Value of Perfect Information

On the 4th of June we produced this chart below:

At the time the market was declining from nonfarm payroll numbers. The market was at 10000 and we said the market must decide if it can reverse within the next day or two or it will stage a decline with the 10000 mark being the pivot.

We didn’t reverse so we said the market would decline further!!

HOWEVER whilst all the pundits were talking about a significant decline and a crash with it – we said we don’t expect a crash or market to have a significant decline and that was because our expanding triangle we had devised:

So then the market staged a decline and THEN we started talking about 10400!! Not many were giving it a mention, although a few selective pros were.

Of course today you can see what has just happened. The market is expected to back off from here or could we break the triangle higher?

This is A VERY SIGNIFICANT time for the U.S. Stock markets.

I am Ajit Singh, the writer of this article who started work with the financial markets from a very young age of 17 and this is our website: www.tradingmarketsignals.com – -TMS’.

If you like what you read and would like to gain insight on position trading style signals on five major markets. Or perhaps you want to add clarity to your short term trading with our signals which are fired via email and soon possibly by a live chat room platform then you should come on board at wwww.tradingmarketsignals.com and catch the unbiased action with us professionally.

http://tradingmarketsignals.com/#/subscribe/4539058094

Stocks sit this weekend at the precipice. Conditions are ripe for a waterfall decline. This does not mean there will be a crash starting over the next few weeks, so please do not go out and short the farm. What we can tell you is the risk of one occurring is higher than normal, that conditions that preceded prior stock market crashes exist right here and now.

I believe that short-term we are now in a high probability zone for a stock market crash. Further, I believe this catastrophic Supercycle wave (C) down leg of the Grand Supercycle Degree Bear Market that started in 2007 will see a series of stock market crashes over the next 3 to 5 years. Further, I believe that when all is said and done, the Industrials, the S&P 500, and most major domestic and international stock indices will be near the value zero. This belief is based upon the technical analysis patterns and indicators that we follow, and is not some wild speculative opinion. This is dangerous ground we stand on this weekend.

We have been waiting and watching for a Hindenburg Omen to surface, that would warn of a possible stock market crash. We have not had a stock market crash over the past 25 years without an H.O. However, we noted several months back in these pages that it is going to be very hard to get a Hindenburg Omen until deep into 2010 because prices had risen so far, so fast above a year earlier’s lows that it would be nearly impossible to see the requisite number of New 52 Week Lows on the NYSE to appear at the same time we get the requisite number of New Highs. We posited that did not mean a stock market collapse could not occur without an H.O. this time, that this time could be the exception to what we have seen over the past 25 years.

But a fascinating development has arisen that identifies a similar condition in the market that the Hindenburg Omen does, which increases our belief that in fact we could see a stock market crash start and continue over the next several months. The whole point of the Hindenburg Omen, the essence of what it is about, is to identify an unhealthy market, on the brink. I will quote Peter Eliades of stockcylces.com in his assessment of why a Hindenburg Omen identifies dangerous stock market conditions: “The rationale behind the indicator is that, under normal conditions, either a substantial number of stocks establish new annual highs or a large number set new lows — but not both.” When both new highs and new lows are large, “it indicates the market is undergoing a period of extreme divergence — many stocks establishing new highs and many setting new lows as well. Such divergence is not usually conducive to future rising prices. A healthy market requires some semblance of internal uniformity, and it doesn’t matter what direction that uniformity takes. Many new highs and very few lows is obviously bullish, but so is a great many new lows accompanied by few or no new highs. This is the condition that leads to important market bottoms.”

Now pay careful attention to Peter’s thinking. He is absolutely right. An H.O. is not magic. It is a reasoned indicator that identifies a deeply unhealthy market that is not conducive to future rising prices.

Well, get this: There is another indicator we follow every day which has spelled out the precise market condition as a Hindenburg Omen identifies. That is the number of 90 percent up days and 90 percent down days we have seen over the past seven weeks. Are ready for these stats? Amazing. Since April 16th, 2010, there have been eight 90 percent down days and five 90 percent up days. 90 percent days are panic buying or panic selling days. This is highly unusual market action. And it indicates as Peter says about the H.O., “the market is undergoing a period of extreme divergence . . . And such divergence is not usually conducive to future rising prices. A healthy market requires some semblance of internal uniformity, and it doesn’t matter what direction that uniformity takes.”

