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Stock Market Trends & Observations

Stock Market Trends Weekly Update 11/06/11


P os tedN ovember6 ,2 0 1 1 byBob Categories:WE E KL Y U P D A T E

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WEEKLY UPDAT E FOLLOWS T HE BREAK

INDEX MY CHART LINK WAVE COUNT S SIMPLIFIED ABBREVIAT IONS WEEKLY UPDAT E EDSON GOULD (PDFs) OT HER WORDS OF WISDOM (PDFs) T RANSACT ION SIGNALS REAL EST AT E MISCELANEOUS
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MISCELANEOUS PDF FILE If y ou are reading this in a PDF file, click on the following link for better v iewing and formatting. Stock Market T rends & Observ ations CHART S MY CHART LINK (updated constantly ) Im now getting in ex cess of 1 5,000 hits per month on the abov e chart link. This link is my personal chart list and has become my only chart reference. I draw the trend lines and wav e counts on a daily basis (sometimes more often). When a market mov e has been going in one direction for a lengthy period of time, y ou will only find the trend lines and wav e counts on charts with longer time frames. This giv es perspectiv e to the lines and counts. Perspectiv e was a fav orite of Edson Gould. I restrict my trend lines and wav e counts to only a few charts, TSX, DJI, SOX, COMPQ and FTSE. The other charts on the page are usually for confirmation of the trend and wav e structure. Page 1 Index es With 1 Minute Bars Page 2 Index es With 5 Minute Bars Page 3 Index es With 1 5 Minute Bars Page 4 Index es With 30 Minute Bars Page 5 Index es With 60 Minute Bars Page 6 Index es With Daily Bars (candlesticks last 1 3 months)
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Page 7 Index es With Daily Bars (since Nov ember 2008) Page 8 Index es With Weekly Bars Page 9 Index es With Monthly Bars Pages 1 0 through 1 3 are indicators. The indicators are used to simply look for some ty pe of leading action before a turn or confirm ing action of the wav e count. Page 1 0 is a look ev ery day page. The other indicator pages are less frequently v isited. Page 1 4 through 26 are sector ETFs. They represent most of the activ e sector ETFs and are alway s a good bet when looking for something that is breaking in a new direction. Page 27 through 39 are growth stocks. These are stocks that hav e risen in price since 1 990. One qualification is that they must not be sev erely damaged in a bear market so they cant rise to significant new highs in the following bull market. The growth stocks show daily market action for the last 3 y ears and weekly prices since 1 990. This giv es a good perspectiv e of how they hav e behav ed in the immediate past (daily charts) and how they behav ed during good and bad times (weekly charts). WAVE COUNT S SIMPLIFIED Myw avecountsarenotElliottWave!Itsdifferent,simpleand functionsw ithoutamazeofexclusions. T here are 3 peaks (or v alley s) to a com pleted wav e count. A rev ersal of trend takes place after a completed wav e count. Often times its as simple as counting 3 bumps (or dips) on a chart . . . Other times, not so easy . In a downtrend the same rules apply ex cept y ou are counting 3 dips instead of 3 bumps.
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WORDSOFWISDOM(7)

November2011 M T W T F 7 1 8 2 9 3 4 S S 5 6

10 11 12 13

14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Oct

Wall Street Quotes


Theessenceofinvestment managementisthe managementofrisks,notthe managementofreturns.Well managedportfoliosstartwith thisprecept. BenjaminGraham Thetimeofmaximum pessimismisthebesttimeto buyandthetimeofmaximum optimismisthebesttimeto sell. JohnTempleton Buyonthecannons, sellonthetrumpets. OldFrenchProverb Rule#1:Neverlosemoney. Rule#2:Neverforgetrule#1 pdfcrowd.com

