Edson Gould, Prem ier Stock Market Strategist Edson Gould had a profound influence on the dev elopment of my techniques and indicators. Prior to me subscribing to his adv isory serv ice, I was just one of the crowd. After 40 y ears I still hav e many of the publications from his adv isory serv ice, Findings & Forecasts. Fearing the loss of these hard copy reports I hav e recently scanned and created pdf files of these reports. Now I hav e hard copies and computerized v ersions of the reports. My series #1 indicator w as mentioned by Gould only once in his market letters. If y ou didnt catch its importance, too bad, because he only gav e y ou a peek. I believ e that he used this tool ex tensiv ely and nev er told the world its importance. Prior to Gould writing about this indicator I had been looking for one that had similar characteristics without success. Thus when Gould wrote about it, I recognized instantly that I had struck gold. I hav e modified this indicator slightly and researched it back to
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1 939 for the Industrials, Transportations and Utilities . This was a lot of work as it was before computers and online data (remember when Barrons was av ailable only on paper, still is for the distant past). Edson Gould was truly a legend in his own time. Its too bad that today many people hav e forgotten or nev er heard of him or his discov eries. Below y ou will find only the first page of these reports. A teaser is what y ou might call it. The rest of the reports are av ailable upon request. This is a man that deserv es to be remembered throughout technical analy sis market history . T he following are links to Edson Gould reports. My Most Im portant Discov ery by Edson Gould It was also my most important discov ery , for it ex plained the irrational v olatility of markets that had my stified me in my early y ears. During those early y ears I found nothing worked in predicting these irrational market swings. But the fog lifted after reading this report and I began to understand how to begin predicting the market. The book Ex traordinary Popular Delusions and the Madness of Crowds is v ery useful in ex plaining crowd behav ior. Edson Gould Profile by MT A Edson Gould Concepts by William Scheinm an Decade Cy cle by Edson Gould Decade Cy cle Update by Ned Dav is Swing Principle by Edson Gould A measuring indicator
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Utilities by Edson Gould A forecasting indicator Div idends by Edson Gould Bonds by Edson Gould Speed Lines by Edson Gould Sentim eter by Edson Gould With companies failing to pay div idends commensurate with their earnings, this indicator has failed. As the market deteriorate in the coming y ears, I would ex pect div idends to return to their former lev els and this indicator will once again become useful. Prior to the late 1 990s, it had 1 00 y ears of success. Bottom s by Edson Gould This was written and directed at the upcoming bottom in 1 97 4 but it applies to all major bottoms. T hree Steps by Edson Gould Where do y ou think my three steps principle came from? Straight from this report although I modified the concept through the y ears. Edson Goulds 197 4 Forecast Goulds 1 97 4 forecast kept me bearish and short throughout 1 97 4 until the week before Christmas 1 97 4, during which I began making long term purchases. After that it was ride the bull phases that transpired from 1 97 5 to 1 982. 1 982 to 2000 was the greatest bull market of all time. Edson Goulds 197 5 Forecast Edson Goulds 197 6 Forecast Edson Goulds 197 7 Forecast Edson Goulds Fiv e Y ear Forecast 197 7 to 1982 This was a remarkable forecast in 1 97 7 , where the Dow Industrials
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had nev er been higher than 1 ,000. NO ONE had predicted a rise of this magnitude in 1 97 7 . Most were waiting for a resumption of the bear market. As part of the 1 97 7 to 1 982 forecast I hav e the following story . On Wednesday August 4, 1 982 I went long the market for the first time in months. By Friday , August 6 I was worried that I had made a mistake as I was deep in the red (I was long the Kansas City Stock Market Contracts). The Kansas City Stock Market Contract was the first of the stock index contracts (February 1 982). It was based on the V alue Line Arithmetic Index , margin requirement were quite low, and it had a multiplier of 1 00 times the V alue Line Arithmetic Index , which meant the lev erage was v ery high. On Friday (Aug 6), my wife and I went to dinner and I told her my tale of woe and asked her whether I should sell my long positions. I ex plained that my series #1 indicator had rev ersed and continued higher on Thursday and Friday but the market had continued lower. Since the key indicator was usually correct, we decided to stick it out awhile longer (I was crazy in those day s). On Monday August 9, 1 982 the market took off like a rocket and nev er looked back. The ignition for the 1 982 to 2000 bull market was underway . I sky rocketed out of the red and had a big profit. In August 1 982 the only people that were bullish were Edson Gould, Robert Prechter and my self (probably a couple of others but I didnt know them). Ev ery one else was ex tremely bearish. It was a perfect ex ample of ex treme crowd behav ior. Sign Of T he Bull by Edson Gould ************************************************************************************ T RANSACT ION SIGNALS
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All actionable signals are only for short term time frames. These signals are not designed for intermediate or long term time frames BUT . . . . . After a short term buy signal, long term tax status can be achiev ed by a continuation of the upward trend, which causes short term actions to morph into long term holdings. See more details in the glossary under Tax es, Futures Contracts and Money Management. Glossary Link T RANSACT ION RECORD In this blog a warning of an impending bottom (or top) is often issued well in adv ance of the formal buy or sell date. This allows thoughtful consideration prior to a formal action signal. To get a sense of how this works, y ou should read the day s prior to a formal buy /sell signal. I often buy /sell in my personal account based on the early warnings. The transaction record near stock market bottoms will show that I am v ery skittish and usually remain so until the new direction is well underway . Qualified buy signal giv en from Decem ber 5th to Decem ber 20th, 2011 Buy signal in October 2011 was nev er issued due to a SERIOUS fam ily illness SELL SEPT EMBER 9, 2011 BUY AUGUST 30, 2011
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SELL AUGUST 30, 2011 Stopped out, re-bought quickly BUY AUGUST 29, 2011 SELL AUGUST 25, 2011 BUY AUGUST 23, 2011 SELL AUGUST 1, 2011 BUY JUNE 23, 2011 ************************************************************************************ MISCELLANEOUS There are useful items throughout this blog. For instance, the Wall Street Quotes can be v ery instructiv e. So make sure and look all through the blog.
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Elder Impulse System 01/30/12

P os ted J anuary 3 0 , 2 0 1 2 by Bob Categories: WO RD S O F WI SD O M
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CLICK HERE IF READING PDF ************************************************************************************ ELDER IMPULSE SY ST EM On MY CHART LINK I hav e begun using the Elder Impulse Sy stem on the D.J. Industrials on pages 2-9. This is an interesting momentum based sy stem. The following ex cerpt was taken from COME INTO MY TRADING ROOM, A Complete Guide to Trading by Dr. Alex ander Elder. Y ou can find this book at Am azon.com and it has great tidbits of info.
Begin Quote: Entries I designed this sy stem to identify the inflection points where a trend speeds up or slows down. The Impulse Sy stem works in any timeframe, including intraday . It prov ides buy and sell signals, but leav es it up to y ou to select good markets, tweak parameters, and supply the discipline. Choose an activ e market whose prices swing in a broad channel. What happens if y ou make a C trade and grab only 1 0% of a channel width? This result is not too bad if the channel is 20 points wide, but a C trade is an ex ercise in futility if the channel is only 5 points wide. Chase fat rabbits, dont waste y our time on skinny ones. The Impulse Sy stem combines two simple but powerful indicators. One measures market inertia, the other its momentum. When both point in
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the same direction, they identify an impulse worth following. We get an entry signal when both indicators get in gear, but as soon as they stop confirming one another, we take that as an ex it signal. The Impulse Sy stem uses an ex ponential mov ing av erage to find uptrends and downtrends. When the EMA rises, it shows that inertia fav ors the bulls. When EMA falls, inertia works for the bears. The second component is MACD-Histogram, an oscillator whose slope reflects changes of power among bulls or bears. When MACD-Histogram rises, it shows that bulls are becoming stronger. When it falls, it shows that bears are growing stronger. The Impulse Sy stem flags those bars where both the inertia and the momentum point in the same direction. When both the EMA and MACDHistogram rise, they show that bulls are roaring and the uptrend is accelerating. When both indicators fall together, they show that bears are crushing the market. Those indicators may stay in gear with each other for only a few bars, but thats when the market trav els fastthe impulse is on! Before y ou rush to apply the Impulse Sy stem to y our fav orite market, remember how Triple Screen analy zes markets in more than one timeframe. Select y our fav orite timeframe and call it intermediate. Multiply it by fiv e to define y our long-term timeframe. If y our fav orite chart is daily , analy ze the weekly chart to make a strategic decision to be a bull or a bear. Use a 26-week EMA, the slope of weekly MACDHistogram, or both, on the weekly chart. Once y ouv e defined the long-term trend, return to y our daily chart and look for trades only in the direction of the weekly . The Impulse Sy stem uses a 1 3-day EMA and a 1 2-26-9 MACD-Histogram. The EMA, tracking market inertia, is a little shorter than our usual 22 bars, making the
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sy stem more sensitiv e. When the weekly trend is up, turn to the daily charts and wait for both the 1 3-day EMA and MACD-Histogram to turn up. When both inertia and momentum rise, y ou hav e a strong buy signal, telling y ou to get long and stay long until the buy signal disappears. When the weekly trend is down, turn to the daily charts and wait for both the 1 3-day EMA and MACD-Histogram to turn down. They giv e y ou a signal to go short, but be ready to cov er when that signal disappears. Some technical programs allow y ou to mark price bars with different colors. Make them green when both the EMA and MACD-Histogram rise, and red when both indicators fall. Dont mark the bars where the indicators point in the opposite directions. This lets y ou easily see signals at a glance. Ex its When a cowboy at a rodeo hops on the back of a wild bronco, how long does he ride it? Twenty seconds, 35 may be, 50 if he is good and lucky . Wild momentum trades dont last long either. Try to hop off while y oure still in the money . The time to buy into a momentum trade is when all y our ducks are in a row, that is, when the weekly trend is up and the daily EMA and MACDHistogram are rising. Hop off as soon as a single indicator turns down. Usually , daily MACD-Histogram turns first as the upside momentum starts weakening. When the buy signal disappears, sell without waiting for a sell signal. Rev erse the procedure in downtrends. A momentum trade on the short side starts when the weekly trend turns down and the daily EMA and
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side starts when the weekly trend turns down and the daily EMA and MACD-Histogram also fall, showing that the downward momentum is accelerating. Cov er shorts as soon as one of those indicators stops giv ing a sell signal. The most dy namic part of the decline is ov er, and y our momentum trade has fulfilled its goal. The Impulse Sy stem encourages y ou to enter cautiously but ex it fast. This is the professional approach to trading, the total opposite of the amateurs sty le. Beginners jump into trades without thinking too much and take forev er to get out, hoping and waiting for the market to turn their way . Y ou must be v ery disciplined to trade this sy stem because it is hard to place an order when the market is already fly ing, but ev en harder to quit while y oure ahead without waiting for a rev ersal. Y ou are not allowed to kick y ourself if the trend continues after y ou get out. Do not touch this sy stem if y ou hav e the slightest problem with discipline. End Quote: CHART S MY CHART LINK (updated constantly ) These are my personal charts and my play ground for doodling trend lines, wav e counts and other ideas. I draw the trend lines and wav e counts on a daily basis (sometimes more often). Y ou can find these doodles from 1 minute to monthly charts. I usually restrict my trend lines and wav e counts to the first three charts on each page, TSX, DJI & COMPQ. The other charts on the page are usually for confirmation of the trend and wav e structure.
