02/27/12 update of stock market trends & observations

8/2/2019 02/27/12 Update of Stock Market Trends & Observations

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gets too long, I worry about disconnected thoughts, more so than

normal for me (ohhh look at the pretty bright shinny ob ject . . . now

what was I doing???).

Yo u can also leav e comments for me at my chart link on StockCharts,

“send feedback” in the upper right corner.

International requests for Edson Gould files should make sure their emailis transmitted properly . I receiv ed a request from Italy the other day

and the return address was to their I SP and not to the individual.

Needless to say, my respo nse bounced back. Someone out there is

probably disappointed that I didn’t respond. We’ll see if she is on her

toes for this week’s blog.

Incidentally, the end of the world isn’t until December 21 , 201 2, give o r

take 60 days (the Mayans didn’t keep good notes). So we have lots of time before we have to sell stocks and take our money (gold bars & guns)

to the nearest cav e. Doesn’t every one know someone who believes these

voodo o predictions??? I live in California and naturally there are lotsa

nuts who believ e this stuff. I do hav e a lot of fun needling the goof-balls.

CYCLES

There are three datasets shown below, the datasets begin at different

points in time; (1) beginning in 1950, (2) beginning in 1998, and (3)

beginning in 2007 . Each dataset begins in the named year and runs to

the present. Each of the datasets has a short, intermediate and long term

chart.

On a long term basis there is little or no difference between the dataset

cy cles but short term cyc les “may” have a different interpretation. We

CYCLES (1)

DAILY UPDATE (82)

EDSON GOULD (21)

GLOSSARY (1)

JEFFREY SAUT (1)

SELL/BUY ACTION UPDATE(18)

WEEKLY UPDATE (21)

WORDS OF WISDOM (9)

Recent Posts

02/27/12 – Cycles,

Divergences & Loss Of MO

02/14/12 – Down, Sideways,Up? + My First Computer &

Apple Stock

Stock Market Update

– 02/06/12

Stock Market Update

– 02/04/12

Elder Impulse System

– 01/30/12

Archives

February 2012 (4)

January 2012 (7)

December 2011 (11)

November 2011 (17)

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http://stockmarketobservations.wordpress.com/category/glossary/

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http://stockmarketobservations.wordpress.com/category/weekly-update/

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,

term dataset had a 16 week cyc le bottom oc curring in late January, while

the older and longer dataset had the same cyc le bottom oc curring in late

February. Now that we have passed the January bottom cy clic

timezone, all of the datasets appear to agree that the bottom oc curred on

January 30th. It was a 16 week cycle low and these lows are normally

more significant than January 30th.

The next c y cle low o f significance is scheduled for May and it’s a 33 week

low. That cy clic low is smaller than the Octobe r 4th low, which was a 16-

18 month cyc lic low. Nevertheless, the May c yc lic low is long enough to

be significant. Longer cy cles are more powerful than shorter cy cles, see

“The Principle of Proportionality” below.

May is also the date of an interesting Fibonacc i time sequence. We have

two Fibonacci arcs ending in May 201 2. One arc originates from the

October 20 02 low and terminates on the October 20 07 peak. The

second arc originates from the October 200 7 peak and terminates on the

March 2009 low. I hav e no idea if these arcs will be significant but I find

them interesting due to their convergence and the anticipated cy clic

low. If you study some of the ending dates for the other arcs in the chart,

you will see that some terminated near important market dates.

If you want to get really spoo ked Wicked Laugh. Large step 1 up

ended in May 201 0 and large step 2 up ended in May 20 11 . That’s pretty

freaky co incidenc e, right??? But will large step 3 up end in May 20 12 ???

Hopefully not, because I have greater ex pectations for this bull market

(megaphone formation) than what could b e fulfilled by May 20 12

(megaphone illustrated on the following chart).

Yo u aren’t going to see much difference in the dataset charts, unlike what

October 2011 (19)

September 2011 (17)

August 2011 (32)

July 2011 (17)

June 2011 (10)

February 2012

M T W T F S S

« Jan

1 2 3 4 5

6 7 8 9 10 11 12

13 14 15 16 17 18 19

20 21 22 23 24 25 26

27 28 29

Wall Street Quotes

“The essence of investment

management is the

management of risks, not the

management of returns. Well-

managed portfolios start with

this precept.”

Benjamin Graham

The time of maximum

pessimism is the bes t time to

buy and the time of maximum

optimism is the best time to

sell.






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happened in January.

Fibonacci Arc Chart

02-26-12 #26 .1 Industrials Weekly - Fibonacci Tim e Arcs

195 0 Dataset

o n emp e on

Buy on the cannons,

sell on the trumpets.

Old French Proverb

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 chan e.






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02-26-12 1 998 Dataset Cy cle Short Term

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.

In 2008 stocks were a good

buy . . . . . Goodbye

Mercedes, goodbye yacht,

goodbye vacation home,

goodbye . . .

Markets can remain irrational






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02 -2 -1 2 1 9 9 a ase y c e n er m e a e er m

02-26-12 19 98 Dataset Cycle Long Term

2007 Dataset

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 inthe market.

Don't catch a falling knife.

Spend a t least as much time






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02-26-12 2007 Dataset Cy cle Short Term

02-26-12 2007 Dataset Cycle Interm ediate Term

researc ng a s oc as you

would choosing a refrigerator.

Peter Lynch

When you realize that you

are riding a dead horse the

best strategy is to dismount.

Sioux Indian Proverb

Don’t ever make the mistakeof 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 humannature never changes.

Jesse Livermore

Let Wall Street have a

nightmare and the whole

country has to he lp get them

back in bed again

Will Rogers

Bulls makes money, bearsmakes 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.






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02-26-12 2007 Dataset Cy cle Long Term

PRINCI PLES OF HURST’S CY CLI C T HEORY

The Principle of Commonality – All equity (or forex o r commodity ) price

mov ements have many elements in common (in other words similar

classes of tradable instruments have price mov ements with much in

common)

The Principle of Cyclicality – Price mov ements consist of a co mbination

of specific waves and therefore exhibit 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 wavelengths of neighboring waves in

Wall Street is a street with a

river at one end and a

graveyard at the other.

Never check stock prices on a

Friday, it could spoil your

weekend.

Nobody is more bearish thana sold-out bull.

The public is right during the

trends but wrong at both

ends.

Humphrey Neill

Those who can, do.

Those who can’t, teach.

Those who can’t teach, workfor the government.

Never se ll 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."






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the collection of cyc les contributing to price mov ement are related by a

small integer v alue.

The Principle of Synchronicity – Waves in price mov ement are phased so

as to cause simultaneous troughs wherever possible

The Principle of Proportionality – Waves in price mov ement have an

amplitude that is pro portional to their wavelength.

The Principle of Nominality – A spec ific, nominal co llection of

harmonically related waves is common to all price mov ements.

The Principle of Variation – The prev ious four principles represent

strong tendencies, from which variation is to be expec ted.

HURST CY CLE SOFT WARE

Yo u c an find further information about Hurst’s Cyc lic Principles here.

There is lotsa goo d Hurst info at that link and if y ou want up to the

minute info o n the Hurst Cycles, c onsider subscribing to their serv ice at

the following link, Hurst Signals. It’s a very good service and I am a

subscriber too. The software to generate the cyc les is expensive but

Hurst Signals is reasonable and the c harts and co mments are co nstantly

updated throughout the market day . One reason why I subscribe to their

service is that it can be accessed very quickly. For me I don’t have toupdate my data files and boot up Parallels, a Windows vir tual OS running

concurrent inside the Apple OS X. After Parallels is up I can then start

the Hurst software. Once it’s operating on my A pple, it’s no problem.

But as you c an see there is some time and effort to running Windows

software on an Apple. But Hurst Signals gives me the answers I need

quickly and straight to the point and it’s cheaper. Hurst Signals operates

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.

"If Santa fails to call thebears will roam on Broad and

Wall!"

About This Blog

Observations of Stock Market

Trends uses several

proprietary technical

indicators discovered by the

author. The object of this blogis 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 publishedon 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






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b h h f h f au or expressng s


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began on Dec 20 th. The step from Dec 20th is just one compo nent of a

larger upward wav e (large step 3). That means when we finish this step,

we should consolidate for a period of time and then mov e higher after

the market has renewed its buying power.

The only cav eat would be that since we have ac hieved new highs abov e

May 20 11 (some indexes) and that satisfies the bare minimum for a third

step since March 200 9. It doesn’t seem likely that we would have atruncated third step but investment surv ival dictates that we always loo k

at all sides of the situation.

The following are some of the charts that show div ergence and loss of

momentum (MO). These charts are from MY CHART L INK. To find

these charts, the chart number follows the date in the c aption.

MACD is losing MO in the up/dn cumulativ e volume line

au or expressng s

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

by writing a stock market

blog. This blog relies on

several unique and

proprietary indicators.

I have been correct at someof 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,






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02-26-12 #10.1 - Up Dn Cu mlat iv e Volum e - Daily

Look at the dec lining volume (last chart in this group)

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

October 2007 peak I becamea 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 February-

May 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 o f the

market on October 6, 1987,

just days before the 1987

h B t I h d b











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02 -26-12 #1 0.2 - NET NEW HIGHS - NYSE

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

key indicator has workedcorrectly.

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 foundthat 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 hismethods 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".

It loo ks like we are in the 3rd step up (prov iding we aren’t sub stepping













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It loo ks like we are in the 3rd step up (prov iding we aren t sub-stepping,

which is always possible in a buy ing stampede)Spam Blocked






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02 -26 -1 2 #45 .1 0 - $INDU - Daily - Candlestick A ssessment

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02 -26 -1 2 #45 .1 1 - $COMPQ - Daily - Candlestick Assessm ent

SPX is stay ing next to its mid-line in the Andrew’s Pitchfork, but it hasn’t

touched it’s outer envelope. Some indexes have hit (or exceeded) their

outer env elope boundaries. That’s frequently a message that the market

will correct or slow down.











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02-26 -12 #46 - $SPX - Daily - Candlestick A ssessment

The Value Line Index was a v ery big leader beginning in March 200 9

achieving significant new all-time highs beginning in 2010 and

continuing through May 20 11 . Presently I find it troublesome that it

can’t exce ed its May 2 01 1 peak. It lags well behind, while a few of the






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can t exce ed its May 2 01 1 peak. It lags well behind, while a few of the

other indexes have bro ken through their May 20 11 peaks.






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02-26-12 #7 2.0 - Value Line Index

h ll f i d i h h h






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Is the economy really softening as portray ed in these charts, or are these

indicators wrong? I guess we’ll have to wait a couple of months to find

out.






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02-26-12 #72 .01 - The Economy In Real-Time

FEAR, HOPE & GREED

Due to its importance, this little chart is going to become a co nstant in

my blog.

The driving force of how the stock market arrives at a price is emotions

and the primary of these emotions is “fear, hope and greed”. It’s difficult

for people to understand this principle because it do esn’t seem logical.

A co mment I hear frequently is that the earnings of a company are still

going up and the stock price MUST continue rising too. That “can” be

true depending on a lot o f factors but it might not stop the market from

cutt ing the PE of yo ur stoc k in half.

Rising earnings and dividends were an ongoing theme throughout the

197 3-197 4 bear market. Normally earnings suffer at some point during

a bear market, but 197 4 was the exception. An ov er-priced market

(remember the “Nifty 50 ″ from 197 2) plus an unstable political climate

coupled with rising earnings came together in the perfect storm cutting

the PE ratio of most stocks in half.

Mentioning the “Nifty 50″ giv es y ou some idea of the old fart that’s

writing this blog. I can make it even worse by asking; Do y ou remember

President Kennedy jawboning the steel industry o ver their price hike in

1961 ? There were consequences for those actions as President Kennedy














was widely viewed as anti-business after the jawboning incident.

Naturally the stock market didn’t like that and since it was already ripe

for a correc tion, it willingly o bliged. The market decline began in

November 1 961 (I think?). But I remember very well the climactic

plunge in May 1962 when the Dow Industrials lost 35 points in one day .

The Dow av erage was only 61 2 at the time and a lost of 35 points was

huge. It was a 5.7 % one day plunge. I thought the world was going toend as I had never seen anything similar (wait until October 1 987 ). I was

a naive kid at the time and no w I’m not naive, just an old kid.

Fear , Hope, an d Greed

JEFFREY SAUT

Jeffrey Saut is Raymond James’ Chief Investment Strategist and a very

h b d h bl k f i d h k






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savv y guy. He has been around the block a few times and he keeps

meticulous notes. He has the market history written down and I rely o n

my memo ry (good thing long term memory is the last to go cuz I can’t

remember why I left one room for another most of the time – ohhh look

at the pretty bright shinny object . . . now why am I here???). Jeffrey

and I seldom disagree ex cept at the major turns. I may pull the trigger

first at the peaks (Investment firms don’t like to sell) and it’s split on whomay v enture out of their cave at the co ncluding moments of a bear

market. Raym ond James link.

The following is from today’s market comments (02/27 /1 2)

As for the stock market, last we ek the S&P 500 (SPX/1 365.7 4) eclipsed

its previous reaction high, recorded on April 29, 2011 of 1363.61 , and

now stands at its highest level since June 6, 2 008. The closing high,

how ever, came on very low volume and with numerous divergences.

The tw o mo st egregious are the lack of upside co nfirmation from the D-J

Transportation A verage (TRAN/51 39.14) and the Russell 200 0

(RUT/826.92). While there are c learly other divergences like the non-

confirmation from the Operating Company Only Advance/Decline Line,

the fact that there hav e bee n no 90% Upside Days this year, the

narrow ing leadership, too many three-digit stocks, etc., the Trannies

and the Russell are indeed the tw o most w orrisome. That’s because the RUT is more than 5 % below its one-year high, while the Transports are

~9% below their one-year high. Historically, wh en the S&P 500 was at

a fresh 5 2-wee k high, but the Russell 2000 and the DJ Transports were

more than 5% below th eir respective 52-we ek highs, stocks have been

vulnerable. Therefore, if I am going to err it is going to be by be ing too

cautious (not bearish), consistent with Ben Graham’s mantra – The






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12/06/05

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CHARTS

MY CHART LINK (updated constantly)

These are my personal charts and my playground for doodling

trend lines, wave counts and other ideas.

I draw the trend lines and wave co unts on a daily basis (sometimesmore often). Y ou can find these doodles from 1 minute to

monthly charts.