Each step m ust stay confined to a channel. Lay ing a pen or pencil on the chart will help y ou v isualize the channel. As the trend progresses, all of the steps that make up the ov erall current trend will also be confined to a larger channel. When the m arket breaks a channel (regardless of the perceived wav e count), the current step has been term inated. (Make sure y our channel was correct before calling a termination). The correction following the second step is larger than the correction that followed the first step. Obv iously the correction following the third step will be larger than the preceding two corrections. A single wav e m ay sub-div ide into another 3 wav es. I will call this an ex tension. When this happens (1 ) the trend is still intact, (2) the channel will widened and (3) instead of a total of 3 steps, there will be 5 steps. Sometimes I will use the terms step and wav e interchangeably . Reading the glossary helps in the understanding of this blog. Glossary Link ABBREVIAT IONS DJI = Dow Jones Industrials DJT = Dow Jones Transportations SPX = SP 500 ES = SP 500 Futures COMPQ = Nasdaq Composite Index TSX = Toronto Stock Ex change (Canadian blue chips) SOX = Semiconductors XLY = Consumer
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Rule#2:Neverforgetrule#1 WarrenBuffett Thefourmostdangerous wordsininvestingare "Thistimeit'sdifferent". JohnTempleton "Thistimeit'sdifferent"was prevalentduringthebubble of2000.In1929itwascalled "NewEconomics". Bob Historyalwaysrepeats,only thedetailschange. EdsonGould Ifyouhavetroubleimagining a20%lossinthestock market,youshouldn'tbein stocks. John(Jack)Bogle Stockareboughton expectations,notfacts. GeraldLoeb Emotionsareyourworst enemyinthestockmarket. DonHays P/EratioThepercentageof investorswettingtheirpants asthemarketkeeps crashing. Anonymous

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HerdMentality Men,ithasbeenwellsaid, ************************************************************************************ thinkinherdsitwillbeseen thattheygomadinherds, WEEKLY UPDAT E whiletheyonlyrecovertheir sensesslowly,andoneby CLICK ON CHART S T O ENLARGE one. ExtraordinaryPopular Short T erm DelusionsandtheMadnessof Crowds Oct 4, 2011 T o Present

FTSE = London Stock Ex change (blue chips)

Step 3 of First Step Up Is Possibly Ahead (channel break has not taken place) OR Step 1 Up Com plete (channel break will determ ine truth) SHORT T ERM COMMENT S

HerdMentality CasessuchasTulipomaniain 1624whenTulipbulbs tradedatahigherpricethan goldsuggesttheexistence ofwhatIwoulddub "Mackay'sLawofMass Action:"whenitcomestothe effectofsocialbehavioron theintelligenceofindividuals, 1+1isoftenlessthan2,and sometimesconsiderablyless than0. ExtraordinaryPopular DelusionsandtheMadnessof Crowds Imademoneybysellingtoo soon. BernardBaruch Ifallyouhaveisahammer, everythinglookslikeanail. BernardBaruch

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Themainpurposeofthe stockmarketistomakefools ofasmanypeopleas possible. BernardBaruch Thehardestpartofabull marketisstayingon. Abubbleisabullmarketin whichyoudon'thavea position. Abuyandholdstrategyisa shorttermtradethatwent wrong. October,thisisoneofthe peculiarlydangerousmonths tospeculateinstocks.The othersareJuly,January, September,April,November, May,June,December,August andFebruary. MarkTwain Economistshavepredicted14 ofthelast3recessions. MarketCorrectionTheday afteryoubuystocks. In2008stockswereagood buy.....Goodbye Mercedes,goodbyeyacht, goodbyevacationhome, goodbye...

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Marketscanremainirrational longerthanyoucanremain solvent. JohnMaynardKeynes Moneytalks,butallmineever saysis"goodbye" Don'tgamble.Takeallofyour savingsandbuysomegood stockandholdituntilitgoes up,thensellit.Ifitdon'tgo up,don'tbuyit. WillRogers Returnofprincipalismore importantthanthereturnon principal. Hopeisyourworstenemyin themarket. Don'tcatchafallingknife. Spendatleastasmuchtime researchingastockasyou wouldchoosingarefrigerator. PeterLynch Whenyourealizethatyou areridingadeadhorsethe beststrategyistodismount. SiouxIndianProverb Dontevermakethemistake oftellingthemarketitis wrong. pdfcrowd.com

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JamesDines WallStreetneverchanges, thepocketschange,the suckerschange,thestocks change,butWallStreetnever changes,becausehuman natureneverchanges. JesseLivermore LetWallStreethavea nightmareandthewhole countryhastohelpgetthem backinbedagain WillRogers Bullsmakesmoney,bears makesmoney,pigsget slaughtered. MyGrandfather Neverbuyastockthatwon't goupinabullmarket.Never sellastockthatwon'tgo downinabearmarket. WallStreetisastreetwitha riveratoneendanda graveyardattheother. Nevercheckstockpricesona Friday,itcouldspoilyour weekend. Nobodyismorebearishthan asoldoutbull.

