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[PolarBear]

Eight months into the rally, what is next for the market and gold?

David A. Banister, Chief Investment Officer

We have come a long way since early March of this year.  After bottoming at 666, the SP 500 Index has rallied as high as 1101 at its recent peak pricing.  I wrote about the market bottoming and my outline for a bull rally prediction back in late February.  My targets at the time were 10,400 on the Dow and 1140 on the SP 500 index.  Since we came within 3% of those targets, I believe the next leg for the market is a corrective movement to the downside.  The bounce up that we are getting now is likely temporary, and will be followed by another bout of selling.  My methodology uses a confluence of factors to determine direction and price targets.  A combination of Elliott Wave Theory, sentiment indicators, technical analysis patterns, and cyclical movements.  We are looking for the SP 500 to pullback into the 840-880 ranges before a significant pivot bottom, and are moving our trading positions from very bullish and aggressive to defensive.  I continue to favor the gold stocks on a strong pullback to accumulate for a five year bull market that began in early August of this year.

To wit, the SP 500 has retraced a normal A B C pattern to the upside following a cataclysmic 5 wave pattern from October 2007 to March of 2009.  The 8 month rally is roughly 50% of the 17 months of decline that preceded it into early March.  With the sentiment readings back at very high bullish levels, many small cap stocks rolling over, and leadership spread amongst fewer and fewer equities, it is time for a corrective decline.  We see this bounce ending shortly to the upside, followed by another bout of selling.



Our advice is to maintain higher than normal cash positions at this time, accumulate Gold on large dips, and wade into Gold Stocks on a big drop as well.  We also plan to recommend the occasional use of Bear ETF’s for defense and insurance on our portfolios.



Dave Banister is the CIO and founder of Active Trading Partners, LLC.  David has been often quoted on 321Gold.com, The AUreport.com, Stockhouse.com, Ticker Trax, and other advisory venues.  His activetradingpartners.com service advises subscribers in real time with frequent updates on managing portfolios through various market conditions. You can learn more at www.activetradingpartners.com and reach Dave at Dave@ActiveTradingPartners.com

[PolarBear]

Gold Stocks & The Market Forecast for 2010

I wrote a post here for ATP called “The bull case is not dead yet”. This ended up as an article on 321Gold.com, which you can review here: Bull Not Dead Article- Banister. I stuck my neck out, which I love to do once in awhile when the contrarian mood strikes me. I wrote a Feb 25th article this year going very bullish on the markets when everyone was bearish. I wrote an article in early August going very bullish gold and gold stocks, when they were not in bull mode. Obviously, if you stick your neck out enough you’ll get your head chopped off, but I only write these every 3-4 months or so… so far, so good.

In regards to my update on Gold, I have Gold moving to $1325 or so in the first 3-4 months of 2010.  This should be followed by a spring-summer correction and consolidation that will last into the late summer.  By the end of 2010, I'm looking for Gold to get as high as $1625 an ounce, and the Gold stocks will be enjoying another large leg up.  My article on 321Gold.Com in early August predicted a 5 year massive bull market in Gold stocks, and we are sticking with that prediction.  There will be pullbacks along the way, and we will trade around those as best as we can.  I recently picked 3 stocks under $5 for 2010 on TheStreet.Com interview with Alix Steel. 

You can view that here if you'd like:
http://cosmos.bcst.yahoo.com/up/player/popup/?rn=289004&cl=17483005&src=finance&ch=633473

In regards to the SP 500 and the broader market indices:  In the recent bullish market November article, I noted how many bears were growling and how some noted Elliott wavers were calling for a hard wave pattern down. What I was trying to outline was that the Bull case was still alive, and we needed to watch the price action and wave patterns to confirm. I was watching the IWM (Small Caps) index to confirm the Dow etc. This has confirmed and pushed above my $63 IWM targets, and this now indicates to me a 5th wave up is confirmed since March.

What does it mean in English? In the world that I am in for Market forecasting, it means a bullish impulsive pattern since March 9th lows is confirmed. This means, instead of a “corrective a-b-c” pattern since March, we are moving impulsively higher. If you have a clear 5 wave pattern up, normally it indicates the strength of the trend is bullish and not just a correction to the upside. The next shift will be an A B C market correction, but not until the 5th wave has run it’s course. Back in early February, I made the case that the bear market was ending since 2000 with an 8 Fibonacci year decline into late February 2009. I showed an SP 500 index chart making that case as well. Here we are 10 plus months later and you still have people bearish who don’t get it. Markets move on sentiment, not on fundamentals… markets predict a shift in fundamentals obviously… but they move first on sentiment.

The 5th wave is tough to predict, because they can be extension waves or they can be truncated and short. IWM could climb to 78 easily from 64 ranges here (IWM is an ETF). This means you want to keep riding the bull for now, and focus on the best sectors and stocks within those sectors. Inflation is friendly to stocks, and deflation is the enemy of stocks. When I wrote my Feb 25th article going bullish on the markets, I talked about moving from deflationary trends to inflationary trends. The market anticipated this as I predicted then, and we have moved much higher.