I usually restrict my trend lines and wave counts to the first three

charts on eac h page, TSX, DJI & COMPQ. The other c harts on the

page are usually for c onfirmation of the trend and wave structure.

Page 1 – Buy /Sell Signals & Misc Charts

Page 2 – Index es With 1 Minute Bars





Page 7 – Indexes With Daily Bars

Page 8 – Index es With Weekly Bars (since 1 981)

Page 9 – Indexes With Monthly Bars (since 1 981)Page 10 – Indexes With 60 Minute Bars, Candlestick

Page 11 – Indexes With Daily Bars, Candlesticks

Page 12 – Index es With Weekly Bars, Candlestick

Pages 13 through 1 4 are shorter term indicators. The indicators

are used to simply look for some type o f leading action before a

turn or confirming action of the wave co unt. Page 13 is a look-

eve ry day indicator page. The other indicator pages are less

f tl i it d














frequently visited.

Page 15 – Hurst FLD Projections

Page 16 – Indicators, Long Term

Page 17 – International Indexes

Page 18 through 30 are sector ETFs. They represent most of the

active sector ETFs and are always 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 have bee n in a lengthy uptrend. One qualification is

that they must not be sev erely damaged in a bear market so they

can’t 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 1992. This gives a good perspective of

how they have be haved in the immediate past (daily c harts) and

how they behaved during good and bad times (weekly charts).

Page 46 – Last 6 charts are trades from the mec hanical sell/buy

signals

WAVE COUNT S SIMPLIFIED

My wave counts are not Elliott Wave! It’s different, simple and

functions w ithout a maze of exclusions.

T here are 3 peaks (or valleys) to a com pleted wave cou nt.

A rev ersal of trend takes place after a completed wave count.

Often times it’s 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 co unting 3

dips instead of 3 bumps.

3 steps m ust stay confined to a channel. Laying a pen or

pencil on the c hart will help y ou v isualize the channel









pencil on the c hart 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 co nfined to a larger channel. Sometimes a

channel is not clear until the surge phase (vertical mov e) has

ended.

When the m arket breaks its channel (regardless of the

perceived wave cou nt), the step has been terminated.(Make sure yo ur channel was correctly drawn before c alling a

termination). Sometimes this may be y our best indicator that a

wave count is completed.

The correction following the second step is larger than the

correc tion that followed the first step, and obv iously the

correc tion following third step is larger than the second step

correction.

A single wave m ay sub-divide into another 3 waves. I willcall 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 “wave” interchangeably .

Reading the glossary helps in the understanding of this blog.

There are many other important facts in the glossary.

Glossary Link

ABBREVIATIONS

DJI = Dow Jones Industr ials

DJT = Dow Jones Transportat ions

SPX = SP 50 0

ES = SP 500 Futures

COMPQ = Nasdaq Composite Index

TSX = Toro nto Stock Exchange (Canadian blue chips)






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SOX = Semico nducto rs

TXX = Technolo gy

****************************************************************

Long T erm – UP

Uptrend

Mar 2009 To Present

Step 2 Up (of 3) Com pleted

Step 3 Up Has Likely Begun

From the bottom in March 200 9

Large step one up ended in May 2010

Large step two up ended in May 2011

Large step three is underway






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1 2-28 -11 LONG TERM

****************************************************************

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 2-28 -1 1 VERY LONG TERM

VERY LONG T ERM COMMENT S

We have 3 possibilities for the future.

We have entered a very wide swinging m arket

(megaphone formation) sim ilar to that of 1965 to 1974.

During that era we had three bear markets with two intervening

bull market rallies. Each bear market had a lower low than the

previous b ear. The interve ning bull market rallies saw new all










time highs before the nex t bear market began.

We also have formed a huge head and shoulders formation since

1998. If this formation is valid, the downside measurement calls

for a bottom around Dow Jones Industrials 1,0 00.

We began a long term bull market in March 2009.

I favor the m egaphone formation as the m ost likely

scenario.

Since 2000 we have had two bear markets, 2000 to 200 3 and 2007 to

2009. Like 1966 to 197 4, the recov ery from the first bear market saw a

new all time high (2007 peak). It’s 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 o f the final bear market is

approximately 20 18.

The lesser downside target of both formations is the megaphone

formation as it likely calls for a bottom 1,0 00 to 2,000 points below the

2009 low, which would be around Dow 5,00 0.

In the head and shoulders formation the measurement calls for a bottom

around Dow Jones Industrials 1,0 00. This is almost an unimaginable

eve nt regarding the possible fundamentals to c reate this scenario. If this

did happen, ev ery thing that could go wrong would have to go wrong.

This scenario is so dark that it doesn’t seem possible but neve rtheless,

the head and shoulders formation is there and will be waiting until we

pierce the all-time highs of Octobe r 200 7 .

R b h i l ibl i d b dd d i









Remember these are simply possible scenarios and are not embedded in

fact. Whatever the outc ome, it never hurts to be a little cautious with

some of your money . But in the worst case scenario, every thing that we

take for granted as being safe . . . . would not be safe. This is something

to never forget in the event things go v ery badly.

Hopefully we will never have to think about the worst case scenario.

This v ery long term thinking is almost not practical for investment

strategies. Following the long term strategy should be adequate. But

one should always keep this scenario in mind whenever we are on the

verge of a new bear market. If correct it co uld indicate how bad things

could become.

****************************************************************

EDSON GOULD

Edson Gould, Premier Stock Market Strategist – Edson

Gould had a profound influence o n the dev elopment of my

techniques and indicators. Prior to me subscribing to his

advisory servic e, I was just one of the crowd.

After 40 y ears I still have many of the publications from his

advisory servic e, “Findings & Forecasts”. Fearing the loss of these

hard copy reports I hav e recently scanned and created pdf files of

these reports. Now I have hard copies and computerized ver sions

of the reports.

My series #1 indicator w as mentioned by Gould only o nce in his

market letters. If you didn’t catch its importance, too bad,

because he only gav e yo u a peek. I believe that he used this tool

extensiv ely and never told the world it’s importance. Prior to

Gould writing about this indicator I had been loo king for o ne that









had similar characteristics without succ ess. Thus when Gould

wrote about it, I recognized instantly that I had struck gold. I

have mo dified this indicator slightly and re searched it back to

19 39 for the Industrials, Transportations and Utilities . This was a

lot of work as it was before co mputers and online data (remember

when Barrons was available only on paper, still is for the distantpast).

Edson Gould was truly a legend in his own time. It’s too bad that

today many people hav e forgotten or never heard of him or his

discov eries. Below y ou will find only the first page of these

reports. A teaser is what yo u might call it. The rest of the reports

are available upon request. This is a man that deserves to be

remembered throughout technical analysis 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 volatility o f markets that had my stified me in my early

years. During those early y ears I found nothing worked in

predic ting these irrational market swings. But the fog lifted after

reading this report and I began to understand how to beginpredicting the market. The book “Extrao rdinary Popular

Delusions and the Madness of Crowds” is very useful in explaining

crowd behavior.

Edson Gould Profile by MT A

Edson Gould Conc epts by William Scheinm an






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Edson Gou ld’s 1975 Forecast


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Edson Gould’s 197 7 Forecast

Edson Gould’s Five Y ear Forecast 1977 to 1982

This was a remarkable forecast in 197 7 , where the Dow Industrials

had never been higher than 1,00 0. NO ONE had predicted a rise o f

this magnitude in 197 7 . Most were waiting for a resumption of the

bear market. As part of the 197 7 to 1982 forecast I have 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 Contrac ts). The Kansas City Stoc k Market Contract

was the first of the stock index co ntracts (February 1 982). It was

based on the Value Line Arithmetic Index , margin requirement

were quite low, and it had a multiplier of 1 00 times the Value Line Arithmetic Index, which meant the leverage was very high. On

Friday (Aug 6), my wife and I went to dinner and I to ld her my tale

of woe and asked her whether I should sell my long positions. I

explained 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 corre ct, we decided to

stick it out awhile longer (I was crazy in those days). On Monday

August 9, 1982 the market took off like a rocket and never looked back. The ignition for the 1982 to 200 0 bull market was

underway. I skyroc keted out of the red and had a big profit. In

August 1982 the o nly peo ple that were bullish were Edson Gould,

Robert Prechter and myself (probably a c ouple of others but I

didn’t know them). Eve ry one else was extremely bearish. It was a

perfect example of extre me crowd behavior.

Sign Of The Bull by Edson Gould







http://stockmarketobservations.wordpress.com/2011/11/07/edson-goulds-five-year-forecast-1977-to-1982-may-1977/

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****************************************************************

TRANSACTION 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

achieved 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 botto m (or top) is often

issued well in advance o f the formal buy or sell date. This allows

thoughtful consideration prior to a formal action signal. To get a

sense of how this works, you should read the days 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 ve ry skittish and usually remain so until the new direction is

well underway .

STOP BUYI NG – FEBRUARY 6, 2012

QUALIFI ED BUY – DECEMBER 15, 2011


QUALIFI ED BUY DECEMBER 2011








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http://stockmarketobservations.wordpress.com/2011/12/12/stock-market-update-qualified-buy-mode-121211/

http://stockmarketobservations.wordpress.com/2011/12/05/stock-market-update-qualified-buy-120511/





ACKNOWLEDGED BOTT OM – OCTOBER 16, 2011

PREVIEW TO A BUY SIGNAL – OCT OBER 2, 2011

BLOG SUSPENDED ON 9/27/11

This blog was suspended the first time on 9/17 /1 1 due to a deathacco mpanied by a family illness. It was suspended a second and

longer time on 9/27 /1 1 due to an extremely serious family

illness. Blog resumption with co mments and charts began again

on 11 /27 /1 1. Unfortunately due to illness I clearly missed issuing

a formal & important buy signal closer to the 10 /4/1 1 bo ttom.

Hopefully this error will not be repeated.

SELL – SEPTEMBER 9, 2011BUY – AUGUST 30, 2011

SELL – AUGUST 30, 2011 – Stopped out, re-bought quic kly

BUY – AUGUST 29, 2011

SELL – AUGUST 25, 2011



BUY – JUNE 23, 20 11

****************************************************************

MISCELLANEOUS

There are useful items throughout this blog. For instance, the

“Wall Street Quotes” can be v ery instructive. So make sure and

look all through the blog.







http://stockmarketobservations.wordpress.com/2011/10/16/stock-market-update-%E2%80%93-101611/

http://stockmarketobservations.wordpress.com/2011/10/02/stock-market-fact-%E2%80%93-100211/

http://stockmarketobservations.wordpress.com/2011/09/27/blog-suspended-temporarily-092711/

http://wp.me/p1DRwF-Iu

http://wp.me/p1DRwF-Cq


http://wp.me/p1DRwF-BN

http://stockmarketobservations.wordpress.com/2011/08/25/daily-stock-market-update-%E2%80%93-part-three-%E2%80%93-082511/

http://stockmarketobservations.wordpress.com/2011/08/23/breakout-buy-signal-082311/

http://stockmarketobservations.wordpress.com/2011/08/01/short-term-sell-finalized-080111/

http://stockmarketobservations.wordpress.com/2011/06/23/big-down-day-a-reversal/



beat the hell out of a car that’s too close to me while I’m in the

crosswalk. I actually saw this exac t incident happen in front of one of my

Taco Bells in the 1980s I laughed so hard I almost wet my pants




Taco Bells in the 1980s. I laughed so hard I almost wet my pants.

Crotchety old men are allowed literary and eccentric license and I’ve got

the literary license today . I’ve had the eccentric license since I was a

teenager.

If yo u aren’t interested in what a nerd I was (am) and how I bec ame a

brain-washed Apple borg collectiv e, sc roll down to “What’s Happening”.

This doesn’t have any thing to do with the stock market but it do es tie

into Apple stoc k and their computers.

All in all, this gives y ou a little background on the fearless, nutty goof-

ball nerd that’s writing this blog. In my old age I’ve bec ome relatively

conserv ative (compared with earlier decades). Of course I realize that

conserv ative is a relative concept. What’s conserv ative to me is

certainly wacko to so meone else. To each their own because that’s what

makes the world interesting.

MY FIRST PERSONAL COMPUT ER IN 197 7

I built my first computer from a kit in 197 7 . That’s right, I assembled it

with my trusty soldering iron and a whole lot of time and patience. This

was 4 years before the introduction of the IBM PC in 1981. Personal

computers were just beginning with some of the key nerds of that time,people like Bill Gates, Steve Jobs and Woz. Too bad I nev er hooked up

with any of them but I wasn’t in the right place at the right time.

The 197 7 computer I b uilt was a Cromemco with a Z-80 CPU, 4 memory

cards of 16K RAM each (total of 64K), 5 1 /4″ floppy disk drive with 91K

capacity (does anybo dy realize how small these figures are by to day’s

standards???), a Hazeltine smart terminal and a Digital Equipment

DecWriter printer. The Cromemco was really cutting edge stuff at the

time featuring many of the same c omponents found on mainframe









time featuring many of the same c omponents found on mainframe

computers.

My Cromemco co mputer had only 1 floppy disk drive as I didn’t see any

need for a second floppy drive (that was very short-sighted of me). A

hard disk drive was so expensiv e that only mainframe computers had

them. It was two computers later before I had a hard disk drive. The

Cromemco came in an ugly b lack case that was large and heavy (13″ x

20″ x 26″ and 36 lbs). It had 21 slots for the S-10 0 buss (that’s was

really ov erkill). This computer continued to serve me well until I

decided to buy a new PC clone in 1983 . I spent over $4,00 0 on the

Cromemco, which included peripherals. Each of the four 16K memory

cards cost me $500 . Today a 16K chip (not a board, a chip) would cost

about a buck. I doubt if yo u can buy a 1 6K memory chip anymore

(insignificantly small capacity ).

In 197 7 , there was no software available exce pt the language that was

used to program the computer. All of the software had to be custom

written by y ours truly. To make things really c hallenging I didn’t know

how to write a c omputer program, in fact I knew nothing about

computers other than the fact that I wanted one. It would have been

very helpful if I had taken a computer pro gramming course in college

but that neve r happened. I was a physics major and never had time for

such things. Needless to say I was fearless in my approach and believed

that I could teach my self how to do any thing, just give me a good tex t

book and a little time (that system worked in college as I nev er went to

class).