Do you see? The high number of 90 percent up days interspersed over the past seven weeks is botching up the uniformity we would see in a normal corrective downtrend — which would be a good thing for the market because it means a base building bottom is approaching. But there is not any uniformity to the decline from April 16th. Panic selling followed by panic buying followed by panic selling, etc… In other words, we now have the precise condition necessary for a stock market crash to occur over the next few months. This market has flies on it.

The most the Central Planners can hope for is an orderly decline over a period of weeks or months instead of a couple days of flash crashing. But a couple days of flash crashing where prices drop 2000 points over a few days cannot be ruled out. We believe that by the end of 2010, we would have seen stock prices fall at least 20 percent below where they are this weekend. There will be bounces along the way, but we have entered a period of time where lower lows and lower highs will occur, and that period of time could last several more years, into the 2012 to 2014 time period.

You can read an article on the theory and history of the Hindenburg Omen in our Guest Article section at www.technicalindicatorindex.com

There are several other troubling developments at this time: Head & Shoulders tops that started back in November 2009 in the major U.S. market averages are nearing completion with downside targets that require a crash to get there. This weekend, we show in our newsletter to subscribers at www.technicalindicatorindex.com something else that is interesting, a possible fractal pattern of the decline from October 2007 through 2009 may be occurring from mid-April, that is a declining wedge with a waterfall conclusion.

Check out our June Specials, good through Sunday, June 6th, 2010, including a fabulous 13 month offering, only $259, a little under $20 a month, or 2 years for only $459 at www.technicalindicatorindex.com. We added a 3 months for $89 budget friendly deal this week.

If you would like to follow us as we analyze precious metals, mining stocks, and major stock market indices around the globe, you can get a Free 30 day trial subscription by going to www.technicalindicatorindex.com and clicking on the Free Trial button at the upper right of the home page. We prepare daily and expanded weekend reports, and also offer mid-day market updates 3 to 4 times a week for our subscribers.

“Jesus said to them, “I am the bread of life; he who comes to Me
shall not hunger, and he who believes in Me shall never thirst.
For I have come down from heaven,
For this is the will of My Father, that everyone who beholds
the Son and believes in Him, may have eternal life;
and I Myself will raise him up on the last day.”

John 6: 35, 38, 40

A short while ago our systems have just entered short term sell signals on the Dow Jones 10320, GBP/USD 14785 and Euro 12297.

Members have received emails and updates on all the action so far. At the open of activities on Sunday Globex action members were informed how prices could continue moving higher in this way in which we stated that TMS would stand aside during the Asian and European session. The U.S. session has begun and the prices have aligned nicely with our sell areas for the short term system sell signal triggers.

We would now expect a pullback to materialise soon but we would allow for price action to unfold for the next few days, as prices can reach higher elevated overextended levels in which case the TMS system may trigger another sell signal should prices move higher and if the criterion is met.

Currently the markets have halted at near entry levels in which recognition of overextended prices on LIGHT VOLUME is taking place. Either markets will simply correct from here or they will grind higher to produce more euphoria about a breakout of short term activities in which talks of back to the highs will start to surface. We don’t expect markets to breakout before a pullback is achieved.

Of course our members are kept posted with any technical developments on price action, as it occurs.

The above signals don’t need to pull through as this is the work for Monday in which the whole week is left to play, although we would expect them to!! Last week however we made over 600 points on short term signals and these signals were only triggered from last Wednesday onwards!

I am Ajit Singh, the writer of this article who started work with the financial markets from a very young age of 17 and this is our website: www.tradingmarketsignals.com – ‘TMS’.

If you like what you read and would like to gain insight on position trading style signals on five major markets. Or perhaps you want to add clarity to your short term trading with our signals which are fired via email and soon possibly by a live chat room platform, then this would be the best time to join us with our annual membership offer that unfortunately expires on TODAY 14th June 2010, in line with the U.S. stock market close on Monday.

http://tradingmarketsignals.com/#/flash-crash-price/4540799314

Until next time, remember:

Trading Market Signals
…the hub of unbiased technical analysis!

When you’re trading short term timeframes it’s important to have a check of what the long term timeframes are doing as somewhere along the line they interlink with one another providing critical levels and trading triggers.