Look for the Market to continue higher in this 5th wave, and then we will try to be prepared for the A B C correction that will ensue afterwards.

Dave Banister
CIO-Founder
Active Trading Partners, LLC
www.ActiveTradingPartners.com

Disclaimer: David Banister does not own  any o the stocks mentioned in the video link listed above.

[PolarBear]

5th Wave of Market Advance is Tiring Out

It’s time for a review of the broader market indices and possible implications for traders and investors:  This analysis may prove controversial, but I tend to make big picture calls at critical junctures. This analysis is getting more bearish I realize, as I’ve been bullish since Feb 25th on the markets.  I simply look at all the evidence, and instead of burying my head in the sand, I take it all in and plan accordingly.  Being a perma-bull or perma-bear is a quick way to under-perform the markets.  I try to be nimble and trade/invest accordingly.  The next few weeks are likely to be volatile, possibly to the downside a bit.  The market may not have peaked quite yet, but it’s feeling like the 8th inning in the game.  Below are my thoughts:

1.  It appears we have the qualifications to have a potential top in since the March 2009 lows.  This is due to the rebound of the Dow to above my 10400 targets I put out in late February of 2009.  We have had a 61% Fibonacci retracement of the 2007 highs to the 2009 lows. In addition, we have had about a 61% time period duration with an 11 month rally which followed a 17 odd month decline.  From the world in which I work, this means that the markets have fulfilled intermediate objectives for a top.

2.  The caveat in this analysis, is that markets could still work their way higher.  Just because we have met certain typical patterns in Time and Price movement, elliott wave patterns and the like, doesn’t mean we have peaked for sure.  The markets could continue in a higher % retracement of the 17 month decline and the indices work their way higher.  What I am pointing out today is that the requirements for a top have been met, and we need to be on guard. Also, we have other non elliott wave measures I use that are giving me some topping signals (Below).

At the bottom of this post is my 5 wave Elliott pattern on the Russell 2000 index.  I will again note that this pattern could be re-interpreted if I wanted into a 3 wave (A-B-C) corrective pattern.  It is all in the eyes of the Elliott Wave beholder I guess.  Sometimes you need to take a little poetic license in the analysis.  Elliott wave theory is not foolproof by any means, so I try to overlay other factors.  Read my Feb 25th 2009 article on 321Gold.com if you want to see my point there.     We have bullish sentiment running at extreme highs.  We have the VIX or “Volatility” index running at extreme lows.  The last time we had this many bulls in surveys vs bears was July and October 2007.  I think we all know what happened then.

Bull to Bear ratio is running at Extreme Highs



Therefore, whether this was an impulsive 5 wave pattern from March, or an A B C correction upwards… doesn’t matter much near term because in either event, the evidence is mounting for an interim top in the next 1-2 months or less.  Tops don’t usually happen in one day or one week, they are a process… and we are mounting the top of this mountain I think.  The bull to bear ratio is a warning flag.

Other Factors: Consumer Expectations index has rallied from a low of 22 in February 2009 (My bullish article period) to a reading of 70 now. This would make sense as these bottomed with a low market, and rise with a rising market.  This means expectations have soared off the lows, along with the markets.  However, how people feel about their “present situation” is rather unnerving.  It has hit all time lows even with the market rebounding.  This is a potential problem for sure.  This is also reflected somewhat in the % of bulls in the market vs the bears… again, a warning flag.




Bottom line: Markets are at a critical juncture of higher than normal risk levels here.  This does not mean we can’t trade and make profits on the long side however.  What it does mean is what I’ve been hinting at lately.  We are in the 5th wave up in this structure since March lows.  5th waves can be very difficult to forecast as they can be extension waves or “truncate” and reverse sharply.  Friday last week was ugly, but it was also options expiration week, making analysis more difficult.  Partners in this service should note that we have been aggressively taking profits and removing positions off the table in the past two weeks, as well as  general advice to raise  cash levels a bit.  Partners who are planning to stick around for the long haul should be aware that there are times in the market to be aggressive on the long side, and times to be high in cash and sit back for awhile.  Right now, the evidence is to be more cautious and to have higher than normal cash balances while we wait for confirmation of market/wave patterns.

Other notes: Robert McHugh, is a very good Elliott wave forecaster and he is also beginning to make a convincing bearish cycle/wave case now.  I often ignore his analysis as he has consistently been forecasting a top for 2-3 months now, and we have plowed ahead… but now I’m watching his work a bit closely to see if it mirrors my views.  Eric Hadik is also a strong cycle and time forecaster, and again, not perfect.  He is also looking for potential tops into latter February and early March.  I also have not reviewed his work in 10 months or so, but am starting to review it again.