Eventually I sat down with my newly c ompleted computer, a lot of

programing books and spent 6 straight months (day and night) glued to

the keybo ard until the first program was finished. In those day s the

existing computer programing books were not very complete or









existing computer programing books were not very complete or

instructive. They pretty much expec ted you to understand basic things

about programing. They couldn’t have been more wrong in their

assumption. Primarily the boo ks were sorely lacking in explaining

syntax command structure. For those unfamiliar with computer

programing, correct sy ntax is paramount when giving instructions to acomputer. Without correct sy ntax, the computer can’t understand the

simplest com mand. Consequently , I spent a LOT of time using trial and

error to find the correct sy ntax structure. I kept this up until each

command functioned properly . After that it was simply a matter of

putting it all together in a structured program that the co mputer would

exe cute. Y eah it was a real piece of cake if y ou didn’t mind putting 100

hours per week into it. It’s a good thing I had good managers in my 3

Taco Bell restaurants because I was mostly ab sent from the business.

The first program completed was a profit and loss statement for the Taco

Bell restaurants. After that came a pay roll check writing program, which

was followed by the payro ll report programs, which were due quarterly

and yearly for both the state and federal gove rnment. What a time saver

it was. I spent about a solid year writing these programs so that I could

save a whopping 2 or 3 hours each month doing tedious business

activities. It really was a great challenge and I triumphed in the end butI would never c ome close to rec ov ering the time that I had spent writing

these programs. But there was a side benefit because it did lead to some

discov eries that were unanticipated in the stock market. My wife didn’t

divorc e me but my life was threaten on many occ asions. I also wore two

holes in the carpet from rocking the chair back on 2 legs as I was prone

to do when lost in thought. I spent a huge amount of time with that chair

rocked bac k on two legs, hence the vapo rized carpeting spots.

Programing is 90% thought and 10 % typing commands.









The following pic ture is a page from a magazine adv ertising the

Cromemco computer in 197 7 . By assembling the computer from a kit I

saved about $600 . The assembly procedure required me to solder

eve ry electrical component to the printed circuit boards. My 13 year

old daughter helped me and she was a really big help too. She was

fascinated by this enormous task that I had undertaken but she also knew

her father was nuts.

CLI CK ON ANY PICT URE OR CHART T O ENLARGE






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Cromemco Computer, Z-2D (my computer only had 1 disk driv e)

Following is a picture of the monitor that I used (smart terminal

monitor). It had characters that were displayed in dots and was really

hard on the eyes. None of these pictures are of my original equipment,

they are representative of exac tly what I had. The picture of the

Hazeltine monito r below is sitting on what looks like an old Altair

computer. No programing on that computer was possible other than the

switches that you threw on the front panel. Now that was limited and

archaic even for 197 7 . There were also computers that had cassette tape

drives, just like the ones used by the music industry. The large open reel

tape drives (seen on large main frame computers) were excellent. But

the cassettes were prone to recording unreliable computer instructions

and that never interested me. They were just cheap junk and were on

low end machines never intended for business use..











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Hazeltine 1 5 00 Montior & Term inal

This DecWriter printer below was so clatteringly loud that I installed it in

a closet and kept the door closed. It was dot matrix (remember that???)

and printed at the blazing speed of 30 characters per second. That may sound fast but it took several minutes to print one page. Today my laser

printer will churn out 12 pages per minute. I also had a 300 baud

telephone modem for dial-up connection to outside computers. 300

baud is about 30 charac ters per second and it was agonizingly slow.






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DecWriter Print er (dot m atr ix, 3 0 cps)

One day I had a eureka moment. With a computer I thought I co uld

undertake a lot of studies of the stock market that I nev er thought

possible, plus I could program it to print charts. Here I went again,

spending endless hours in front of the computer creating new programs.I was in so much trouble with my wife because I practically didn’t exist

in the family anymo re. I was just this blob that said “huh” to ev ery thing.

Also, “Just tell me when dinner is ready and I’ll come”. “Y eah sure, get it

yourself”. ” Chrissi and I are going out to eat”. And so it went. She

eve ntually murdered me, disposed of the body in the desert and I was

replaced with a loo k-alike android that paid her more attention.

Androids were really ex pensive in those days.

Truthfully I was really lucky that I had an understanding wife as a lot of

omen ould ha e reall unloaded on me and I ould ha e c ertainl






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women would have really unloaded on me and I would have c ertainly

deserved it.

With my new computer I kept thinking of more and more things to

analyze that I would NEVER attempt by hand, things too te dious, long

and prone to many erro rs. On and on it went with more and morecreations invo lving the stock market. Most of these programs didn’t lead

anywhere but they answered questions.

In 1 981 when the IBM PC came out, I was unimpressed by it but a co uple

of year later I did buy a PC clone with lots of bells and whistles that were

lacking on the IBM. For the first time there was now software available

for this useless pile of semiconductors c alled a computer. Computers are

really nothing more than large doorstops without the software. The Apple computer precede d the IBM PC but it had very , very little

software available and this would remain true for a v ery long time. I

vowed that there was no way I would ev er buy an A pple computer

because software is the heart and soul of a computer. When the original

mac c ame out, it did loo k interesting if you were into desktop publishing

or something similar that involv ed graphics. My co ntinuing direction

was towards custom financial software that I wrote myself for my

business and stock market analy sis. There was nothing Apple had tooffer that interested me. And so it co ntinued for literally decades.

Then one day I noticed that Apple was adopting the same Intel processor

that the PC was using. Hmmmm, that’s interesting but it was still useless

from a PC software point of view. But wait, Apple then introduced

“Bootc amp”, a method of booting yo ur Apple iMac up into Microsoft

Windows. Suddenly I was interested in an Apple computer because y ou

had an Apple iMac plus a Windows PC rolled up into one machine. This

sounded pretty good, I could use my Windows software on an Apple plus









Apple had made great strides in introducing their own software and often

it was easier to operate than its Windows counterpart.

Not long after Bootcamps introduction (2008) I went to my local Apple

store and fell in love with an iMac. I bought it and proceeded to use it for

my Windows applications and also A pple applications. Things were sogood that after a year I had almost completely abandoned my Windows

software. Better still, the iMac o perating system was so stable that I

never saw the blue screen of death or its related Apple co unterpart (does

it exist???). No rebooting because things froze up or whatev er else that

might go wrong with PCs. I now started talking to friends about my

Apple computer and how they had to buy one too. I was the proud

owner of an iMac and had become a full fledged member of the Apple

club. These were unbelievable words coming from my month, an

avo wed hater of Apple computers. A y ear later I bought a MacBook

(laptop) and was now a two computer o wner of Apple products. My

Apple brainwashing was almost co mplete and ev idently I was turning

into a mindless Apple borg collectiv e member.

The Amazon Kindle came out and I had to have one, lov ed it but it didn’t

do some things that I would like to see do ne by a small device like this.

Boom, A pple announces the iPad and it does ev ery thing the Kindle does

and LOTS more. I quickly sold my Kindle on eBay before the iPad was

introduced and prices dropped b ecause the world was going to wake up

one day and realize that the Kindle wasn’t up to the job and ex pendable.

I bought my iPad on the second day they were av ailable (Monday after

Easter 2010 ). I was now a 3 computer owner of Apple products. It’s

official, I was now an A pple zombie, “me want more A pples”.

And here we are at present day , awaiting the arrival of the iPad 3. I will

be buy ing an iPad 3 because I want the new features so widely rumo red









be buy ing an iPad 3 because I want the new features so widely rumo red.

I theorize that there are a LOT of other people that are thinking exactly

like my self. They have an iPad 1 and want to trade up because the new

features will be too adv anced to pass up. Try to find an unhappy iPad

owner. They “almost” don’t exist.

Now I don’t participate in first day ac tivities with all the Apple dev otees

who can be a little bit crazy with their borg-type dev otion. But I think

it’s highly likely that the iPad 3 demand will ex haust the av ailable supply

on the first day . Second day buy ers and beyo nd will be left with nothing

but an order to be filled at a later date. On black Friday (Friday after

Thanksgiving) the iPhone 4S was sold out throughout the country . There

is obviously precedent for huge demand overwhelming supply. With this

in mind, I must bec ome part of the day one problems but I won’t be partof the opening craziness. I’ll be there about 2 hours after the open when

the opening crazy rush is mostly finished (I hope its finished). It seems

likely that there should be iPads available throughout most of day one.

Hopefully that better not be wishful thinking or I’ll be standing in line

waiting for nothing (yuk).

MUSING ABOUT APPLE

With all of this in mind, it seems extre mely likely that Apple will have

another blowout quarter of earnings propelled by the iPhone 4S and the

new iPad 3. Apple’s guidance for the first quarter of 2012 was well

abov e analy st’s ex pectations and that neve r happens. Apple ALWAY S

predicts very conserv ative numbers that are easy for them to hit. So

first and second quarters are v ery likely going to be sensational.

Earnings for 201 2 should be nothing short of spectacular. Apple TV (the

actual televisions made by A pple) are rumored to also be coming in

201 2. These will be top of the line televisions that yo u will speak

d (Si i) d th ill d thi t ith t









commands (Siri) and they will do ev ery thing you want with no remotes

cluttering your tables. The downside of these TVs will be price but as

usual every thing Apple makes is first rate and not the c heapest when

compared to others. Apple has no peers when yo u compare features,

only c ompetitors that try to catc h up and mimic last year’s Apple

product and never quite catc hing up to Apple.

The stock price of Apple has had a very nice run since its consolidation

around the $350-$360 lev el during the 4th quarter of 201 1. The recent

run up of about 15 0 points (over $5 00 presently ) from $350 has been

prompted by much better earnings than anticipated during the 4th

quarter. This was caused by the blowout sales figures for the iPhone 4S

plus the recent and long awaited announcement that the iPad 3 will be

unveiled during the first week in March.

Apple now has 100 billion dollars in cash. That’s a lot of money . I think

Apple’s new price ov er $50 0 per share makes Apple the most valuable

company in the world eclipsing Exx on. I think it’s very likely that Apple

will begin paying a dividend this year. Apple co uld pay a 4% dividend

and still increase their cash reserv es. A more likely figure for a

beginning dividend is something on the order of 2% per year. Steve Jobs

was dead set against pay ing a dividend but Cook is amendable to pay ing a

dividend. One of the problems that Apple has is that many institutions

have hit their limit on the amount o f stock they can hold in a single

company (Apple). This fact by itself limits severely the buying power

available for Apple. If Apple begins paying a dividend a lot of

institutions that won’t buy Apple due to no dividend pay out will look

favorably towards buying the stock. That’s new buying power plus a lot

of individual investors will look favorably at Apple that passed before

due to no dividend. Apple has all this money and uses a very small

amount of it for acquisitions It’s very strange What did Steve Jobs









amount of it for acquisitions. It s very strange. What did Steve Jobs

have in mind by ac cumulating all this money ???? It’s a mystery to me.

Maybe he just wanted to see how much money he co uld accumulate

before he passed.

A few recent comments about Apple’s money:

“A pple is not exactly hurting for cash; Cupertino reve aled last month

that it’s sitting on approximately $97.6 billion. But rather than burning

those funds on acquisitions, half-baked technology, or iPads for all,

Apple chief Tim Cook insisted Tuesday that the c ompany is very

practical about its money.

“We spend o ur money like it’s our last penny,” Cook said at Tuesday’sGoldman Sachs Technology and Internet Conference. “We’re judicious,

we ’re deliberate.”

Apple shareholders “don’t want us to act like we’re rich,” Cook

continued. “That may sound bizarre, but it’s the truth.”

That being said, Apple isn’t just lounging in piles of gold coins Scrooge

McDuck-style. Cook said Apple has spent b illions on its supply c hain,

acquisitions, intellectual property ( sorry, Samsung ), infrastructure, and

retail stores.

“But yes, we still have a lot [of money],” Cook concede d.

So w hat is Apple going to do with all this cash? “It is being discussed

more now and in greater detail,” he said. “I’d be the first to admit, we

have mo re cash than we need to run the business on a daily basis. And

so w e’re actively discussing it. I only ask for a bit of patience so w e can

do this in a very deliberate way and m ake the best decision for the

shareholders ”






http://i2.listal.com/image/1186335/500full.jpg

http://www.pcmag.com/article2/0,2817,2400163,00.asp




shareholders.

“Cook said the late Steve Jobs “drilled in all of us [that] we should stay

extremely focused on a few things rather than try to do so many that

we did nothing well.” But it’s clear that Apple has th e desire the means

to branch out at least a little in the years to come .”

One of the remarkable features of Apple stock is that it’s currently selling

at 1 4 times trailing earnings and probably selling around 9 times forward

earnings. This is EXTREMELY low valuation for a stock that is growing at

double digit rates every quarter for years. As I said, the buying power is

limited in this stock and that “may” be o ne of the reason why it is v alued

so low. There is probably a lingering feeling that with Steve Jobs gone,

Apple will turn into tomorro w’s wasteland. The fact is that Stev e leftmany, many y ears of projects in the pipeline. Also the entire mindset

has changed at A pple (thanks to Steve), they now think differently than

any o ther company . They aren’t followers like Microsoft and others like

Samsung who is busy stealing Apple’s patents. Apple is now the leader of

the pack and they think like winners. Another reason for a low v aluation

is the nagging fear that another recession/depression is coming. Most

people view Apple as a technology c ompany, which they are, but they

are more correc tly thought of as a end product consumer oriented

stock. As the co nsumer pulls back in their buy ing habits, the thought is

that Apple has to suffer also. The problem with that thinking is it hasn’t

been true in the past. For instance when the economy went into a

slowdown in mid-2011 , Apple rolled right along at high speed. Apple’s

uniqueness keeps their sales going when others are suffering. If the day

comes when Apple loses their edge, the PE ratio that they c arry presently will beco me reasonable but until that happens they will

continue to surprise all of the naysay ers.









Have y ou wanted to buy Apple but y ou kept waiting for a meaningful

correc tion??? Y up, yo u and millions of other people are in that

category . If you look at the charts for Apple in MY CHART LINK ,

page 31, y ou’ll find that Apple has a history of declining down to the peak

of a prior high. It has done this repeatedly. For instance, 2007 to 2009, Apple declined from slightly ov er $200 to approx imately $80. The $80

level was the peak made in 2006 followed by a small correc tion. This

correc tion was followed by Apple’s almost uninterrupted run to the

$200 level. If we had a large recessionary c orrection in the market at

this time, I would ex pect in a worst case sc enario that Apple would

correct from the $500 lev el to $200 (2007 peak price). More than

likely it would stop at one of the other peaks like the $360 level made

during 2011 . So watch those peaks for future support levels should

Apple come under attack.