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Thepublicisrightduringthe trendsbutwrongatboth ends. HumphreyNeill Thosewhocan,do. Thosewhocant,teach. Thosewhocantteach,work forthegovernment. Neverselladullmarketshort. Iselleuphoriaandbuy panic. Thewayhedeterminesthat istowaituntilpricesstart gappinginthecharts. Gappingontheupsideis euphoria,whilegappingon thedownsideispanic. JimmyRogerscourtesyofJeff Saut "Cutyourlossesandletyour profitsrun." Don'tmarryastock.Every stockmustbesold. OftentimesWHENyoutakea positioncanbemore importantthanWHATyou takeapositionin. Bob

About T his Blog


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ObservationsofStockMarket Trendsusesseveral proprietarytechnical indicatorsdiscoveredbythe author.Theobjectofthisblog istonotifyyou(preferablyin advance)oftheimportant topsandbottomsinthestock market.Weknowthat's impossible,butnevertheless, it'sattemptedinthisblog. "ObservationsofStock MarketTrends"ispublished onanirregularschedulebuta dailyupdateislikelywhenwe arenearastockmarket inflectionpoint. Ifyoufindtheblog interesting,pleasebecomea followerbyenteringyour emailaddressinthesection "EmailSubscription"(topof thiscolumn).Youmustalso confirmyouremail subscriptionbyclickingona linkintheconfirmationemail, otherwiseyouain't subscribed.

SHORT T ERM

The abov e chart (with trend lines and wav e counts) can be found at page 4 on my chart link. Most of the pages before page 6 are updated frequently with lines and wav e counts. Page 6 to page 9 are longer term and change slowly . The short term correction began a day early , October 31 . Last week I had thought that institutional window dressing would keep the market afloat until Nov ember 1 st. That didnt turn out to be the case.
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afloat until Nov ember 1 st. That didnt turn out to be the case. Like last week the wav e count is still fuzzy . I can make a case for sev eral different counts. Best case scenario is that we could rally into the third step up (short term) of a larger step one up (intermediate term). Worst case scenario is the correction following intermediate term step 1 up is underway . The depth of the nex t correction could determine whether we will establish new highs this y ear, deep correction no new highs this y ear, shallow correction possible new highs this y ear. Tim Hay es of Ned Dav is Research thought we were going to hav e new highs this y ear, that would fit in nicely with a Santa Claus rally .

construedasinvestment advice. Nostatementbytheblog's authorshouldbeinterpreted asarecommendationtobuy orsellanysecurity,financial instrument,ortoparticipate inatradingorinvestment strategy.

Anyinvestmentdecisionby anyonethatresultsinlosses orgainsbasedoninformation fromthisblogisnotthe responsibilityoftheblog's ************************************************************************************ author.

Interm ediate T erm 3 Steps Down Are Com plete (February 2011 T o October 4, 2011) October 4, 2011 to Present Step 1 Up Is Possibly Still Underway

Theblog'sauthorwillmake statementsaboutcertain investmentvehiclesand strategies,butIt'ssimplythe authorexpressinghis opinion,oraction,regarding hisowninvestments.These

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hisowninvestments.These opinionsarenevertobe construedasinvestment advice.

About Me
With55yearsofstudyingand investinginthestockmarket, Iamsharingthese experiencesandknowledge bywritingastockmarket blog.Thisblogrelieson severaluniqueand proprietaryindicators. Ihavebeencorrectatsome ofthebiggestmarketturnsin thelast40years.Iwasshort formostof19731974, reversedcourseandbecame abuyerduringtheweek beforeChristmas1974.Iwas alsoshortformostofthefirst halfof1982butbecamea buyeronAugust4,1982.This wasfivedaysbeforethe August9,1982blastoffon thehistoricbullmarketrunof

INT ERMEDIA T E T ERM

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INT ERMEDIA T E T ERM 2

Its my belief that a significant low was made on October 4th and the rally since that low is not complete. After an intermediate term 3 step decline has taken place, the ex pectation is that the rally must break the look of the downtrend. Presently , this rally still looks like it could be part of the prior bear market. Hence it still has the look of the prior bear market. That will change before this rally is finished (notwithstanding interruptions). Any change in my outlook would mean a significant and unex pected change has taken place to our economic outlook (Europe is a wildcard). If this were to take place, we would ex perience steps 4 and 5 down, dating from February 201 1 .