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Page 1 Buy /Sell Signals & Misc Charts Page 2 Index es With 1 Minute Bars Page 3 Index es With 5 Minute Bars Page 4 Index es With 1 5 Minute Bars Page 5 Index es With 30 Minute Bars Page 6 Index es With 60 Minute Bars Page 7 Index es With Daily Bars Page 8 Index es With Weekly Bars (since 1 981 ) Page 9 Index es With Monthly Bars (since 1 981 ) Page 1 0 Index es With 60 Minute Bars, Candlestick Page 1 1 Index es With Daily Bars, Candlesticks Page 1 2 Index es With Weekly Bars, Candlestick Pages 1 3 through 1 4 are shorter term indicators. The indicators are used to simply look for some ty pe of leading action before a turn or confirm ing action of the wav e count. Page 1 3 is a lookev ery day indicator page. The other indicator pages are less frequently v isited. Page 1 5 Hurst FLD Projections Page 1 6 Indicators, Long Term Page 1 7 International Index es Page 1 8 through 30 are sector ETFs. They represent most of the activ e sector ETFs and are alway s a good hunting ground when looking for something that is breaking in a new direction. Page 31 through 46 are growth stocks with indicators. These are stocks that hav e been in a lengthy uptrend. One qualification is that they must not be sev erely damaged in a bear market so they cant rise to significant new highs in the following bull market. The growth stocks show daily market action for the last 1 .5 y ears
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and weekly prices since 1 992. This giv es a good perspectiv e of how they hav e behav ed in the immediate past (daily charts) and how they behav ed during good and bad times (weekly charts). Page 46 Last 6 charts are trades from the mechanical sell/buy signals WAVE COUNT S SIMPLIFIED My w ave counts are not Elliott Wave! Its different, simple and functions w ithout a maze of exclusions. T here are 3 peaks (or v alley s) to a com pleted wav e count. A rev ersal of trend takes place after a completed wav e count. Often times its as simple as counting 3 bumps (or dips) on a chart . . . Other times, not so easy . In a downtrend the same rules apply ex cept y ou are counting 3 dips instead of 3 bumps. 3 steps m ust stay confined to a channel. Lay ing a pen or pencil on the chart will help y ou v isualize the channel. As the larger trend progresses, all of the steps that make up the trend will also be confined to a larger channel. Sometimes a channel is not clear until the surge phase (v ertical mov e) has ended. When the m arket breaks its channel (regardless of the perceived wav e count), the step has been term inated. (Make sure y our channel was correctly drawn before calling a termination). Sometimes this may be y our best indicator that a wav e count is completed. The correction following the second step is larger than the correction that followed the first step, and obv iously the
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correction following third step is larger than the second step correction. A single wav e m ay sub-div ide into another 3 wav es. I will call this an ex tension. When this happens (1 ) the trend is still intact, (2) the channel will widened and (3) instead of a total of 3 steps, there will be 5 steps. Sometimes I will use the terms step and wav e interchangeably . Reading the glossary helps in the understanding of this blog. There are many other important facts in the glossary . Glossary Link ABBREVIAT IONS DJI = Dow Jones Industrials DJT = Dow Jones Transportations SPX = SP 500 ES = SP 500 Futures COMPQ = Nasdaq Composite Index TSX = Toronto Stock Ex change (Canadian blue chips) SOX = Semiconductors TXX = Technology ************************************************************************************ Long T erm UP Uptrend Mar 2009 T o Present Step 2 Up (of 3) Com pleted Step 3 Up Has Possibly Begun From the bottom in March 2009
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Large step one up ended in May 201 0 Large step two up ended in May 201 1 . Significant break abov e the May 201 1 highs should signal that Step 3 up is official
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1 2 -2 8 -1 1 LONG T ERM
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bull market rallies. Each bear market had a lower low than the prev ious bear. The interv ening bull market rallies saw new all time highs before the nex t bear market began. We also hav e formed a huge head and shoulders formation since 1 998. If this formation is v alid, the downside measurement calls for a bottom around Dow Jones Industrials 1 ,000. We began a long term bull market in March 2009. Each subsequent min-bear market will result in higher lows than the prior major low. I fav or the m egaphone form ation as the m ost likely scenario. Since 2000 we hav e had two bear markets, 2000 to 2003 and 2007 to 2009. Like 1 966 to 1 97 4, the recov ery from the first bear market saw a new all time high (2007 peak). Its possible that we may ex perience another all time high during the present recov ery period. This would support the megaphone formation. A failure to make new highs would support the head and shoulders argument. In both formations the conclusion of the present recov ery would call for a third and final bear market. An estimated time for the conclusion of the final bear market is approx imately 201 8. The lesser downside target of both formations is the megaphone formation as it likely calls for a bottom 1 ,000 to 2,000 points below the 2009 low, which would be around Dow 5,000. In the head and shoulders formation the measurement calls for a bottom around Dow Jones Industrials 1 ,000. This is almost an unimaginable ev ent regarding the possible fundamentals to create this scenario. If this did happen, ev ery thing that could go wrong would hav e to go wrong.
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The reasons range from the absurd to the absurdly absurd. This scenario is so dark that it doesnt seem possible but nev ertheless, the head and shoulders formation is there and will be waiting until we pierce the alltime highs of October 2007 . Remember these are simply possible scenarios and are not embedded in fact. Whatev er the outcome, it nev er hurts to be a little cautious with some of y our money . But in the worst case scenario, ev ery thing that we take for granted as being safe . . . . would not be safe. This is something to nev er forget in the ev ent things go v ery badly . Hopefully we will nev er hav e to think about worst case scenarios other than to hav e a good laugh at them presently . ************************************************************************************ EDSON GOULD Edson Gould, Prem ier Stock Market Strategist Edson Gould had a profound influence on the dev elopment of my techniques and indicators. Prior to me subscribing to his adv isory serv ice, I was just one of the crowd. After 40 y ears I still hav e many of the publications from his adv isory serv ice, Findings & Forecasts. Fearing the loss of these hard copy reports I hav e recently scanned and created pdf files of these reports. Now I hav e hard copies and computerized v ersions of the reports. I hav e used a technique of his that I found in an obscure reference in one of his reports. It was only mentioned once and nev er again. I believ e that he used this tool ex tensiv ely and nev er told the world its importance. Prior to my finding this tool, I had been
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try ing unsuccessfully to find a different way to chart the market. When I read about his technique I knew instantly that this was ex actly what I had been seeking. I hav e charted this method back to 1 939 and found it to be v ery useful. There is no mention of it in the reports that I posted below as I hav e deleted any reference to it. Its a super secret indicator and Id hav e to kill y ou if I told y ou about it. Edson Gould was truly a legend in his own time. Its too bad that today most people hav e forgotten or nev er heard of him or his discov eries. Below y ou will find only the first page of these reports. A teaser is what y ou might call it. The rest of the reports are av ailable upon request. This is a man that deserv es to be remembered throughout technical analy sis market history . T he following are links to Edson Gould reports. My Most Im portant Discov ery by Edson Gould It was also my most important discov ery , for it ex plained the irrational v olatility of markets that had my stified me in my early y ears. During those early y ears I found nothing worked in predicting these irrational market swings. But the fog lifted after reading this report and I began to understand how to begin predicting the market. Edson Gould Profile by MT A Edson Gould Concepts by William Scheinm an Decade Cy cle by Edson Gould Decade Cy cle Update by Ned Dav is Swing Principle by Edson Gould
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A measuring indicator Utilities by Edson Gould A forecasting indicator Div idends by Edson Gould Bonds by Edson Gould Speed Lines by Edson Gould Sentim eter by Edson Gould With companies failing to pay div idends commensurate with their earnings, this indicator has failed. As the market climate continues to deteriorate in the coming y ears, I would ex pect div idends to return to their former lev els and this indicator will once again become useful. Prior to the late 1 990s, it had 1 00 y ears of success. Bottom s by Edson Gould This was written and directed at the upcoming bottom in 1 97 4 but it applies to all major bottoms. T hree Steps by Edson Gould Where do y ou think my three steps principle came from? Straight from this report although I modified the concept through the y ears. Edson Goulds 197 4 Forecast Goulds 1 97 4 forecast kept me bearish and short throughout 1 97 4 until the week before Christmas 1 97 4, during which I began making long term purchases. After that it was ride the bull phases that transpired from 1 97 5 to 1 982. 1 982 to 2000 was the greatest bull market of all time. Edson Goulds 197 5 Forecast Edson Goulds 197 6 Forecast Edson Goulds 197 7 Forecast
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Edson Goulds Fiv e Y ear Forecast 197 7 to 1982 This was a remarkable forecast in 1 97 7 , where the Dow Industrials had nev er been higher than 1 ,000. NO ONE predicted a rise of this magnitude in 1 97 7 . Most were waiting for a resumption of the bear market. As part of the 1 97 7 to 1 982 forecast: On Wednesday August 4, 1 982 I went long the market for the first time in months. By Friday , August 6 I was worried that I had made a mistake as I was deep in the red (I was long the Kansas City Stock Market Contracts). The Kansas City Stock Market Contract was the first of the stock index contracts (February 1 982). It was based on the V alue Line Arithmetic Index , margin requirement were quite low, and it had a multiplier of 1 00 times the V alue Line Arithmetic Index , which meant the lev erage was v ery high. On Friday (Aug 6), my wife and I went to dinner and I told her my tale of woe and whether I should sell my long positions. I ex plained that my key indicator had rev ersed and continued higher on Thursday and Friday but the market had continued lower. Since the key indicator was usually correct, we decided to stick it out for a few day s more (I was crazy in those day s). My key indicator w as mentioned by Gould only once in his market letters. If y ou didnt catch its importance, too bad, because he only gav e y ou a peek. Prior to Gould writing about this indicator I had been looking for one that had similar characteristics without success. Thus when Gould wrote about it, I recognized instantly that I had struck gold. I hav e modified this indicator slightly and researched it back to 1 939. This was a lot of work as it was before computers and online data (remember when Barrons was av ailable only on paper, still is for the distant past). Meanwhile on Monday August 9, 1 982 the market took off like a rocket and nev er looked back. I
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sky rocketed out of the red and had a big profit. In August 1 982 the only people that were bullish were Edson Gould, Robert Prechter and my self (probably a couple of others but I didnt know them). Ev ery one else was ex tremely bearish. It was a perfect ex ample of crowd behav ior. Sign Of T he Bull by Edson Gould ************************************************************************************ T RANSACT ION SIGNALS All actionable signals are only for short term time frames. These signals are not designed for intermediate or long term time frames BUT . . . . . After a short term buy signal, long term tax status can be achiev ed by a continuation of the upward trend, which causes short term actions to morph into long term holdings. See more details in the glossary under Tax es, Futures Contracts and Money Management. Glossary Link T RANSACT ION RECORD In this blog a warning of an impending bottom (or top) is often issued well in adv ance of the formal buy or sell date. This allows thoughtful consideration prior to a formal action signal. To get a sense of how this works, y ou should read a few day s prior to a formal buy /sell signal. I often buy /sell in my personal account based on the early warnings.