We’ve been catching the short term moves with ease last week using our short term timeframes and with our TMS Strategy which has been catching some nice position signal moves using longer term timeframes.

Today we’ll look at the markets using daily/weekly charts to see what unbiased messages they are signalling. We start with the Dow Jones:

Dow Jones Industrial Average

Firstly we look at a Four Hour chart below just to signify the range that we’ve been in for nearly a month:

Larger Image

As you can see the market has been ranging whilst producing some volatile moves but no clear cut direction on the long term context of things has been decided by the Dow Jones.

Below you can see a daily chart:

Larger Image

The red intersecting channel shows where this range is actually coming from. The SIGNIFICANT thing to note is that the market is showing problems at the same area on both timeframes. Whilst the short term timeframe shows problems at current prices and upwards to 10330 the daily also shows problems in the same area with the red intersecting channel.

However the major recognition that needs to be absorbed is the 10400ish mark. The short term timeframe shows the area will produce problems as the channel widens. Look at the daily chart ‘dark maroon line’ which ALSO shows problems at the same area.

Both charts show differing timeframes, both have different unbiased technical analysis painted over them and uniquely both flag up the same area of concern using varying analysis.

So for the week ahead the 10400 mark may be too tall for the market to reach and if we do get to it then THIS is the mark that the market must KILL in order to see higher prices. If the market moves higher then this mark, then you have to admit the case for back to the highs or new highs for 2010 would come alive, just as we’ve been saying.

When the market hit 11200 we stuck our neck out at the time and labelled it as THE high in which we stated prices should start to decline from here. BUT many pundits, analysts, commentators and traders simply forget some basic elements. When tops and bottoms are formed prices RARELY, in fact hardly ever react straight from there to produce ultimate tops and bottoms. The tops and bottoms are formed; markets produce them as a ‘formation’. When these formations take place for tops and bottoms markets can go back to the highs/lows or reach near to the highs/lows or simply take them but only as part of the formation. So whilst the prices of 11200 is a high for 2010 you cannot say it is the HIGH as at this moment in time it is fair to say the price action is in a formation phase of this long term top in the making which means back to the highs or near the highs or new marginal highs cannot be ruled out.

In conclusion though the market may face a tough time even reaching 10400ish let alone taking it out and in which case the range may last longer before we have a chance to spurt higher. All eyes on this area as failure leads to more range bound activity whilst conquering it could take us back to the highs.

Crude Oil

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The chart above is a weekly chart, so it’s a longer term chart and it gives some real clarity! Oil must hold at or near its recent lows in order to avoid a deeper decline to $60 or $55 something which will only happen if the decline in stock markets deepens! Holding at these levels or even if a quick v-shape move occurs to $60 we feel that in 2010 for the price of Oil you simply cannot avoid talking about $90-$100! Sounds like lofty prices but it is easily achievable this year! However it’s not plain sailing at present as the lower blue line must be taken out in which TMS feels the price of Crude would head back to the 2010 highs and even higher.

Euro

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Again for the Euro we’ve used a weekly chart as the short term direction has been clear recently. However the green line shows how we could be in a bottom making phase, in which a lower low could occur but the formation of bottom making, could still stick. It’s important for the market to regain 126 as that would make the Euro overall bullish in which a sharp oversold move would take us back to the 135 level! The blue line has been hit frequently over the past three years and TMS feels we haven’t seen the last of it yet.

Of course the green support line must hold otherwise vacuum opens up, in which we would travel straight to 113 and if that folds then for sure you’ll see 1:1 to the dollar.

Sterling

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Once again we’ve used another weekly chart for the Sterling to view the situation at play. The Sterling has been trying to make some progress over the last few weeks as it tries to edge somewhat higher from around 14250 but ironically on the weekly chart it appears as nothing more than a dot as the Sterling clearly trades in range bound movements.

The United Kingdom is in a dire state and the nation holds uncertainty over its actual size of the deficit and the measures that will be used to tackle it not to forget its effectiveness or lack of it. On top of that inflation figures are flawed as governments have been known to gloss them up to paint a differing picture from the actual high inflation that the public suffers from. On top of that, we have a housing market, which is currently witnessing a ‘dead cat bounce’ in which the projected collapse of it, has simply not taken motion YET! This would start to batter the Sterling even more in which 1:1 will likely be seen at some stage over the next few years.

