Value of Perfect Information

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.

I have to wonder, are we entering the ending phase of this cyclical bull?

For some time now I’ve noticed the similarities between the ’02-’07 cyclical bull and what we’ve experienced since March of last year. The one difference is that this time we’ve truncated the middle phase of the bull. I suspect that was a direct result of the massive liquidity Bernanke … and all central banks have pumped into the system.

Both bulls exhibited powerful moves out of the bottom followed by a 9% correction separating the second leg from the third. In the ’02 – ’07 bull we then entered a 2 year phase were the market ground higher. That phase is missing from the current bull.

What followed the ’06 correction was a powerful runaway move into the February ’07 top. That persistent rally skewed sentiment extremely bullish at the time. We saw the exact same thing develop as the market entered the runaway move out of the February 5th bottom. At its peak sentiment had reached bullish levels exceeding what we saw at the top of the last bull market in the fall of ’07.

In ’07 the runaway move led to investor complacency and severely depressed put buying. The same thing happened at the recent top in April. Investors became terribly complacent. Protective put purchase fell off the chart. The market had no safety net under it. In that condition it was at risk for a crash if investors all tried to head for the door at the same time. They did, and we suffered a mini-crash in the spring of ’07 and again in May.

In ’07 the initial crash low was tested and broken followed by a 2b reversal.

Recently the S&P also broke to lower lows and bottomed with a 2b reversal.

Both markets experienced volatile swings as the market put in the intermediate term bottom.

Both crashes quickly moved sentiment back to extreme levels of bearishness. In ’07 sentiment turned sourer than at any other time during that cyclical bull. At the recent bottom sentiment was blacker than at any time in the last 10 years as measured by a basket of intermediate term sentiment indicators.

These kind of extreme sentiment levels are the building blocks for powerful moves. In ’07 the extreme bearish sentiment drove the market into a final double top that capped the cyclical bull.

If sentiment levels are any indication we should now be set up for at least one more explosive move higher before the fundamentals final overcome this market and drag it back down into the next leg of the secular bear.

The similarities are piling up:

Initial runaway move drives sentiment to extreme bullish levels? Check!

Protective put buying dries up leaving the market with no safety net and vulnerable to crash conditions? Check!

Mini-crash? Check!

Test and 2b reversal of the initial crash low? Check!

Sentiment depressed to extreme levels of bearishness? Check!

Volatile swings back and forth during bottoming process? Check!

If history is any indication we should now be on the verge of one more explosive move higher before this cyclical bull expires and heads back down into the next leg of the secular bear.

Last week looked and felt like a pivotal week for both stocks and commodities. The past two weeks have had investors and traders in a panic as they try to find safe investments for their money. After watching and reviewing the panic selling in the market it looks as though the majority decided to sell everything and be in cash for the time being. This is bullish for the stock market.

I will admit it has been tougher to trade recently because of increased risk levels due to the large 2-4% sell offs and rallies happening within minutes… While this is amazing for disciplined and experienced traders who are able to pull the trigger getting in and out with quick profit in the matter of minutes, this same price action can blow up trading accounts of those who do not have a trading strategy, money management and the discipline to take profits and cut losses very quickly. The speed of the rallies and sell offs is the matter of being up or down thousand of dollars in the matter of 5-10 minutes… That is one of the reasons I have stepped back from being aggressive and into more of an observation mode playing with small amounts of money and focusing on the larger trends at.

My #1 goal is to make subscribers money with the least amount of risk and watching the market swing 2-4% in minutes makes it extremely difficult to get everyone in and out positions with a profit before the market changes directions. As much as I love trading, some times the best position is to have small ones or be in cash.

GLD – Gold ETF Trading
Here is my weekly updated chart of gold as it works its way through the correction from last year. The daily chart looks to be forming a larger Cup & Handle pattern which is extremely bullish. If this pattern does a text book move then we could see GLD reach $140 and spot gold would reach the $1400 area.

That being said this pattern still has to complete the handle portion which could easily last another 4 weeks, so I am not in a panic to add more to our position.

SLV – Silver ETF Trading
Silver is in much of the same situation. Because of the added volatility in silver the charts do not look quite the same but they are similar in many ways… Silver is used a lot for industrial purposes and because the economy which is very weak still (though it is getting better) we are not seeing silver demand rise much. If silver can break this large resistance level then we could see silver surge to $25 (25%) this year.