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based on the early warnings. The transaction record near stock market bottoms will show that I am v ery skittish and usually remain so until the new direction is well underway . Qualified buy signal giv en from Decem ber 5th to Decem ber 20th, 2011 Buy signal in October 2011 was nev er issued due to a SERIOUS fam ily illness SELL SEPT EMBER 9, 2011 BUY AUGUST 30, 2011 SELL AUGUST 30, 2011 Stopped out, re-bought quickly BUY AUGUST 29, 2011 SELL AUGUST 25, 2011 BUY AUGUST 23, 2011 SELL AUGUST 1, 2011 BUY JUNE 23, 2011 ************************************************************************************ MISCELLANEOUS There are useful items throughout this blog. For instance, the Wall Street Quotes can be v ery instructiv e. So make sure and look all through the blog.
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P os ted J anuary 2 9 , 2 0 1 2 by Bob Categories: D A I L Y U P D A T E
CLICK HERE IF READING PDF ************************************************************************************ WHOOPS My last update had nothing new included, just the normal ev ery day stuff that is alway s included. I was preparing for today s post and tagged the wrong button. Sorry about that. Ev ery time I put a new file (pdf) in my blog an update goes out automatically . Thats not intentional just the way wordpress does things. So I apologize in adv ance if I upload 5 files in one day and 5 updates go out. CY CLES I hav ent posted the charts for the cy cles since 1 /1 8 and today Ill show y ou whats happening.
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Two of the three charts show that we should be bottoming presently . Thats still possible with a quick deep correction and nex t week should tell us if thats going to happen. Whether the correction is inv isible (v ery good sign) or it will occur in February remains to be seen. If the correction is practically inv isible, it will indicate that a larger cy cle has dominance (good sign). The 1 950 dataset shows a February bottom but that factors 60 y ears of data and doesnt put emphasis on recent cy cles like the dataset 1 998 and 2007 . The nex t cy cle of real significance is indicated for March (1 950 dataset) or May (1 998 and 2007 dataset). The 1 950 dataset shows an 1 8 month cy cle bottom in March, while the 1 998 and 2007 dataset show that the 1 8 month cy cle bottomed last October. If we hav e a significant correction into February that takes us into the area of the October lows, it will likely indicate that the 1 950 dataset is correct. That isnt my fav orite outlook but I dont get to choose what the market does (nuts). The market is v ery ov erbought and a correction of some ty pe should take place to replenish the markets firepower. Its alway s possible that we could see nothing more than 1 -3 day corrections with a resumption of the rally . Thats really great market action if it continues. The following charts are the datasets 1 950, 1 998 and 2007 , in that order.
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0 1 /2 9 /1 2 1 9 5 0 t o pr esen t da t a set cy cles
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0 1 /2 9 /1 2 1 9 9 8 t o pr esen t da t a set cy cle
0 1 /2 9 /1 2 2 0 0 7 t o pr esen t da t a set cy cle
MISC Jeffrey Saut mentioned Linn Energy (LINE) on his Thursday update. I hadnt looked at it before but it pay s a 7 .5% div idend, has an ex cellent growth record and is constantly making acquisitions. Jeffrey said this is the stock he recommends to friends and family to put away for a few y ears. Of course if oil prices dont rise, LINE wouldnt do well. Presently the oil price chart shows that oil is in an inv erse head and shoulders formation (see my charts page 1 3, #7 1 .6). This hasnt been confirmed by a neckline breakout but the projected rise is to approx imately $1 1 3 per barrel. This isnt a recommendation because I dont do that, just take a look. My normal field of play is the stock index futures where Im v ery
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careful to NOT become ov er-lev eraged (been there, done that). CONFIDENCE INDEX The following is the confidence index (junk bonds div ided by treasury bonds). Although the index is rising, the curious and bothersome part about this chart is the index has not risen abov e its October high. Another problem is that v arious market index es are approaching their May 201 1 highs and the confidence index is far away from its 201 1 high. When the market ex pects a recov ery , junk bonds will rise much faster than treasury bonds. That is barely happening at the present. The lower part of this chart is the V alue Line Arithmetic Index . Did y ou realize that this index hit an all-time in March 201 0 and kept right on rolling. Its present all-time high was May 201 1 .
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0 1 /2 9 /1 2 Con fiden ce In dex
ECONOMY The following chart giv es indication for the economy in real-time. The last chart is the Baltic Dry Index , which is the cost of ocean shipping. When the economy is rolling in high gear, this index will be at high lev els and the rev erse is also true. Presently , this index is v ery near the lows made in December 2008. Y ou can draw y our own conclusions on that
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one.
0 1 /2 9 /1 2 Econ om y
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Another chart real-time chart for the economy is the Aruoba-DieboldScotti Business Conditions Index , which is kept by the FED. It shows conditions rising slightly . The past record of this index has been pretty good.
0 1 /2 9 /1 2 A r u oba Diebold Scot t i Bu sin ess Con dit ion s In dex
Although Iv e had some negativ e things in this post, I remain in an ov erall uptrend theme as per prev ious updates. This is based on my wav e counting techniques and we should keep in mind that the market
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alway s climbs the wall of worry . CHART S MY CHART LINK (updated constantly ) These are my personal charts and my play ground for doodling trend lines, wav e counts and other ideas. I draw the trend lines and wav e counts on a daily basis (sometimes more often). Y ou can find these doodles from 1 minute to monthly charts. I usually restrict my trend lines and wav e counts to the first three charts on each page, TSX, DJI & COMPQ. The other charts on the page are usually for confirmation of the trend and wav e structure. Page 1 Buy /Sell Signals & Misc Charts Page 2 Index es With 1 Minute Bars Page 3 Index es With 5 Minute Bars Page 4 Index es With 1 5 Minute Bars Page 5 Index es With 30 Minute Bars Page 6 Index es With 60 Minute Bars Page 7 Index es With Daily Bars Page 8 Index es With Weekly Bars (since 1 981 ) Page 9 Index es With Monthly Bars (since 1 981 ) Page 1 0 Index es With 60 Minute Bars, Candlestick Page 1 1 Index es With Daily Bars, Candlesticks Page 1 2 Index es With Weekly Bars, Candlestick Pages 1 3 through 1 4 are shorter term indicators. The indicators are used to simply look for some ty pe of leading action before a turn or confirm ing action of the wav e count. Page 1 3 is a lookopen in browser PRO version
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ev ery day indicator page. The other indicator pages are less frequently v isited. Page 1 5 Hurst FLD Projections Page 1 6 Indicators, Long Term Page 1 7 International Index es Page 1 8 through 30 are sector ETFs. They represent most of the activ e sector ETFs and are alway s a good hunting ground when looking for something that is breaking in a new direction. Page 31 through 46 are growth stocks with indicators. These are stocks that hav e been in a lengthy uptrend. One qualification is that they must not be sev erely damaged in a bear market so they cant rise to significant new highs in the following bull market. The growth stocks show daily market action for the last 1 .5 y ears and weekly prices since 1 992. This giv es a good perspectiv e of how they hav e behav ed in the immediate past (daily charts) and how they behav ed during good and bad times (weekly charts). Page 46 Last 6 charts are trades from the mechanical sell/buy signals WAVE COUNT S SIMPLIFIED My w ave counts are not Elliott Wave! Its different, simple and functions w ithout a maze of exclusions. T here are 3 peaks (or v alley s) to a com pleted wav e count. A rev ersal of trend takes place after a completed wav e count. Often times its as simple as counting 3 bumps (or dips) on a chart . . . Other times, not so easy . In a downtrend the same rules apply ex cept y ou are counting 3 dips instead of 3 bumps.
