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[PolarBear]

Preparing for a monsoon drop?

David A. Banister- TheMarketTrendForecast.com

The market continues upward in either a C wave or Wave 2 corrective upside re-tracement if I’m correct. In reviewing the pattern since the April top this year, we have had clear Fibonacci retracement levels of the 13 month rally. These occurred at 1040 and 1011 areas so far, 31% and 38% fibonaci re-tracement levels of the Fibonacci 13 month rally.

Some are saying the market just bottomed at 1011 at the 38% re-tracement area, but the Elliott wave patterns that I rely on do not appear to me to be complete. I could still be wrong and we keep on climbing here and I get egg on my face, certainly possible. However, you don’t normally get a straight 8 of 9 days down pattern to 1011 like we just saw and then end a correction there as a C wave in an A B C pattern. C waves are made up of either 3 or 5 waves within, and that was one clear wave down.
These happen in fast moving markets and lead to a rare correction pattern called a “running” correction.

In the video which is free to view off my website below, I educate and illustrate on how these look and apply it to the current state of the Market. I’m looking for the following MAX topping areas for all three indices. Dow 10450, Nasdaq 2295, and SP 500 1104-1115. We are within 1-2 % here of a nice reversal to the downside that can be played via shorting. The ultimate target remains 942 on the SP 500 index, and of course those are the 50% fibonacci downside levels of the 13 month rally, and would fit neatly into the first 180 point SP 500 drop from 1220-1040. This means 1130 is the recent major B wave top, and 180 points from there is about 950 to complete the correction pattern in this bull market. I am looking for sentiment to turn pretty negative again shortly.

Please review to get updated. This current rally has hit 1099 on the SP 500, past the 1092 area I saw the sliver gap on, but below the 78% re-tracement area as well, this 7 day rally is getting long in the tooth. Options expiry week makes it even harder, reminds me of my Mid April top call in fact here on Kitco.Com, it wasn’t long before the market rolled over hard.  I am looking for the same here as well.

CLICK TO VIEW VIDEO

[PolarBear]

Jul 20th- Scaling into Trades for Profits

At Active Trading Partners, we believe that nobody can predict exact bottoms nor tops, but we can certainly come close. In light of that belief, we “scale in” to our preferred trade set ups using 1/3 tranches at a time. Using our backdrop of looking for waterfall decline entry points for reversal profits, we add in some Elliott Wave theory and Fibonacci figures to mix up our recipe.  As we see a trade set up coming around the bend, we begin to “Scale In” to our trades as each Fibonacci or Wave pattern is reached.

Samples are our recent trade into BGZ, which is 3x short the Russell 1000 Index.  The Elliott Patterns we interpreted said the market rally would wane as we hit 1071/1074, 1085, and 1092.  As those areas were hit on the SP 500, we would purchase 1/3 positions into BGZ, inevitably profiting from the overbought reversal to the downside in the markets.  This reversal happened on cue on Friday last week, July 16th.  Our BGZ position rose 8.5% in just one day of trade, allowing us to enter into a “green” profitable territory on our scaled in position.

Scaling in eliminates the traders desire to let the ego over-take their emotions.  By this, we mean your trading system is useless if your emotions can’t be kept in check both on the downside and the upside.  At ATP, we try to combat that by scaling into and out of positions, forcing ourselves to buy while others cry… and sell when they yell.  It is extremely difficult to go counter-trend against the noise of the markets, but certainly if you plan to do so you must have a plan of action.  Trading with emotion is a sure-fire way to lose money in the markets.  Taking your time and being methodical with scale in entry points into a trade, reduces your risk of entry and allows for a much greater probability of profits, as well as greatly reduced losses on the trades in which you are wrong.

Never dive “all in” into a trade position, no matter how confident you are of the entry timing, chart, and price.  Always scale in methodically.  Worst case the position takes off to the upside for you and you didn’t buy a full position, but that is so much better than going all in one one trade and mis-timing your entry, costing your trading account major dollars.

Dave Banister
www.ActiveTradingPartners.com
www.TheMarketTrendForecast.com
 

[PolarBear]

Should the Bulls expect a massive hangover after this party next week?

Dave Banister- www.TheMarketTrendForecast.com   July 25

Although the market had an impressive rally, amidst strong Large Cap earnings, I continue to fear a reversal to the downside.  Keep in mind that the upside MAX objective's I gave out on July 14th last week here and on Kitco and other sites were as follows:

Nasdaq 2295; DOW 10450, and SP 500 1104-1115.  