We need to be on our toes to be prepared to trim back positions if needed and to cut losses quickly if needed.  This update is not to alarm anyone, as there is likely one more leg up in this up cycle to higher highs yet.  However, let’s be on guard.
Here is the current IWM (Russell 2000 Small cap) index chart.  It’s getting long in the tooth:  Does this mean the market crashes from here? No, but again, it means we may need to be extra on the guard for an interim top and to again build higher than normal cash levels…and prepare to be defensive.  Stay tuned.



Dave Banister is the Chief Investment Strategist and commentator for ActiveTradingPartners.com.  David has written numerous market forecast articles on various sites (SafeHaven.Com, 321Gold.com, Gold-Eagle.com, TheStreet.Com etc. ) that have proven to be extremely accurate at major junctures. You can read more at www.activetradingpartners.com

[PolarBear]

Where Will Gold Bottom in this Corrective Cycle?

Feb 4, David A. Banister- www.activetradingpartners.com

Around two months ago I advised my Partners to look for Gold to drop to the 1040-1070 area in US dollars. This followed my projection in early August of a Gold rally from 900 to 1250 before the next top, and I was close as we hit $1,225 and rolled over. This correction so far in Gold is normal in a bull market, and is intended to knock everyone off the back of the bull. The bull likes to make sure as few people as possible are along for the ride.

Currently we are seeing a strong counter-trend rally up in the US Dollar. Investor’s should keep in mind that the dollar index is simply a mathematical calculation against a basket of other currencies. In this case, 57% of that formula is the Euro. The Euro has had a dramatic correction and is likely to continue to drop due to problems in Greece and other countries. This makes the dollar look better on a relative basis, but investors should remember this is largely cosmetic. Deficits continue to balloon, debt ceilings are raised, and the US Treasury has to rollover a significant amount of Treasury Bonds this calendar year. Traders and Investors over-react to the rallying dollar and start selling off Gold and Silver as fast as they can. However, at some near term point, Gold is likely to firm up and bottom regardless of the dollar rally. There has been no fundamental shift in the US Dollar or it’s merits in my opinion, and in fact, the recent economic events are only making Gold look more attractive relative to other world currencies. This pullback is required to work off the excessive optimist we saw in early December.

Most recently on January 22nd, I wrote an update to my December 4th forecast for Gold. In that update I mentioned that Gold was in a “C wave” down, and would likely bottom around 97-102 on the GLD ETF. You can read the entire article here:
http://activetradingpartners.com/articles/2010/01/gold-continues-in-c-wave-down-dave-banister-jan-22/ 

A pullback in Gold to the 102.50 area on the GLD ETF would fill a “Gap” in that chart, and represent a normal bull market 50% correction of the last swing. A further decline to the 97-98 area on the GLD ETF would represent a 61% Fibonacci re-tracement of the entire rally from April 2009 into December 2009. This correction in my opinion could continue into early March or May of this year, before the next leg up begins. Gold investors are advised to scale into Gold as 1040 US is hit, and all the way down to $980. At that point, the bull will continue to new highs as the smart money will be accumulating the gold dips in my opinion over the next 30-90 days.

David Banister

David Banister is the Chief Investment Strategist and founder of www.activetradingpartners.com. David uses his unique methods of forecasting major market turns in addition to Gold, Oil, Sectors, and individual stocks with counter-intuitive methods he has developed over twenty years of investing.

note: this article has been delayed posting due to my busy schedule over last weekend AirShow

[PolarBear]

A Cyclical Bear Should Not Be Feared If You Trade It Correctly!

Dave Banister- www.activetradingpartners.com


Back on January 18th, I wrote an article indicating that all requirements for a market peak had been met. Articles and prior forecasts can be read by clicking HERE.

In my January market forecast, I outlined the sentiment indicators being at the same peak levels last seen in July and October of 2007. In addition, consumer sentiment had rallied up from the March 09 lows, and yet the “Present Situation” sentiment was at decade level lows.  With these factors along with my Elliott Wave patterns peaking, the market peaked on Jan 19th the following day, and has been trending down ever since.  The trend is your friend as they say on Wall Street, but the key is identifying the trend before everyone else rushes into the trade.

A bear cycle is nothing more than a bull chart flipped upside down.  If we are in a bearish cycle for a period of several months as I believe we may be, then you need to change your trading plans accordingly.  Of course investors and traders can still find stocks in an uptrend and attempt to benefit from their continuing rise; we certainly continue to look for those opportunities for my subscribers.  However, with the SP 500 likely to trend down into June to the 910 area according to my views, we are set up much better to consider using the Bear and Bull ETF vehicles for our preferred trading vehicles.