Fundamentals however can get one more emotional then technical’s and that is why we prefer to react to price. In which case the recent lows are holding and until they hold, 135 won’t come into play. Folding them would take us to the level directly! Holding that, doesn’t necessarily mean, that the Sterling is safe as the orange lines are giving two problems on the weekly chart. A declining orange line that must be overcome AND a range bound orange line that must be overcome! Until both cannot be conquered the longer term scenario will remain range bound to lower price action over the coming years.

Short term it’s a different ball game all together, the dynamics are different, the targets are different, the expectations are different, as you’re not bothered about long term price objectives in day to day trading although overall any trader should respect long term price action, and it’s always good to recap long term action regularly as some critical levels interrelate within timeframes.

GOLD

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Whilst analysts, traders and commentators across the globe are looking at long term projections for gold we thought we’d look at the short term scenario at play and for this insight we’ve used the four hour chart which is supreme at depicting short term movements in Gold.

First of all you don’t have to be a rocket scientist to understand that Gold has a short term issue with 1250! For us at TMS it is plain and simple, if we get a four hour close above this mark then we would be very surprised, if momentum, doesn’t carry the price to 1300 – direct move!

However it is also not hard to see why the recent attempt on 1250 failed as the purple line shows it’s alignment with this level. The blue line provided very short term support but the green line is the short term four hour trend holder. If this line is taken out with a four hour close then we would feel gold would travel straight to 1200 and lower for a corrective phase OR a deepened pullback in which the euphoria would start to be questioned by the media but the contrarian would be ready to BUY BUY and BUY some more for the longer term activities.

I am Ajit Singh, the writer of this article who started work with the financial markets from a very young age of 17, even though it wasn’t legal and WE are www.tradingmarketsignals.com – ‘TMS’.

If you like what you read and would like to gain insight on position trading style signals on five major markets. Or perhaps you want to add clarity to your short term trading with our signals which are fired via email and soon possibly by a live chat room platform, then this would be the best time to join us with our annual membership offer that unfortunately expires on 14th June 2010, in line with the U.S. stock market close on Monday.

http://tradingmarketsignals.com/#/flash-crash-price/4540799314

Until next time, remember:

Trading Market Signals
…the hub of unbiased technical analysis!

This first Chart is my EOD analysis that was posted on 8 June 2010. My primary scenario was the Bullish path depicted by the blue arrows. These arrows were drawn to indicate typical market direction and action for the next day. The first arrow up indicated that I thought the market would make a little headway before correcting into a buy-the-dip setup. Then I expected a significant rally into the EOD.

The chart below is the market’s action the next day with the arrows superimposed. Not perfect, but I’ll take that call all day long!

We don’t provide a day trading system. I am a probability trader that has modified a system that gives you an opportunity to learn to fish. The value we provide is in understanding setups and managing risks. However, there are times when I will give you a fish and other traders here will do the same. Also, please remember that this is about probabilities, not certainties.

My goal would be an “Elliott Wave for Dummies” curriculum. I love all the “for Dummies” books because they strive to simplify and clarify. They are profoundly simple. The mark of a good teacher IMO is someone who can get the hay down from the loft so the horses can eat it. Many teachers like to complicate their subject matter so they can appear “smart”. I have no use for insecurity in teachers. The old saying that “it’s better to teach someone to fish than give them a fish” is never more true than in teaching.

To that end, the best way to see what we do on a daily basis and on an intraday basis is to try our Premium Content. If this site doesn’t add back more than the price of admission, then you have no obligation to subscribe after one month, and you will have still learned some Elliott.

If you like what you see here, wait to see how MortiES’s analysis can assist you in your everyday investing or trading strategy! Go ahead, check out my track record and Click on “Subscribe to MortiES Premium” and give it a try! I am offering a 30 day free trial period.

Or just click the “Sign Up” button below!

We obtained 647 points in a few days trading. Read this two part article below:

PART1 9^th June 2010

This article will present to you how members gained today with tradingmarketsignals.com in which four signals on the Dow Jones, Eur/usd, Gbp/usd and Crude Oil were provided. THE TOTAL WAS 230 POINTS! Read on…

Tradingmarketsignals.com is evolving in a big way and with it we’re looking to introduce further new areas such as a live trading room.  The current method of email signals is producing phenomenal success for current members. We’re getting phenomenal feedback from traders who actually want signals AND want to learn to trade for themselves. Therefore another new section will consist of pure unbiased charts which members will have access to new charts every single day and with it the charts will show clearly where too pounce on Long or Short entries.