thehistoricbullmarketrunof the1980sand1990s.In 1999Ibegantollingthebell onthestockmarketknowing thattheendwasnear(no onelistened).InMarch2003, priortothebeginningofthe IraqwarIbecamevery bullishwhenitwasobvious thattherewasnoreasonto ownstocksandwehadalso achievedadoublebottom. ShortlyaftertheOctober 2007peakIbecameaseller andbear.Dayspriortothe March2009bottom,Ibought stocksinanticipationofa verygoodrallythatturned intoabigbullrun.Inthelater stagesoftheFebruaryMay 2011toppingprocess,I beganwarningofan importantmarketcorrection. Onemanwasresponsiblefor myeducation,EdsonGould, thegreatesttechnicianthat everlived.

Afterreadingmanyofthe booksonstockmarket ************************************************************************************ technicalanalysis,Ifound thatallofthesemethodshad Long T erm highfailurerates.Isearched Uptrend foraformulathatworked Mar 2009 T o Present consistentlyandin1973I

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Step 2 Up (of 3) Com pleted Has Step 3 Up Begun ??? From the bottom in March 2009 Large step one up ended in May 201 0 Large step two up ended in May 201 1 . Significant break abov e the May 201 1 highs should signal that Step 3 up is official

consistentlyandin1973I subscribedtoEdsonGould's "Findings&Forecasts".HereI struckgoldwiththemaster technicianofthe20th century.Extendinghis methodsIdiscoveredseveral proprietaryindicatorsthatI usetoday. Ifyoufindmyobservationsof interestpleaseaddyour emailaddresstothesection, "EmailSubscription".

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LONG T ERM

************************************************************************************ Very Long T erm Downtrend Jan 2000 T o Present Step 2 Down (of 3) Com pleted Currently In Rally Phase From Step 2 Down