USO – Oil Fund Trading
USO (Oil) has held up really well in the past 12 months but the recent sell off has seriously damaged the bullish outlook I had not long ago. While it is oversold and looks to have started a bounce last week the chart is pointing to lower prices over the longer term… This USO fund does have contago which makes this fund under perform the actual price of oil. The current prices of oil are still trading at a key support level and could post nice bounce if not trigger a new rally. The problem with following some ETF’s which have contago is that you do not see the real price action of the commodity. But that is were I come in as I track the underlying commodity and relate it to ETFs for you.

SPY – SP500 ETF Trading
The Stock Market (SP500) sure has been a roller coaster. The chart below shows you what happened in January for the last correction and where we stand currently in comparison. If a setup is obvious in the financial market there is a very high chance it will not work out as planned and by knowing this it allows us to be cautious and take profits at key short term support and resistance levels.

Trend Trading Conclusion:
In short, I feel gold and silver will drift around to digest the recent move up and to form the handle portion. Oil looks to have put in a short term bottom and if we get a small pullback in the coming days to test the intraday chart breakout level and touch the support trend line we could look to take a position.

We tend to see the most price appreciation during the final stages of a trend and we could have seen that on the US Dollar over the past 6 weeks. It looks as though the dollar could have put in a double top. If the dollar rolls over it would help boost precious metals, oil and stocks… But we will not know it’s a top until there is a clear trend reversal which in any case will be weeks before that type of price action can unfold.

As for the SP500, we have seen the same level of selling as we did in Feb-March 2009. High volume panic selling has ruled the market since late April. There are equal arguments for saying the market has bottomed with all the panic selling and that we should start another large rally lasting 8-12 months or one could argue this is capitulation volume signaling massive distribution of shares and now every rally/bounce will be sold… Personally I am torn between the two… but lean more towards higher prices with a multi month grind up at slow rate…

If you would like to receive my trading analysis, thoughts and low risk trading setups check out my trading services at www.TheTechnicalTraders.com.

Let me start off by pointing out that we did indeed break below the yearly cycle low yesterday.

I’ve been saying for a couple of weeks now that a break of 1044 would change the pattern of higher lows. That would be the first warning shot across the bow that the cyclical bull might be in the process of expiring.

Does that mean I want to short stocks? Are you crazy? No way I want to fight with a bear market and the Fed’s printing press. For one Ben has already aborted a left translated 4 year cycle.

Never in a million years would I have believed that was possible, but happen it did. Print enough money and the Fed could just as easily negate a broken yearly cycle low. And if you think he won’t do it I have some ocean front property here in Las Vegas I’d like to sell ya? Sell short? No way no how. Not even with your money.

Let’s face it the mathematics on the short side are just not conducive to getting rich. It took a year and a half for the market to drop 58% in the second worst bear market in history. Sure one can leverage up but if you happen to get hit with a vicious bear market rally or the rules are changed (ban on short selling) you run the risk of losing everything. Need I remind everyone that leverage is what is bringing down the global financial system. Leverage is like walking through a dynamite factory with an open flame. Sure you might survive but you’re still an idiot.

Trading bear markets is tough to do even if the bear is allowed to run its course undisturbed. But I guarantee the powers that be will throw everything they can at the bear. I just don’t need those kind of odds stacked against me, especially when there is easy money to be had.

Now that I’ve made my position clear (just so there won’t be any misunderstanding later. There will be none of this “hey you said the bear is back and we should short stocks. How come the market went up and I lost all my money”).

I’m emphatically telling you that by selling short you are taking your life into your own hands. If you are bound and determined to fight the Fed, Wall Street, Washington and an angry and tricky bear, you are going to do it all on your own. Leave me out of it. I’m going to be over in the corner picking up gold coins, you can join me if you want to.

Whenever the market doesn’t do what it’s supposed to do it’s probably a good idea to pay attention. Yesterday markets all over the world were down and down hard. Some by over 3%. The futures were signaling a big gap down. By all rights the S&P should have followed the rest of the globe lower today. It didn’t. We ended the day positive.

I’ve been warning for over a week now that sentiment has reached severe bearish extremes. Quite a few sentiment indicators are now at levels lower than the `09 bear market bottom. When these kind of extremes are reached the market runs the risk of running out of sellers. Yesterdays reversal may be a signal of selling exhaustion. When that happens, even in bear markets, we can look for a violent 1 to 3 month short covering rally. (In bull markets we can expect a 3 to 5 month new leg up.)