The DOW pretty much hit 10450 objective and dropped a bit from there today, Day #13 of the Counter-Trend rally.  The SP 500 got about to 1104 as a max, which is a Fibonacci # I had out well over a week ago.  The NASDAQ came back up, hit its gap at 2250 it left from the July 16 gap down day (last Friday), and went a bit higher to re-test the highs of the prior week.

In all, this still qualifies as part of an A B C correction to the upside after a massive 8 week drop to 1011 on the SP 500 for example from 1219.  We have had about 3 weeks or so of counter-trend rally, which is also a Fibonacci number of weeks colliding with a Fibonacci 13 days of upside correction.

Bearish wedges are forming on various indices, and Head and Shoulder tops are still all over the place.

The market indices will have to plow through my max top prices for me to turn Bullish and call the Correction over at the 38% retracement figure of 1011 SP 500.

FWIW, over at my ActiveTradingPartners service we closed out a profitable BGZ Bear position right at the 1058 SP 500 pivot low earlier in the week at about 16.50, and that ETF tanked to 14.50 by the end of this week.  That was a Fibonacci Pivot, and a likely C wave up from there was possible so we fortunately timed it right.  I also had advised shorting the Emerging Market indexes, but we worked into a 1/2 position there and halted adding to it a few days ago fearing the EEM ETF may rise to 41.20-41.95 first, and we would wait to double down our short there.  Today EEM hit 41.19, one penny off and then fell down into the close a bit.

The strongest index was the Russell 2000, rising over 12% off it's recent lows, an impressive rally for sure.

Gold continues to stumble below $1,200 US and I see it next at $1129-$1140 on it’s way to $1040 to $965 down the road perhaps.

Now what?  I suspect that beginning Monday the clouds could start to gather and the remaining vestiges of this rally will wane.  Given all the great news from Europe Stress Tests, the strong corporate earnings, the FIN Reg reforms, the Unemployment being extended, Goldman Sachs settling, the BP oil leak getting capped.... what is left for the Bulls?

So with all the above said, here is my opinion.  If those Max figures do not get taken out materially, then the best trade near term is to be shorting the various indexes.  I suspect buying some BGZ in the last 1/2 hour of trade today around 14.50-14.70 was a possibly very nice trade entry for next week.

I continue to expect a re-test of 1011 on the SP 500, re-tests of lows on other indexes, and the Emerging Markets to break down as well.  Will I be correct?  Sure doesn't look that way tonight does it?

Can the market bottom after only 8 weeks of correction and 38% re-tracement of a 13 month rally? Possibly yes, and for sure I am a long term bull given the larger wave structures. However, the probabilities are slim that that was the bottom in my opinion.

Next week we will find out if I was way off base, or if my warnings were worth the time to type them.  Please check out my Market Forecast website at TheMarketTrendForecast.com for samples, testimonials, and options to subscribe.

[PolarBear]

Jul 29th- Is Market Topping Again?

Here at TMTF, I enjoy making controversial calls based on Human Behavioral topping and bottoming patterns, often referred to as Elliott Wave Theory.  This is a difficult pattern recognition model to follow as there can be numerous interpretations.  Instead, I look for additional clues like sentiment indicators, a few traditional technical indicators, headlines in the news and covers of papers etc.  Recently I saw an article on Bloomberg indicating that short positions were at two year lows, with the ratio of longs to shorts at 2 year highs.  Those types of indicators I use to help confirm if I’m on the right or wrong track with a forecast.

Right now I think the SP 500 and markets are topping in a counter-trend ABC-X-ABC rally that really started with the May 25th lows of 1040, to the June 21st highs of 1130, back to the Jul 1 lows of 1011, and now to 1121 so far the highs.  That 1121 number is a Fibonacci 50% re-tracement of the 2007 to 2009 highs to lows, and just 9 points below a 61% re-tracement upwards of the April highs to July 1st lows.  Evidence mounts now that August could prove tough for Bulls and some risk aversion here is a good trade in my opinion.