Thousands and thousands reading our articles in which we have demonstrated the way we view the markets with such precision but with also such ease. Many of you have taken advantage from what you’ve read and now have come on board in which you’re enhancing your basket of success further. But for those of you who are wandering what all the fuss is about well we have the following charts and TMS system signals that went out today in which hours later traders had the weeks work done even though we’ve got more to gain from the rest of the week as today it’s only Wednesday!

Dow Signal – A quick 50 pointer today!

This chart was provided preciously in which we stated the market must decide which channel it is sitting in the wider red channel or the channel that is made with the faint pink line. Also not that after the action has taken place the chart on the right has the pink line place higher as although the market did not ‘stay’ in this channel it is now finding resistance to it!

You also need to note the 10000 level which is the pivot level for the past few weeks. As you can see the market is clearly hovering above it and under with no clear break in mind.

So what did we do today with the Dow Jones?

Well we sent out this signal via email:

TMS system is firing an additional long on the Dow Jones should we get a 15 minute candle close above 10000. 

Please note we had already taken a ride up with a buy signal at 9858. But the following chart shows what the quick signal above was all about and how it produced a gain of 50 points in just 30 minutes and why was it time to get out before the quick turnaround later in the day:

So we got a close above 10000 at 10008 with a 15 minute candle and members went long at 10008. The danger kicked in as the indicator at the bottom flagged the turn so 30 minutes an easy 50 points was made!

GBP.USD Signal – A quick 60 pointer!

This was the signal sent via email to members:

TMS system is firing another long at 14538 for the GBP which should be exited for a quick move at a max of 100 points. Original signal is still long from way below!

Of course the system fired the signal as we got an hourly close above the green resistance line at 14538. Four Hours later the trade produced a quick 60 points as the indicator at the bottom issued a danger flag; EUR.USD Signal – A quick 30 pointer!

The following TMS system signal was emailed to members:

If the Euro closes above 12020 on the hourly candles the TMS system is to fire another long signal and again this signal will be for a quick move, please exit in line with your satisfaction of the gains and your risk appetite. 50 to 100 points would be nice.

Again the trade triggered as we got an hourly close above 12020 at 12038 which was the long signal. Soon after the move was rapidly exhausted and our indicator along the bottom gave the red flag to get out in which 30 points was gained.

Crude Oil Signal – A quick 90 Pointer!

The following signal was emailed to members today:
 

TMS system will be long on Crude Oil should we get a 30 minute candle close above $7350.

However TMS system may prompt a short after this long signal should price reach near the levels of $75. In which case you should look to take quick gains should the long signal be triggered and wait for more news on the short signal...
 

You just won’t get much more clarity then this anywhere! The long was triggered at $74 and the red flag with the indicator was given at $75 not to forget that the signal email also stated a $75 warning. A nice quick and easy 90 points! Not bad at all...

230 points in one day with a few hours vision all presented by tradingmarketsignals.com!

T.M.S - We deal with the markets by winning!

As we’re locking the doors to our annual membership on Monday June 14th 2010 this is why you should join! 647 Points in two days!!!!! ......that’s not including buying at the lows for all markets all week!

Part 2 - 10th & 11th June 2010

In our previous article we showed you precisely how we dealt with the markets on Wednesday and quickly turned over 230 points! Well Thursday(Entry)/Friday(Exit) was NO DIFFERENT - We turned 417 POINTS! No doubt should the systems address potential for Friday then we will be in the markets again robbing points!

In addition to Wednesday, Thursday & Friday we bought the dips in all markets as we informed members last week’s declines won’t stick and 10000+ Dow and Euro 120+ will be back this week and here you have it! Members also made gains from our daily commentary notes!

Our current members are simply in a sublime state of happiness!  Perhaps you want to start learning how to trade professionally? Perhaps you need to admit that you’re simply no good alone as so far your journey hasn’t provided you with the correct approach and information? Maybe you need to build your confidence and can’t pull the entry and exit triggers? Whatever your agenda I will personally make sure our team holds your hand so that we can make you obtain one prime aim from trading: CONSISTENCY!