Lately we are hearing the D word (deflation) thrown around quite a bit. Let’s face it we are going to hear this every time assets start to drop. However let me remind everyone that Ben halted the worst deflationary spiral in 80 years in just a little over 7 months. Ben has clearly proven that a determined government, in a purely fiat monetary system, can reverse deflation. The question isn’t whether or not we are going to experience deflation. The question is simply how long will the powers that be allow it to last before they crank up the presses and flood the world with paper again.

The cold hard reality is that the USA has now gone down the path of no return. We are piling on trillions upon trillions of debt in a futile attempt to spend & stimulate our way out of bankruptcy. I don’t know about you but generally speaking isn’t it counterproductive to go deeper in debt if one is already broke?

This debt can’t possibly be serviced … ever. So we have two choices. One we can eventually just default on our massive mountain of debt. At some point we just throw up our hands and cry uncle. Folks if the United States of America chooses to default on its debt then yes we are going to see a deflationary storm cover the world in ruin and despair.

The second choice is to inflate away the debt by printing trillions and trillions of federal reserve notes out of thin air. This course will buy us some time. It may even briefly appear that we’ve cured our problems (it has seemed that way until recently hasn’t it?). If we choose this path, then unless someone like Volker comes along and forces us to take our medicine, the inflationary spiral will continue until a final hyperinflationary storm destroys the country.

Now each of you has to ask themselves which you think is more likely. Will the US all of a sudden come to its senses, default on its obligations to halt the exponential growth of debt, thus unleashing a deflationary holocaust upon the world…or will we just continue to kick the can down the road like we’ve been doing for the past 10 years, thus making the debt burden bigger and bigger and rendering it serviceable only by hyperinflating the money supply?

How you answer that question will dictate how you want to invest for the next 5-10 years.

If you think like I do that we will continue to kick the can down the road then the easy investment is to just get on board the secular gold bull and hold on.

Here is a potential big picture view. Pink lines are all parallel and run parallel to orange modified Schiff pitchfork lines. Support today was off pink line from prior swing low. Thick pink line from Jan high cuts through around 1145 (just under a .618 of latest swing). Potential right shoulder. If the neckline at today’s low was then to break, target would be around 862 near July 09 low. If we break higher, pink line target would be around 1262 which would equate to 1.272 ext ret of this pullback. Happy trading to all, Mark

Here is a picture of how the Emini has been trading within a pitchform frame of reference.  See it right now getting support at the median line and the blue downward sloping line.  If it can’t break above the upward sloping green line, it would be a sign of weakness.

Strength and weakness are defined within the channel, not on the horizontal, so for example if the vehicle is unable to make a new high within the channel, even though it might have made a higher high numerically, this is a sign of a weakening trend.

I hang out at MortiES Premium during the trading day where I provide charts and analysis during the trading day. Mortie has a free thirty day trial going on. Give it a try by going here: http://www.bostonwealth.net/subscribe-to-morties-premium/ and then clicking on

Market Update: The DOW JONES Rocked – We did too!

Dow Jones

Today the Dow Jones was showing a horrible decline before the open which got a little messier at the open. In our previous article TMS showed you how we previously dealt with a horrible decline at the open on Friday.
TUESDAY was no different; the following was emailed to all members when Futures were pointing to the possible end of the world: 

As we’re in the process of bottom making in the short term, TMS system is now long at 9858 for the DOW JONES in which probabilities would favour a higher market by the end of this week.

Kind Regards

Trading Market Signals

By the close this is what one member had to say via email:

FANTASTIC.

Thanks to you guys this was a REAL TRADING DAY for me. Very enjoyable!

I have hit my weekly goal of pips in one day 

Greetings 

Andre in Oslo.

I guess he like other members was happy to have gained around 250 points!

Here is a chart showing graphically, one of the reasons why the TMS system went Long:

The blue circle interaction with the bottom of the channel shown by the green channel line kind of gives it away in the four hour chart above!

In our daily market commentary we stated:

‘The Dow Jones must hold 9800 and 9750 respectively with an outside chance that the 9900 mark may hold for the real session later.’

So the 9800 stood its ground in solid fashion as even the 5 minute chart did not give us one close below the level. The 9900 and even the 10000 held on the daily timeframe.

It looked ugly, it was all over the media, new lows for 2010 and panic and volatility at extreme. We love the danger as it’s the perfect signal to go long in itself!