Back in late June I saw similar sentiment and Elliott Wave topping patterns in Gold as well.  The headlines were bullish, the talking heads on CNBC were all saying to buy any dip in gold and stay long.  A 21 month rally was topping and I went ahead and stuck my neck out and predicted a multi month correction.  Since then Gold has dropped from $1243 to $1158 at it’s recent low, and should be heading to $1043 eventually if I’m right.  It takes awhile to knock the sentiment down from overly optimistic levels, just like with the SP 500 top in April which I forecasted in mid April as well.

The SP 500 would need to clear 1130 aggressively for me to cave in and call 1011 the bottom.  That was a 38% fibonacci re-tracement of the 13 month market rally, and it’s possible that was the bottom for sure.  Normally though, you would at least get a re-test of that low, and possibly a drop to 942 area on the SP 500 which is a 50% fibonacci re-tracement of the 13 month rally.  In addition, the pullback so far only lasted about 8 weeks relative to 13 months of rally, so I think there is another several weeks yet before we can call a bottom in 2010.

Below is an interesting chart showing recent action since late May in the SP 500 index.  Investor’s like to act in patterns and this seems to show a good one.  Best to you and your trading!



If you would like to learn more about our market forecasting service, please go to www.markettrendforecast.com to sign up for free reports and to see what we offer.

David Banister

[PolarBear]

Was that the Bottom at 1011?

The SP 500 had a very interesting Fibonacci Intersection as I call it here at TheMarketTrendForecast.com on July 1st.  At the 1011 pivot low, the index re-traced a Fibonacci 38% of the 2010 highs from the 2009 lows and bottomed out.  In addition, the 1011 pivot was a 38%  upward re-tracement of the 2007 highs to the 2009 lows.  How is it that markets can be considered “random” when in fact they often pivot at clearly defined Fibonacci price points?

Let’s look at the April 2010 highs of 1221 on the same SP 500 index.  Did you know that was an exact 61.8% Fibonacci re-tracement of the 2007 highs to the 2009 lows?  Were you aware that back in late February 2009, I wrote an article on 321Gold.Com predicting a move to about 1200 on the SP 500, when we were 710 at the time?  Did I have a crystal ball or something ephemeral to work with? No, in fact that was an educated guess for a 61% fibonacci rally off a 5 wave decline into March 2009 is all.  Even more fascinating is my work showing that at 666, the SP 500 in fact stopped at an exact 61.8% Fibonacci re-tracement of the 1974 lows to the 2000 highs!  All of the top and bottom rally points in the past 90 days have been Fibonacci pivots.

The market is certainly not random in our views at TMTF, and we strive to pinpoint tops and bottoms using a combination of Elliott Wave theory and Fibonacci cycles, as well as time periods that often coincide.  What is the market doing now after this rally off the July 1st lows?  I think the major pivot point to watch is 1131 on the SP 500 and our subscribers know exactly why.  Perhaps today you will consider subscribing and avoid wondering what is happening at all these major pivot points?  Recent pivots that we outlined were 1011, 1040, 1130, 1121 and more on the SP 500 index for our subscribers.

Below I outline a 3-3-5 Elliott Wave Pattern that is often part of a “Corrective Wave” movement.  If we can overlay Fibonacci pivots along with reliable patterns, it can help our subscribers avoid pitfalls and take advantage of opportunities in the markets.  Gold recently exhibited clear patterns at a late June 2010 top we forecasted.  The drop to 1155 was a “rally pivot” we told our readers, and the move up would likely take us as high as $1,212 an ounce before the next major move.


Consider subscribing today and get out of the dark and into the light! If you would like to learn more about our market forecasting service, please go to www.markettrendforecast.com to sign up for free reports and to see what we offer.

David Banister

[PolarBear]

A pattern analysis of the SP 500 Index Rally- August 5th 2010

Judging by some analysts comments, the bullish heads on CNBC, and fearless Bulls, we have to continue to question whether this is a "corrective" rally up in the markets working off oversold indicators and sentiment in late June.... or.... the start of a major 3rd Elliott wave structure off the 2009 bottoms which takes the markets to new all time highs.

In the interim, evidence mounts that the Bull Trade is getting pretty crowded now just 30 odd days since there were nothing but Bears on CNBC and headlines were pretty negative. I scan CNBC here and there mostly to see how many talking heads and pundits are bearish vs. bullish. Near the July 1st lows there were all kinds of calls to raise cash and for markets to move much lower, indicating a bottom was probably nigh. Now nobody is willing to be bearish after this rally, indicating a near term top is nigh as well.

