The Turning Tide? - Day Trading and Scalping · Pesavento-index (P-index) date for all of 2011 and...

Patterns – Profits & Peace of Mind - Page 1 – 02/22/11

Published by TFNN, Corp. ~ 601 Cleveland Street, Ste 618 Clearwater, FL 33755 ~ 1-877-518-9190 ~ http://www.tfnn.com ~ Copyright © 2010 ~ All Rights Reserved

This is our introductory issue of the new newsletter "Patterns - Profits & Peace of Mind". It is

based on patterns, cycles, and the numbers from the Fibonacci summation series. No

fundamental information of any kind will ever be used in making a decision to place a trade. Our

belief is that price is the ultimate indicator of the value of anything at any particular time. The

peace of mind will come by using stops and not over trading. Each week we will try to list several

trading opportunities with exact buy and sell points using both futures and options. In addition,

there may be several daily updates each week depending on market conditions and trading

opportunities. This letter will focus on the most active speculative vehicles in the market such as

stock index futures, gold, crude oil, cross rates currency pairs, treasury bonds and ETF's.

Stock market

The stock market continued its rally from the low of March 6 making it the strongest rallies since

1938. This was not unexpected as the low on March 6 was a very significant low that released the

bearishness that has held the market hostage since mid-August. Now we have completely

reversed the bearish sentiment and the financial press is talking about the new bull market. It is

very difficult to be bullish after a six-week run! In fact it is looking as though we have reached an

intermediate term top. There are several trading opportunities at this particular time. First, in the

S&P 500 there is strong resistance in the 870 area and the market should not exceed 882 if we

are correct. Close examination of the daily and hourly S&P charts will show that there is

considerable evidence to be short at this time. The time up in the last two rallies as shown by the

yellow triangles is highly suggestive of a top occurring April 17 or April 20. Patterns on the hourly

chart (i.e. three drives to a top) are also present. These patterns tend to fail but they also have a

high probability of working (better than 70%). Stop protection of $500-$1000 is always

suggested. Stops are placed for your protection so you must use them to protect capital. Second,

FAZ is a triple weighted ETF for the financial index. We would suggest either buying the ETF

outright with a two dollar stop or buying a May $15 call. This call strategy has a great risk reward

ratio as the call is trading under one dollar, which would be your total amount of risk and you

have 20 days to see if it'll work. This is tremendous leverage because a slight move in a low-

priced stock can easily bring multiple returns because the stock once sold for $200 a share.

*You'll see a chart of the Bradley stock market model included in the newsletter. The Bradley

stock market model is based on the Astro harmonic movement of planets and is a numbers based

cycle program. The Bradley model will track the stock market better than 70% of the time and it

can do that years in advance. It is most useful for the timing dates, and also the secondary use

to determine trends for up to several months. Bradley should not be used alone, pattern

recognition and money management will make it more efficient

Gold

02-22-11

The Turning Tide? For those of you who follow my analyses closely, something significant occurred

on February 21 (President’s Day). Specifically, this date was the largest Pesavento-index (P-index) date for all of 2011 and represented the highest

number of cycles coming together since March of 2009 (another very significant date). Whether this will be sufficient to make the markets start a downward shift

remains to be seen. However, the overnight action in stock indices appear to have been under a lot of pressure over the last 2 days (both Sunday and Monday

night)

As I have discussed previously, the markets are grossly overbought and long

overdue for a correction. In fact, the magnitude of this next correction will provide us with a lot of information regarding the next major move which I still

believe will be to the downside

Treasury Bonds Treasury bonds have been oversold and are going through what looks to be a

short-covering rally that should finish near the 120 to 121 level for March Treasury bonds. The sudden crisis in Libya is once again making bonds the asset

of choice in the flight to quality. Although the Yen and Dollar both tracked higher, Japanese bonds underwent a downgrade over the weekend as many had

expected.