But I don’t really ex pect much in the way of a correc tion as long as the

economy holds up. The economies strength is surprising a lot of people

as many are still predicting a recession in 2012. But a lateral correction

may b e the worst that we will get until something very unexpec ted takes

place (black swan event).

In the growth stock section of my charts (Apple, page 31), I hav e just

added moving aver age lines, purple and gold. These are called the

“Guppy Multiple Mov ing Averages”. Y ou can read these chart lines

using the tactics o utlined below. These lines form an easily seen v isual

oscillator. Extreme points in the mov ing averages produce the same

extremes in the oscillators that appear on each chart. This makes it easy

to quickly follow ov erbought and overso ld points of reference.

The “Guppy Multiple Moving Average” has the following features (see

below chart for an e xample o f Guppy Lines):










p ppy

TACTICS

Join established trends at points of price weakness

Join established trends breaking to new highs

Trade breakouts using rally dips and rebounds

Trade downtrend rallies as rallies rather than trend breaks

Recognize trend breaks as they dev elop

RULES

Degree and nature of separation in the long term group define

trend strength and weakness

Degree and nature of separation in the short term group define thenature of trading activity .

Degree and nature of separation between the two gro ups of

mov ing averages define the character o f the trend.

Compression shows agreement on price and value.

Compression of both groups at the same time indicate major re-

evaluation of stock and po tential for a trend change

Trade in the direction of the long term group o f averages

The relationships between the groups prov ide the necessary

information about the nature and character o f the trend.

Do not use as a mov ing average cro ssover to ol

ADVANTAGES

Enables effectiv e analysis o f the trend env ironment

Improv es selection of the appropriate trading tacticsBetter understanding of trend strength

Effectiv e ev aluation of unusual price mov ements, such as dips and

spikes









spikes

Effectiv e understanding of trading activity and behav ior

DISADVANTAGES

Not effectiv ely applied to trend less stocksCannot be applied to all trending stocks

Do not use as a mov ing average crossov er signal

Apple stock chart from page 31 (daily view for the last 18 months).






http://stockmarketobservations.files.wordpress.com/2012/02/2011-02-14-apple-daily-18-months.jpg





W d I h d l i t d d t f d b t A l O I t















Wow and I had only intended to say a few words about Apple. Once I get

started I don’t know when to shut up. But now y ou know the rest of the

story.

WHAT ’S HAPPENING?

I have n’t issued a sell signal recently and don’t expe ct to do so anytime

in the immediate future. We’re going to ride the wave until the saw-tooth

develo ps or I get too hy per to sit still any longer (it happens).

In one o f the mechanical signal methods used on page 1 of my c hart link,

chart number 10 .8, we are very close to a sell signal. With paper profits

of about 100 points in the SP 500 , this method is going to have a very

good trade for its first transaction of 201 2. In the real world of my interpretations, I believe that we co uld have o ne more upthrust with

new recov ery highs before a correction takes place. Until that happens,

we may not see any real signs of a correc tion but I’m receptive to a

correc tion beginning at any moment. I still believe that my “no more

buying” was the correct mov e but it may not be r eadily apparent for

another week or two. If the correction co mes, I will issue a renewed buy

signal at the conclusion of the corre ction. I have had sev eral qualified

buy signals in recent months (since Oct 4th).

We have had an irregular market since my last “don’t buy ” update. We

aren’t really going down, more of a sideways to up market depending on

what index y ou are watching. Tuesday I thought we were going to start

something but it aborted at the end of the trading day and traded back up

to close little changed for the day. I had gone short early Tuesday morning and closed it out after the small 3 step do wn showed a little too

much life on the upside for me. Made a little money but its a risky trade

and I v ery definitely don’t reco mmend that sane people trade against the













larger trend. It’s one of those axioms, do n’t trade against the larger

trend. It’s very sound advice but I’m a little crazy (not as bad as I used

to be) and hence the risky short position taken early in the day. It could

have v ery easily gone against me and I would have lost money.

John Murphy has turned a bit cautious as he commented on Tuesday :

“It see ms reasonable to expect that an ev entual upside breakout by the

stock market will start to pull commodity prices higher. [Historically,

stock prices have usually turned up before commo dities]. In the

meantime, howe ver, relative w eakness in commo dity prices may be

hinting that the stock rally is overdone.”

“I’ve written a couple of recent messages explaining the importance of

Canada in the global intermarket picture. That’s why I remain focused

in the inability of Canadian stocks to clear their November high and

200-day mov ing average as show n in Chart 4. Its sho rt-term trend also

appears to be weakening a bit. The 1 4-day RSI line is in danger of

slipping below th e 50 level, w hile the daily MACD lines have turned

negative. Any we akness in Canadian stocks would make U.S. stocks

more vulnerable to short-term profit-taking. That’s bec ause the twoneighboring markets are usually c losely c orrelated. The inability o f the

CDW to breakout to the upside may also be helping to keep a lid on

commo dity prices.”

I hav e been establishing a new position in a stock (a stock???). I do own a

few but I normally b uy/ sell SP 500 futures contracts and roll them over

as they ex pire for any longer term holding periods. The stock that I have been slowly buy ing is Linn Energy (LINE). It’s considered a long term

holding and I’m tranching in as a conserv ative entry point. The current

price has a dividend pay out of 7 .7 %. I had already mentioned LINE in









my last comments and won’t bother to say any more.

Meanwhile I had said that I wo uld get back on b oard when the Nasdaq

Composite resumed its relative strength. It has resumed its strong

relative strength position but I I lied because I hav en’t give n an all clearfor buy ing. The COMPQ has resumed an irregular higher move but once

again it has showed a to pping formation ov er the last four day s, which

was destroy ed on Wednesday. It did this before when I warned of not

buying and that also proved to be a false alarm in the Composite Index.

I’m going to be conservative and not put the buy flag out yet. Any one

who is nutty enough to listen to me in the past should have bought a long

time ago and should only hav e been adding to these positions with new

money as it became available. Right now the bank is where the new money belongs.

It’s possible that we may get one more push into new recov ery ground

before a co rrection begins. The chart below shows that we have

completed 2 steps up (red 2 at top right) since December 19th. When the

3rd step up is completed, we can correc t. Overall, we are only in a larger

2nd step up (black 2 of 2) since the October 4th bottom. 1st step up (blue

1) ended in late October. Since then we have been in a larger step up(blue 2 not seen on this chart). If the count is correc t, we have muc h

further to go before the final top. That top will end the bull market,

which began in March 20 09.

Did yo ur ey es glaze over with that last paragraph??? Don’t worry,

eve ryb ody always says, “huh” . . . what did yo u just say???? I think the

conce pt is simple but ex plaining it in words is difficult and co mpletely BSto understand. It’s one of those, a picture is worth a thousand words.

The minutes from the most recent FED meeting have just been released

t d d th t k k t i d d lli ff M b th









today and the stock market was unimpressed and selling off. Maybe the

correc tion has begun. I have seen so many false starts in recent days

that we have to wait and see. This market has been impressive o n the

upside with high persistence and c ontinuing momentum.

20 1 1 -02 -1 4 INDU DAILY

The Nasdaq Composite index burst through the upper red circ le today

(Wednesday). These topping formations seem to be built so they c an be

destroy ed quickly. We are continuing to enjoy the ride but all new

buying is deferred for the moment.






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20 1 1 -02 -1 4 COMPQ 5 MINUTE

The semiconductor index is showing poor relative strength and is often

an early indicator of market turns. It clearly shows two steps down but

in an eager bull market, we often only hav e two steps do wn with a

truncated third step. That may b e possibly indicated here and a higher

high than 5 day s ago will prove that case.






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201 1 -02-14 SOX 5 MINUTE

The technology index stocks are showing good strength with a new

recov ery high today. That is certainly not an indication of any

correc tive ty pe action. This index has been in a solid uptrend since the

December 20 th bottom.






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201 1 -02-14 TXX 5 MINUTE

The banks (BKX) and the securities bro ker/dealer index have been ac ting

poorly but show 3 completed steps down. If true, this indicates a good

rally is forthcoming in these indexes. The only mo nkey wrench would be

a 4th & 5th steps down, but with the underly ing strength in the ov erall

market, that doesn’t seem likely.







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2 01 1 -02-1 4 BKX AND XBD 5 MINUTE

The Russell 2000 index (RUT) has been declining for sev eral days, but

today formed a higher low and all that is needed is for a higher high than

Monday’s close. If today’s late rally carries over into tomorrow, we

could easily best the Monday close.






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20 1 1 -02 -1 4 RUT 5 MINUTE

The SP 500 (SPX) has been go ing nowhere for the last week, but if y ou

look closely at this chart you will see a reverse head and shouldersformation (bullish formatio n). The left shoulder is last Thursday , the

head is Friday and the right shoulder is today. A break of the neckline

(the highs acro ss the top of this chart) would v alidate this formation and

call for a mov e upward of 17 points above the nec kline at approximately

135 4. A target would be about 137 1, which is precisely at the level of the

May 2011 high.






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201 1-02-14 SPX 5 MINUTE

The DJ Transports have been in a downtre nd for more than a week. The

late rally to day did v ery little to change that outlook.

201 1-02-14 TRAN 5 MINUTE

A longer v iew of the Canadian blue chip index (TSX) has formed a doub le

top and declined since the seco nd peak. I would count this as

somewhere in the second step down, where the first step down was






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somewhere in the second step down, where the first step down was

between the double tops. Second step down began immediately after the

seco nd peak. I like watching the TSX as it has less “noise” than some of

the American indexes. Institutions of all sorts have a temporary

distorting effect on the Americ an indexes. Consequently the distortionscan make count ing steps more difficult in some of the index es. This is the

reason why I hav e 10 indexes on each page with the same chart period.

The hope is that one of these indexe s will have a c lear picture of what’s

happening. Frequently that’s true but when its not, my life beco mes

more difficult.

201 1 -02-14 TSX 15 MINUTE










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201 1-02-14 TXX 3 0 MINUTE

The next c hart which is for the same time period as the TXX chart abov e

is the banks (BKX) and sec urites broker/ dealers (XBD) and it shows a

rather clear 3 steps up since the December 1 9th bottom. A perfect

example of why I have 1 0 indexes on each page for the same chart

period (30 minutes).







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2 01 1 -02-1 4 BKX & XBD 3 0 MINUTE

A lot of people have become more bullish in recent weeks and that oftenprecedes a temporary reversal, but this indicator is notoriously wrong in

the later stages of a bull market. The period leading up to the 20 00 b ull

market peak was an excellent ex ample of rampant bullish behavior but

no correc tion until the market had expended the buy ing power






http://stockmarketobservations.files.wordpress.com/2012/02/2011-02-14-bkx-xbd-30-minute.jpg




p y g p

available. When there is no one left to buy b ecause ev ery one has spent

their money, y ou are only left with sellers.

I remain in an “ov erall” uptrend theme as per previous updates. Thatmeans zig-zag not straight lines.

Told you this was a windy comment. I can really bore the crap out of

you if I start talking about the stoc k market. But I hav e learned to

restrain myself because nobody loves this stuff like I do . Talk about it for

a couple of minutes and then stop. If they want to continue the

conv ersation, they’ll tell me. But you guys are a captive audience

(maniacal laugh here). Only in 1999 did ev ery one want to talk about thestock market and I was telling them to sell, not what they wanted to

hear. Also nobody wants to buy when there is blood in the streets and

nobody wants to sell when eve ry thing is so good that making money in

the stock market is a sure thing. I always like to say “Don’t confuse

genius with a bull market”. Nobody understood that in 1999 and they

thought they had learned more in a short time than I had since 1 957

(they were thinking this guy is really dumb!). I have made peac e with

this attitude and alway s expect it. I don’t even say later, “I told y ou so”.Usually the person will say it for me.

Never forget that the driv ing force in the stock market is emotions and

those primary thoughts are “fear, hope and greed” as displayed in the

following chart.










Fear , Hope, an d Greed

CHARTS




I draw the trend lines and wave co unts on a daily basis (sometimes

more often). Y ou can find these doodles from 1 minute to

monthly charts.























Page 9 – Indexes With Monthly Bars (since 1 981)

Page 10 – Indexes With 60 Minute Bars, Candlestick







frequently visited.






looking for something that is breaking in a new direction.Page 31 through 46 are growth stocks with indicators. These are





and weekly prices since 1992. This gives a good perspective of how they have be haved in the immediate past (daily c harts) and



signals









signals


My wave counts are not Elliott Wave! It’s different, simple and functions w ithout a maze of exclusions.






dips instead of 3 bumps.3 steps m ust stay confined to a channel. Laying a pen or





ended.


perceived wave cou nt), the step has been terminated.(Make sure yo ur channel was correctly drawn before c alling a





correc tion following third step is larger than the second stepcorrection.

A single wave m ay sub-divide into another 3 waves. I will

call this an ex tension. When this happens (1) the trend is still


3 t th ill b 5 t













Glossary Link

ABBREVIATIONS



SPX = SP 50 0

ES = SP 500 Futures




TXX = Technolo gy

****************************************************************

Long T erm – UPUptrend

Mar 2009 To Present




Large step one up ended in May 2010Large step two up ended in May 2011













****************************************************************


Downtrend




















scenario.













In the head and shoulders formation the measurement calls for a bottomaround Dow Jones Industrials 1,0 00. This is almost an unimaginable














when Barrons was available only on paper, still is for the distant

past).






y y p p g



are available upon request. This is a man that deserves to beremembered throughout technical analysis market history.







reading this report and I began to understand how to begin

predicting the market. The book “Extrao rdinary Popular


crowd behavior.



Decade Cycle by Edson Gould

Decade Cyc le Update by Ned Davis

Swing Principle by Edson Gould

A measuring indicator

Utilities by Edson Gould

A forecasting indicator

Dividends by Edson Gould

Bonds by Edson Gould

Speed Lines by Edson Gould

Sentimeter by Edson Gould









http://stockmarketobservations.wordpress.com/2011/10/28/decade-cycle-by-edson-gould/

http://stockmarketobservations.wordpress.com/2011/10/28/decade-cycle-update-by-ned-davis/

http://stockmarketobservations.wordpress.com/2011/10/28/swing-principle-by-edson-gould/

http://stockmarketobservations.wordpress.com/2011/10/28/utilities-by-edson-gould/

http://stockmarketobservations.wordpress.com/2011/10/28/dividends-by-edson-gould/

http://stockmarketobservations.wordpress.com/2011/10/28/bonds-by-edson-gould/

http://stockmarketobservations.wordpress.com/2011/10/28/speed-lines-by-edson-gould/

http://stockmarketobservations.wordpress.com/2011/10/28/sentimeter-by-edson-gould/




With companies failing to pay dividends c ommensurate with their

earnings, this indicator has failed. As the market deteriorate in

the coming years, I would expec t dividends to return to theirformer levels and this indicator will once again become useful.