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3 steps m ust stay confined to a channel. Lay ing a pen or pencil on the chart will help y ou v isualize the channel. As the larger trend progresses, all of the steps that make up the trend will also be confined to a larger channel. Sometimes a channel is not clear until the surge phase (v ertical mov e) has ended. When the m arket breaks its channel (regardless of the perceived wav e count), the step has been term inated. (Make sure y our channel was correctly drawn before calling a termination). Sometimes this may be y our best indicator that a wav e count is completed. The correction following the second step is larger than the correction that followed the first step, and obv iously the correction following third step is larger than the second step correction. A single wav e m ay sub-div ide into another 3 wav es. I will call this an ex tension. When this happens (1 ) the trend is still intact, (2) the channel will widened and (3) instead of a total of 3 steps, there will be 5 steps. Sometimes I will use the terms step and wav e interchangeably . Reading the glossary helps in the understanding of this blog. There are many other important facts in the glossary . Glossary Link ABBREVIAT IONS DJI = Dow Jones Industrials DJT = Dow Jones Transportations SPX = SP 500 ES = SP 500 Futures
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COMPQ = Nasdaq Composite Index TSX = Toronto Stock Ex change (Canadian blue chips) SOX = Semiconductors TXX = Technology ************************************************************************************ Long T erm UP Uptrend Mar 2009 T o Present Step 2 Up (of 3) Com pleted Step 3 Up Has Possibly Begun From the bottom in March 2009 Large step one up ended in May 201 0 Large step two up ended in May 201 1 . Significant break abov e the May 201 1 highs should signal that Step 3 up is official
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1 2 -2 8 -1 1 LONG T ERM
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************************************************************************************ CHART S MY CHART LINK (updated constantly ) These are my personal charts and my play ground for doodling trend lines, wav e counts and other ideas. I draw the trend lines and wav e counts on a daily basis (sometimes more often). Y ou can find these doodles from 1 minute to monthly charts. I usually restrict my trend lines and wav e counts to the first three charts on each page, TSX, DJI & COMPQ. The other charts on the page are usually for confirmation of the trend and wav e structure. Page 1 Buy /Sell Signals & Misc Charts Page 2 Index es With 1 Minute Bars Page 3 Index es With 5 Minute Bars
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Page 4 Index es With 1 5 Minute Bars Page 5 Index es With 30 Minute Bars Page 6 Index es With 60 Minute Bars Page 7 Index es With Daily Bars Page 8 Index es With Weekly Bars (since 1 981 ) Page 9 Index es With Monthly Bars (since 1 981 ) Page 1 0 Index es With 60 Minute Bars, Candlestick Page 1 1 Index es With Daily Bars, Candlesticks Page 1 2 Index es With Weekly Bars, Candlestick Pages 1 3 through 1 4 are shorter term indicators. The indicators are used to simply look for some ty pe of leading action before a turn or confirm ing action of the wav e count. Page 1 3 is a lookev ery day indicator page. The other indicator pages are less frequently v isited. Page 1 5 Hurst FLD Projections Page 1 6 Indicators, Long Term Page 1 7 International Index es Page 1 8 through 30 are sector ETFs. They represent most of the activ e sector ETFs and are alway s a good hunting ground when looking for something that is breaking in a new direction. Page 31 through 46 are growth stocks with indicators. These are stocks that hav e been in a lengthy uptrend. One qualification is that they must not be sev erely damaged in a bear market so they cant rise to significant new highs in the following bull market. The growth stocks show daily market action for the last 1 .5 y ears and weekly prices since 1 992. This giv es a good perspectiv e of how they hav e behav ed in the immediate past (daily charts) and how they behav ed during good and bad times (weekly charts).
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Page 46 Last 6 charts are trades from the mechanical sell/buy signals WAVE COUNT S SIMPLIFIED My w ave counts are not Elliott Wave! Its different, simple and functions w ithout a maze of exclusions. T here are 3 peaks (or v alley s) to a com pleted wav e count. A rev ersal of trend takes place after a completed wav e count. Often times its as simple as counting 3 bumps (or dips) on a chart . . . Other times, not so easy . In a downtrend the same rules apply ex cept y ou are counting 3 dips instead of 3 bumps. 3 steps m ust stay confined to a channel. Lay ing a pen or pencil on the chart will help y ou v isualize the channel. As the larger trend progresses, all of the steps that make up the trend will also be confined to a larger channel. Sometimes a channel is not clear until the surge phase (v ertical mov e) has ended. When the m arket breaks its channel (regardless of the perceived wav e count), the step has been term inated. (Make sure y our channel was correctly drawn before calling a termination). Sometimes this may be y our best indicator that a wav e count is completed. The correction following the second step is larger than the correction that followed the first step, and obv iously the correction following third step is larger than the second step correction. A single wav e m ay sub-div ide into another 3 wav es. I will call this an ex tension. When this happens (1 ) the trend is still
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intact, (2) the channel will widened and (3) instead of a total of 3 steps, there will be 5 steps. Sometimes I will use the terms step and wav e interchangeably . Reading the glossary helps in the understanding of this blog. There are many other important facts in the glossary . Glossary Link ABBREVIAT IONS DJI = Dow Jones Industrials DJT = Dow Jones Transportations SPX = SP 500 ES = SP 500 Futures COMPQ = Nasdaq Composite Index TSX = Toronto Stock Ex change (Canadian blue chips) SOX = Semiconductors TXX = Technology ************************************************************************************ Long T erm UP Uptrend Mar 2009 T o Present Step 2 Up (of 3) Com pleted Step 3 Up Has Possibly Begun From the bottom in March 2009 Large step one up ended in May 201 0 Large step two up ended in May 201 1 . Significant break abov e the May 201 1 highs should signal that Step 3 up is official
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3 up is official
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1 2 -2 8 -1 1 LONG T ERM
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JEFFREY SAUT Back in the 7 0s and 80s, one of my fav orite analy sts was Robert Farrell of Merrill Ly nch. He was v ery , v ery good and widely followed. He is quoted by Jeffrey Saut in his Monday missiv e, which immediately follows. Everybodys Unhappy!? January 23, 2012 Money managers are unhappy because 7 0% of them are lagging the S&P 500. Economists are unhappy because they do not know w hat to believe: this months forecast of a strong economy or last months forecast of a w eak economy. Technicians are unhappy because the market refuses to correct and gets more and more extended. Foreigners are unhappy because due to their
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underinvested status in the U.S. they have missed a big double play: a big currency move plus a big stock market move. The public is unhappy because they just plain missed out on the party after being scared into cash. It almost seems ungrateful for so many to be unhappy about a market that has done so w ell. Unhappy people w ould prefer the market to correct to allow them to buy and feel happy, w hich is just the reason for a further rise? Frustrating the majority is the markets primary goal. Bob Farrell, Merrill Lynch; September 1 989
The bears are unhappy since the Santa rally , which began last Thanksgiv ing, has giv en the short-sellers no comfortable place to cov er their shorts. Last week the bears suffered ev en more angst as most of the indices I follow tagged new reaction highs. The upside skein from the December 1 9th low has left the senior index better by ~8.1 %, and up an ey e-popping 1 3.3% since Thanksgiv ing. Counting the trading day s from that mid-December low shows the rally has now encompassed 21 sessions with no more than a 1 3 session pause and/or correction. That makes this a fairly long of tooth buy ing stampede. Recall, buy ingstampedes ty pically last 1 7 25 sessions, with only 1 -3 session pauses/corrections along the way , before they ex haust themselv es on the upside. It just seems to be the rhy thm of the thing in that it takes that long to get participants bullish enough to throw in the towel and buy em right before the markets peak and hav e a downside correction. Moreov er, during the current stampede just about ev ery thing has been run, including all the sectors punctuated by the Banks +1 1 .6% performance Y TD. Accordingly , the only thing missing for a short-term
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top is a final burst to the upside driv en by short-cov ering. My sense is this will occur into tomorrow nights State of the Union address, which should be followed by a post address letdown for the stock market. To be sure, the recent rally has not been accompanied by a noticeable increase in Buy ing Demand as measured by Lowry s Buy ing Power Index . Rather the rally has occurred more from a reduction in Selling, which is reflected in Lowry s Selling Pressure Index . Then too, the percentage of stocks abov e their respectiv e 1 0-day mov ing av erages (DMAs) has failed to confirm the upside and the New High list is not ex panding. In fact, 40% of my short-term indicators are now bearish and none are bullish. Meanwhile, the NY SE McClellan Oscillator is ov erbought, the stock market does not hav e much internal energy left for a big rally , the S&P 500 (SPX/1 31 5.38) is three standard dev iations abov e its 20-DMA, the V olatility Index (V IX/1 8.28) is telegraphing too much complacency , and we hav e negativ e seasonality for the nex t few weeks. Nev ertheless, I continue to think it is a mistake to get too bearish because I believ e any pullback in the v arious indices will be contained. My bullishness was reinforced last week during a conv ersation with Frederick Shad Rowe, the sagacious general partner of Dallas-based Greenbrier Partners. Summing the conv ersation, we decided the world is becoming richer faster than debt is ex panding. This is not an unimportant point since ev ery one seems to be focusing on the debt bomb, which likely means it is the wrong question. Clearly , some folks are liv ing abov e their means, some below, but many are liv ing within their means, which can be seen in the Household Debt Serv ice Ratio chart that is plumbing generational lows. Manifestly , the world is getting more prosperous and is producing more for less driv en by technology . Truly , it is one world and we should start thinking of the U.S. as a state
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within that one world. This v iew is plainly stated in Federal Ex press annual report. To wit: Wev e reached a tipping point in how the world works. T he largest econom y in the world is no longer the econom y of any one country its the econom y of global trade of goods and serv ices. V alue: $1 8.3 trillion in 201 0. At FedEx , our job is to facilitate these transactions, the heart of commerce, by prov iding access mov ing goods across the global supply chain. Or, how about this from Googles annual report: Google is a global technology leader focused on improv ing the way s people connect with information. We aspire to build products that improv e the liv es of billions of people globally . Our Mission is to organize the worlds inform ation and m ake it univ ersally accessible and useful. One world indeed and there are actually a lot of good things happening. While the world is still a v iolent place, it is becoming less so as the wars we hav e been fighting come to an end. Additionally , the U.S. finally appears to be heading down the road of energy self-sufficiency , which should increase employ ment, and the U.S. dollar is currently the least unattractiv e currency in the world. Furthermore, as scribed in prev ious reports, there is a huge hidden lay er of the U.S. economy that is becoming the engine of growth and wealth creation; and, this hidden lay er is misrepresented in corporate financial reports. Surprisingly , the equity markets appear to v alue this hidden lay er at approx imately zero suggesting huge opportunity for inv estors to profit. The hidden lay er referenced is Organizational Capital and Knowledge Capital, both of which reside under the macro moniker Intangible Capital so often
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mentioned in these missiv es. As the astute Gav eKal organization writes:
When w e account for intangibles the picture of the U.S. economy changes. It is revealed that w e are saving more and investing more than w e thought. This means our economy is much more dynamic than w e thought. This result is relevant in view of the perception of a low rate of saving in the U.S. economy, particularly because existing measures exclude much of the investment in know ledge capital that is a defining feature of the modern U.S. economy. V alidating intangibles is the key to eliminating the guessw ork in valuing a company correctly. Indeed, this new view of intangibles suggests they are the missing link betw een financial accounting and financial valuation.