Here are yesterday’s signals that went out to members:
Dow Jones – 50 points

TMS is still long from 9858 on the Dow Jones.

However for the short term trade TMS system is firing a short signal on the Dow at 10125. This signal is for a quick gain and a 100 point move would be nice.
Kind Regards

TMS
 
Crude Oil – 236 points 
TMS system is now short on Crude Oil at $7612. We will be looking for a quick move down as the rise is signalling to be stretched.
Kind Regards
TMS
GBP/USD – 131 points
TMS system is now short the GBP/USD @ 14666.
This along with the Dow and Crude are short term signals and do not cancel out previous position signals.
The last part of the signal above was mentioned as we’ve been long the GBP.USD from 14260!!!
At virtually $19 per month the annual subscription is ending on Monday 14th June 2010. New members will only be able to come on board at a monthly rate of $74 per month. The doors will close to the public for this new intake once 200 members have joined. 
We leave you with the following Dow Jones Chart:

As you can see we nailed the recent decline with the light blue line pattern shown. All the orange circles represent where the significant resistance is and it is this simple: if we can take the orange circle/upper red channel line out then we will go back to the highs of 2010!
For now though the market doesn’t need to go to that level and certainly doesn’t need to test it to start a decline from here! Remember 10200? You probably don’t but here it is: The yellow circles show you the previous problems we’ve had with it and whilst everyone may anticipate a further rise to the orange area we can simply fail at this current yellow circle/ blue resistance lines!
The green line is the pivot of this channel and it sits at roughly 10000. Should we pullback from here then the pivot line coupled with the dark red circles may be an area where the market finds support and twice this line has provided support and twice it has provided resistance so clearly we have some reactions as can be seen by the dark red circles!
If you like what you read and fed up of trading the wrong way then you can join us now but please remember the ANNUAL MEMBERSHIP expires on MONDAY after which new members will only be able to join on a month to month basis:
http://tradingmarketsignals.com/#/flash-crash-price/4540799314
It’s the best time to join Tradingmarketsignals.com and at the best rate as the annual membership of $225 ends on 14th Junes 2010 after which new members can obtain monthly membership at $74 per month.
We obtained 647 points in a couple of days.
Until next time, remember:
Trading Market Signals

 ...the hub of unbiased technical analysis!
PS. Do you want to ask us any questions? Email: info@tradingmarketsignals.com
 

US Dollar Index – Daily Chart

The past two months the dollar as been in rally mode. The last 14 days we have seen a large bullish pennant form and this pattern typically marks the half way point for the current tend. The measured move for the USD is pointing to 93 over the next few months.

Gold Futures Prices – Daily Chart

Gold as we all know is seen as the major safe haven and the price per ounce has been steadily climbing. Friday we saw the major indexes sell down very hard but both the dollar and gold posted some solid gains. Gold does looks as though it needs some time to digest the recent move higher and this could take a week or two before anything exciting happens but I am on the lookout for low risk setups.

VIX – Volatility Index – 60 Minute Chart

This index measures the fear in the market. When fear is high and everyone is selling their positions we see the VIX jump in price. Over the past month we can see a possible Head & Shoulders pattern forming. If this pattern unfolds like it should then we will see the price of equities bottom in the coming week with the VIX dropping below the blue neckline. The old saying is “When the VIX is High is time to Buy, when the VIX is low its time to Go”.

Put Call Ratio – 60 Minute Chart

In short, when the put/call ration is over 1.00 then there are more traders/investors buying Put Options than Call Options. Put options are when people are buying leverage to take advantage of lower prices. My thought/opinion about this is when more people are trading with leverage anticipating lower prices, I figure they have sold all their long positions and are now using leverage to profit from lower prices. Well if the majority of individuals have sold everything then in reality there should not be much left to be sold… So I feel this correction which started in April is almost finished.

NYSE Advance/Decline Line – 60 Minute Chart

This is one of my favorite charts to look at. While there are several indicators, market internals and technical analysis needed to clearly determine if the market is currently overbought or oversold, this chart is one that can help give you a good idea if you should be looking to buy, short or just stay in cash for the time being.