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V ERY LONG T ERM

VERY LONG T ERM COMMENT S We hav e 3 possibilities for the future. We hav e entered a v ery wide swinging m arket (m egaphone form ation) sim ilar to that of 1966 to 197 4. During that era we had three bear markets with two interv ening
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bull market rallies. Each bear market had a lower low than the prev ious bear. The interv ening bull market rallies saw new all time highs before the nex t bear market began. We also hav e formed a huge head and shoulders formation since 1 998. If this formation is v alid, the downside measurement calls for a bottom around Dow Jones Industrials 1 ,000. We began a long term bull market in March 2009. Each subsequent min-bear market will result in higher lows than the prior major low. I fav or the m egaphone form ation as the m ost likely scenario. Since 2000 we hav e had two bear markets, 2000 to 2003 and 2007 to 2009. Like 1 966 to 1 97 4, the recov ery from the first bear market saw a new all time high (2007 peak). Its possible that we may ex perience another all time high during the present recov ery period. This would support the megaphone formation. A failure to make new highs would support the head and shoulders argument. In both formations the conclusion of the present recov ery would call for a third and final bear market. An estimated time for the conclusion of the final bear market is approx imately 201 8. The lesser downside target of both formations is the megaphone formation as it likely calls for a bottom 1 ,000 to 2,000 points below the 2009 low, which would be around Dow 5,000. In the head and shoulders formation the measurement calls for a bottom around Dow Jones Industrials 1 ,000. This is almost an unimaginable ev ent regarding the possible fundamentals to create this scenario. If this did happen, ev ery thing that could go wrong would hav e to go wrong.
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The reasons range from the absurd to the absurdly absurd. This scenario is so dark that it doesnt seem possible but nev ertheless, the head and shoulders formation is there and will be waiting until we pierce the alltime highs of October 2007 . Remember these are simply possible scenarios and are not embedded in fact. Whatev er the outcome, it nev er hurts to be a little cautious with some of y our money . But in the worst case scenario, ev ery thing that we take for granted as being safe . . . . would not be safe. This is something to nev er forget in the ev ent things go v ery badly . Hopefully we will nev er hav e to think about worst case scenarios other than to hav e a good laugh at them presently . ************************************************************************************ EDSON GOULD Edson Gould, Prem ier Stock Market Strategist Edson Gould had a profound influence on the dev elopment of my techniques and proprietary indicators. Prior to my subscribing to his adv isory serv ice, I was just one of the crowd. After 40 y ears I still hav e many of the publications from his adv isory serv ice, Findings & Forecasts. Fearing the loss of these hard copy reports I hav e recently created pdf files of these reports. Now I hav e hard copies and computerized v ersions of the reports. I hav e used a technique of his that I found in an obscure reference in one of his reports. It was only mentioned once and nev er again. I believ e that he used this tool and nev er told the world its importance. Prior to my finding this Edson Gould tool, I had been
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try ing unsuccessfully to find a different way to chart the market. When I read about his technique I knew instantly that this was ex actly what I had been seeking. I hav e charted this method back to 1 939 and found it to be v ery useful. On occasion I may post one these charts. This man was truly a legend in his own time. Its too bad that today most people hav e forgotten or nev er heard of his discov eries. Because of this I hav e posted some of his adv ice from the 1 97 0s. Its my small contribution to memorializing a giant of technical analy sis. My Most Im portant Discov ery by Edson Gould.pdf Edson Gould Profile by MT A.pdf Edson Gould Concepts Inform ation T im e & Risk by William Scheinm an.pdf Decade Cy cle by Edson Gould.pdf Decade Cy cle Update by Ned Dav is.pdf Swing Principle by Edson Gould.pdf Utilities by Edson Gould.pdf Div idends by Edson Gould.pdf Bonds by Edson Gould.pdf Speed Lines by Edson Gould.pdf Sentim eter by Edson Gould.pdf OT HER WORDS OF WISDOM One Way Pockets Book Written In 1917 .pdf T he 12 Cardinal Mistakes Of Com m odity T rading by Walter Bressert.pdf
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Money Managem ent by Walter Bressert.pdf Jesse Liv erm ores T rading Rules.pdf Identify ing Bear Market Bottom s & New Bull Markets by Paul Desm ond.pdf Robert Farrells 10 Rules For Inv esting.pdf Decade Cy cle Updated by Ned Dav is.pdf ************************************************************************************ T RANSACT ION SIGNALS ALL ACTIONABLE SIGNALS (buy or sell) ARE ONLY FOR SHORT TERM TIME FRAMES. These signals are not designed for intermediate or long term time frames BUT . . . . . After a short term buy signal, long term tax status can be achiev ed by a continuation of the upward trend, which causes short term actions to morph into long term holdings. See more details in the glossary under Tax es, Futures Contracts and Money Management. Glossary Link T RANSACT ION RECORD In this blog a warning of an impending bottom (or top) is often issued well in adv ance of the formal buy or sell date. This allows thoughtful consideration prior to a formal action signal. To get a sense of how this works, y ou should read a few day s prior to a formal buy /sell signal. I often buy /sell in my personal account based on the early warnings.
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The transaction record near stock market bottoms will show that I am v ery skittish and usually remain so until the new direction is well underway . Buy signal in October was aborted by a fam ily illness SELL SEPT EMBER 9, 2011 BUY AUGUST 30, 2011 SELL AUGUST 30, 2011 Stopped out, re-bought quickly BUY AUGUST 29, 2011 SELL AUGUST 25, 2011 BUY AUGUST 23, 2011 SELL AUGUST 1, 2011 BUY JUNE 23, 2011 ************************************************************************************ REAL EST AT E Here is a PDF report on the cy clic nature of real estate prices. Any one interested in cy cles and real estate should find it of interest. Real Estate Cy cles ************************************************************************************ MISCELANEOUS There are useful items throughout this blog. For instance, the Wall Street Quotes can be v ery instructiv e. So make sure and look all through the blog.
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One Way Pockets Book Written In 1917


P os tedN ovember2 ,2 0 1 1 byBob Categories:WO RD SO FWI SD O M

One Way Pockets Book Written In 1917 .pdf


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The 12 Cardinal Mistakes Of Commodity Trading by Walter Bressert


P os tedN ovember2 ,2 0 1 1 byBob Categories:WO RD SO FWI SD O M

T he 12 Cardinal Mistakes Of Com m odity T rading by Walter Bressert.pdf


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Money Management by Walter Bressert


P os tedN ovember2 ,2 0 1 1 byBob Categories:WO RD SO FWI SD O M

Money Managem ent by Walter Bressert.pdf


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Jesse Livermores Trading Rules


P os tedN ovember2 ,2 0 1 1 byBob Categories:WO RD SO FWI SD O M

Jesse Liv erm ores T rading Rules.pdf


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Robert Farrells 10 Rules For Investing