These observ ations, taken in concert amid the backdrop of a world that is profoundly underinv ested in U.S. equities, continues to leav e me walking on the sunny side of Wall Street ev en though in the v ery short term I am looking for a trading peak. T he call for this week: Last Thanksgiv ing I suggested the Santa rally was beginning. I stuck with that call into the new y ear. On January 3, 201 2 I stated that session felt like an emotional peak and that January 1 0, 201 2 felt like the price peak. Subsequently I wrote, The only question in my mind is if the markets are going to hav e a pullback into the 1 230 1 240 support zone, or go sideway s to correct their ov erbought condition and allow the internal energy to be rebuilt. So far, it has been a sideway s consolidation until last weeks upside breakout
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causing one old Wall Street wag to ex claim, Breakout or fake-out?! On a short-term basis I think it is a fake-out believ ing a trading top is due this week . WHAT S HAPPENING? January 23rd shows signs that a top of some ty pe was made. Well wait and see if that top holds and the January correction is underway . As we continue to draw nearer to the May 201 1 highs, it appears possible that we hav e entered large step 3 up. From the bottom in March 2009 Large step one up ended in May 201 0 Large step two up ended in May 201 1 . If we penetrate the May 201 1 highs by a significant amount, we can safely say that large step 3 is underway . Whether we make new all-time highs is only a gleam in my ey e. All-time highs are not a requirement for the megaphone formation (see v ery long term comment below) but it seems likely that we would get into the area of prior highs. With today s economic problems that would certainly require the market to climb the wall of worry and thats the way its alway s done. No cy cles hav e been posted in this update because nothing has changed. If we continue through January without a correction of consequence, it makes one wonder if the large data-set from 1 950 might hav e the correct bottom, which was indicated in February (see update dated 01 /1 8/1 1 ). I remain in an ov erall uptrend theme as per prev ious updates. T HE UPDAT E SCHEDULE, ET CET ERA
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At dinner the other night with a good friend, he pointed out to me that I dont hav e much to say in my blog. Thats v ery true and its something that I had noticed already . When I began this blog in July it was obv ious that the market was in trouble. Markets in decline propel me into a hy per mode and I hav e a lot to say . During the summer I was constantly looking for signs of a market bottom and pointing out possibilities. After we bottomed on October 4, 201 1 and again in Nov ember and December, I hav e been more relax ed and content to let the market trend higher. This mode will continue in my blogs until I become worried that an inflection point is near or passed. I ex pect at that time I will hav e a lot to say again. Until then Alfred E. Newman and I are:
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A lfr ed E. New m a n
But as alway s Im alert to unex pected market changes. ************************************************************************************ CHART S MY CHART LINK (updated constantly ) These are my personal charts and my play ground for doodling trend lines, wav e counts and other ideas. I draw the trend lines and wav e counts on a daily basis (sometimes more often). Y ou can find these doodles from 1 minute to
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monthly charts. Y ou will find the best trend lines and wav e counts on charts with longer time frames. This giv es perspectiv e to the lines and counts. Perspectiv e was a fav orite of Edson Gould. I usually restrict my trend lines and wav e counts to the first three charts on each page, TSX, DJI & COMPQ. The other charts on the page are usually for confirmation of the trend and wav e structure. Page 1 Buy /Sell Signals Page 2 Index es With 1 Minute Bars Page 3 Index es With 5 Minute Bars Page 4 Index es With 1 5 Minute Bars Page 5 Index es With 30 Minute Bars Page 6 Index es With 60 Minute Bars Page 7 Index es With Daily Bars Page 8 Index es With Weekly Bars (since 1 981 ) Page 9 Index es With Monthly Bars (since 1 981 ) Page 1 0 Index es With 60 Minute Bars, Candlestick Page 1 1 Index es With Daily Bars, Candlesticks Page 1 2 Index es With Weekly Bars, Candlestick Pages 1 3 through 1 4 are shorter term indicators. The indicators are used to simply look for some ty pe of leading action before a turn or confirm ing action of the wav e count. Page 1 3 is a lookev ery day indicator page. The other indicator pages are less frequently v isited. Page 1 5 Hurst FLD Projections Page 1 6 Indicators, Long Term Page 1 7 International Index es Page 1 8 through 30 are sector ETFs. They represent most of the
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activ e sector ETFs and are alway s a good hunting ground when looking for something that is breaking in a new direction. Page 31 through 45 are growth stocks with indicators. These are stocks that hav e been in a lengthy uptrend. One qualification is that they must not be sev erely damaged in a bear market so they cant rise to significant new highs in the following bull market. The growth stocks show daily market action for the last 3 y ears and weekly prices since 1 992. This giv es a good perspectiv e of how they hav e behav ed in the immediate past (daily charts) and how they behav ed during good and bad times (weekly charts). Page 46 Misc older charts WAVE COUNT S SIMPLIFIED My w ave counts are not Elliott Wave! Its different, simple and functions w ithout a maze of exclusions. T here are 3 peaks (or v alley s) to a com pleted wav e count. A rev ersal of trend takes place after a completed wav e count. Often times its as simple as counting 3 bumps (or dips) on a chart . . . Other times, not so easy . In a downtrend the same rules apply ex cept y ou are counting 3 dips instead of 3 bumps. Each group of 3 steps m ust stay confined to a channel. Lay ing a pen or pencil on the chart will help y ou v isualize the channel. As the trend progresses, all of the steps that make up a larger trend will also be confined to a larger channel. Sometimes the channel is not rev ealed until the surge phase has ended. When the m arket breaks a channel (regardless of the
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perceived wav e count), the current step has been term inated. (Make sure y our channel was correctly drawn before calling a termination). The correction following the second step is larger than the correction that followed the first step. Obv iously the correction following the third step is a rev ersal. A single wav e m ay sub-div ide into another 3 wav es. I will call this an ex tension. When this happens (1 ) the trend is still intact, (2) the channel will widened and (3) instead of a total of 3 steps, there will be 5 steps. Sometimes I will use the terms step and wav e interchangeably . Reading the glossary helps in the understanding of this blog. There are many other important facts in the glossary . Glossary Link ABBREVIAT IONS DJI = Dow Jones Industrials DJT = Dow Jones Transportations SPX = SP 500 ES = SP 500 Futures COMPQ = Nasdaq Composite Index TSX = Toronto Stock Ex change (Canadian blue chips) SOX = Semiconductors TXX = Technology ************************************************************************************ Long T erm UP Uptrend
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Mar 2009 T o Present Step 2 Up (of 3) Com pleted Step 3 Up Has Possibly Begun From the bottom in March 2009 Large step one up ended in May 201 0 Large step two up ended in May 201 1 . Significant break abov e the May 201 1 highs should signal that Step 3 up is official
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1 2 -2 8 -1 1 LONG T ERM
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WHAT S HAPPENING? The market is ov erbought and ripe for a correction . . . BUT when markets are ov erbought and dont correct for more than 1 -3 day s, thats a sign of an ex tended mov e upward. In the 60 minute chart below y ou can see since Dec 20th, the market has had v ery shallow corrections and nothing bey ond 3 day s. This is a rather narrow channel and probably wont hold up through time. If the channel widens with a deeper correction that doesnt ex ceed 3 day s followed by a renewal of the rally , that will be a v ery good sign for an ex tended rally . As we draw nearer to the May 201 1 highs, it certainly appears possible that we hav e entered large step 3 up. From the bottom in March 2009 Large step one up ended in May 201 0
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Large step two up ended in May 201 1 . If we ex ceed the May 201 1 highs, how the market accomplishes this will be interesting. Will we hav e a (1 ) meaningful correction at the May peaks, (2) v acillate in the area of the May peaks, or (3) thrust through the May highs with force. A thrust that continues without a correction ex ceeding 3 day s would be v ery nice. Looking at the timing of the prev ious peaks, does that mean the end of large step 3 will be in May 201 2 or possibly May 201 3. The stock market tries to alway s fool y ou so I wouldnt put much faith in this but I will certainly be watchful around these dates. There is a LOT of money on the sidelines and if this money decided to mov e back into stocks, a melt-up could take place. This could occur when inv estors realize that interest rates are mov ing up (bond prices falling). This will force inv estors to sell bonds and buy stocks. Higher interest rates are not a problem unless the economy begins to ov erheat. That isnt a problem presently . Im unsure how a melt-up would fit into the Presidential race but the stock market usually figures out the winner before or during the summer months. As I hav e proposed since this bull market began in 2009, we had a possibility of ex ceeding the 2007 all-time highs. This fits perfectly with my v ery long term megaphone formation beginning in 2000. See V ERY LONG TERM COMMENTS far down in this update.
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0 1 /2 1 /1 2 - 6 0 Min u t e SPX - 5 Da y EMA Bu y /Sell Sig n a l
No cy cles hav e been posted in this update because nothing has changed. If we continue through January without a correction of consequence, it makes one wonder if the large data-set from 1 950 might hav e the correct bottom, which was indicated in February (see update dated 01 /1 8/1 1 ). Its also possible that we will soon hav e a v igorous 3 day correction followed by more rally . This 3 day correction could be all that we will get from the January bottoming cy cle. If true, this is a good indication of a market that wants to mov e higher and should be bought. I remain in an ov erall uptrend theme as per prev ious updates. MECHANICAL BUY /SELL SIGNALS The following paragraphs are a curiosity and not recommended, but I do
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find this mechanical trading sy stem interesting. With this sy stem y ou arent allowed to stray away from the trend. The chart is from MY CHART S, page 1 , number 1 0.4 This is a quote from Robert Colby s book, T he Ency clopedia Of T echnical Market Indicators, Second Edition and taken from my notes on chart number 1 0.4 EMA is an abbrev iation for ex ponential mov ing av erage This is the best simple trend-follow ing indicator w e tested against daily DJIA data. Substituting 5-days for 1 20-days in the same formula (above), and starting w ith $1 00 and reinvesting profits, total net profits for this 5-day EMA Crossover Strategy w ould have been $1 6 billion, assuming a fully invested strategy, reinvestment of profits, no transactions costs and no taxes. This w ould have been 7 8 million percent better than buy-and-hold. Short selling w ould have been profitable. . In the chart abov e I hav e modified the 5 day into a 35 hour EMA. This was due to v olatility issues (gaps) that occur in today s markets. Trading the SP futures (nearly 24 hours/day ) can minimize gaps but not completely (who wants to trade 24 hours per day ). To av oid sleepless nights, there are trading algorithms av ailable with some brokerages that can ex ecute this trade automatically . This sy stem simply states that when the market is abov e the 35 hour EMA, the market is a buy , below it is a sell. When the trend is obv ious and y ou decide to stay with the trend (trend is y our friend, blah blah blah), y ou may hav e to ignore small penetrations of the 35 hour EMA otherwise y ou must trade all of the penetrations.