The Elliott Wave patterns still appear to be an intermediate upward correction or a Wave 2 or Wave B up in sentiment off the Jul 1st 1011 SP 500 index lows. Often bottoms come out of nowhere, as do tops. They don't tend to ring bells at either bottoms or tops do they? I don't remember getting a phone call on July 1st, but I did indicate a pivot low around 1008 on the SP 500 would be normal. What I didn't fathom was the extent of the rise since that low, and this has forced be to go back and re-draw charts and find my old Fibonacci calculator.

Right now the area between 1131 and 1140 on the SP 500 fits several Fibonacci upward targets over various time zones. In addition, the current pattern looks and walks not like a duck, but like an "Ending Diagonal" triangle. These are terminal patterns and serve to stop sentiment in it's tracks when read right.

Will we have a terminal top or throwover top in the next few days on this rally, then followed by a substantial correction? The probabilities say it’s likely, and below is a chart showing a sample of an "Ending Diagonal" pattern, and then the actual SP 500 pattern right now. They look nearly the same. We will soon see if this "3-3-5" corrective pattern was the right read I made, or if we are off to the races. Evidence suggests a lot of racing from here will be difficult for the Bulls to pull off, but we shall see. The lows at 1011 in terms of the pattern itself, just don't seem that they completed to me, hence my stubborn views that we need a re-test of those lows... time will tell. Sometimes forecasting is like predicting the weather 3 days in advance, we will have to see how the radar is tuned in shortly.


To read more samples of our work please check out www.MarketTrendForecast.com and sign up for free weekly reports.

David Banister

[PolarBear]

What Just Happened? August 11th Market review

The market dropped unexpectedly today, or did it?  Here at TheMarketTrendForecast we review Elliott Wave and Fibonacci patterns to identify potential tops and bottoms in advance.  Our subscribers are forewarned of both opportunity and danger when we read the patterns correctly.  Below for example is a chart we sent out to our subscribers on August 4th, a full 7 days prior to today’s drastic decline:


We were calling for a top around 1130 on the SP 500 for the past few weeks as a “Bearish Wedge” pattern was in the process of completing.  I felt this was the final stage in a multi-week 3-3-5 Elliott Pattern that would terminate with a sudden drop out of the wedge.  These tend to come out of left field, and at major pivots bulls and bears are normally both caught off guard or flat footed at best.

However, the market does not move in random fashion as many people think.  As we espouse here at TMTF, the market moves in reliable “herding patterns” exhibited by the participants in the market itself. People tend to get overly optimistic at tops and overly pessimistic at bottoms.  These patterns are oft identified at TMTF as Fibonacci re-tracements or pivots.  In addition, we overlay Elliott Wave patterns whether corrective or impulsive to help determine probabilities and the next likely outcome.

More often than not, we are ahead of our peers in our Elliott Wave forecasts and our counts tend to be more accurate than most.  This is because I use a big picture view, and I don’t rely entirely on just the wave pattern itself. We add a few ingredients to our market forecasting soup and this allows us to be consistently ahead of the crowd with our predictions.  Are we bragging a little bit?  You bet we are, and the reason we launched TMTF was to help educate investors on the value of Elliott Wave theory and thinking outside the box when looking at the markets.  It’s time to turn off CNBC and tune out the noise, and at TMTF we try to tune out all the noise, turn down the volume, and provide some straightforward probabilities and forecasts for our readers.

Perhaps you should join us, and if your not ready, please review our free occasional reports by going to www.MarketTrendForecast.com and signing up today!

David Banister

[PolarBear]

How To Trade A Volatile In The Energy Market

At Active Trading Partners, we take a different approach to trading than most online services in terms of advising our subscribers.   Our methodology revolves around behavioral characteristics of the crowd, and taking advantage of the extremes in sentiment, whether bullish or bearish.

In the case of ETF trading, we often work with 3x Bull or Bear ETF’s like BGZ, ERY, ERX, TZA, TNA and so forth.  Using a combination of Fibonacci re-tracements and Elliott Wave theory, we look for high probability set-ups and extreme overbought or oversold situations to trigger a trade recommendation.  A most recent example with ETF’s was a short position we took against the rising energy stock index, the XLE.  This index had become incredibly overbought in just a few weeks, and looking at prior topping indicators and fibonacci trading day cycles, we felt it was a “Low Risk” bet to short the rally.  We recommended ERY at $45.40 as the XLE headed over $56 and was becoming overbought.  Within 7 days we had a 15% plus gain by going against the crowd.  I saw a 13 fibonacci day trading rally at extremes, so we used the XLE chart below, to identify the timing to enter into ERY.