Should the SP 500 continue working it’s way down in an “A-B-C” fashion as I suspect, then we want to hone in on the bear ETF’s that will be climbing in an A B C fashion in order to best profit.  Avoiding single stock risk is wise in a bear cycle, and investing with the leveraged ETF’s is a way to avoid single stock risk and still be on the “right side of the trade”.  You see, the best traders know that it doesn’t pay to be a perma-bear nor a perma-bull.  It pays to be on the right side of the trend, and right now that is obviously down.  Emerging Markets and Small Cap stocks are the most vulnerable to continuing market downside corrections into June.  The paired ETF trades at key pivots for the 3x leveraged funds are EDZ for the bear side, and EDC for the bull side.  In the small cap arena, you are looking at TNA for the Bull side and TZA for the bear side.  My subscribers are profiting from trading the extreme sell-offs and counter-trend rallies by entering either the bull or bear side of these ETF’s at those extremes. 

The advice is not to continue to bang your head against the wall looking for stocks that will fight the normal cyclical corrective downtrend, but instead to focus on ETF’s that you can easily enter into and exit out of, while removing the single stock risk factors that can damage your portfolio.  My forecast since my market top prediction on Jan 18th is for an ABC correction at a minimum to about 900-920 on the SP 500 index.  This will not happen in a few weeks, more likely 3-5 months or so.  There will be counter-trend bounces along the way, but the general trend will be down.  I had two major buy signals flash in January on the TZA Bearish ETF fund when it crossed over $9.00 a share.  Those signals tell me that the main trend is down until further notice.  Higher than normal cash balances, less trading, and more focus on ETF’s are the recipe we are running with at Active Trading Partners.  Stay cool and calm, and keep a level head.

[PolarBear]

The 13 Year Gold Bull Has Much More Room To Run

A few weeks ago on February 4th, I penned an article for Kitco forecasting the gold correction trends and the likely outcomes. My opinion was that gold was pulling back to work off excessive optimism from the early December 09 highs. This type of pullback was orderly and there was a gap at 102.50 on the GLD ETF that I believed would fill. The following day, that gap filled and gold hit a bottom at 1042 and has rallied much higher since. I opined that the rally in the US dollar was merely cosmetic against other world currencies, and that Gold was still the preferred asset to accumulate and would begin to move regardless of the dollar moves.

The recent technical move up in Gold only confirms that we are in the final five year window in my opinion where the investing public becomes “aware” that gold is real money.  In my August article last year, I discussed my thirteen year bull theory for the Gold market. The first five years from 2001-2006 was the “stealth bull” in Gold and Gold stocks.  The average Gold Fund ran up 30% a year for five years compounded.  By the time investors figure this out, they all pile in right near a five year peak.  The market then chops for three years sideways in an up and down fashion, getting nowhere.  Investors get bored, and then we move into the final five year stage where awareness takes hold and the bull cycle really takes off.

It is maybe the second inning of this five year stage, so the recent pullback in Gold to 1040 is normal, and the next advance is likely to be larger than the August to December advance. As this awareness grows, the bears get upset and try to explain how gold bulls are foolish. The investing public sometimes does not get enough credit for being correct, and in this case, those investing in Gold have been proven correct over and over again for the past nine years. They will be proven correct for the next few years as well as Gold continues to climb and  befuddle the gold bears of the world. You will know that Gold’s bull market has topped when all of the bears are completely silent and every Gold bull is running around screaming buy at the top of their lungs. Every time I have seen Gold pull back in the past nine years I have chuckled at how fast the erstwhile Gold bulls start getting nervous and the Gold bears pile on hard.  As long as I continue to see these behavioral patterns, and the technical and Elliott Wave patterns stay bullish, I will remain a Gold bull while trading around the important pivot highs and lows. As long as the pundits keep trying to talk Gold down, it will keep on rallying and fooling them until they are all believers. This is how the 13 year Tech Stock Bull unfolded from 1986-1999, and it’s how this Gold Bull is unfolding before your eyes.

It is interesting that Gold bottomed a few times and bounced off the 1070 areas, and then made what appears to be a final bottom around 1042 on February 5th and has rallied hard since then. In my opinion, Gold rallying past the 1040 and 1070 fibonacci pullback windows and now over 1,100 is indicative of a new wave of bullish advance taking us to $1325-$1350 at the next pivot top in Gold. It is as if Gold just cleared two important psychological hurdles at 1040 and 1070, and yet we see articles talking Gold down.

What many market pundits do not understand about Gold and it’s ascent since 2001 is that Gold is real money. Since most world currencies are nothing more than “burning matches” in a debt ridden world, Gold rises to the top of the asset class charts.  If you look at the Dow Jones average relative to Gold prices in the past ten years, you can see what real money is doing. The Dow is flat over ten years now while gold is up nearly 400% in the same period of time. Measure the Dow or the SP 500 index against Gold as your money indicator, and we are still in a major 10 year plus bear market. Folks, the Kondratiev winter is still here and the weather is about to get a lot colder.  In the winter cycle, all debt gets washed out of the system and this creates all kinds of carnage. Gold becomes favored “money” in this type of cycle.  Once this cycle completes, the “spring” comes and we start anew.  In the interim, look for Gold to continue ever higher and look for continuing trash talk by the pundits who don’t  get it.