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The abov e chart has many good illustrations of this problem since Dec 20th. The trend is up but it has sev eral small penetrations of the 35 hour EMA. Following this sy stem means a lot of trades on small corrections. But since online brokerage fees are so low, cost is not a matter of consequence. If y ou decide to liv e with small penetrations, y ou MUST establish a max imum percentage penetration in order to not be caught in a trend rev ersal. This is important because the entire purpose of this indicator is for y ou to remain on the correct side of the 5 day trend. We all know that y ou can encounter a lot of whipsaws in a non-trending market. This is where the ADX lines can be helpful (see abov e chart). An ADX signal occurs: (1 ) When the black line is abov e or below the red/green horizontal lines coupled with an ex treme in the green +DI or red -DI lines; (2) When the green +DI or red -DI lines approach or cross the red or green ex treme lines, y ou may hav e a signal. (approach of similar color lines is bullish, red on red, green on green; approach of dissimilar color lines is bearish, red on green, green on red; (3) In both 1 and 2 y ou must wait for the rev ersal in +DI or -DI lines to v erify the new trend. ************************************************************************************ CHART S MY CHART LINK (updated constantly ) These are my personal charts and my play ground for doodling trend lines, wav e counts and other ideas. I draw the trend lines and wav e counts on a daily basis (sometimes more often). Y ou can find these doodles from 1 minute to monthly charts.
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Y ou will find the best trend lines and wav e counts on charts with longer time frames. This giv es perspectiv e to the lines and counts. Perspectiv e was a fav orite of Edson Gould. I usually restrict my trend lines and wav e counts to the first three charts on each page, TSX, DJI & COMPQ. The other charts on the page are usually for confirmation of the trend and wav e structure. Page 1 Buy /Sell Signals Page 2 Index es With 1 Minute Bars Page 3 Index es With 5 Minute Bars Page 4 Index es With 1 5 Minute Bars Page 5 Index es With 30 Minute Bars Page 6 Index es With 60 Minute Bars Page 7 Index es With Daily Bars Page 8 Index es With Weekly Bars (since 1 981 ) Page 9 Index es With Monthly Bars (since 1 981 ) Page 1 0 Index es With 60 Minute Bars, Candlestick Page 1 1 Index es With Daily Bars, Candlesticks Page 1 2 Index es With Weekly Bars, Candlestick Pages 1 3 through 1 4 are shorter term indicators. The indicators are used to simply look for some ty pe of leading action before a turn or confirm ing action of the wav e count. Page 1 3 is a lookev ery day indicator page. The other indicator pages are less frequently v isited. Page 1 5 Hurst FLD Projections Page 1 6 Indicators, Long Term Page 1 7 International Index es Page 1 8 through 30 are sector ETFs. They represent most of the activ e sector ETFs and are alway s a good hunting ground when
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looking for something that is breaking in a new direction. Page 31 through 45 are growth stocks with indicators. These are stocks that hav e been in a lengthy uptrend. One qualification is that they must not be sev erely damaged in a bear market so they cant rise to significant new highs in the following bull market. The growth stocks show daily market action for the last 3 y ears and weekly prices since 1 992. This giv es a good perspectiv e of how they hav e behav ed in the immediate past (daily charts) and how they behav ed during good and bad times (weekly charts). Page 46 Misc older charts WAVE COUNT S SIMPLIFIED My w ave counts are not Elliott Wave! Its different, simple and functions w ithout a maze of exclusions. T here are 3 peaks (or v alley s) to a com pleted wav e count. A rev ersal of trend takes place after a completed wav e count. Often times its as simple as counting 3 bumps (or dips) on a chart . . . Other times, not so easy . In a downtrend the same rules apply ex cept y ou are counting 3 dips instead of 3 bumps. Each group of 3 steps m ust stay confined to a channel. Lay ing a pen or pencil on the chart will help y ou v isualize the channel. As the trend progresses, all of the steps that make up a larger trend will also be confined to a larger channel. Sometimes the channel is not rev ealed until the surge phase has ended. When the m arket breaks a channel (regardless of the perceived wav e count), the current step has been
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term inated. (Make sure y our channel was correctly drawn before calling a termination). The correction following the second step is larger than the correction that followed the first step. Obv iously the correction following the third step is a rev ersal. A single wav e m ay sub-div ide into another 3 wav es. I will call this an ex tension. When this happens (1 ) the trend is still intact, (2) the channel will widened and (3) instead of a total of 3 steps, there will be 5 steps. Sometimes I will use the terms step and wav e interchangeably . Reading the glossary helps in the understanding of this blog. There are many other important facts in the glossary . Glossary Link ABBREVIAT IONS DJI = Dow Jones Industrials DJT = Dow Jones Transportations SPX = SP 500 ES = SP 500 Futures COMPQ = Nasdaq Composite Index TSX = Toronto Stock Ex change (Canadian blue chips) SOX = Semiconductors TXX = Technology ************************************************************************************ Long T erm UP Uptrend Mar 2009 T o Present
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Step 2 Up (of 3) Com pleted Step 3 Up Has Possibly Begun From the bottom in March 2009 Large step one up ended in May 201 0 Large step two up ended in May 201 1 . Significant break abov e the May 201 1 highs should signal that Step 3 up is official
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1 2 -2 8 -1 1 LONG T ERM
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WHAT S HAPPENING? For the moment Im kinda in a quiet period and remain in an ov erall uptrend theme. When I get ex cited about an important change in market direction, a lot of blog updates usually take place. Presently , there are some div ergences showing in the 60 minute and daily charts. Also the wav e count appears to be maturing. All of this could be early warning signs of a correction into late January (see cy cles update in the nex t section). The ex pectation is the correction will be a point to add to holdings or resume speculativ e positions. The following is the 60 minute index es found on page 1 0 of my charts. Notice some of the indicators hav e div ergences where prices are trending higher and the indicators are making lower highs.
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0 1 /1 8 /1 2 - INDEX ES - 6 0 MINUT ES
CY CLES I hav e alway s found the Hurst Cy cle concept to be interesting and Ill try to make this an integral part of my blog updates. Y oull notice how the dates of the anticipated cy cle lows dont change much from one month to the nex t (compare my last blogs cy cle charts with today s). Only a sharp mov e up or down changes the cy cle ex pectations. The first chart is the SP 500 cy cles from 1 950 to 2042. The semi-circle contact points at the bottom are cy cle low dates. When we hav e numerous cy cles bottoming at the same time or large cy cles bottoming, these are usually important dates in stock market history . Due to the size of this chart, only the large cy cles are v isible. Obv iously cy cle lows shown bey ond the present are predictions and not y et reality . Some cy cle lows dont produce bottoms. In a strongly upward trending market, a cy cle low can be a sideway s pattern followed by a breakout to the upside. Looking at the chart below y ou can see how sev eral large cy cle are approaching a crest and beginning a mov e to their cy cle low. This is not a strongly upward trending market as portray ed by this chart. At best it shows the last stage of a bull market, which coincides with a large 3rd step in the wav e count. Click On Charts T o Enlarge
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0 1 /1 8 /1 2 - 1 9 5 0 Da t a - 1 9 5 0 T o 2 0 4 2
According to Hursts Principle of Proportionality Waves in price movement have an amplitude that is proportional to their w avelength. This simply means that longer cy cles produce bigger mov es up or down. Smaller cy cles produce smaller fluctuations. The nex t chart is a close up of the abov e chart and it shows a confluence of cy cle lows occurring from May to September 201 3. This appears to be anticipating the most important cy cle bottom since March 2009. Further out the cy cle low occurring in early 201 8 is much larger and there are also sev eral other cy cles lows anticipated about the same time. This calls into play the Principle of Synchronicity Waves in price movement are phased so as to cause simultaneous troughs. This means all of these cy cles will bottom at the same time. This will likely be a time for a v ery im portant m arket low. 201 8 could mark the end of a long period of bad markets that began with the bursting of the 2000 internet bubble.
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Please dont get too caught up in the large cy cles and forget that we hav e bull markets that occur in between these large cy cle lows. March 2009 to the present is a good ex ample. Theres a time to be bearish and a time to be bullish. Y ou dont want to be like some famous wav e analy sts and become so bearish that y ou miss the good stuff between cy cle lows.
0 1 /1 8 /1 2 - 1 9 5 0 Da t a - La r g e Cy cles - 2 0 1 0 T o 2 0 1 9
The third chart is also based on data from 1 950 to the present and shows late February to early March 201 2 as the date for the nex t important bottom (1 5/1 6 month cy cle low). After that bottom the chart shows a lesser bottom occurring during May 201 2. This chart is based on 62 y ears of data and it tries to fit the cy cles to this large data-set. In the nex t chart were going to see a difference of opinion on the upcoming bottom based on a shorter data-set.
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0 1 /1 8 -1 2 - 1 9 5 0 Da t a - Cy cle Det a il - Oct 2 0 1 1 T o Nov 2 0 1 2
The following cy cle chart is based on data since late 2007 and is obv iously geared towards ev ents that hav e affected us ov er the last 5 y ears. Looking at this chart y ou can see how the nex t cy cle low is anticipated in late January (instead of late February ). For the moment I am inclined to believ e the 2007 cy cle data-set. If the late January cy cle low is correct a decline should begin soon. Since this cy cle low is less significant than the October low, it could be a quick correction with a rapid rev ersal similar to Nov ember 201 1 .
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0 1 /1 8 /1 2 - 2 0 0 7 Da t a - Cy cles - A pr il 2 0 1 1 T o Ma r ch 2 0 1 3
This nex t cy cle chart is based on data since 2007 and shows the important cy cle lows ov er the last 5 y ears. Notice how it differs slightly from the chart based on the 1 950 data-set. Its simply squeezing the cy cles to fit into the time frame selected. I think long data-sets are suitable for long cy cles and smaller data-sets are more accurate for smaller cy cles. Well see how that works out in the near future.