We use the same approach when it comes to trading individual stocks.  We look for “Waterfall decline” reversal patterns, which are somewhat proprietary for ATP and our methodology.  This method reduces our entry risk because we are buying stocks that have already taken a recent short term multi-day or even multi-week hit as investors have exited the stock.  Recent examples include buying DCTH, a former high flier that fell from $16 down to $5.80 when ATP advised purchase.  Within days the stock bottomed and ran to as high as $9 within a few weeks for a 50% move.  Another example is OREX, who took a hit in concert with VVUS several weeks ago.  We felt the sell-off was overdone and recommended the stock at $4.01, after it dropped from $6.  The stock ran back to $5.30 within 10 days for a 30% plus gain.

Trading in a volatile market means you need to be patient, discerning, and wait sometimes for an oversold or overbought condition before you act.  Sometimes acting early can cause you to get spooked out of positions that end up being profitable, but only after you panic sell out at a loss. At ATP, we use a “tranche buying” methodology which tries to help with the emotional side of entering or exiting a trade.  We recommend 1/3 or 1/2 positions at a time, even if we are really confident in our entry point.  This way just in case you mis-timed the bottom of your target by one or two days, which often happens, you reserve some powder to add additional capital into the trade to work your way in over several days.  We also advise that our partners enter  into these tranches over 24 hours of trading time, perhaps buying 3-4 times into our position especially on minor pullbacks.  How many times have you bought into a trade entry at say $5.00 a share, and two days later the position bottomed at $4.50, you close it for a loss, and then it runs to $6?  Using a tranche buying methodology keeps your emotions in check and you actually look for a bit further dip as a benefit, not a detriment to your trading.

We also adjust our stops as the stock or ETF moves after we have completed our entry.  The main goal as a trader or investor is to book profits and limit losses when you are wrong.   Since our ego is often our worst enemy, adjusting your stops as the trade moves in your favored direction keeps you from gettting too giddy and letting a profit slip away.  In addition, a reasonable stop prevents you from being over-confident and letting a small loss turn into a larger one.  Another recent sample at ATP was buying into VITA, which was very oversold at $1.76-$1.80 ranges.  We also though advised our partners take profits at $1.92-$1.97, with a nice and tidy 6-10% gain over 7-8 days of hold period.  The stock then fell hard just a few days later to $1.64.  Not taking profits would have meant wiping out all of your hard work and watching your paper profits turn into a “hoping for a rebound” position.

In volatile markets, don’t get off your game plan and try to keep your ego in check.  Enter into your trades no matter how confident you are, slowly and over 24 -48 hours of trade time.  Adjust your stops and prevent yourself from getting too greedy or giving away profits.  Take your time, wait for set-ups, and also take a break every now and then…nobody needs to trade everyday. 

Come check us out at www.ActiveTradingPartners.com and join us and/or sign up for our free weekly reports!

David Banister

[PolarBear]

A forecast Follow-Up on the SP 500 and Gold

David Banister- www.markettrendforecast.com

In my last article a few weeks ago for Kitco.com, I was concerned that the market could have a hangover after the recent rally.  Apparently, my concern was not un-founded as we dropped from a rising bearish wedge near 1130, to the 1070 Fibonacci pivot earlier this week.  Although my subscribers were prepared for this drop by shorting the SP 500 in advance of that move, we covered our short near 1070 on the SP this week.

Bringing things up to speed, the market rallied up from July 1st to near 1130, which was a maximum target I mentioned in my last article.  This completed a 3-3-5 elliott wave pattern that I identified, and broke the rising wedge on cue.  At 1130, the SP 500 had re-traced a Fibonacci 61% of the April highs to Jul 1st lows, and had completed that re-tracement over a Fibonacci 5 week window. At TMTF, we believe that markets move in extremely reliable patterns and are not at all random.  At the 1221 SP 500 top in April, it landed exactly at a 61% Fibonacci upward re-tracement of the 2007 highs and the 2009 lows.  At the 2009 lows, the SP 500 had corrected 61% of the 1974 lows to 2000 highs right on the nose at 666!