I will be launching a new Market Trend Forecast service in early March of this year which will forecast the short, intermediate, and long term views of the markets, indices, ETF’s, and precious metals.  This will be in addition to my Active Trading Partners service. You can learn more at www.activetradingpartners.com , read our subscriber testimonials we have  compiled in 6 months since our July 2009 launch, and also review our past forecasts at www.activetradingpartner.com/articles.

David Banister

[PolarBear]

Feb 27th- Market Rallies Getting Weaker and Weaker

This is a commentary on the SP 500 index and the broader NYSE index.  As I often mention here for Partners, we try to work in probabilities and then plan accordingly with our investing and trading.  I look at Elliott Waves, Fibonacci levels, oversold and overbought patterns, cycles, and other indicators to give me some clues.  Today, we look at an indicator called The Force Index.

The Force Index:  Developed by Dr Alexander Elder, the Force index combines price movements and volume to measure the strength of bulls and bears in the market. The raw index is rather erratic and better results are achieved by smoothing with a 2-day or 13-day exponential moving average (EMA).

•   The higher the positive reading on the Force index, the stronger is the bulls’ power.
•   Deep negative values signal that the bears are very strong.
•   If Force index flattens out it indicates that either (a) volumes are falling or (b) large volumes have failed to significantly move prices. Both are likely to precede a reversal.

That last explanation I bolded because we may be under that type of condition.   Below are two charts, one with the SP 500 and the other is the NYSE composite index.  Recently, the NYSE composite has managed a light 45% re-tracement of the Jan/Feb decline, whereas the SP 500 has managed a stronger 67% re-tracement of the prior decline.  Some have surmised the SP futures are being manipulated most every monday morning by strange and heavy futures buying in pre-market.  22 of the last 25 weeks this has been the case, yet the overall internals of the market are not showing as being very strong if you look at the Force Index.  They especially show up weak if you view the larger NYSE composite index, which would be much harder to “paint” as it were.

My point on these charts is to look at the brown color for the Force index as it relates to the market movements over several months.  As that brown graph gets weaker with each rally, it means the bulls have less and less power and volume and money pushing the market higher.  Most recently, this last market rally has been the weakest in months according to The Force Index indicator,  and again, helps to provide me with clues that a C wave down is still due.

This may help you all understand my apprehension near term on the broader markets and why we have positioned or recommended positioning in the EDZ and/or the TZA ETF’s.  The market may bounce a bit higher early in the week to complete the zig zag bounce from the Feb lows, but I expect a re-test of the Jan/Feb lows to commence.  If I’m wrong, it won’t be the first time nor the last…

SP 500 Weekly Chart



NYSE Composite Chart - Daily Chart



David Banister is the Chief Investment Strategist for ActiveTradingPartners.com and for the soon to launch TheMarketTrendForecast.com.  You can review all of our offerings at www.TheTechnicalTraders.com

[PolarBear]

Market Shows Signs of Interim Peak

David Banister- ActiveTradingPartners.com;TheMarketTrendForecast.com- April 16th.

Markets move in large wave swing patterns based on the stretches and swings of investor optimism to pessimism.  These are known as Elliott Wave Patterns as theorized by R.N. Elliott in the 1920’s and 1930’s.  I became a student of his work in 2001 amidst the market mess, and after a few years became a convert that markets move largely on crowd behavioral patterns.

With the above said, I look for clearly defined wave patterns if discernible to help me with clues as to where we are in the market bear or bull cycles.  Besides the chart patterns themselves, you can review Investor Sentiment ratings, Consumer Confidence numbers, and other data to help figure out which direction the crowd is leaning, and if that rubber band is being stretched too far both on the optimistic or pessimistic side.

Reviewing the recent wave patterns and investor sentiment surveys were certainly telling me we were in the home stretch after 13 months of bullish movements in the indices.  13 is a Fibonacci number by the way, and crowds also tend to behave within Fibonacci sequence patterns both during corrections and rallies.  Here is some evidence I’m looking at for a decent corrective pattern to likely unfold over the intermediate time frame.

1.  Investor Sentiment-  Bulls in the latest April 13th survey were running hot at 52% vs just 19% for Bears.  This 2.8 to 1 ratio was the highest since July and October 07.  The % of Bears is similarly at the same extreme lows seen in Jul/Oct 07 tops, and the summer of 2009 interim highs.

1a.  VIX or the volatility index levels were at extremes for complacency, another sign of impending tops.

1b.  Fibonacci re-tracements of 61% would be at 1233 on the SP 500 index from the Oct 07 highs to March 09 lows.  We were within 1% or so of that figure and pretty close.  The Nasdaq hit a 78% retracement level this week, also a typical topping point in a wave structure.

2.  Bears are dead all over the roads, consistently wrong and consistently calling for tops nearly everyday.  I think they finally got exhausted, which would actually be a sign of a top.