SP500 Futures Prices- 2 Hour Chart

The SP500 has been up and down like a yoyo with some very dramatic moves. Up 2+% day down 2+% the next… very sharp and powerful moves can be both every profitable or costly if not traded correctly. Last week we caught a nice 2% gain in less than 24 hours which was an exciting trade. It looked at though the market was about to breakout to the upside and possibly reach the 1150 level but early Friday morning there were rumors about some Euro bank having serious problems and that was just enough to cause a domino effect sending the market lower throughout the entire session closing on a very strong negative note for the day/week.

That being said the market internals are indicating that equities are oversold at these current prices and a bounce is due any time. With the panic selling on the NYSE Friday reaching 119 sell orders for every 1 buy order I think we will see some follow through next week with lower prices, then a rebound once investors finish selling everything they own at which point we will be looking to get involved again.

Weekly Trading Conclusion:

In short, money continues to flow into the safe havens (Gold & US Dollar). The major indices are showing extreme panic selling and look ready to in the next few days. There is a possibility that the market could break down and start another major leg lower which is a big concern to me. I will be glued to the market internals and support levels for the major commodities and equity sectors in hopes to catch the bottom or to avoid another melt down.

If you would like to receive my Daily Pre-Market Videos and Trading Alerts please checkout my website at: www.FuturesTradingSignals.com.

It’s sad to say but I’m afraid 90/95% of all retail traders/investors are not going to successfully ride the gold bull. The reason of course is that they are deathly afraid of draw downs. It’s glaringly apparent every time gold pulls back or suffers the slightest correction. Immediately a slew of traders come on the blog and warned of impending doom. “Gold is going to $600″ (think Elliot wave). Some are even brave (maybe I should say ‘foolish’) enough to short. Here is one we hear a lot lately, “miners are going to get crushed if the stock market enters a new leg down in the secular bear market”.

Pure nonsense!

Let me show you what happened to gold and miners during the 2000-2003 bear market.

During one of the worst bear markets in history gold rallied over 50% and miners well over 200%. So this notion that the precious metals sector has to get hit during a bear market is simply ludicrous.

Now I know what you are going to say, “Just look at what happened in ’08″.

The reality is that the crash in ’08 was a very special set of circumstances that aren’t likely to repeat. Up until September the bear market was following the normal path most bear markets follow. Slow grinding declines followed by explosive counter trend rallies. Gold was holding up amazingly well during this period as were miners. Both were actually up significantly during the first 5 months of the stock market bear. It wasn’t until gold entered a normal D-wave correction in March of ’08 that either corrected at all.

In September a rare event happened that drastically changed the entire fundamental picture of the bear market. At that time roughly $700 billion in debt came due. The financial system needed to roll that debt over but couldn’t as the credit bubble was in the process of imploding. That led to one of the few true stock market crashes in history.

The ensuing panic led to a selling climax in every asset class even including, to some extent, gold. The actual price of physical gold never even came close to dropping to the levels of the paper market. Smart money investors were taking advantage of the irrational selling by buying up every single available oz. of physical gold on the market. At the time premiums on physical were over $100 above the paper price.

The point I’m trying to get across is it took a very special set of circumstances to create the kind of selling climax that could take down the precious metals sector. Those circumstances are not present today. The EU has already gone to the printing press to halt their debt problems. The US has done away with the mark to market rules and Ben stands ready to print so we have no looming debt crisis in our future.

So if we are about to enter another leg down in the secular stock market bear the odds are it will be another slow grinding affair, very similar to the 2000-2003 bear. There will be plenty of sharp counter trend rallies and one can bank on the Fed throwing more and more trillions of freshly printed dollars at the problem all along the way.

And that, my friends, is the fundamental bedrock of the gold bull.

Now let me show you a long term chart of the last great secular bull market.

This is just about text book for a big secular bull market. We see a very extended period of consolidation below a key resistance level. Eventually that resistance level gets broken. Once it does it’s like a damn breaking, the force then becomes unstoppable, ultimately reaching heights far beyond what anyone can foresee at the original break out.

In oil’s case the secular bull rallied almost 300% above the $40 breakout level, topping out with a massive parabolic move lasting about a year and a half (remember me saying bubbles tend to last about 1 to 1 1/2 years as the final phase tops out?).

I want to point out this happened in oil, a commodity that was virtually impossible for the average Joe to invest in. This was a bubble driven purely by the the investing community. Remember this because it’s important.

Now let’s take a look at the next secular bull, one that’s still in the baby stage.