Prior to the late 1990s, it had 100 y ears of success.

Bottoms by Edson Gould

This was written and directed at the upco ming bottom in 197 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 years.


Gould’s 197 4 forecast kept me bearish and short throughout 197 4

until the week before Christmas 197 4, during which I began

making long term purchases. After that it was ride the bull phases

that transpired from 197 5 to 1982. 1982 to 2000 was the greatest

bull market of all time.Edson Gou ld’s 1975 Forecast







bear market.

As part of the 197 7 to 1982 forecast I have the following story. On








http://stockmarketobservations.wordpress.com/2011/11/07/bottoms-by-edson-gould/

http://stockmarketobservations.wordpress.com/2011/11/07/three-steps-by-edson-gould/

http://stockmarketobservations.wordpress.com/2011/11/07/edson-goulds-1974-forecast-feb-1974/










was the first of the stock index co ntracts (February 1 982). It was based on the Value Line Arithmetic Index , margin requirement

were quite low, and it had a multiplier of 1 00 times the Value Line

Arithmetic Index, which meant the leverage was very high. On





lower. Since the key indicator was usually corre ct, we decided tostick it out awhile longer (I was crazy in those days). On Monday

August 9, 1982 the market took off like a rocket and never looked

back. The ignition for the 1982 to 200 0 bull market was







****************************************************************

TRANSACTION SIGNALS



BUT . . . . .


achieved by a continuation of the upward trend which causes












See more details in the glossary under “Tax es, Futures Contracts”and “Money Management”.

Glossary Link




thoughtful consideration prior to a formal action signal. To get asense of how this works, you should read the days prior to a





well underway .

STOP BUYI NG – FEBRUARY 6, 2012QUALIFI ED BUY – DECEMBER 15, 2011



ACKNOWLEDGED BOTT OM – OCTOBER 16, 2011

PREVIEW TO A BUY SIGNAL – OCT OBER 2, 2011

BLOG SUSPENDED ON 9/27/11

This blog was suspended the first time on 9/17 /1 1 due to a death

acco mpanied by a family illness. It was suspended a second and

longer time on 9/27 /1 1 due to an extremely serious family

illness Blog resumption with co mments and charts began again








http://stockmarketobservations.wordpress.com/2011/12/15/qualified-buy-again-121511/

http://stockmarketobservations.wordpress.com/2011/12/12/stock-market-update-qualified-buy-mode-121211/


http://stockmarketobservations.wordpress.com/2011/10/16/stock-market-update-%E2%80%93-101611/

http://stockmarketobservations.wordpress.com/2011/10/02/stock-market-fact-%E2%80%93-100211/

http://stockmarketobservations.wordpress.com/2011/09/27/blog-suspended-temporarily-092711/




Share this:

illness. Blog resumption with co mments and charts began again

on 11 /27 /1 1. Unfortunately due to illness I clearly missed issuing

a formal & important buy signal closer to the 10 /4/1 1 bo ttom.

Hopefully this error will not be repeated.

SELL – SEPTEMBER 9, 2011







BUY – JUNE 23, 20 11

****************************************************************

MISCELLANEOUS




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Stock Market Update – 02/06/12Pos ted February 7, 201 2 by Bob

C t i DAILY UPDATE SELL/BUY AC TION U PDATE






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Categories: DAILY UPDATE , SELL/BUY AC TION U PDATE

CLI CK HERE IF READING PDF

****************************************************************


In my last update I said: “It w ill be interesting to see what type o f

resistance the prior highs of May 2011 will provide. Very little

resistance could prompt a continuing run. Stiff resistance w ould likely

indicate the end of 2nd step since the late Nove mber bottom.”

This week I hav e noticed that the Nasdaq Composite has slowed it growth

relative to the b lue chips (SPX). This is probably warning of a correction

of some type. In fact, most of the indexes hav e topped exc ept for the

blue chips. Maybe the February bottom will take place (????).

First see the c ontinuing strength in the blue c hips.








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http://stockmarketobservations.wordpress.com/

http://stockmarketobservations.files.wordpress.com/2012/02/2011-02-06-spx-5-minute.png




20 1 1 -02 -06 SPX 5 MINUTE

201 1 -02-06 IND 5 MINUTE

While the Nasdaq Composite and a few of its friends are lagging behind.






http://stockmarketobservations.files.wordpress.com/2012/02/2011-02-06-spx-5-minute.png

http://stockmarketobservations.files.wordpress.com/2012/02/2011-02-06-ind-5-minute.png

http://stockmarketobservations.files.wordpress.com/2012/02/2011-02-06-comp-5-minute.png




20 1 1 -02-06 COMP 5 MINUTE

The banks have slowed their growth.







http://stockmarketobservations.files.wordpress.com/2012/02/2011-02-06-bkx-5-minute.png




20 1 1 -02 -06 BKX 5 MINUTE

The semiconductors often turn before the rest o f the market.






http://stockmarketobservations.files.wordpress.com/2012/02/2011-02-06-bkx-5-minute.png

http://stockmarketobservations.files.wordpress.com/2012/02/2011-02-06-sox-5-minute.png




20 1 1 -02 -06 SOX 5 MINUTE

The same is true o f the Canadian blue chips (TSX)






http://stockmarketobservations.files.wordpress.com/2012/02/2011-02-06-sox-5-minute.png

http://stockmarketobservations.files.wordpress.com/2012/02/2011-02-06-tsx-5-minute.png




2011-02-06 TSX 5 MINUTE

Naturally this could be a natural rotation among groups but for now, it issimply a warning of a “possible” correc tion. Meantime, I’m not buying

nuthin’ for the moment. When the Nasdaq and the other index es

mentioned here begin to show more relative strength, I’ll join up with

them. Naturally things could change quickly as the charts shown are a

very small snap shot in time and it doesn’t take much to change this

picture. Be aware for now.

Bottom line, this is a don’t buy update unt il relative strengthimproves in th e smaller cap stocks.

I remain in an “overall” uptrend theme as per prev ious updates.

CHARTS






monthly charts.



















Page 6 – Index es With 60 Minute BarsPage 7 – Indexes With Daily Bars






Pages 13 through 1 4 are shorter term indicators. The indicatorsare used to simply look for some type o f leading action before a



frequently visited.






looking for something that is breaking in a new direction.

Page 31 through 46 are growth stocks with indicators. These are










g y p q








signals







. . Other times, not so easy .In a downtrend the same rules apply ex cept y ou are co unting 3







ended.


perceived wave cou nt), the step has been terminated.

(Make sure yo ur channel was correctly drawn before c alling a














correction.








Glossary Link

ABBREVIATIONS


DJT = Dow Jones Transportat ionsSPX = SP 50 0

ES = SP 500 Futures




TXX = Technolo gy

****************************************************************

Long T erm – UP

Uptrend

Mar 2009 To Present












****************************************************************


Downtrend



















scenario.







conclusion of the present recov ery would call for a third and final bearmarket. An estimated time for the conclusion o f the final bear market is


























****************************************************************

EDSON GOULD





After 40 y ears I still have many of the publications from hisadvisory servic e, “Findings & Forecasts”. Fearing the loss of these



of the reports.












past).




t A t i h t i ht ll it Th t f th t

















predic ting these irrational market swings. But the fog lifted afterreading this report and I began to understand how to begin



crowd behavior.














earnings this indicator has failed As the market deteriorate in





















the coming years, I would expec t dividends to return to their

former levels and this indicator will once again become useful.







from this report although I modified the concept through the

years.






bull market of all time.








bear market.





Stock Market Contrac ts) The Kansas City Stoc k Market Contract


























stick it out awhile longer (I was crazy in those days). On Monday

August 9, 1982 the market took off like a rocket and never looked








****************************************************************

TRANSACTION SIGNALS

All actionable signals are only for short term time frames. Thesesignals are not designed for intermediate or long term time frames

BUT . . . . .















Glossary Link




thoughtful consideration prior to a formal action signal. To get asense of how this works, you should read the days prior to a





well underway .

Qualified buy signal given from December 5th toDecem ber 20th, 2011

Buy signal in October 2011 was never issued due t o a

SERIOUS family illness




BUY – AUGUST 29, 2011SELL – AUGUST 25, 2011



BUY – JUNE 23, 20 11

****************************************************************


















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Stock Market Update – 02/04/12Pos ted February 5, 201 2 by Bob

Categories: DAILY UPDATE


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CYCLES






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Previously I said: “It’s alway s possible that we could see nothing more

than 1-3 day c orrections with a resumption of the rally. That’s really great market action if it continues.” And that’s exactly what’s been

happening. The next po ssibility for a cy cle bottom is late February o r

early March per the 1950 dataset.

The best possible outco me for the late January cy cle bottom is that it is

invisible because the larger 18 month cyc le is exerting strong upward

influence and ov erriding the shorter term cy cles. Hopefully this is true

but we won’t know for sure until later.

The 1950 dataset shows:.










http://stockmarketobservations.files.wordpress.com/2012/01/01-29-12-1950-to-present-cycles-2.jpg




01/29/12 19 5 0 to present dataset cy cles


Although we have not made new reco very highs in most of the indexes

(Industrials and Nasdaq Composite have a new clo sing high on Friday ),

we are in large step 3 dating from the March 200 9 bottom. The first

chart shows the favo red wave c ount. If we are in large step 3 up, we will

have new recov ery highs before too long.

It’s a bit early to begin speaking about all-time highs but it doe s reside in

the back of my mind. Again this is favo red because of my v iewpoint onthe long term megaphone formation (blue lines top chart). A massive

head and shoulders and megaphone formation have been forming since

2000 . The head and shoulders is not believe d to be viable.












The last large megaphone formation was 1965 to 1 97 4. I believe we are

doing the same as 1965-197 4 only the timeline is doubled. The

expec tation is that we will finish the megaphone in 201 8.











http://stockmarketobservations.files.wordpress.com/2012/02/1965-1974-megaphone.jpg




1 965 -19 7 4 MEGAPHONE

Since December 19th we have bee n in a single step upward. At worst, the

very short term count is step 3. At best, the count is the beginning of

step 2.

It will be interesting to see what ty pe of resistance the prior highs of May

201 1 will prov ide. Very little resistance could prompt a continuing run.

Stiff resistance would likely indicate the end of 2nd step since the late

November b ottom. The Industrials and Nasdaq Composite had no

resistance and punched through easily on Friday’s closing high. The

market continues to remain overb ought but this is typical of a strong

bull run, ov erbought with a refusal to correc t.







http://stockmarketobservations.files.wordpress.com/2012/02/1965-1974-megaphone.jpg

http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-ind-daily-long-term.png




2 01 2-02 -04 IND DAILY LONG TERM

Weekly candlestick charts since 20 08 with Fibonacci speed lines.






http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-ind-daily-long-term.png

http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-tsx-weekly.png




201 2-02-04 T SX WEEKLY






http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-tsx-weekly.png

http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-ind-weekly.png




2 01 2 -02-04 IND WEEKLY






http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-ind-weekly.png

http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-comp-weekly.png





2 01 2 -02-04 COMP & VLE WEEKLY
























http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-spx-weekly.png




201 2-02-04 SPX WEEKLY

Daily c andlestick charts since May 20 09






http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-spx-weekly.png

http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-ind-daily.png




2 01 2-02 -04 IND DAILY

The Nasdaq composite on Friday also ex ceeded its May 201 1 high.There was no resistance, it gapped right through the old highs. It’s

almost always good market action to see the Nasdaq leading the

advance. When this index begins lagging we’ll know that a corre ction is

near.

The Value Line Index mo ve d through its 2007 all-time highs in April

201 0. Currently the index is drawing in on the May 20 11 highs.






http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-ind-daily.png









http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-comp-daily.png





2 01 2 -02-04 C OMP & VLE DAILY











http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-spx-daily.png




20 1 2-02-04 SPX DAILY

Price limiting bands on daily charts since 200 9






http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-spx-daily.png

http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-indexes-daily-limiting-bands.jpg





201 2-02-04 INDEXES DAI LY – LIMITING BANDS

60 minute charts since June 201 1

20 1 2-02-04 TSX 60 MINUTE
















2012-02-04 IND 60 MINUTE

201 2-02-04 COMP 60 MINUTE

Internal Indicators

The next c hart is the new highs and it is expanding as the market moves

up. Obv iously this is good market action.








http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-net-new-highs.png




201 2-02-04 NET NEW HIGHS

The advance decline line (cumulative) is at an all-time high






http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-net-new-highs.png

http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-advance-decline-line.png




20 1 2 -02-04 ADVA NCE DECLINE CUMULATIVE

The cumulative net v olume line is not at a new high but it is showing a

strong uptrend.






http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-advance-decline-line.png









http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-new-volume-cummulative.png




2 01 2 -02-04 NET VOLUME CUMMULATIVE

The Dow Theory co ntinues to have co nfirming recov ery highs. The

Industrials exceeded the May 20 11 closing high without a confirmation

from the Transportations. We’ll keep an ey e on a c onfirmation by the

Transports.






http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-new-volume-cummulative.png

http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-dow-theory.png




201 2-02-04 DOW THEORY

This is my super secret buy /sell indicator (Series #1) in red. The chart

show the Industrials and series #1 since May 20 10 . The decline from

May to October 20 11 was not reflected in the series #1 indicator. I

would interpret this as investors co ntinuing to ex ert a co ntinuous

buying influence o n the market.






http://stockmarketobservations.files.wordpress.com/2012/02/2012-02-04-dow-theory.png

http://stockmarketobservations.files.wordpress.com/2012/02/2011-02-04-ind-buysell-indicator.png




2 01 1 -02 -04 DJ IND & SERIES #1 INDICA TOR

2 01 1 -02-04 DJ TRN & SERIES #1 INDICAT OR

The following chart is the Tranportations av erage and the series #1

indicator since January 20 07 . There was ample warning in this

indicator that the market was in trouble prior to the peak in Octobe r

2007 . The Transports made a subsequent high after Oct 200 7 but the

series #1 indicator was far below its high early in 2007 .






http://stockmarketobservations.files.wordpress.com/2012/02/2011-02-04-ind-buysell-indicator.png

http://stockmarketobservations.files.wordpress.com/2012/02/2011-02-04-trn-series-1-indicator.jpg

http://stockmarketobservations.files.wordpress.com/2012/02/2011-02-04-trn-series-1.jpg




2 01 1 -02-04 TRN & SERIES #1 INDICAT OR

All of the abov e charts (exc ept the series #1 charts) are available on my

chart link below.