3.  Headlines in various newspapers exclaiming the strength of the bull (NY Times etc.)

4.  Elliott Wave patterns were clearly “impulsive” or bullish since the February 5th pivot lows.  The key is figuring out when the 5th wave of a 5 wave impulsive pattern ends, because that is extremely difficult.  5th waves can extend and confound bears and run higher than most expect.  In most cases I don’t even attempt to determine where they terminate. However, you can watch seminal events and market reaction to give you clues, combined with the various indicators mentioned above.

Today’s Goldman Sach’s charges as levied by the SEC were clearly politically driven and rather old news.  Anyone who has read Matt Taibbi’s articles in Rolling Stone over the past two years is aware of how they manipulated AIG and the Government to cash in on bearish bets against the mortgaged back securities market, the one they helped pump to the moon.  The impish lawsuit or allegations filed today are kind of a joke, a drop in a rather large bucket as it were.  However, this event can serve to terminate a bullish pattern and shock the crowd into a “negative” swing or shift in sentiment.  The crowd goes from “what me worry, I’m a big risk taker and making huge money trading!” to… Hey, I don’t think I like this risk game anymore and I want to protect my money.

So, today’s news is really nothing new or all that material since it is old news… but, it’s possibly a seminal event that terminated a 5 wave bull structure… just nobody knows it yet.  To watch Jim Cramer ever so briefly tonight tell everyone to buy the banks and chip stocks after the huge run they just had, indicates nobody is really worried.

I digress and will post my Elliott Wave SPY (SP 500 ETF Index Fund) below.  It appears that 5 clear waves up terminated today, but we will need to see the market reaction or action on Monday to confirm.  Today was OPEX options expiration, and that by itself can cause volatility.  If the market continues downward early on next week, we should be expecting a Zig Zag correction to 113 on this SPY, or 50% of the recent rally.  If the market powers higher than today’s highs early in the week, then the impulsive pattern has a bit more legs left… though likely running on fumes.  I moved to close out some positions quickly today in our ATP service to be defensive.  The advice here is to go and do likewise for now.



David Banister- ActiveTradingPartners.com;TheMarketTrendForecast.com

[PolarBear]

Broad Market & Gold Projections

We were in front of this latest downdraft and also correct in my bullish projections for Gold at the same time.  Gold has hit 1210, the SPY has hit sub 113, which was the initial area for a minimum bottom.  We have to put aside some of the computer related problems and look at around 110-111 as the recent bottoming areas on the SPY ETF.

I’m looking again for the SPY to work it’s way down to 94-97 and probably over 4-5 months from mid April.  My projections are for a bottom on or around September 15th, plus minus a few days.  There are trading opportunities during this 5 month correction in this bull market, so it does not mean one has to be 100% in cash.  However, mutual fund investors and index investors are best to be on the sidelines for the most part.

Below is my projection for the SPY ETF on a go forward basis.  Back in November of 2009 I actually projected 121 on the SPY when it was trading well below that figure for an initial market top.  Therefore, my projections now for 94-97 seem reasonable to me using my methodology, with potential to spill within a few points of that 94 bottom to 91-92 ranges on an oversold situation.



David Banister – www.ActiveTradingPartners.com

[PolarBear]

An update on the Gold Bull Market and the SP 500 Index

Back in the third week of April I predicted here on Kitco.com a topping in the broader market indices. The theory was the VIX levels were extremely and historically too low concomitant with extremely high historical readings in investor bullish sentiment gauges.  After thirteen Fibonacci months of a bull cycle rally, it was likely an A B C correction to the downside would begin. In further follows ups on TheMarketTrendForecast.com service I run on April 20th, I again outlined concerns with falling volumes on small cap stocks and too many “stories” being run up too far ahead of the economics.

At this point in the Bull market, it is common to have the crowd of investors move from a bias towards viewing all news as positive, to a negative slant on all news.  Nothing has changed dramatically on the problems the world had before with Debt and currencies, but the reaction to those events turns negative.  This works off the overly optimistic Elliott Wave patterns of the crowd, turning into a typical Zig Zag correction that lasts several months.  There will be trading opportunities between that Mid-April topping forecast and my forecast for a bottom around mid-September.  However, as recommended in April, Index investors and mutual fund investors should have been moving to the sidelines. I am looking for the SP 500 Index to drop to the 920-970 areas by mid-September before the next leg of the Bull market takes off.   Now, the one caveat to that forecast is actually a lot more bullish.  If the SP 500 can hold the 1100-1110 areas and pivot up strongly, we could move on to new highs.  I put the likelihood of that around 20%, so be on guard. A counter-trend rally up in the next few weeks is highly probable, but the evidence continues to suggest working our way down into the 900’s in the SP 500 before the Bull resumes in earnest.  We are selectively buying Gold and Biotech stocks in the Active Trading Partners service as well.