What I forecast now is for a re-test of the 1011 area on the SP 500 to be completed likely by the end of August, and potentially a drop to 942 by the end of September and early October.  I realize this is not a popular forecast right now, but at a bare minimum we should expect the market to go back and bounce off the 1011 area where it bottomed on July 1st.  What would negate this view is if the SP 500 can rally past 1105 this week and hold into next week, then we may expect the bulls to re-take control.  Another interesting point is when the market did in fact bottom at 1011, it was a Fibonacci Intersection.  By that I mean it re-traced 38% of the 2009 lows to 2010 highs, and also was at the exact 38% pivot of the 2007 highs to 2009 lows at the same time. This gives pretty strong support for a 2010 market bottom, with the re-test possible.

I expect Gold to complete it’s “B wave” bounce at 1225-1238 ranges, and pull back to re-test the $1,155 recent low, but possibly stopping around $1177.  That recent pivot low was a 50% Fibonacci re-tracement of the February lows and June highs of this year.  Again, markets actually move in reliable patterns as they are largely controlled by the crowd’s sentimental reactions to news and events, which tend to be the same over time no matter the conditions.  The downside to Gold is that we have had 8 consecutive years of Gold ending the calendar year in positive territory, and somewhere along the line that trend is likely to be interrupted.  The lower level projections I have for gold are a deeper re-tracement to as low as $1,040 by the end of this year, correcting a recent 21 Fibonacci month advance.  The probabilities as outlined on my chart below are for $1,177, a 38% Fibonacci figure.



If you would like to sample our work for free, go to www.markettrendforecast.com and sign up.

David Banister

[PolarBear]

Gold Bullion Likely To Pullback Then Rocket Higher

Back in latter June I forecasted a big top in Gold, mostly due to the 5 wave structures up from the October 2008 lows to June highs, and the 5 waves up from February lows to June highs converging.  We then dropped from 1243 at the time of the forecast to $1155, which was one of my potential “A wave down” rally pivots.  I expected a counter-trend rally or “B” wave up to 1212-1225.  So, all of that worked out pretty well, until we hit $1238.  Now, $1238 is a 78% Fibonacci re-tracement of the drop from $1265 to $1155.  Normally, a re-tracement in a weaker market or sector is capped at 61.8% or 50%.

The strength of that counter-trend move caused me to go back and review my patterns a few more times.  Most of this is pure instinct and experience, but I think $1155 was the low of the correction.  It  also looks like that was an A B C correction to $1155, and with the strong rally… it means we are likely beginning a new set of 5 waves up from $1155.

That brings us to my recent commentary for my paying subscribers that I was going to review the wave patterns and that we closed our  Gold trading short position out several days ago with a small profit.  It is a a good thing we did because Gold rallied hard from 1212 to 1243 since that time, catching some people off guard.  At this time, Gold is quite overbought and due for a small corrective pattern. It would seem logical that after a rally from $1155 to $1243 roughly, that we would pull back 38-50% of that move, so I'm looking for a pullback to around $1200 plus , and then a rally.  We could see new highs in Gold in the next few months, and $1300 is on the radar now.

In summary, I got the topping call right, the bottom pivot right, and the counter-rally pretty much right…. but I'm changing my views to BULLISH intermediately after a pullback, from BEARISH intermediately. Obviously the fundamentals for Gold have never been stronger, but I was expecting a deeper correction off the 21 month rally, and instead to me it looks like with Quantitative Easing 2 upon us that Gold buyers are really stepping up their gold purchases.

Below is an updated Elliott Wave based chart showing clear corrective (3 wave) patterns from December 2009, and bullish (5 wave) pattern from February through the June 2010 highs.  We just completed a 3 wave correction to $1155, and now this is probably a short-term peak wave 1 up, with a mini-wave 2 down to $1200 or so to follow.  Once done with a pullback, we could see a run to $1280 or so, and later over $1,300.



If you’d like to receive free weekly reports, check us out at www.markettrendforecast.com

David Banister

[PolarBear]

Silver About To Break Out Big!