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Stock Market Update 10/31/11


P os tedO c tober3 1 ,2 0 1 1 byBob Categories:D A I L Y U P D A T E

DAILY UPDAT E FOLLOWS T HE BREAK CHART S MY CHART LINK (updated constantly ) Im now getting in ex cess of 1 5,000 hits per month on the abov e chart link. This link is my personal chart list and has become my only chart reference. I draw the trend lines and wav e counts on a daily basis (sometimes more often). When a market mov e has been going in one direction for a lengthy
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period of time, y ou will only find the trend lines and wav e counts on charts with longer time frames. This giv es perspectiv e to the lines and counts. Perspectiv e was a fav orite of Edson Gould. I restrict my trend lines and wav e counts to only a few charts, TSX, DJI, SOX and COMPQ. The other charts on the page are usually for confirmation of the trend and wav e structure. Page 1 Index es With 1 Minute Bars Page 2 Index es With 5 Minute Bars Page 3 Index es With 1 5 Minute Bars Page 4 Index es With 30 Minute Bars Page 5 Index es With 60 Minute Bars Page 6 Index es With Daily Bars (candlesticks last 1 3 months) Page 7 Index es With Daily Bars (since Nov ember 2008) Page 8 Index es With Weekly Bars Page 9 Index es With Monthly Bars Pages 1 0 through 1 3 are indicators. The indicators are used to simply look for some ty pe of leading action before a turn or confirm ing action of the wav e count. Page 1 0 is a look ev ery day page. The other indicator pages are less frequently v isited. Page 1 4 through 26 are sector ETFs. They represent most of the activ e sector ETFs and are alway s a good bet when looking for something that is breaking in a new direction. Page 27 through 39 are growth stocks. These are stocks that hav e risen in price since 1 990. One qualification is that they must not be sev erely damaged in a bear market so they cant rise to significant new highs in the following bull market. The growth stocks show daily market action for the last 3 y ears and weekly prices since 1 990. This giv es a good perspectiv e of
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how they hav e behav ed in the immediate past (daily charts) and how they behav ed during good and bad times (weekly charts). WAVE COUNT S SIMPLIFIED Myw avecountsarenotElliottWave!Itsdifferent,simpleand functionsw ithoutamazeofexclusions. T here are 3 peaks (or v alley s) to a com pleted wav e count. A rev ersal of trend takes place after a completed wav e count. Often times its as simple as counting 3 bumps (or dips) on a chart . . . Other times, not so easy . In a downtrend the same rules apply ex cept y ou are counting 3 dips instead of 3 bumps. Each step m ust stay confined to a channel. Lay ing a pen or pencil on the chart will help y ou v isualize the channel. As the trend progresses, all of the steps that make up the ov erall current trend will also be confined to a larger channel. When the m arket breaks a channel (regardless of the perceived wav e count), the current step has been term inated. (Make sure y our channel was correct before calling a termination). The correction following the second step is larger than the correction that followed the first step. Obv iously the correction following the third step will be larger than the preceding two corrections. A single wav e m ay sub-div ide into another 3 wav es. I will call this an ex tension. When this happens (1 ) the trend is still intact, (2) the channel will widened and (3) instead of a total of 3 steps, there will be 5 steps. Sometimes I will use the terms step and wav e interchangeably .
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Reading the glossary helps in the understanding of this blog. Glossary Link ABBREVIAT IONS DJI = Dow Jones Industrials DJT = Dow Jones Transportations SPX = SP 500 ES = SP 500 Futures COMPQ = Nasdaq Composite Index TSX = Toronto Stock Ex change (Canadian blue chips) SOX = Semiconductors XLY = Consumer ************************************************************************************ DAILY UPDAT E CLICK ON CHART S T O ENLARGE Short T erm Oct 4, 2011 T o Present Wav e Count Fuzzy But Sm all Step 3 Up Appears Likely Resistance Was Encountered At Friday Highs Possible Short T erm Correction Ahead As I hav e said before, follow my trend lines and wav e counts on my chart link (abov e) to keep up to date on my current thinking. There are no ex planations on the charts other than lines and numbers, but if y ou follow my wav e count strategy (abov e), y oull understand my v iewpoint.

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Jeff Saut and I seldom disagree and the following quote from his weekly comments finds us in total agreement.