For those of you that didn’t read our previous comments on the Dow Jones for Friday, here they are below:

At Trading Market Signals we ask you how much precision you’re trading requires. Would this be any good?

After the decline of the 20^th for the Dow Jones, Trading Market Signals stated the following to all its members in our daily market commentary;

‘’Should a decline occur today then we will be hoping for the washout to occur early in the session in which we will be watching the 9915 extremely carefully as that may well be the last of the decline. Either way, we haven’t got much to go on the downside.’’

At TMS we were watching like a hawk and so were our members!

At the Dow Jones open we had the 9915 on Long Alert and in the first minute of trading the market made its low within 10 points of this magic number! FANTASTIC just as we asked for, a horrible looking decline at the open in which our target was met with precision.  36 minutes later we were 200 points higher! Two hours and 23 minutes later we were virtually 300 points higher!

The downside target for the very short term was met and whilst the above chart holds a possible scenario the price action situation is seriously not as simple. This week will prove critical for the medium term trend. Snapping Friday’s lows can easily take the market significantly lower in which we could see a large collapse in prices take place.

At TMS it is safe to say that we evaluate our unbiased technical analysis approaches however our TMS system will dictate our following of market prices consistently.

Euro

It was obvious to see the Euro hold its session lows and stage a turnaround in which higher prices now need to hold 12144 and would need to take out 126 with conviction. Such a case would see the Euro trade higher towards upside targets.

Where now?

If you’re trading requires you to stay one step ahead of the market moves, if you need the critical numbers before the market reacts and takes off, if you need the TMS system to perhaps act as your secondary indicator on your trading checklist then you can join us with the link below with our special flash crash rate subscription:

http://tradingmarketsignals.com/#/special-client-100-members/4540799314

Obtain technical analysis commentary like no other with critical market charts and TMS signals that netted 15377 points in 2009 on the five major markets we follow: Dow Jones, GBP.USD, EUR.USD, Crude Oil and FTSE100.

Don’t peep from the outside wondering how we do it as simply your missing out. Come in, join, learn and see how TMS conquers market moves!

Until next time, remember:

Trading Market Signals

…the hub of unbiased technical analysis!

I think the market will play out the following…. Clearly I am currently favoring the blue scenario

The stock market topped in April which was expected from analyzing stocks and the indexes. Back in April I posted a few reports explaining how to read the charts to spot market tops. Today’s report is about identifying market bottoms.

It does not get much more exciting than what we have seen in the past 2 months with the market topping in April and the May 6th mini market crash. This Thursday we saw panic selling which pushed the market below the May 6th low washing the market of weak positions.

For those of you who have been following me closely this year I am sure you have noticed trading has been a little slower than normal. This is due to the fact that the market corrected at the beginning of the year and we went long Feb 5th and again on Feb 25th. Since then the market rallied for 2 months and never provided another low risk entry point. In April the market became choppy and toppy and we eventually took a short position to ride the market down. Now were we are looking at another possible reversal to the upside.

Only a few trades this year which I know frustrates some individuals but if you step back and look at my trading strategy you will learn that we only need to trade a few trades a year to make some solid returns. I don’t know about you but I would rather trade a few times a month and live life between trades… not trade all day every day getting bug eyed in front of the computer.

Ok enough of the boring stuff let’s get into the charts…

SP500 – Stock Market Index Trading ETFs & Futures
The pullback in the broad market was expected but the mini crash on May 6th really through a wrench into things for us technical analysts. We don’t really know the truth about what happened that day… was it just a simple error or was it a planned error for the US government to take a massive short position to move something in their favor quickly to generate MASSIVE gains? It leaves us technicians hanging wondering if that was a shift in trend from up (accumulation) to down (distribution)?

My thoughts are if the crash was truly an error then we will see months if not another year of higher prices… But if it was a planned sell off with banks moving to the sidelines then we are most likely headed into another bear market. Personally it does not matter what happens as big money will be made in either direction. Problem is if we do go into another bear market then the majority of individuals will lose capital as investor’s portfolios get smaller and smaller. That will lead to a lot of depressed people…

In short, I am neutral on the stock market for the intermediate and long term. Once we have a few more months of price action only then will I have a plan for longer term investments. But on the short term time frame the market is screaming at me with extreme sentiment levels lining up on the stock market and gold.

The daily chart of the SPY – SP500 Index shows several important points which help me time market bottoms. We have prices trading at a support zone. Buyers step back into the game here and should provide a decent bounce which started Friday Morning.