Precious Metals Gold has rallied to within $25 of its old highs while silver has managed to hit a

new high at close to the 1.618 Fibonacci expansion of the last swing high (near

the $35 per ounce level). Should gold also make a new high above $1,435 per ounce, it could easily reach the $1,650 range. This would be especially true

should the U.S. dollar drop to the 73 level or below. If this indeed does happen, we could see the beginning of a vicious inflationary spiral that the Fed would be

hard-pressed to control. Although a real possibility, the current probability of this occurring is approximately 10% in my opinion.

http://www.tfnn.com/


Foreign Currencies

The foreign exchange markets traded through a series of wild gyrations over the holiday weekend. The U.S. dollar versus the Canadian dollar was making new

lows and forming a three-drive to a bottom pattern on the long term weekly charts. This is particularly important because the Canadian and Australian dollars

are the cross rates which essentially make the commodity markets rock and roll. Such volatility will likely play into commodity prices.

Meanwhile, the Euro is showing strong resistance at the 1.37 level whereas the

U.S. dollar’s major support is at 73.00. Below this level, I believe we will see acceleration in the money markets.

Crude Oil

The $85 per barrel level we mentioned previously proved to be strong support (note that it was the 0.618 retracement of the last swing low). The increasing

instability in Libya caused oil to rally $9 per barrel in the thinly-traded holiday

markets. It remains to be seen what will happen when tensions do subside (if that should be the case) and whether oil supplies can be resumed quickly. There

is no doubt that much of the world is dependent on Middle East oil and the price spikes we have witnessed are clearly consistent with this. The reaction can also

be seen in Brent (North Sea) crude, which is trading at a $10 or more per barrel premium than West Texas crude. This is not a market where the novice trader can

trade easily given that swings can be in the $9,000 range over the span of a few hours, and that corresponding stops need to be approximately $1,000.

Trade of the Week

I recommend keeping a close watch on the ETF DBA which is used to reflect the price movements of wheat, corn, soybeans and sugar. This ETF has completed a

0.618 retracement of the big bear market spanning from 2007 to 2011 (see enclosed chart). The risk here would be $2 per share with a profit potential of

about $8 per share.

Technical Corner

Enclosed are the transit charts (cycles) from March 9 (2009) through February 21 (2011). Note that there are some similarities that may make the February 21

date as important as the March 5 low, particularly the two lines that split the charts (the oppositions are 180 degrees). We should know more after the market

calms down and will be looking for a drop of more than 3% from the highs from February 18 as an indicator.

Final Thoughts

Over the past several weeks I have been illustrating the long term AB=CD Gartley sell signal/pattern in the CRB commodity index. It still remains valid and may end

up being the lead indicator for the next down cycle. Recall that this index was the


first to warn that something was seriously wrong back in 2007. Another sign is

that the Baltic dry shipping index has been looking very sick for quite some time

now. As usual, analysts are dismissing its worth as an economic indicator although history has repeatedly shown us that when things finally begin to look

like the end, there is always a series of events which bring the mainstream back to reality. We have previously discussed the economic and monetary

repercussions of the Fed’s actions (and to a lesser extent some of the other central banks). While the financial day of reckoning has not yet arrived (we were

awfully close in 2009!), the political and social instability surfacing in the Middle East/North Africa, along with rumors of unrest in other regions in Africa and even

China show that we may be reaching a tipping point. The protests in Wisconsin also suggest that we are neither immune nor are these troubles a distant

concern. Whether this will be the episode that marks the next fall is unclear. However, there is little doubt that this is a credit default cycle and it has a long

way to go. The Federal Reserve has been parlaying a dangerous experiment and history will be rewritten before the final bell tolls.

Stock Exchanges



Treasury Bonds


Precious Metals


Foreign Currencies




Crude Oil


Technical Corner


___________________________________________________________________________________ Disclaimer: Trading in securities such as stocks, options, indices, currencies and futures involve risk and should not be undertaken without due diligence

and serious independent study. Subscribers may carry out their own trading based on what they learn from Patterns – Profits & “Peace of Mind”, but all

risks of potential financial losses are the subscribers responsibility. TFNN will be in no way liable for financial losses resulting from trading decisions based on this newsletter. Past performance is no guarantee of future results. Reproduction in whole or in part is not permitted without prior written

consent. All rights reserved.

Date post:	11-Apr-2018
Category:	Documents
Upload:	doankiet
View:	214 times
Download:	1 times

The Turning Tide? - Day Trading and Scalping · Pesavento-index (P-index) date for all of 2011 and...

Documents