CHARTS






monthly charts.








Page 5 Index es With 30 Minute Bars






http://stockmarketobservations.files.wordpress.com/2012/02/2011-02-04-trn-series-1.jpg





Page 5 – Index es With 30 Minute BarsPage 6 – Index es With 60 Minute Bars











frequently visited.
















signals














Often times it’s as simple as counting 3 bumps (or dips) on a chart .. . Other times, not so easy .







channel is not clear until the surge phase (vertical mov e) hasended.









correction.




3 steps there will be 5 steps









3 steps, there will be 5 steps.Sometimes I will use the terms “step” and “wave” interchangeably .



Glossary Link

ABBREVIATIONS

DJI = Dow Jones Industr ialsDJT = Dow Jones Transportat ions

SPX = SP 50 0

ES = SP 500 Futures




TXX = Technolo gy

****************************************************************

Long T erm – UP

Uptrend

Mar 2009 To Present
























scenario.

















around Dow Jones Industrials 1,0 00. This is almost an unimaginableeve nt regarding the possible fundamentals to c reate this scenario. If this





Remember these are simply possible scenarios and are not embedded infact. Whatever the outc ome, it never hurts to be a little cautious with





****************************************************************









EDSON GOULD









of the reports.












past).
























crowd behavior.



Decade Cycle by Edson GouldDecade Cyc le Update by Ned Davis











the coming years, I would expec t dividends to return to their

former levels and this indicator will once again become useful.




























years.







Edson Gou ld’s 1975 ForecastEdson Gou ld’s 1976 Forecast






bear market.
























q , p







stick it out awhile longer (I was crazy in those days). On Monday August 9, 1982 the market took off like a rocket and never looked








****************************************************************

TRANSACTION SIGNALS


signals are not designed for intermediate or long term time framesBUT . . . . .















Glossary Link





sense of how this works, you should read the days prior to aformal buy /sell signal. I often buy/sell in my personal account




well underway .

Qualified buy signal given from December 5th to

Decem ber 20th, 2011Buy signal in October 2011 was never issued due t o a









BUY – JUNE 23, 20 11

****************************************************************

MISCELLANEOUS



















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Elder Impulse System – 01/30/12Pos ted January 30, 201 2 by Bob

Categories: WORDS O F WISDOM


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ELDER IMPULSE SYST EM

On MY CHART LINK I hav e begun using the Elder Impulse System o n

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 C l t G id t T di ” b D A l d Eld















http://stockmarketobservations.wordpress.com/category/words-of-wisdom/








TRADING ROOM, A Complete Guide to Trading” by Dr. A lex ander Elder.

Yo u can find this book at Amazon.com and it has great tidbits o f info.

Begin Quote :

Entries

I designed this system to identify the inflection points where a trend

speeds up or slows down. The Impulse Sy stem works in any timeframe,

including intraday. It pro vides buy and sell signals, but leave s it up to

you to select good markets, tweak parameters, and supply the discipline.

Choose an activ e market whose price s swing in a broad channel. What

happens if yo u make a C trade and grab only 10 % of a channel width? This

result is not too bad if the channel is 20 points wide, but a C trade is an

exe rcise in futility if the channel is only 5 po ints wide. Chase fat rabbits,

don’t waste your time o n skinny o nes.

The Impulse System c ombines two simple but powerful indicators. One

measures market inertia, the other its momentum. When both point in

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 exit signal.

The Impulse Sy stem uses an exponential mov ing average to find

uptrends and do wntrends. When the EMA rises, it shows that iner tia

favor s the bulls. When EMA falls, inertia works for the bears. The sec-

ond component is MACD-Histogram, an oscillator whose slope reflects

changes o f 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.










http://www.amazon.com/Come-Into-My-Trading-Room/dp/0471225347/ref=sr_1_1?ie=UTF8&qid=1327942821&sr=8-1




The Impulse System flags those bars where bo th the inertia and the

momentum point in the same direc tion. When both the EMA and MACD-

Histogram rise, they show that bulls are ro aring 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 o nly a few bars, but that’s when the market trav els fast—the

impulse is on!

Before yo u rush to apply the Impulse System to y our favorite market,

remember how Triple Screen analyzes markets in more than one

timeframe. Select y our favo rite timeframe and c all it intermediate.

Multiply it by five to define your long-term timeframe. If yo ur favorite

chart is daily, analyze the weekly chart to make a strategic decision to be

a bull or a bear. Use a 26-week EMA, the s lope o f weekly MACD-

Histogram, or both, o n the weekly c hart.Once y ou’ve defined the long-term trend, return to y our daily chart and

look for trades only in the direction of the weekly. The Impulse System

uses a 13-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

system more sensitive.

When the weekly trend is up, turn to the daily charts and wait for boththe 13-day EMA and MACD-Histogram to turn up. When both inertia and

momentum rise, you have a stro ng buy signal, telling yo u to get long and

stay long until the buy signal disappears.

When the weekly trend is do wn, turn to the daily charts and wait for both

the 13 -day EMA and MACD-Histogram to turn down. They give y ou a

signal to go short, but b e ready to co ver when that signal disappears.

Some technical programs allow yo u to mark price bars with different









co lors. Make them green when bo th the EMA and MACD-Histogram rise ,

and red when bo th indicators fall. Don’t mark the bars where the

indicators point in the opposite directions. This lets you easily see

signals at a glance.

Exits

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 don’t last long either. Try to hop off while you’re

still in the money .

The time to buy into a momentum trade is when all yo ur ducks are in a

row, that is, when the weekly tre nd is up and the daily EMA and MACD-

Histogram are rising. Hop o ff as soon as a single indicator turns down.

Usually, daily MACD-Histogram turns first as the upside mo mentum

starts weakening. When the buy signal disappears, sell without waiting

for a sell signal.

Reverse the procedure in downtrends. A momentum trade on the short

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 over, and y our

momentum trade has fulfilled its goal.

The Impulse System encourages y ou to enter c autiously but ex it fast.

This is the pro fessional approach to trading, the to tal opposite o f the

amateurs’ style. Beginners jump into trades without thinking too much

and take forever to get out, hoping and waiting for the market to turn

their way .

Yo u must be very disciplined to trade this system because it is hard to









Yo u must be very disciplined to trade this system because it is hard to

place an order when the market is already flying, but even harder to quit

while yo u’re ahead without waiting for a reversal. Y ou are not allowed to

kick yourself if the trend continues after y ou get o ut. Do not touch this

system if y ou hav e the slightest problem with discipline.

End Quote:

CHARTS






monthly charts.













Page 11 – Indexes With Daily Bars Candlesticks










Page 11 Indexes With Daily Bars, Candlesticks






frequently visited.Page 15 – Hurst FLD Projections















signals
























ended.









correction.








Glossary Link










ABBREVIATIONS



SPX = SP 50 0

ES = SP 500 Futures




TXX = Technolo gy

****************************************************************

Long T erm – UP

Uptrend

Mar 2009 To Present


Step 3 Up Has Possibly Begu n



Large step two up ended in May 2011.

Significant break abov e the May 20 11 highs should signal that Step

3 up is o fficial











****************************************************************


Downtrend











Downtrend

























time highs before the nex t bear market began. We also have formed a huge head and shoulders formation since



We began a long term bull market in March 20 09. Each

subsequent min-bear market will result in higher lows than the

prior major low.

I favor the m egaphone formation as the m ost likely scenario.















support the head and shoulders argument. In both formations theconclusion of the present recov ery would call for a third and final bear










The reasons range from the absurd to the absurdly absurd. This scenario

is so dark that it doesn’t seem possible but nev ertheless, the head and

shoulders formation is there and will be waiting until we pierce the all-time highs of October 2 007 .






Hopefully we will never have to think about worst case sc enarios other

than to have a go od laugh at them presently









than to have a go od laugh at them presently.

****************************************************************

EDSON GOULD


Gould had a profound influence o n the dev elopment of my techniques and indicators. Prior to me subscribing to his






of the reports.

I hav e used a technique of his that I found in an obscure referencein one of his reports. It was only mentioned once and never

again. I believe that he used this tool extensiv ely and never told

the world it’s importance. Prior to my finding this tool, I had been

try ing unsuccessfully to find a different way to c hart the market.

When I read about his technique I knew instantly that this was

exac tly what I had been seeking. I have 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 have deleted any reference to

it. It’s a super secret indicator and I’d have to kill you if I told y ou

about it.


today most people have forgotten or nev er heard of him or his
















irrational volatility o f markets that had my stified me in my early years. During those early y ears I found nothing worked in



predicting the market.








A forecasting indicatorDividends by Edson Gould





earnings, this indicato r has failed. As the market climate

continues to deteriorate in the coming years, I would expec t

dividends to return to their former lev els and this indicator will

once again become useful. Prior to the late 1990s, it had 100




















years of success.







years.












had nev er been higher than 1,0 00 . NO ONE predic ted a rise o f thismagnitude in 197 7 . Most were waiting for a resumption of the

bear market.

As part of the 197 7 to 1 982 forecast: On Wednesday A ugust 4,

19 82 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 Stoc k Market Contract was the first of

the stock index co ntracts (February 1 982). It was based on the

Value Line Arithmetic Index , margin requirement were quite low,
















and it had a multiplier of 1 00 times the Value Line Arithmetic

Index , which meant the leverage was very high. On Friday (A ug

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 reversed and c ontinued higher on Thursday and

Friday but the market had continued lower. Since the key

indicator was usually correc t, we decided to stick it out for a few

days more (I was crazy in those days). My key indicator w as

mentioned by Gould only onc e in his market letters. If y ou didn’t

catch its importance, too bad, because he only gave y ou a peek.

Prior to Gould writing about this indicator I had been loo king for

one that had similar characteristics without success. Thus when

Gould wrote about it, I recognized instantly that I had struck

gold. I have modified this indicator slightly and researched it

back to 1939. This was a lot of work as it was before co mputers

and online data (remember when Barrons was available only on

paper, still is for the distant past). Meanwhile on Monday A ugust

9, 1982 the market took off like a rocket and never lo oked back. I

skyroc keted out of the red and had a big profit. In August 1982

the only people that were bullish were Edson Gould, Robert

Prechter and myself (probably a c ouple of others but I didn’t know them). Ever yo ne else was extremely bearish. It was a perfect

example of crowd behavior.


****************************************************************

TRANSACTION SIGNALS













BUT . . . . .






Glossary Link



issued well in advance o f the formal buy or sell date. This allowsthoughtful consideration prior to a formal action signal. To get a

sense of how this works, you should read a few days prior to a





well underway .


Decem ber 20th, 2011





SELL – AUGUST 30, 2011 – Stopped out, re-bought quic kly BUY – AUGUST 29, 2011

SELL AUGUST 2 2011















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MISCELLANEOUS






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****************************************************************

WHOOPS

My last update had nothing new included, just the normal every day stuff that is always included. I was preparing for today ’s post and tagged the

wrong button. Sorry about that.

Every time I put a new file (pdf) in my blog an update goes o ut

automatically. That’s not intentional just the way wordpress does

things. So I apologize in advance if I upload 5 files in one day and 5

updates go out.

CYCLES

I haven’t posted the charts for the cy cles since 1/1 8 and today I’ll show

you what’s happening.

Two of the three charts show that we should be bottoming presently.

That’s still possible with a quick deep c orrection and next week should

tell us if that’s going to happen. Whether the correc tion is invisible (very

good sign) or it will occ ur in February remains to be seen.

If the correc tion is practically inv isible, it will indicate that a larger cy cle

has dominance (good sign). The 1950 dataset shows a February bottom

but that factors 60 y ears of data and doesn’t put emphasis on recent

cy cles like the dataset 1998 and 2007 .

The next cy cle of real significance is indicated for March (1950 dataset)or May (1998 and 2007 dataset). The 195 0 dataset shows an 18 month

cy cle bottom in March while the 1998 and 2007 dataset show that the










cy cle bottom in March, while the 1998 and 2007 dataset show that the

18 month cy cle bottomed last Octobe r. If we have a significant

correc tion into February that takes us into the area of the October lows,

it will likely indicate that the 195 0 dataset is correct. That isn’t my

favorite outlook but I don’t get to choose what the market does (nuts).

The market is very ov erbought and a correction of some type should

take place to replenish the market’s firepower. It’s always possible that

we could see nothing more than 1-3 day correc tions with a resumption of

the rally. That’s really great market action if it continues.

The following charts are the datasets 1950 , 1998 and 2007 , in that

order.










01/29/12 19 5 0 to present dataset cy cles

01/29/12 19 98 to present dataset cy cle







http://stockmarketobservations.files.wordpress.com/2012/01/01-29-12-1998-to-present-cycle-2.jpg






01/29/12 2007 to present dataset cy cle

MISC

Jeffrey Saut mentioned Linn Energy (LINE) on his Thursday update. I

hadn’t looked at it before but it pay s a 7 .5% dividend, has an excellent

growth record and is co nstantly making acquisitions. Jeffrey said this is

the stock he rec ommends to friends and family to put away for a few

years. Of course if oil prices don’t rise, LINE wouldn’t do well. Presently

the oil price chart shows that oil is in an inverse head and shoulders

formation (see my charts page 13, #7 1.6). This hasn’t been confirmed by a neckline breakout but the projected rise is to approximately $1 13 per

barrel. This isn’t a reco mmendation because I don’t do that, just take a

look. My normal field of play is the stock index futures where I’m very

careful to NOT become ov er-leveraged (been there, do ne that).

CONFIDENCE INDEX

The following is the confidence index (junk bonds divided by treasury

bonds). Although the index is rising, the curious and bothersome part

about this chart is the index has not risen abov e it’s October high.

Another problem is that various market indexes are approaching their

May 201 1 highs and the confidence index is far away from it’s 201 1 high.