Gold has continued higher confirming my April 20th forecast on www.TheMarketTrendForecast.com a move from 1125 to 1235 in Gold.  The Elliott Wave patterns remain extremely bullish for Gold to continue a 13 Fibonacci year cycle up into 2014.  Gold has formed a very bullish pattern intermediately for a move to $1470-$1550 at the next major pivot top.  In the interim, I expect continued consolidation in and around my $1,235 US levels before the next pivot high at $1300-$1,325 US.  Fiat currencies are burning matches as foreign governments and other entities continue to attempt to put out a fire by printing more paper and covering the same fire with it.  Until the analysts on CNBC stop questioning the validity of Gold and start questioning the validity of Fiat Paper, the bull will rage onwards with most of the pundits watching the caboose from the back of the tracks.

SP 500 Forecast from the Mid-May TMTF forecast service updates:


Gold Forecast is for $1570 over 6-9 months with pivot at $1300


Checkout my forecasting and trading services at www.TheTechnicalTraders.com

Chris Vermeulen

[PolarBear]

May 19th- SSEC completing a correction?

The recent Shanghai Surprise has been breaking that potential bullish triangle I outlined several weeks ago with a downside break of 2900.  Subscribers to TheMarketTrendForecast.Com may recall that was my line in the sand for the SSEC index to remain bullish.  With the break of that possible bull triangle, the SSEC index has fallen down to near 2500.  Everyone on CNBC is bearish on the Chinese  Indexes now, and I can’t find any bulls for that country either.  They were everywhere several months ago, and now, nowhere to be found.

What I’m seeing as a possible intermediate “BULLISH VIEW” is that the Shanghai Index is completing what is known as a “3-3-5″ wave pattern.  This means it’s an A B C zig zag to the downside, which works off the prior bull move from 1600-3400.   So far this correction has re-traced a bit over 50% of that bull move, which would be typical and would kick everyone off the bull.

A 3-3-5 correction unfolds in a series of wave patterns.  3 waves down, 3 waves up, and then 5 waves down to complete.  I outline this potential pattern below in the SSEC chart.  This does not mean I will be right,  merely that this is a very valid and normal corrective pattern after a massive bull wave up.  The index is extremely oversold as well on traditional indicators, which I use to overlap my Elliott Wave views.

This forecast could mean some Chinese stocks are super cheap here, and it will be fun to watch the action from here.  The index could drop to about the 2300 range and still validate this bottoming pattern.  That means there could still be another 8% or so drop from here, but aggressive investors would start scaling into long positions over a few weeks.  Indeed it was January of 2009 when I started recommending small cap indexes and mutual funds, but that index didn’t bottom until early March of course. Scaling in was wise though, as the TNA 3x ETF soared from 11 to 60 during the bull phase up.  I started buying at 28 and down to 11, so my average was around 20 or so.

Worth watching anyways…



David Banister – www.ActiveTradingPartners.com

[PolarBear]

The SP 500 and Gold Update, a Bear and a Bull cycle- June 5th, 2010

Back in mid April on Kitco.com I wrote a market forecast calling for a top in the SP 500 index and an ABC correction.  Since that time I had one intervening update on both Gold and the SP 500 index, and this is a June 5th follow-up.

Gold should continue to back and fill as I postulated around the 1200-1235 area’s, until the next surge taking it up to 1300-1325 US per ounce.  The burning matches we call currencies are getting hotter, and fingertips are getting burned in Europe a little at a time.  The Elliott Wave patterns I use as my underlying basis for forecasting are continuing to look bullish for the precious metal. In addition, it’s a darn good alternative to fiat paper during this period of the Kondratiev winter where debt is repudiated and washed out of the system.

The SP 500 index or the US broader markets if you will, continue to unfold in my predicted A B C correction.  I forecasted in pre market on May 25th  that a “3-3-5” ABC low pattern was completing that morning from the April highs, with an intervening bounce likely.  The problem is this “Bounce” as it were, has only recovered a 38% re-tracement of the April highs to May lows.  The upward correction was mild in percentage terms, and the gap down in the SP 500 index and markets on Friday morning portends lower lows to come.  A weak bounce and a solid thud is not near term bullish.  My ultimate forecast called for 92-97 on the SPY ETF by mid September 2010, and I am continuing to stick with that as the likely outcome before the Bull can resume the advance in earnest. This would be a 50% re-tracement of the 13 Fibonacci month rally from March 2009 to April 2010.  I look for the summer to be choppy and volatile with a likely downside bias.  As I thought in April, it’s a sell in May and go away year until the summer ends.  Trading profits could be made on the 2x/3x bear and bull ETF’s, and we plan to work with those this summer in my paid website services.