(Excerpted from August 31st forecast to our Paying subscribers, who were alerted at $18.73 per ounce, now $19.50)

Silver is one asset class I do not cover very often, but have been largely bullish on since $6 an ounce many years ago.  It can be considered “poor man’s Gold” as they say.  I believe Silver is about to stage a pretty large advance based loosely on the Elliott Wave pattern I see unfolding after a 9 odd month consolidation. (Obviously, there are also fundamental fiat currency/debt events worldwide that give it the underlying bull chart pattern).  Since the average person can’t run out and buy an ounce of Gold for $1,240 tomorrow, as the unfolding of the fiat crises continues to enter the public psyche, you will see a strong populace movement into buying silver, silver coins, etc.  To wit, many silver stocks are moving up strongly of late, signally an imminent breakout of this precious and industrial metal.

The triangle pattern has taken nearly 9 months so far, and a move over $19.50 could start a multi-month run targeting $26-$29 per ounce for starters before a broad pullback.  A few silver stocks worth looking at include SLW (Silver Wheaton, which purchases future silver mine production in advance at a discount), a long-time favorite of mine and Fortuna Silver, a growing producer and explorer favored by some of the brightest minds in the business.  I do not own shares in either, so I have no inherent bias to mention them other than they are worth your time to review sooner than later. TMTF does not offer stock or trading advice, so please do your own research and consult a professional if need be.

I post the Silver chart below and my outline shows my views of a multi month 5 wave bullish triangle pattern on a weekly chart.  Silver needs to bust through $19.50 per ounce to confirm, but I suspect we will see this fairly soon.


Consider subscribing while our Charter Rates are still in effect! Check us out at www.MarketTrendForecast.com
David A. Banister
Chief Investment Strategist and Founder

[PolarBear]

Bulls are about to move the markets higher

By: David A. Banister

I’ve been busy counting the months of correction since Mid-April this year when I forecasted a top in the U.S. Markets following a massive 13 month rally off the March 2009 lows.  The theory I had at the time was that the % of bulls in sentiment surveys was running at nearly 3 to 1 over Bears.  57% of those surveyed were Bullish in Mid-April and only 20% were Bearish.  In addition, we had completed a clear 5 wave bullish pattern up from the March 2009 lows, and the time period of the rally was also a Fibonacci ratio.

Since that time, we have dropped to as low as 1011 on the SP 500, which is a 38% Fibonacci intersection of the 2007 highs to 2009 lows, and also the 2009 lows to 2010 highs.  This created a platform for a calendar year bottom, and since then we have marked some time rallying up to Fibonacci pivots and back down again.

The most recent action is what really caught my eye and my subscribers were made aware a few weeks ago to prepare for a rally.  The drop from 1130 to 1040 on the SP 500 was a “corrective pattern”, meaning it was in a three wave formation.  60 points down to 1070, 30 points up to 1100, and another 60 points down to 1040.  This also lined up with the May 25th bottom and is yet another Fibonacci intersection.  The rally up last week was extremely strong off the lows, and admittedly probably caught some bears off guard and caused short covering as well.  What really woke me up as I did my research over the weekend was the sentiment surveys through last Tuesday.

The percentage of Bulls in the survey had dropped to 29% whilst the Bears had roared ahead to just over 37%.  This is the first time that the Bears had been this high in the surveys in a very long time, and in addition, the last time the Bulls percentile readings were nearly this low was back in March of 2009, at 26%.  Typically these types of readings when coupled with what I believe to be bottoming or “corrective” wave patterns often lead to big rallies and catch people off guard.  Conversely, overly bullish readings as in Mid April concomittant with certain Elliott Wave patterns I identify often lead to tops as well.


What I expect now is a pullback to 1080, possibly 1070-1074 on the SP 500, and then a large rally to roughly 1145.  This will encounter some resistance there as it also is a 61.8% Fibonacci pivot of the 2010 highs and the 2010 lows.  The pendulum appears to be swinging back to the Bulls, and I expect that following the first full week of October we will be rallying up past 1160 on the SP 500 and then challenging the 1220 highs of April of this year.

A side note on Gold and Silver as well:  I wrote a forecast on silver last week with silver at $18.73 an ounce predicting an imminent move above $19.50 with a breakout leading to  $26-$29 per ounce over several months.  At this time I favor Silver over Gold performance wise for the foreseeable future, and I still like Gold moving to the $1300-$1325 per ounce level in the coming months.

Below is my projected SP 500 chart recently released to our paying subscribers at TMTF. 


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