Investment Strategy by Jeffrey Saut


Crescendo? October 31, 2011 Webstersdefinesthew ordcrescendoas,Thepeakofagradual increaseoraclimax.And,thatstheclimaticfeelingIgotlast Thursdayw hentheD-JIndustrials(INDU/1 2231 .1 1 )sprintedsome340 pointsontheEuropeaneuphoriatocloseabove1 2000forthefirsttime sinceAugust2,201 1 .SuchactioncausedoneoldWallStreetw agto exclaim,Buyonthecannonsandsellonthetrumpets!Clearlyw e boughtonthecannonsbackonOctober4thw hentheindexesbroke below theirrespectiveAugust8thand9thselling-climaxlow s.That callw asdrivenbythebelieftheOctober1 97 8/1 97 9analoguesw ould continuetoplay.Recallthoselate1 97 0spatternssaw theaverages slightlyundercuttheirsellingclimaxlow sbeforethebottoming processw ascomplete.Accordingly,w etermedthisyearsOctober peek-a-boolookbelow theearlyAugustlow sasanundercutlow and advisedparticipantstobuytheindexoftheirchoice. GotchaNourielRoubiniGotchaHarryDentGotchaRobert Prechter,forw hilesuchpunditsw erecontemplatingtheendof financiallifeasw eknow it,theS&P500(SPX/1 285.09)lookstohave posteditsbiggestmonthlygainsinceOctober1 97 4(~1 6% )andlikely thetenthbestmonthsince1 928.V erily,fromtheOctober4thintraday low (1 07 4.7 7 )intolastThursdaysintradayhigh(1 292.66)theSPXhas gained~20.3% w ithmanyinvestmentvehiclesdoingmuchbetterthan
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that.Theculpritsforthemassivemovehavebeenbetterthanestimated economicreports(w hichhavetakenrecessionfearsoffofthetable),a kissandmakeupfromMerkelandSarkozy,andgreat3Q1 1 earnings reports.Infact,asofthismorning,the323companiesintheS&P500 thathavereportedthusfarhaveshow edyear-over-yearearningsup 24.3% w ithrevenuesbetterby1 2.8% .Thatsacompanyearningsbeat rateof64.7 % combinedw itharevenuebeatrateof63% .Theresult haslefttheSPXsconsensus201 2earningsestimatenestledaround $1 09,implyingaforw ardP/Eratioof1 1 .7 x.GivensuchmetricsIllsay itagain,Toanunderinvestedportfoliomanager(PM)thecurrentnew s environmentisanightmare.Y etsurprisingly,thew orldremains profoundlyunderinvestedinU.S.stocks. Underinvestedindeed,forasrepeatedlystated,Icouldnotfindone EuropeanPMthathadmorethana1 5% w eightinginU.S.equities despitethefacttheirbenchmarkindexhasa~43% w eighting.Evenhere inthiscountrymostendow mentfundshavelessthana1 0% w eighting inU.S.stocks.Ladiesandgentlemen,thereisnow ayanendow ment fundcanachieveitsmandatedreturnof6% 9% peryearusing2.3% yielding1 0-yearTreasuries.Manifestly,allw eneedisforPMstorealize this,anddecideitstimetoreallocatemoneybysw itchingoutoffixed incomeandintoequities,fortheSPXtodobetterthanmostexpect.To besure,thatsw hatw eexpect,w hichshouldcauseprofessionalmoney tochasestockshigherdrivenbyperformanceanxiety.Therefore,w e continuetofavorthestrategyofbuyingdips. Thatsaid,theupsideskeinhasleftthemarketsoverboughtintheshorttermw ith93.6% oftheSPXsstocksabovetheir50-daymoving averages(DMAs).Backatthemarketlow sthatfigurew asonly4% . Additionally,theMcClellanOscillatorremainsaboutasoverboughtas
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itevergets.Moreover,thebuyingstampedenow standsatsession1 9. Readersofthesemissivesknow suchstampedestendtorun1 7 25 sessions,w ithonlyone-tothree-sessionpausesand/orpullbacks, beforetheyexhaustthemselvesontheupside.Therefore,w iththemajor averagesupagainstoverheadresistancelevels,asw ellastrading aroundtheir200-DMAs,itw ouldnotbesurprisingtoseealonger pause(orpullback)thantheone-tothree-sessionpatternw ehavebeen experiencingsincethe1 0/4/1 1 low s.Tous,therealquestionisw ill theSPXgetapullbacktotheoftenmentionedpivotpointof1 21 7 ,orw ill anypullbackbeshortandshallow ?Well,byourw orktheequity marketsstillhavealotofinternalenergytopow ertheirw ayhigher,so oursenseistheSPXw illkeeppushinghigherinthemonthsaheadw ith onlyshallow pullbacksandsidew ayspausesalongthew ay. AsfortheplethoraofemailsIreceivedabout,Didw efinallygetaDow Theorybuysignal?Itdoesappearthatabuysignalhasbeen registeredw ithboththeD-JIndustrialsandtheD-JTransportsrising abovetheirrespectiverecentreactionhighs,ascanbeseeninthechart onpage3.Thatupsidebreakoutcameafterbothindicesmadenew closingreactionlow sonOctober3,201 1 hence,thebuysignalseems valid.ThismeanstheDow TheorysellsignalofAugust4,201 1 should provetobeafalsesignal,asw ehaverepeatedlyopinedfornearlytw o months.Ofcourse,thelongestkeeperofDow Theory,namelyRichard Russell,hasstatedthatthereneverw asasell-signalsinceheisusing theJuly201 0reactionlow sof9686.48and3906.23togetasell-signal, w hileIusedthisyearsclosinglow sofMarch1 6th.Ifonefollow s RichardsmethoditimpliesthatheprobablydidntgetaDow Theory buysignaleithersincehelikelyw ouldneedbothaveragestotravel abovetheirrespective201 1 reactionhighsof1 281 0.54and561 8.25. Recall,itw asanupsidenon-confirmationfromtheIndustrials,w hich
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failedtoconfirmtheTrannysnew all-timehighofJuly7 ,201 1 at 561 8.25,thatleadtotheensuing~1 7 % declinefortheseniorindex.Lets hopeitdoesntplaythatw ayagain.