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0 1 /1 8 /1 2 - 2 0 0 7 Da t a - 2 0 0 7 T o Pr esen t
I find these cy cle charts to be of significant interest as it can giv e y ou an idea of when to ex pect bottoms to occur. Wav e counting giv es y ou an idea of where y ou are in the rally or decline. Altogether, these cy cle lows coupled with wav e counts can be of great help for narrowing down v alid buy points. If y ou find these cy cle charts interesting, the serv ice Hurst Signals prov ides cy cle charts and trading adv ice based on the work of J.M. Hurst, More info at HURST SIGNALS Its an ex cellent serv ice. PRINCIPLES OF HURST S CY CLIC T HEORY The Principle of Commonality All equity (or forex or commodity ) price mov ements hav e many elements in common (in other words similar classes of tradable instruments hav e price mov ements with much in common) The Principle of Cy clicality Price mov ements consist of a combination
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of specific wav es and therefore ex hibit cy clic characteristics. The Principle of Summation Price wav es which combine to produce the price mov ement do so by a process of simple addition. The Principle of Harmonicity The wav elengths of neighboring wav es in the collection of cy cles contributing to price mov ement are related by a small integer v alue. The Principle of Sy nchronicity Wav es in price mov ement are phased so as to cause simultaneous troughs wherev er possible The Principle of Proportionality Wav es in price mov ement hav e an amplitude that is proportional to their wav elength. The Principle of Nominality A specific, nominal collection of harmonically related wav es is common to all price mov ements. The Principle of V ariation The prev ious four principles represent strong tendencies, from which v ariation is to be ex pected. Further information about Hursts Cy clic Principles can be found here. Lotsa good Hurst info here. ************************************************************************************ CHART S MY CHART LINK (updated constantly ) These are my personal charts and my play ground for doodling trend lines, wav e counts and other ideas. I draw the trend lines and wav e counts on a daily basis (sometimes
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more often). Y ou can find these doodles from 1 minute to monthly charts. Y ou will find the best trend lines and wav e counts on charts with longer time frames. This giv es perspectiv e to the lines and counts. Perspectiv e was a fav orite of Edson Gould. I usually restrict my trend lines and wav e counts to the first three charts on each page, TSX, DJI & COMPQ. The other charts on the page are usually for confirmation of the trend and wav e structure. Page 1 Buy /Sell Signals Page 2 Index es With 1 Minute Bars Page 3 Index es With 5 Minute Bars Page 4 Index es With 1 5 Minute Bars Page 5 Index es With 30 Minute Bars Page 6 Index es With 60 Minute Bars Page 7 Index es With Daily Bars Page 8 Index es With Weekly Bars (since 1 981 ) Page 9 Index es With Monthly Bars (since 1 981 ) Page 1 0 Index es With 60 Minute Bars, Candlestick Page 1 1 Index es With Daily Bars, Candlesticks Page 1 2 Index es With Weekly Bars, Candlestick Pages 1 3 through 1 4 are shorter term indicators. The indicators are used to simply look for some ty pe of leading action before a turn or confirm ing action of the wav e count. Page 1 3 is a lookev ery day indicator page. The other indicator pages are less frequently v isited. Page 1 5 Hurst FLD Projections Page 1 6 Indicators, Long Term Page 1 7 International Index es
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Page 1 8 through 30 are sector ETFs. They represent most of the activ e sector ETFs and are alway s a good hunting ground when looking for something that is breaking in a new direction. Page 31 through 45 are growth stocks with indicators. These are stocks that hav e been in a lengthy uptrend. One qualification is that they must not be sev erely damaged in a bear market so they cant rise to significant new highs in the following bull market. The growth stocks show daily market action for the last 3 y ears and weekly prices since 1 992. This giv es a good perspectiv e of how they hav e behav ed in the immediate past (daily charts) and how they behav ed during good and bad times (weekly charts). Page 46 Misc older charts WAVE COUNT S SIMPLIFIED My w ave counts are not Elliott Wave! Its different, simple and functions w ithout a maze of exclusions. T here are 3 peaks (or v alley s) to a com pleted wav e count. A rev ersal of trend takes place after a completed wav e count. Often times its as simple as counting 3 bumps (or dips) on a chart . . . Other times, not so easy . In a downtrend the same rules apply ex cept y ou are counting 3 dips instead of 3 bumps. Each group of 3 steps m ust stay confined to a channel. Lay ing a pen or pencil on the chart will help y ou v isualize the channel. As the trend progresses, all of the steps that make up a larger trend will also be confined to a larger channel. Sometimes the channel is not rev ealed until the surge phase has ended.
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When the m arket breaks a channel (regardless of the perceived wav e count), the current step has been term inated. (Make sure y our channel was correctly drawn before calling a termination). The correction following the second step is larger than the correction that followed the first step. Obv iously the correction following the third step is a rev ersal. A single wav e m ay sub-div ide into another 3 wav es. I will call this an ex tension. When this happens (1 ) the trend is still intact, (2) the channel will widened and (3) instead of a total of 3 steps, there will be 5 steps. Sometimes I will use the terms step and wav e interchangeably . Reading the glossary helps in the understanding of this blog. There are many other important facts in the glossary . Glossary Link ABBREVIAT IONS DJI = Dow Jones Industrials DJT = Dow Jones Transportations SPX = SP 500 ES = SP 500 Futures COMPQ = Nasdaq Composite Index TSX = Toronto Stock Ex change (Canadian blue chips) SOX = Semiconductors TXX = Technology ************************************************************************************ Long T erm UP
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Uptrend Mar 2009 T o Present Step 2 Up (of 3) Com pleted Has Step 3 Up Begun ??? From the bottom in March 2009 Large step one up ended in May 201 0 Large step two up ended in May 201 1 . Significant break abov e the May 201 1 highs should signal that Step 3 up is official
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1 2 -2 8 -1 1 LONG T ERM
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based on the early warnings. The transaction record near stock market bottoms will show that I am v ery skittish and usually remain so until the new direction is well underway . Qualified buy signal giv en from Decem ber 5th to Decem ber 20th, 2011 Buy signal in October 2011 was nev er issued due to a SERIOUS fam ily illness SELL SEPT EMBER 9, 2011 BUY AUGUST 30, 2011 SELL AUGUST 30, 2011 Stopped out, re-bought quickly BUY AUGUST 29, 2011 SELL AUGUST 25, 2011 BUY AUGUST 23, 2011 SELL AUGUST 1, 2011 BUY JUNE 23, 2011 ************************************************************************************ MISCELANEOUS There are useful items throughout this blog. For instance, the Wall Street Quotes can be v ery instructiv e. So make sure and look all through the blog.
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P os ted J anuary 3 , 2 0 1 2 by Bob Categories: D A I L Y U P D A T E
WHAT S HAPPENING? From Jeffrey Sauts column today : As for the technicals, by my w ork w e experienced another Dow Theory buy signal last w eek w hen both the DJIA (INDU/1 221 7 .56) and the DJTA (TRAN/501 9.69) bettered their October 201 1 closing reaction highs. This w eek w e may see another positive occurrence called a golden cross, that is if the DJIAs 50-day moving average (@1 1 934.29) crosses above its 200-DMA (@1 1 946.57 ). That said, the NY SE McClellan Oscillator is short-term overbought and the stock markets internal energy has not yet been fully recharged. Accordingly, after the equity markets pop their collective corks w ith an early January upside blow off, it w ould not surprise me to see a pullback attempt. One thing is for sure, the volatility remains legion, for as the eagle-eyed folks at the Bespoke Investment Group w rite:
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Throughout 201 1 , w e made numerous mentions of the record number of all or nothing days in the stock market. We define an all or nothing day as one w here the daily net Advance/Decline reading for the S&P 500 is greater than +/- 400. Up until recently, these types of days w ere relatively rare and there w ere some periods w here more than a year w ent by w ithout any all or nothing days. In the last few years, how ever, w e have seen an explosion of occurrences, culminating w ith this years record reading of 7 0 days! To put that number in perspective, from 1 990 through 2004, there w ere only 67 all or nothing days!
Such a volatile environment clearly calls for risk management and w ith these thoughts w e w ish you a healthy and prosperous new year. The call for this week: Since the day after Thanksgiving I have stuck w ith the strategy that the Santa Claus rally had begun. On November 25th the SPX w as changing hands around 1 1 58. We are now 1 00 points higher. Consequently, I w ould not chase the dragon right here since I anticipate that an upside blow off is due Thats the the way I see the market too and usually Jeffrey and I dont disagree. Cy cles point to some ty pe of bottom later in the month (see charts page 1 4, #7 1 .95 and #7 1 .96). If the correction lasts late into the month, it could be deeper than anticipated. Today (Jan 3) we are getting a new y ears blast off in the market av erages and when this is spent, we should begin the correction that Jeffrey mentioned. The surge could be a one day hurray or it could last all week. The market was pulling back quickly late in the day and that
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might point to a one day upside wonder. Usually the January corrections hav e carried into mid-January (or later) and I wouldnt ex pect any thing different this time. CY CLES The chart below is from Hurst Signals an interesting cy cle serv ice based on the work of J.M. Hurst, More info at HURST SIGNALS This serv ice (on occasion) can define future dates for possible market turns. Its the big cy cles that are most interesting.
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0 1 -0 3 -1 2 HURST CY CLES
0 1 -0 3 -1 2 HURST CY CLES-2
As y ou can see by the abov e chart we are heading for a low during January that will be much less significant than the October 4, 201 1 low. The October low was a 51 month cy cle low, while the January cy cle is a 1 6 week cy cle low (green circle and line in the abov e chart). According to JM Hursts principle of sy nchronicity , cy cles are phased so as to cause simultaneous troughs for all cy cles of shorter duration than the cy cle in
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question. All cy cles less than the 1 6 week cy cle will bottom at the same time as the 1 6 week cy cle meaning they will all hav e a common trough date. PRINCIPLES OF HURST S CY CLIC T HEORY The Principle of Commonality All equity (or forex or commodity ) price mov ements hav e many elements in common (in other words similar classes of tradable instruments hav e price mov ements with much in common) The Principle of Cy clicality Price mov ements consist of a combination of specific wav es and therefore ex hibit cy clic characteristics. The Principle of Summation Price wav es which combine to produce the price mov ement do so by a process of simple addition. The Principle of Harmonicity The wav elengths of neighbouring wav es in the collection of cy cles contributing to price mov ement are related by a small integer v alue. The Principle of Sy nchronicity Wav es in price mov ement are phased so as to cause simultaneous troughs wherev er possible The Principle of Proportionality Wav es in price mov ement hav e an amplitude that is proportional to their wav elength. The Principle of Nominality A specific, nominal collection of harmonically related wav es is common to all price mov ements. The Principle of V ariation The prev ious four principles represent strong tendencies, from which v ariation is to be ex pected.