When the market expec ts a reco very , junk bonds will rise much faster

than treasury b onds. That is barely happening at the present. The lower

part of this chart is the Value Line Arithmetic Index . Did yo u realize that

this index hit an all-time in March 201 0 and kept right on rolling. It’s

t ll ti hi h M














present all-time high was May 201 1.






http://stockmarketobservations.files.wordpress.com/2012/01/01-29-12-confidence-index.jpg




01 /29 /1 2 Confidence Index

ECONOMY

The following chart give s indication for the ec onomy in real-time. The

last chart is the Baltic Dry I ndex, which is the cost o f ocean shipping. When the economy is rolling in high gear, this index will be at high levels

and the reverse is also true. Presently , this index is very near the lows

made in December 200 8. Y ou can draw your own conclusions on that






http://stockmarketobservations.files.wordpress.com/2012/01/01-29-12-confidence-index.jpg



always climbs the “wall of worry ”.

CHARTS






monthly charts.

I usually restrict my trend lines and wave counts to the first threecharts on eac h page, TSX, DJI & COMPQ. The other c harts on the






















frequently visited.

Page 15 – Hurst FLD ProjectionsPage 16 – Indicators, Long Term






















signals



















SOX = Semico nducto rsTXX = Technolo gy

****************************************************************

Long T erm – UP

Uptrend

Mar 2009 To Present










3 up is o fficial












****************************************************************


Downtrend



















shoulders formation is there and will be waiting until we pierce the all-time highs of October 2 007 .








****************************************************************




EDSON GOULD









of the reports.

I hav e used a technique of his that I found in an obscure referencein one of his reports. It was only mentioned once and never





exac tly what I had been seeking. I have charted this method back

to 1 939 and found it to be v ery useful. There is no mention of it in



about it.




reports. A teaser is what yo u might call it. The rest of the reportsare available upon request. This is a man that deserves to be











had nev er been higher than 1,0 00 . NO ONE predic ted a rise o f this

magnitude in 197 7 . Most were waiting for a resumption of the

bear market.






the stock index co ntracts (February 1 982). It was based on the Value Line Arithmetic Index , margin requirement were quite low,







, g y g y ( g





indicator was usually correc t, we decided to stick it out for a few days more (I was crazy in those days). My key indicator w as













Prechter and myself (probably a c ouple of others but I didn’t know

them). Ever yo ne else was extremely bearish. It was a perfect



****************************************************************

TRANSACTION SIGNALS



BUT . . . . .















Glossary Link










well underway .







SELL – AUGUST 30, 2011 – Stopped out, re-bought quic kly BUY – AUGUST 29, 2011


















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Stock Market Update – 01/26/12

Pos ted January 28, 201 2 by Bob


****************************************************************






















CHARTS






monthly charts.




















f tl i it d










frequently visited.




Page 18 through 30 are sector ETFs. They represent most of theactive sector ETFs and are always a good hunting ground when







and weekly prices since 1992. This gives a good perspective of how they have be haved in the immediate past (daily c harts) and



signals






















ended. When the m arket breaks its channel (regardless of the








correction.








Glossary Link

ABBREVIATIONS


DJT = Dow Jones Transportat ionsSPX = SP 50 0

ES = SP 500 Futures













TXX = Technolo gy

****************************************************************

Long T erm – UP

Uptrend

Mar 2009 To Present







3 up is o fficial











****************************************************************


Downtrend





















prior major low.


scenario.



ll i hi h ( k) ’ ibl h i














In the head and shoulders formation the measurement calls for a bottomaround Dow Jones Industrials 1,0 00. This is almost an unimaginable





shoulders formation is there and will be waiting until we pierce the all-

time highs of October 2 007 .






Hopefully we will never have to think about worst case sc enarios otherthan to have a go od laugh at them presently.

****************************************************************









EDSON GOULD









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 never









about it.







































years of success.























p g 97 4




from this report although I modified the concept through the years.






bull market of all time.Edson Gou ld’s 1975 Forecast







bear market.







Value Line Arithmetic Index , margin requirement were quite low,





















indicator was usually correc t, we decided to stick it out for a few days more (I was crazy in those days). My key indicator w as







back to 1939. This was a lot of work as it was before co mputersand online data (remember when Barrons was available only on









****************************************************************

TRANSACTION SIGNALS



BUT . . . . .

After a short term buy signal long term tax status can be













See more details in the glossary under “Tax es, Futures Contracts”and “Money Management”.

Glossary Link










well underway .





























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BUY – JUNE 23, 20 11

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MISCELLANEOUS





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JEFFREY SAUT

Back in the 7 0s and 80s, one of my favorite analysts was Robert Farrell





















y y

of Merrill Lynch. He was very , very good and widely followed. He is

quoted by Jeffrey Saut in his Monday missive , which immediately

follows.

Everybody’s Unhappy!?January 23, 2012

“Money managers are unhappy because 7 0% o f them are

lagging the S&P 500. Economists are unhappy bec ause

they do no t know w hat to believe: this month’s forecast of

a strong economy or last month’s forecast of a w eakeco nomy. Technicians are unhappy bec ause the market

refuses to c orrect and gets more and more exte nded.

Foreigners are unhappy be cause due to their

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 the y just plain

missed out on the party after being scared into cash. It

almost seems ungrateful for so many to be unhappy abo ut

a market that has done so well. Unhappy people wo uld

prefer the market to c orrect to allow them to buy and feel

happy, w hich is just the reason for a further rise?

Frustrating the majority is the market’s primary goal.”

… Bob Farrell, Merrill Lynch; Septe mber 1 989

The bears are unhappy since the Santa rally , which began last

Thanksgiving, has given the short-sellers no c omfortable place to c ov er

their shorts. Last week the bears suffered even mo re angst as most of the









indices I follow tagged new reaction highs. The upside skein from the

December 19th “low” has left the senior index better by ~8.1%, and up an

eye-popping 13.3% since Thanksgiving. Counting the trading days from

that mid-December “low” shows the rally has now encompassed 21sessions with no more than a 1 – 3 session pause and/or c orrection. That

makes this a fairly long of too th “buy ing stampede.” Recall, buy ing-

stampedes typically last 17 – 25 sessions, with only 1 -3 session

pauses/correc tions along the way, before they ex haust themselves 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 have a downside correction.

Moreove r, during the current stampede just about every thing has been“run,” including all the sectors punctuated by the Banks +11.6%

performance Y TD. Ac cordingly, the only thing missing for a short-term

“top” is a final burst to the upside driven by short-cov ering. My sense is

this will oc cur into tomorrow night’s State of the Union address, which

should be followed by a po st address letdown for the stoc k market.

To be sure, the recent rally has not been acco mpanied by a noticeable

increase in Buy ing Demand as measured by Lowry’s Buying Power Index.

Rather the rally has occ urred more from a reduction in Selling, which is

reflected in Lowry ’s Selling Pressure Index . Then too, the perc entage of

stocks abov e their respective 1 0-day mo ving averages (DMAs) has failed

to confirm the upside and the New High list is not expanding. In fact,

40% of my short-term indicators are now bearish and none are bullish.

Meanwhile, the NY SE McClellan Oscillator is overbo ught, the stock market does not hav e much internal energy left for a big rally, the S&P

500 (SPX/1 315 .38) is three standard deviations abov e its 20-DMA, the

Volatility Index (V IX/18.28) is telegraphing too much co mplacency ,

and we have negative seasonality for the next few weeks. Nevertheless, I









and we have negative seasonality for the next few weeks. Nevertheless, I

continue to think it is a mistake to get too bearish bec ause I believ e any

pullback in the various indices will be co ntained.

My b ullishness was reinforced last week during a conv ersation withFrederick “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 e xpanding. This is not an

unimportant point since every one seems to be focusing on the “debt

bomb,” which likely means it is the wrong question. Clearly, some folks

are living abov e their means, some below, but many are living within

their means, which can be seen in the Household Debt Service Ratio

chart that is plumbing generational lows. Manifestly, the world is getting

more prosperous and is producing more for less driven by technology .

Truly , it is “one world” and we sho uld start thinking of the U.S. as a state

within that “one world.” This view is plainly stated in Federal Express’

annual report. To wit:

“We’ve reached a tipping point in how the world works. T he largesteconom y in the world is no longer the econom y of any one

cou ntry – it’s the econom y of global trade of goods and

services. Value: $1 8.3 trillion in 201 0. A t FedEx, o ur job is to facilitate

these transactions, the heart of commerce, by prov iding access –

mov ing goods acro ss the global supply c hain.”

Or, how abo ut this from Google’s annual report:

“Google is a global technology leader focused on improving the way s

people co nnect with information. We aspire to build products that

improve the lives of billions of people globally. Our Mission is to

organize the world’s information and m ake it univ ersally

ibl d f l ”









accessible and useful.”

One world indeed and there are ac tually a lot of goo d things happening.

While the world is still a vio lent place , it is beco ming less so as the wars

we have 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

unattractive curre ncy in the world. Furthermore, as scribed in previous

reports, there is a huge hidden layer of the U.S. economy that is

becoming the engine of growth and wealth creation; and, this hidden

layer is misrepresented in corpo rate financial reports. Surprisingly, the

equity markets appear to v alue this hidden lay er at approx imately zero

suggesting huge opportunity for investors to profit. The hidden layer

referenced is Organizational Capital and Knowledge Capital, both of

which reside under the macro moniker – Intangible Capital – so often

mentioned in these missives. A s the astute GaveKal organization writes:

“When w e acc ount for intangibles the picture of the U.S.eco nomy changes. It is revealed that we are saving more

and investing more than w e though t. This means our

eco nomy is much more dynamic than we thought. This

result is relevant in view of the pe rception of a low rate of

saving in the U.S. econo my, particularly be cause existing

measures exclude much o f the investment in knowledge

capital that is a defining feature o f the mode rn U.S.

eco nomy. … V alidating intangibles is the key toeliminating the guessw ork in valuing a company

correctly. Indee d, this ‘new view ’ of intangibles suggests

they are the missing link betwee n financial acco unting

and financial valuation.”









f

These observations, taken in concert amid the backdrop o f a world that

is profoundly underinvested in U.S. equities, continues to leav e me walking on the “sunny side” of Wall Street even though in the v ery short

term I am lo oking for a trading peak.

T he call for this week: Last Thanksgiving 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

10 , 201 2 felt like the “price peak.” Subsequently I wrote, “The only

question in my mind is if the markets are going to have a pullback intothe 1230 – 1240 suppo rt zone, or go sideways to co rrect their

ov erbought condition and allow the internal energy to be rebuilt.” So far,

it has been a sideways c onsolidation until last week’s upside breakout

causing one o ld Wall Street wag to ex claim, “Breakout or fake-out?!” On a

short-term basis I think it is a fake-out believing a trading top is due this

week .


January 23rd shows signs that a top of some ty pe was made. We’ll wait

and see if that top holds and the January c orrection is underway .

As we continue to draw nearer to the May 20 11 highs, it appears possible

that we have entered large step 3 up.

From the bottom in March 200 9Large step one up ended in May 201 0

Large step two up ended in May 2 01 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 very long term comment below) but it

seems likely that we would get into the area of prior highs. With today’seconomic pro blems that would certainly require the market to climb the

“wall of worry ” and that’s the way it’s always do ne.

No cy cles have been posted in this update because nothing has changed.

If we continue through January without a correc tion of consequence, it

makes one wonder if the large data-set from 1950 might have the correc t

bottom, which was indicated in February (see update dated 01 /1 8/11 ).


T HE UPDAT E SCHEDULE, ET CET ERA

At dinner the other night with a good friend, he pointed out to me that I

don’t have muc h to say in my blog. That’s very true and it’s something

that I had noticed already.

When I be gan this blog in July it was obv ious that the market was in

trouble. Markets in decline propel me into a hyper mo de and I have a lot

to say . During the summer I was c onstantly 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 relaxed

and content to let the market trend higher. This mode will continue in

my blogs until I become worr ied that an inflection point is near or

passed. I ex pect at that time I will have a lot to say again. Until then

Alfred E. Newman and I are:














http://stockmarketobservations.files.wordpress.com/2012/01/alfred-e-newman.jpg




Alfred E. Newm an

But as always I ’m alert to unex pected market changes.

****************************************************************

CHARTS






monthly charts.

Yo u will find the best trend lines and wave counts on charts with

longer time frames. This gives perspectiv e to the lines and

counts. Perspective was a favo rite of Edson Gould.I usually restrict my trend lines and wave counts to the first three



Page 1 – Buy /Sell Signals






Page 8 Index es With Weekly Bars (since 1 981)






http://stockmarketobservations.files.wordpress.com/2012/01/alfred-e-newman.jpg








Page 11 – Indexes With Daily Bars, CandlesticksPage 12 – Index es With Weekly Bars, Candlestick





frequently visited.










The growth stocks show daily market action for the last 3 y ears




Page 46 – Misc older c harts












functions w ithout a ma e of exclusions.







Each group of 3 steps must stay c onfined to a channel.

Laying a pen or pencil on the c hart will help yo u visualize the

channel.

As the trend progresses, all of the steps that make up a larger

trend will also be co nfined 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 wave cou nt), the current step has been

terminated. (Make sure your c hannel was correc tly drawn

before calling a termination).

The correction following the second step is larger than thecorrec tion that followed the first step. Obv iously the correc tion

following the third step is a reve rsal.








Glossary Link

ABBREVIATIONS










ABBREVIATIONS



SPX = SP 50 0

ES = SP 500 Futures




TXX = Technolo gy

****************************************************************

Long T erm – UP

Uptrend









****************************************************************


Downtrend





Downtrend




















We have entered a very wide swinging m arket(megaphone formation) sim ilar to that of 1966 to 1974.





We also have formed a huge head and shoulders formation since1998. If this formation is valid, the downside measurement calls




prior major low.


scenario.
















conclusion of the present recov ery would call for a third and final bearmarket. An estimated time for the conclusion o f the final bear market is




















****************************************************************

EDSON GOULD











techniques and indicators. Prior to me subscribing to hisadvisory servic e, I was just one of the crowd.





of the reports.


in one of his reports. It was only mentioned once and neveragain. I believe that he used this tool extensiv ely and never told





to 1 939 and found it to be v ery useful. There is no mention of it inthe reports that I posted below as I have deleted any reference to


about it.




















years. During those early y ears I found nothing worked inpredic ting these irrational market swings. But the fog lifted after











Dividends by Edson GouldBonds by Edson Gould







once again become useful. Prior to the late 1990s, it had 100 years of success.




























years.













magnitude in 197 7 . Most were waiting for a resumption of the bear market.