Next we have the panic selling spikes from an indicator I created. Generally the day after we see panic in the market like we did on Thursday we will see a big bounce and many times a large rally.

Down at the bottom you can see my custom market cycles which are both starting to bottom. During times like this the market has a natural tendency to move higher.

VIX – Market Volatility Daily Chart
The VIX has an old saying “When the VIX is high its time to buy, When the VIX is low, its time to go.” Simple analysis clearly shows the VIX trading high and at a resistance zone.

Put/Call Ratio – Daily Trading Chart
This chart measures the amount of put and call options traded each day. When it is trading over 1.00 then we know for every 1 call option traded (wanting the market to go up) there is 1 put option traded (wanting the market to go down). Over 1.00 is extreme and when that many people are bearish and using leverage to profit from a drop in price then in my opinion it means everyone has already sold and the selling pressure is about to end.

Actually if you go back in time and review SP500 and this ratio you will notice 2-3 days after this ratio reaches 1.00 or higher the market bounces/bottoms.

NYSE Advance/Decline Line for Equities – Daily Chart
This chart shows us how many stocks are advancing or declining on any given day. When extremes are reached look for a short term bounce or bottom 1-3 days following.

How to Identify Stock Market Bottoms with Simple Analysis:
In short, I feel the market is forming a bottom here. How big of a rally will we get? I don’t know because of the mixed signals from the May 6th EXTREME heavy volume selling session. As usual I focus on trading with the trend, trading the low risk setups and I manage my money/positions scaling in and out of those positions as I see fit.

If you would like to receive my Real-Time Trading Signals & Trading Education check out my website at www.FuturesTradingSignals.com

By Robert McHugh, Ph.D.

May 22^nd, 2010

Big picture: We believe stocks have entered catastrophic wave (C ) down, which should be the third and most devastating phase of the Grand Supercycle degree wave {IV} Bear Market. This decline has the potential to be a nation changing economic meltdown. We have been showing for months several dangerous massive Head & Shoulders top patterns in major stock indices around the world. The patterns were not complete when we first identified them, but they are now progressing rapidly toward completion and confirmation. Once prices drop below their necklines, which will be catastrophic enough, it means downside targets toward zero will be a high probability, which forecasts a complete global meltdown. We are not trying to scare you, but rather prepare you as to what the technical analysis charts are suggesting. Wish it was better news, but it is not.

So what does this mean? Permit us to give some educated speculative possibilities: It likely means there will be a political reaction to this meltdown like nothing we have ever seen before. You see how aggressive the Central Planners have been, closing the barn door after the horse has gotten out, spending at least $2 trillion that we know about, but are not sure where the money went. Well, multiply this by a thousand. We could see a reaction to a global economic meltdown that includes the following: Either by edict or by popular consent after a successful propaganda campaign, we could see the joining of a western economic intercontinental new sovereign nation, where European nations and North American nations join together, submitting their own sovereignties to a new nation where former nations become essentially states within that new western alliance nation. It would be sold as a necessary union to turn around a collapsed economic system and save the world. This western nation would have its own new currency, replacing the Euro, the Pound, the U.S. and the Canadian Dollars with something else.

There would be massive new controls put in place requiring people of all these nations to follow new rules and adopt new technologies if they want to buy or sell anything. Privacy would be completely lost, replaced by rigid accountability and mandates on the people. The U.S. Constitution would be replaced by something else, a Western Alliance Constitution that all European and North American nations would adopt and submit to. In other words, the fulfillment of the wishes and desires of the Bilderberg Group, of the Council on Foreign Relations, of NAFTA, of the Trilateral Commission. In effect, the coming of a New World Order which is already being worked on behind the scenes by Central Planners. That, I believe is where we will find ourselves at the end of this catastrophic third leg of the Bear Market. Make no mistake, I personally do not want this to happen, but I do believe it is where we are headed nonetheless. To learn more about this, you can read Daniel Estulin’s fascinating book, The True Story of the Bilderberg Group, the North American Union edition, available at amazon.com .

How soon? Hard to say, but the best guess here is sometime between 2012 and 2016. Between now and then we should see things get progressively worse, in stairstep fashion. The Central Planners have blown a one-time opportunity they had to prevent a collapse by doing a massive tax rebate to all U.S. Households. They have wasted so much money, which has disintegrated into thin air, that a massive tax rebate would blow up the Federal Deficit to the point where Greece’s sovereign debt problem would look like child’s play. I guess what I am suggesting, is that the technical charts and patterns are warning that a complete economic collapse is approaching the point of inevitability.