Gold has just recently broken out above the old 1980 high of $850. It hasn’t even doubled yet much less rallied 300%. Now if you think gold rallying to $3500 is ridiculous you are absolutely correct. There is no way gold is going to stop at a mere 300%.

Unlike oil, gold is readily available to the public and ultimately that is what drives the final stages of a secular bull market/bubble. When the public comes into the market their panic buying drives the final parabolic move to unbelievable heights. We saw perfect examples with both the tech and housing bubbles. The public was deeply involved in both.

And now, for the topping on the cake. The precious metals markets are infinitely smaller than the stock market, real estate markets or energy market. That means it won’t take anywhere near as much money to drive these markets to incredible heights.

Look at that chart of oil again. A 300% gain in a very large liquid market without ever drawing in any perceptible buying from the general public.

Now look at that chart of gold again, only this time with fresh eyes. The possibilities are simply staggering. I wasn’t kidding when I said this will be the greatest bull market any of us will ever see in our lifetime.

If, and this is a big if, you can ignore the nonsense from the Nervous Nellies or the gold Bears (a breed destined for extinction) and just hold on to your positions you will ultimately reap unimaginable rewards as this bull progresses.

Now I will say that yes, there are times to take profits in bull markets. You take profits when gold and miners are stretched far above the 200 day moving average. Everything eventually regresses to the mean. So when we see the HUI 40-55% above the 200 DMA then yes, you should think about selling at least some portion of your positions. But to sell positions with the miners 3% above the 200 DMA is … well, it’s just plain dumb. This isn’t the time to sell it’s time to buy, buy, buy.

Let me say this as plain as possible. If you want to get rich from this, the largest bull market you are ever going to see, you don’t listen to the traders and you certainly don’t adopt their flawed strategies. You simply can’t think like that if you want to ride this bull. You need to think like a value investor. When you see value you scoop it up no questions asked. And if the market is foolish enough to give you an even better bargain down the road you buy more.

Unfortunately here is what happens. Retail investors are unable to buy value. For the average retail investor to buy he needs emotional confirmation. I see this all the time. “Wait till the breakout for confirmation before buying.” The problem with that approach is that most breakouts soon fail. If one waited for the recent breakout above $1225 to buy they then had to weather an immediate draw down.

I saw this in spades at the December top. Retail traders entered in droves during that time. They were getting the emotional confirmation they needed. Then when gold corrected they either got knocked out for a loss or they held on just long enough to get out even. Most simply don’t have the patience to ride the bull on his terms. They want the bull to do what they want, when they want. I suspect more investors have been lost to boredom that draw downs.

The best strategy right now is to just sit tight. Remember this is still just a baby bull and it has a long long way to go yet.

GoldScents is a financial blog focused on the analysis of the stock market and the secular gold bull market. Subscriptions to the premium service includes a daily and weekend market update emailed to subscribers. If you would like to be added to the email list that receives notice of new posts to GoldScents, or have questions,email Toby.

That was the thorny question wracking the brains of investors Friday morning on the heels of the hugely disappointing nonfarm payroll report showing that 430,000 jobs were gained in May.

Never mind that this was the best report in several years. The problem arises when you dig deeper and find that 411,000 were temporary census workers who are going to be let go in a few months, leaving the “real” job gain at a measly 19,000.   So this is all $887 billion in stimulus and 19 months of zero interest rates get you?

Traders wasted no time tanking the market, taking the Dow down a nausea inducing 350 points. Private sector hiring actually plunged from 218,000 in April to only 41,000, and the overall labor force shrank by 322,000, as if it had just taken a dip in a frigid lake. Construction took a big hit as usual, losing 35,000 jobs, while manufacturing gained a miniscule 29,000 jobs.

There are now more than 15 million unemployed, including 6.8 million who have been jobless for more than six months. Until today’s number, our nine month long recovery produced a net loss of 133,000 jobs! At this stage of the 2003 recovery, we were regularly clocking 200,000-300,000 a month in job gains.

Administration officials wasted no time trumpeting the decline in the headline unemployment figure from 9.8% to 9.7%, while privately wringing their hands over the true meaning of the report. Is Michele Obama already secretly scoping out new private elementary schools in Chicago?

To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on the “Today’s Radio Show” menu tab on the left on my home page.