Value Line Arithmetic Index , margin requirement were quite low,and it had a multiplier of 1 00 times the Value Line Arithmetic






















days more (I was crazy in those days). My key indicator w as














them). Ever yo ne else was extremely bearish. It was a perfectexample of crowd behavior.


****************************************************************

TRANSACTION SIGNALS

All actionable signals are only for short term time frames. Thesesignals are not designed for intermediate or long term time frames

BUT . . . . .



h h l h ld













Glossary Link




thoughtful consideration prior to a formal action signal. To get asense of how this works, you should read a few days prior to a





well underway .











BUY – JUNE 23, 20 11


















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The market is ov erbought and ripe for a correc tion . . . BUT when

markets are overbought and don’t correct for more than 1-3 day s, that’s

a sign of an extended mo ve upward




















a sign of an extended mo ve upward.

In the 60 minute chart below y ou can see since Dec 20 th, the market has

had very shallow correc tions and nothing bey ond 3 days. This is a

rather narrow channel and probably won’t hold up through time. If the

channel widens with a deeper correc tion that doesn’t exc eed 3 day s

followed by a renewal of the rally, that will be a v ery good sign for an

extended rally.

As we draw nearer to the May 2 01 1 highs, it certainly appears possible

that we have entered large step 3 up.


Large step one up ended in May 201 0

Large step two up ended in May 2 01 1.

If we exc eed the May 20 11 highs, how the market accomplishes this will

be interesting. Will we have a (1) meaningful corre ction at the May

peaks, (2) vacillate in the area of the May peaks, or (3) thrust through the

May highs with force. A thrust that continues without a corre ction

exceeding 3 days would be very nice.

Looking at the timing of the prev ious peaks, does that mean the end o f

large step 3 will be in May 20 12 o r possibly May 201 3. The stock market

tries to always fool y ou so I wouldn’t put much faith in this but I will

certainly be watchful around these dates.

There is a LOT of money o n the sidelines and if this money decide d to

mov e back into stocks, a melt-up could take place. This could occ ur

when investors realize that interest rates are mo ving up (bond pric es

falling). This will forc e investors to sell bonds and buy stoc ks. Higher

interest rates are not a problem unless the economy begins to overheat.









p y g

That isn’t a problem presently.

I’m unsure how a melt-up would fit into the Presidential race but thestock 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 exceeding the 2007 all-time highs. This fits perfectly with

my v ery long term megaphone formation beginning in 2000. See “VERY

LONG TERM COMMENTS” far down in this update.

01 /21 /1 2 - 60 Minu te SPX - 5 Day EMA Buy /Sell Signa l

N l h b t d i thi d t b thi h h d






http://stockmarketobservations.files.wordpress.com/2012/01/012112-60-minute-spx-5-day-ema-buy_sell-signal.jpg




No cy cles have been posted in this update because nothing has changed.

If we continue through January without a correc tion of consequence, it

makes one wonder if the large data-set from 1950 might have the correc t bottom, which was indicated in February (see update dated 01 /1 8/11 ).

It’s also possible that we will soon have a v igorous 3 day c orrection

followed by mo re rally. This 3 day co rrection could be all that we will

get from the January botto ming cyc le. If true, this is a good indication of

a market that wants to mov e higher and should be bought.


MECHANICAL BUY/SELL SIGNALS

The following paragraphs are a curiosity and not recommended, but I do

find this mechanical trading sy stem interesting. With this system y ou

aren’t allowed to stray away from the trend. The chart is from MY

CHARTS, page 1, number 10.4

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 10.4

EMA is an abbreviation for ex ponential moving average

“This is the be st simple trend-following indicator w e teste d against

daily DJIA data. Substituting 5-days for 120 -days in the same formula

(above), and starting with $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 taxe s. This wo uld have be en 7 8 million

percent better than buy-and-hold. Short selling wo uld have be en

profitable.” .







http://www.amazon.com/Encyclopedia-Technical-Market-Indicators-Second/dp/0070120579/ref=sr_1_1?ie=UTF8&qid=1327251744&sr=8-1




In the chart above I hav e modified the 5 day into a 35 hour EMA. This

was due to volatility issues (gaps) that occ ur in today ’s markets. Tradingthe SP futures (nearly 24 hours/day ) can minimize gaps but not

completely (who want’s to trade 24 hours per day ). To avoid sleepless

nights, there are trading algorithms available with some b rokerages that

can exec ute this trade automatically.

This system simply states that when the market is above the 35 hour

EMA, the market is a buy , below it is a sell.

When the trend is obvious and y ou dec ide to stay with the trend (trend is

your friend, blah blah blah), you may have to ignore ‘small’ penetrations

of the 35 hour EMA otherwise yo u must trade all of the penetrations.

The above 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 system means a lot of trades on ‘small corrections’.

But since online brokerage fees are so low, c ost is not a matter of consequence. If you decide to live with small penetrations, you MUST

establish a maximum perc entage penetration in order to not be c aught in

a trend rev ersal. This is important because the entire purpose of this

indicator is for y ou to remain on the correc t side of the 5 day trend.

We all know that you can encounter a lot of whipsaws in a non-trending

market. This is where the ADX lines can be helpful (see above c hart). An

ADX signal occ urs: (1) When the black line is abov e or below thered/green horizontal lines coupled with an extreme in the green +DI or

red -DI lines; (2) When the green +DI or red -DI lines approach or cross

the red or green extreme lines, yo u ‘may’ have a signal. (approach of

similar co lor lines is bullish, red on red, green on green; approach o f

dissimilar color lines is bearish, red on green, green o n red; (3) In both 1

d t it f th l i DI DI li t if th









and 2 yo u must wait for the reversal in +DI or -DI lines to ve rify the new

trend.

****************************************************************

CHARTS




I draw the trend lines and wave co unts on a daily basis (sometimesmore often). Y ou can find these doodles from 1 minute to

monthly charts.



counts. Perspective was a favo rite of Edson Gould.

I usually restrict my trend lines and wave counts to the first threecharts on eac h page, TSX, DJI & COMPQ. The other c harts on the





















g







frequently visited.









that they must not be sev erely damaged in a bear market so they can’t rise to significant new highs in the following bull market.










A rev ersal of trend takes place after a completed wave count















channel.









correc tion that followed the first step. Obv iously the correc tionfollowing the third step is a reve rsal.








Glossary Link

ABBREVIATIONS


DJT D J T t t i











SPX = SP 50 0

ES = SP 500 Futures




TXX = Technolo gy

****************************************************************

Long T erm – UPUptrend

Mar 2009 To Present







3 up is o fficial
























prior major low.


scenario.






t th h d d h ld t I b th f ti th


















around Dow Jones Industrials 1,0 00. This is almost an unimaginableeve nt regarding the possible fundamentals to c reate this scenario. If this













****************************************************************

EDSON GOULD


G ld h d f d i fl th d l t f
















of the reports.


in one of his reports. It was only mentioned once and neveragain. I believe that he used this tool extensiv ely and never told








about it.





are available upon request. This is a man that deserves to beremembered throughout technical analysis market history.



































once again become useful. Prior to the late 1990s, it had 100 years of success.



























years.







Edson Gou ld’s 1975 ForecastEdson Gou ld’s 1976 Forecast






bear market.







Value Line Arithmetic Index , margin requirement were quite low,and it had a multiplier of 1 00 times the Value Line Arithmetic




















days more (I was crazy in those days). My key indicator w asmentioned by Gould only onc e in his market letters. If y ou didn’t
















****************************************************************

TRANSACTION SIGNALS



BUT . . . . .















Glossary Link










well underway .











BUY – JUNE 23, 20 11

****************************************************************


















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MISCELLANEOUS






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For the moment I ’m kinda in a “quiet” period and re main in an “overall”

uptrend theme. When I get exc ited about an important change in market

direction, a lot of blog updates usually take place. Presently, there are

some divergences showing in the 60 minute and daily c harts. Also the




















wave 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 next

section). The expectation is the correction will be a point to add to

holdings or r esume speculative po sitions.

The following is the 60 minute indexes found on page 1 0 o f my c harts.

Notice some of the indicators have div ergences where prices are

trending higher and the indicators are making lower highs.






http://stockmarketobservations.files.wordpress.com/2012/01/011812-indexes-60-minutes1.jpg





01 /18 /12 - INDEXES - 60 MINUTES

CYCLES

I hav e always found the Hurst Cy cle co ncept to be interesting and I’ll try

to make this an integral part of my blog updates.

Yo u’ll notice how the dates of the anticipated cy cle lows don’t change

much from one month to the next (compare my last blog’s cy cle charts

with today’s). Only a sharp move up or down changes the cy cle

expectations.

The first chart is the SP 500 cy cles from 1950 to 20 42. The semi-circle

contact points at the bottom are cy cle low dates. When we have

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 cyc les are visible. Obv iously cy cle lows

shown beyo nd the present are predictions and not ye t reality.















Some cyc le lows don’t produce bottoms. In a strongly upward trendingmarket, a cyc le low can be a sideways pattern followed by a breakout to

the upside. Looking at the chart below you can see how several large

cy cle are approaching a crest and beginning a move to their cy cle low.

This is not a strongly upward trending market as portray ed by this

chart. At be st it shows the last stage of a bull market, which coincides

with a large 3rd step in the wav e co unt.

Click On Charts T o Enlarge

0 1 /1 8 /1 2 - 1 9 5 0 D at a - 1 9 5 0 To 20 4 2

Acco rding to Hurst’s Principle o f Proportionality – Waves in price

moveme nt have an amplitude that is proportional to their wav elength.

This simply means that longer cy cles produce bigger mov es up or down.

Smaller cy cles produc e smaller fluctuations.

The next chart is a close up of the abov e chart and it shows a confluence










http://stockmarketobservations.files.wordpress.com/2012/01/0118-12-1950-data-1950-to-2042.jpg




of cyc le lows occ urring from May to September 2013. This appears to beanticipating the most important cyc le bottom since March 2009.

Further out the cyc le low occurring in early 201 8 is much larger and

there are also several other cy cles lows anticipated about the same time.

This calls into play the Principle o f Synch ronicity – Waves in price

moveme nt 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 very im portant m arket low . 201 8 could mark the end of a longperiod of bad markets that began with the bursting of the 2000 internet

bubble.








01/18/12 - 2007 Data - Cycles - April 201 1 To March 2 01 3

This next cy cle chart is based on data since 2007 and shows the

important cyc le lows over the last 5 y ears. Notice how it differs slightly

from the chart based on the 1950 data-set. It’s 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 acc urate for

smaller cy cles. We’ll see how that works out in the near future.

http://stockmarketobservations.files.wordpress.com/2012/01/0118-12-2007-data-cycles-april-2011-to-march-20131.jpg




01 /1 8/1 2 - 2007 Data - 2007 To Present

I find these cyc le charts to be o f significant interest as it can give y ou an

idea of when to expect bottoms to occur. Wave counting gives you an

idea of where y ou are in the rally or decline. Altogether, these cy cle

lows coupled with wave co unts can be of great help for narrowing down

valid buy points.






http://stockmarketobservations.files.wordpress.com/2012/01/0118-12-2007-data-2007-to-present.jpg




If yo u find these cy cle c harts interesting, the service “Hurst Signals”prov ides cy cle charts and trading advice based on the work of J.M.

Hurst, “More info at HURST SIGNALS” It’s an exc ellent service .

PRINCI PLES OF HURST’S CY CLI C T HEORY

The Principle of Commonality – All equity (or forex o r commodity ) price

mov ements have many elements in common (in other words similar

classes of tradable instruments have price mov ements with much in

common)

The Principle of Cyclicality – Price mov ements consist of a co mbination

of specific waves and therefore exhibit 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 wavelengths of neighboring waves in

the collection of cyc les contributing to price mov ement are related by a

small integer v alue.

The Principle of Synchronicity – Waves in price mov ement are phased so

as to cause simultaneous troughs wherever possible

The Principle of Proportionality – Waves in price mov ement have an

amplitude that is pro portional to their wavelength.

The Principle of Nominality – A spec ific, nominal co llection of

harmonically related waves is common to all price mov ements.

The Principle of Variation – The prev ious four principles represent

strong tendencies, from which variation is to be expec ted.

Further information about Hurst’s Cyclic Principles can be found here






http://hurstsignals.com/





Further information about Hurst s Cyclic Principles can be found here.

Lotsa good Hurst info here.

****************************************************************

CHARTS






monthly charts.



counts. Perspective was a favo rite of Edson Gould.























Page 11 – Indexes With Daily Bars, CandlesticksPage 12 – Index es With Weekly Bars, Candlestick





frequently visited.


































channel.








The correction following the second step is larger than thecorrec tion that followed the first step. Obv iously the correc tion

following the third step is a reve rsal.








Glossary Link

ABBREVIATIONS












p

SPX = SP 50 0

ES = SP 500 Futures




TXX = Technolo gy

****************************************************************

Long T erm – UP

Uptrend

Mar 2009 To Present


Has Step 3 Up Begun ???





3 up is o fficial











****************************************************************


Downtrend

















(megaphone formation) sim ilar to that of 1966 to 1974.During that era we had three bear markets with two intervening





1998. If this formation is valid, the downside measurement callsfor a bottom around Dow Jones Industrials 1,0 00.



prior major low.


scenario.








k t A ti t d ti f th l i f th fi l b k t i










market. An estimated time for the conclusion o f the final bear market isapproximately 20 18.



















****************************************************************

EDSON GOULD




d i i I j t f th d









advisory servic e, I was just one of the crowd. After 40 y ears I still have many of the publications from his




of the reports.


in one of his reports. It was only mentioned once and never

again. I believe that he used this tool extensiv ely and never toldthe world it’s importance. Prior to my finding this tool, I had been





the reports that I posted below as I have deleted any reference toit. It’s a super secret indicator and I’d have to kill you if I told y ou

about it.












predic ting these irrational market swings But the fog lifted after










predic ting these irrational market swings. But the fog lifted afterreading this report and I began to understand how to begin











Bonds by Edson GouldSpeed Lines by Edson Gould







years of success.







years.


























****************************************************************

TRANSACTION SIGNALS


signals are not designed for intermediate or long term time framesBUT . . . . .










Glossary Link





sense of how this works, you should read a few days prior to aformal buy /sell signal. I often buy/sell in my personal account




well underway .

Qualified buy signal given from December 5th toDecem ber 20th, 2011







SELL – AUGUST 25, 2011BUY – AUGUST 23, 2011


BUY – JUNE 23, 20 11

****************************************************************

MISCELANEOUS



















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