I am fascinated by the timing suggested by the big picture charts. If you extend trendlines down from the top of the right shoulders of charts we show on pages 12 through 19, symmetrical with the left shoulder, you see markets fully collapse from 2012 through 2016ish. Amazingly, if you go to the History Channel’s website, you can order a ton of productions pointing out a myriad of scientific and prophetic sources from many different and independent origins suggesting major upheaval during this same period of time. Then, if you go into the Biblical scriptures, including the Old Testament prophecies, we find the possibility of economic and world calamity arriving at a time in the not too distant future as well.

It is hard to tell if the Central Planners were incompetent in placing us in this position, or whether it is by design so a New World Order would come. The fact is, this is the threat we now face, and absent divine intervention, there is probably no way out.

What does one do? Well, Gold will be a good defensive holding. Cash could be important. Prayer would be the best defense. There is hope given in Biblical scriptures that although a time period such as this will come, it comes just before Messiah arrives and cleans up the mess our world finds itself in. Jesus spoke of this coming time in Matthew chapters 24 and 25, as well as in the book of Revelation. The Old Testament prophet Daniel spoke of these coming times as well. For hope regarding this coming time period, I can recommend the book, Rapture Redux, by Daniel J. Gansle, if you are interested. Also helpful in understanding what may be coming is Joel C. Rosenberg’s book, Epicenter. Both books are available at amazon.com . You can also click on the Hope button at our home page at www.technicalindicatorindex.com

Stocks may be Crashing. We define a crash as a decline of 15 percent or more. Since the April 26th, 2010 high of 11,258.01, the Industrials collapsed 1,388 points, or 12.3 percent. And we do not believe this decline is complete. Could there be a bounce somewhere in here? Sure, but lower lows are coming. In fact, Thursday’s decline generated lower closing lows, even below the Flash Crash closing lows on May 6th, or the closing lows of May 7th. This is deteriorating action, not bottoming action. Warning: stocks are very likely in catastrophic wave (C ) down. This is a very dangerous market. Thursday’s internals were some of the worst ever.

 The S&P 500 fell 163.9 points, or 13.4 percent since their April 26th top. This is very close to a crash. The NASDAQ 100 is down a huge 307.1 points, or 14.9 percent. Financials are down 17 percent. Materials are down 16 percent. Energy stocks are down 15 percent. These segments are crashing. The S&P hit new lows for he decline from April 26th this week, on Friday, May 21st.

If you missed the February to April 2010 rally, you should be very happy this weekend. We played it conservative, not going long during that rally because the charts and indicators we follow were warning in neon lights that a major decline was in our near future. We did not believe it was worth the risk to chase a phony, fake-out rally, and get burned by the mainstream financial press’ and Central Planner propaganda that all was well with the world. All is not well with the world.

For the year 2010, The Industrials are down 2.25 percent. The S&P 500 is down 2.44 percent. The NDX is down 2.02 percent. The NASDAQ Composite is down 1.77 percent, Australia’s SPASX200 is down 11.6 percent for the year.

Thursday was the largest single day decline in the Industrials since March 2009, and the largest in the S&P 500 since April 2009.

Check out our May Specials, good through Sunday, May 23rd, 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.

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“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

Disclaimer:    

Robert McHugh Ph.D. is President and CEO of Main Line Investors, Inc., a registered investment advisor in the Commonwealth of Pennsylvania, and can be reached at www.technicalindicatorindex.com.  The statements, opinions, buy and sell signals, and analyses presented in this newsletter are provided as a general information and education service only.  Opinions, estimates, buy and sell signals, and probabilities expressed herein constitute the judgment of the author as of the date indicated and are subject to change without notice. The information contained in the newsletter is expressed in good faith, but its accuracy is not guaranteed. Nothing contained in this newsletter is intended to be, nor shall it be construed as, investment advice, nor is it to be relied upon in making any investment or other decision.  Prior to making any investment decision, you are advised to consult with your broker, investment advisor or other appropriate tax or financial professional to determine the suitability of any investment.  Neither Main Line Investors, Inc. nor Robert D. McHugh, Jr., Ph.D. Editor shall be responsible or have any liability for investment decisions based upon, or the results obtained from, the information provided. Copyright 2010, Main Line Investors, Inc. All Rights Reserved.