If you would like to view an up to the minute June 5th video on the SPY ETF and my updated forecasts, please click this link to view the video: http://www.activetradingpartners.com/articles/2010/06/the-sp-500-index-june-5th-video-update-poised-for-new-lows/

If you think you may benefit from my Market, Gold, and other big picture forecasts, you can learn more at www.themarkettrendforecast.com, and all of our services at www.thetechnicaltrendtraders.com

David A. Banister

[PolarBear]

An update on the Status of the SP 500 Index and the Markets

June 20th, 2010
Back in Mid-April I penned a forecast calling for a top in the markets and suggesting a drop from 1220 or so on the SP 500 index down to 1130 as the first leg down.  That was a minimum downside and based on the rally off the February 5th lows to the April highs.  In the last many weeks, the market actually ended up correcting 31% of the 13 month rally from March 2009 to April 2010.  This type of corrective action had the exact same patterns as the prior two corrections since the Bull began in 2009.

On May 25th in pre-market, I wrote a forecast with a video predicting a bottom at 1030-1040 ranges, and we did in fact bottom that day.  The market has since traced out a rally followed by a re-test in early June, and since then another rally to new highs since May 25th.  I expect this type of chopping action to continue until Mid-September as I predicted back in April.  The preceeding 13 month bull leg rally must be corrected both in sentiment and price over several months of time.  The price objective may have already been met on May 25th and again with the June re-test, but the amount of time for a correction is not nearly enough.  Expect continuing choppy action for the next 3 months, after which I believe the market will firm up and we could run to new highs by the end of the year.

The market should pull back a bit early this week, and if it holds the 109.50 SPY ETF area, it should then continue the rally.  You may view a 3 minute video of the forecast with advisories by clicking the link below to our ATP website free preview section.
Click to review Video Forecast of SP 500

Dave Banister
Chief Investment Strategist
ActiveTradingPartners.com
TheMarketTrendForecast.com

[PolarBear]

Is Gold About To Peak And Nobody Knows It?
David A. Banister- ActiveTradingPartners.com/TheMarketTrendForecast.com

Let me first start by saying I’ve been a long term “Gold Bull” since the fall of 2001, based both on economic factors as well as Elliott Wave patterns that I think are clear on Gold’s Bull rise.  As we are now almost in a Fibonacci 21 months of Gold rally off the October 2008 bottom, I think this pattern is getting long in the tooth.

Gold has risen from $681 at the nadir of the fall of 2008 to $1265 so far, with potential to run to about $1300-$1325 an ounce on this final leg up.  It stands to reason, as with any Bull Market that the Bull gets tired and at some point has to hibernate.  This wave pattern is clearly 5 waves since the October 2008 lows, and we are in the final stages of the 5th wave of this pattern in my opinion.  That means we can have a blow-off top, or we truncate here and start correcting hard.

Bull patterns tend to peak when most are not expecting it, and I forecasted a market top in Mid January and again in Mid April this year in the SP 500 index just prior to huge drops.  These forecasts were based on sentiment and Elliott Wave patterns.  I am now viewing the $681 to $1,265 rally in Gold as a 5 wave bullish structure that is in the final stages of ascent. Fifth waves are notoriously difficult to predict, but taking some off the table here for intermediate traders is probably a wise decision.  Correcting 38% or 50% of the $600 rally would take Gold back to $1030 to $965 area plus or minus, and not invalidate a larger bull structure. 

If you would like to view a video forecast with a chart and audio commentary on this Gold forecast, and the preceding wave patterns, go to www.activetradingpartners.com/articles to view for free.

[PolarBear]

SP 500 and Gold still have a good bit of downside to come?

Back on June 30th, I updated my subscribers that I was looking for an interim bounce in the SP 500 from the 1007 Fibonacci Pivot point to about 1071-1074, followed by much further downside.  The chart is included here from June 30th for reference:


So far the market hit the 1010 area on the SP 500 and has bounced exactly to 1071, the 50% retracement of the most recent downleg from 1130-1110.  This market has been acting in clear Elliott Wave patterns since my Mid-April prediction of a 5 wave 13 month top being in place. My theory was we would then correct in a Zig Zag fashion over about 3-5 months to as low as 920-970 on the SP 500 from 1220.  Right now the market could climb a few percent higher, but is likely to rollover and break the 1010 lows, and drop to the 940 area before the completion of this Bull market correction comes to an end.  Crowds move in very reliable behavioral patterns and I use those patterns to work around major pivot tops and bottoms to help with my investing plans.  In Mid April the advice was for mutual fund and index investors to move to the sidelines based on the Wave patterns at the time, and that is still the case in my opinion.

Recently on Kitco.com and elsewhere, I also predicted a top in Gold after a 21 month rally covering nearly $600 an ounce.  We dropped about $50 an ounce within 48 hours of my Elliott Wave analysis, and although Gold could bounce to $1225 near term, the likelihood is a multi-month correction that could take it below $ 1000 an ounce.  Although I have been Gold Bull as it were since late 2001, it does appear that have 8 years and a recent 21 month rally that the Bull will need to rest and recover strength. This means an A B C correction is more likely than not, and it will take 6-8 months to work off the recent 21 month rally up.

If you would like to try TheMarketTrendForecast.com, please check out the website for yourself and I think you’ll be pleased with the results.

David Banister- www.TheMarketTrendForecast.com