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Further information about Hursts Cy clic Principles can be found here. Lotsa good Hurst info here. SCARY CHART CLICK ON CHART S T O ENLARGE
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0 1 -0 3 -1 2 DJ IND DA ILY
Now thats one scary chart (the red wav e count). This is just one of those what if things that bother me from time to time (all the time actually ). It could gain credibility if the correction running into later January becomes a lot wilder than anticipated. Ill be keeping an ey e on this possibility in the day s ahead. Incidentally , I alway s hav e a scary chart that I can pull out and show whenev er the mood strikes. Thank y ou for the 21 ,37 3 hits to my chart link last month. The activ ity on my charts dropped dramatically begining on December 1 7 th. It seems a LOT of people took off for a v acation during the holiday s. If activ ity had not dropped off during this period, I would hav e had ov er 31 ,000 hits for the month (av eraging ov er 1 ,000 hits per day earlier). Regardless, 21 ,37 3 hits ranked among the highest at stockcharts.com Interestingly , a significant number of these hits came around 3 AM to 5
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AM EST, which coincides with trading in Europe beginning around 3 AM. It seems that there are two possibilities for location for these hits, Europe and the east coast of the USA. 24 hour world-wide trading has forced a lot of traders to adjust their life cy cle patterns, which could allow for east coast v iewing. MAY BE T HIS WILL HAPPEN? In the abov e chart notice how nicely the Andrews Pitchforks hav e contained the market mov es. We hav e broken to the upside from the downward sloping pitchfork and the uptrend pitchfork is performing nicely . Presently the market is on one of the lesser lines (dotted) and should stay below that line. If we were to break that line to the upside, we should mov e to the upper line and slow the adv ance. The central line should restrict any downward mov ement in the market (as long as all is OK). Partial profit taking can be entertained if y ou got in quickly after the false mov e to the downside on December 1 5th. Meantime we will stay with an ov erall uptrend theme. ************************************************************************************ CHART S MY CHART LINK (updated constantly ) These are my personal charts and my play ground for doodling trend lines, wav e counts and other ideas. I draw the trend lines and wav e counts on a daily basis (sometimes more often). Y ou can find these doodles from 1 minute to
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monthly charts. Y ou will find the best trend lines and wav e counts on charts with longer time frames. This giv es perspectiv e to the lines and counts. Perspectiv e was a fav orite of Edson Gould. I usually restrict my trend lines and wav e counts to the first three charts on each page, TSX, DJI & COMPQ. The other charts on the page are usually for confirmation of the trend and wav e structure. Page 1 Buy /Sell Signals Page 2 Index es With 1 Minute Bars Page 3 Index es With 5 Minute Bars Page 4 Index es With 1 5 Minute Bars Page 5 Index es With 30 Minute Bars Page 6 Index es With 60 Minute Bars Page 7 Index es With Daily Bars Page 8 Index es With Weekly Bars (since 1 981 ) Page 9 Index es With Monthly Bars (since 1 981 ) Page 1 0 Index es With 60 Minute Bars, Candlestick Page 1 1 Index es With Daily Bars, Candlesticks Page 1 2 Index es With Weekly Bars, Candlestick Pages 1 3 through 1 4 are shorter term indicators. The indicators are used to simply look for some ty pe of leading action before a turn or confirm ing action of the wav e count. Page 1 3 is a lookev ery day indicator page. The other indicator pages are less frequently v isited. Page 1 5 Hurst FLD Projections Page 1 6 Indicators, Long Term Page 1 7 International Index es Page 1 8 through 30 are sector ETFs. They represent most of the
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activ e sector ETFs and are alway s a good hunting ground when looking for something that is breaking in a new direction. Page 31 through 45 are growth stocks with indicators (new). These are stocks that hav e been in an uptrend. One qualification is that they must not be sev erely damaged in a bear market so they cant rise to significant new highs in the following bull market. The growth stocks show daily market action for the last 3 y ears and weekly prices since 1 992. This giv es a good perspectiv e of how they hav e behav ed in the immediate past (daily charts) and how they behav ed during good and bad times (weekly charts). Page 46 Junk Pile WAVE COUNT S SIMPLIFIED My w ave counts are not Elliott Wave! Its different, simple and functions w ithout a maze of exclusions. T here are 3 peaks (or v alley s) to a com pleted wav e count. A rev ersal of trend takes place after a completed wav e count. Often times its as simple as counting 3 bumps (or dips) on a chart . . . Other times, not so easy . In a downtrend the same rules apply ex cept y ou are counting 3 dips instead of 3 bumps. Each group of 3 steps m ust stay confined to a channel. Lay ing a pen or pencil on the chart will help y ou v isualize the channel. As the trend progresses, all of the steps that make up a larger trend will also be confined to a larger channel. Sometimes the channel is not rev ealed until the surge phase has ended. When the m arket breaks a channel (regardless of the
pdfcrowd.com
perceived wav e count), the current step has been term inated. (Make sure y our channel was correctly drawn before calling a termination). The correction following the second step is larger than the correction that followed the first step. Obv iously the correction following the third step is a rev ersal. A single wav e m ay sub-div ide into another 3 wav es. I will call this an ex tension. When this happens (1 ) the trend is still intact, (2) the channel will widened and (3) instead of a total of 3 steps, there will be 5 steps. Sometimes I will use the terms step and wav e interchangeably . Reading the glossary helps in the understanding of this blog. There are many other important facts in the glossary . Glossary Link ABBREVIAT IONS DJI = Dow Jones Industrials DJT = Dow Jones Transportations SPX = SP 500 ES = SP 500 Futures COMPQ = Nasdaq Composite Index TSX = Toronto Stock Ex change (Canadian blue chips) SOX = Semiconductors TXX = Technology ************************************************************************************ Long T erm UP Uptrend
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Mar 2009 T o Present Step 2 Up (of 3) Com pleted Has Step 3 Up Begun ??? From the bottom in March 2009 Large step one up ended in May 201 0 Large step two up ended in May 201 1 . Significant break abov e the May 201 1 highs should signal that Step 3 up is official
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1 2 -2 8 -1 1 LONG T ERM
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based on the early warnings. The transaction record near stock market bottoms will show that I am v ery skittish and usually remain so until the new direction is well underway . Qualified buy signal giv en from Decem ber 5th to Decem ber 20th, 2011 Buy signal in October 2011 was nev er issued due to a SERIOUS fam ily illness SELL SEPT EMBER 9, 2011 BUY AUGUST 30, 2011 SELL AUGUST 30, 2011 Stopped out, re-bought quickly BUY AUGUST 29, 2011 SELL AUGUST 25, 2011 BUY AUGUST 23, 2011 SELL AUGUST 1, 2011 BUY JUNE 23, 2011 ************************************************************************************ MISCELANEOUS There are useful items throughout this blog. For instance, the Wall Street Quotes can be v ery instructiv e. So make sure and look all through the blog.
pdfcrowd.com
Edson Goulds 1979 Forecast (Dec 1978)

P os ted D ec ember 2 9 , 2 0 1 1 by Bob Categories: E D SO N G O U L D
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Edson Gou ld's 1 9 7 9 For eca st - Pa g e 2
I was a subscriber to Edson Goulds Findings & Forecast from 1 97 4 to 1 97 9. Impressed by the quality of information, I kept Goulds special reports, y early forecasts and important portions of his semimonthly market letters. Hav ing nev er written a book, Edson Goulds stock market memoirs are contained in his market letters and special reports. Searching the internet Iv e found a couple of his reports and none of his market letters. Ex cept for the postings here, its certainly possible that Goulds stock market observ ations hav e been lost. Some may say that these publications are old and not relev ant. I would suggest those believ ers read One Way Pockets. This little stock market gem was written in 1 91 7 and contains a wealth of important information. One Way Pockets certainly prov es how human behav ior doesnt change. I wish I had found this book when I was beginning my stock market education, but believ ing that nothing of genuine importance could come from the distant past, I restricted my reading to current publications. A condensed v ersion of One Way Pockets is posted on this blog. Gould believ ed that the stock market was mov ed by the emotions of the crowd, fear, panic and greed. Those emotions combined with the
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pendulum of swinging from one emotional ex treme to the other formed the foundation of Goulds predictions. Crowd behav ior in the stock market is a timeless factor that will nev er change. The ultimate book on crowd behav ior is Mem oirs of ex traordinary popular delusions and the m adness of crowds by Charles Mackay (1 852). It is av ailable for free from Google Books (click on the link abov e). Because of the timelessness of crowd behav ior y ou will find that Goulds indicators still function v ery well in predicting the stock market. Recently I scanned Edson Goulds y early forecasts and many of his market letters. There remains a significant number of pages and subjects that hav e not been scanned. To receiv e this report (pdf format), please complete the following form.
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Edson Goulds 1978 Forecast (Dec 1977)

P os ted D ec ember 2 9 , 2 0 1 1 by Bob Categories: E D SO N G O U L D
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Edson Gou ld's 1 9 7 8 For eca st - Pa g e 2
I was a subscriber to Edson Goulds Findings & Forecast from 1 97 4 to

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1 97 9. Impressed by the quality of information, I kept Goulds special reports, y early forecasts and important portions of his semimonthly market letters. Hav ing nev er written a book, Edson Goulds stock market memoirs are contained in his market letters and special reports. Searching the internet Iv e found a couple of his reports and none of his market letters. Ex cept for the postings here, its certainly possible that Goulds stock market observ ations hav e been lost. Some may say that these publications are old and not relev ant. I would suggest those believ ers read One Way Pockets. This little stock market gem was written in 1 91 7 and contains a wealth of important information. One Way Pockets certainly prov es how human behav ior doesnt change. I wish I had found this book when I was beginning my stock market education, but believ ing that nothing of genuine importance could come from the distant past, I restricted my reading to current publications. A condensed v ersion of One Way Pockets is posted on this blog. Gould believ ed that the stock market was mov ed by the emotions of the crowd, fear, panic and greed. Those emotions combined with the pendulum of swinging from one emotional ex treme to the other formed the foundation of Goulds predictions. Crowd behav ior in the stock market is a timeless factor that will nev er change. The ultimate book on crowd behav ior is Mem oirs of ex traordinary popular delusions and the m adness of crowds by Charles Mackay (1 852). It is av ailable for free from Google Books (click on the link abov e).
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Because of the timelessness of crowd behav ior y ou will find that Goulds indicators still function v ery well in predicting the stock market. Recently I scanned Edson Goulds y early forecasts and many of his market letters. There remains a significant number of pages and subjects that hav e not been scanned. To receiv e this report (pdf format), please complete the following form.
Name (re quire d)
Email (re quire d)
Comment (re quire d)
Submit
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02/04/12 Update - Stock Market Trends &amp; Observations

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2 0 1 2 -0 2 -0 4 IND DA ILY LONG T ERM

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02/04/12 Update - Stock Market Trends & Observations

02/04/12 Update - Stock Market Trends & Observations