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1 0 -3 1 -1 1 DOW T HEORY

************************************************************************************ EDSON GOULD Edson Gould, Prem ier Stock Market Strategist Edson Gould had a profound influence on the dev elopment of my techniques and proprietary indicators. Prior to my subscribing to his adv isory serv ice, I was just one of the crowd. After 40 y ears I still hav e many of the publications from his adv isory serv ice, Findings & Forecasts. Fearing the loss of these hard copy reports I hav e recently created pdf files of these reports. Now I hav e hard copies and computerized v ersions of the reports. I hav e used a technique of his that I found in an obscure reference in one of his reports. It was only mentioned once and nev er again. I believ e that he used this tool and nev er told the world its importance. Prior to my finding this Edson Gould tool, I had been try ing unsuccessfully to find a different way to chart the market. When I read about his technique I knew instantly that this was ex actly what I had been seeking. I hav e charted this method back to 1 939 and found it to be v ery useful. On occasion I may post one these charts. This man was truly a legend in his own time. Its too bad that
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today most people hav e forgotten or nev er heard of his discov eries. Because of this I hav e posted some of his adv ice from the 1 97 0s. Its my small contribution to memorializing a giant of technical analy sis. My Most Im portant Discov ery by Edson Gould Edson Gould Profile by MT A Edson Gould Concepts by William Scheinm an Decade Cy cle by Edson Gould Decade Cy cle Update by Ned Dav is Swing Principle by Edson Gould Utilities by Edson Gould Div idends by Edson Gould Bonds by Edson Gould Speed Lines by Edson Gould Sentim eter by Edson Gould ************************************************************************************ T RANSACT ION SIGNALS ALL ACTIONABLE SIGNALS (buy or sell) ARE ONLY FOR SHORT TERM TIME FRAMES. These signals are not designed for intermediate or long term time frames BUT . . . . . After a short term buy signal, long term tax status can be achiev ed by a continuation of the upward trend, which causes short term actions to morph into long term holdings. See more details in the glossary under Tax es, Futures Contracts
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and Money Management. Glossary Link T RANSACT ION RECORD In this blog a warning of an impending bottom (or top) is often issued well in adv ance of the formal buy or sell date. This allows thoughtful consideration prior to a formal action signal. To get a sense of how this works, y ou should read a few day s prior to a formal buy /sell signal. I often buy /sell in my personal account based on the early warnings. The transaction record near stock market bottoms will show that I am v ery skittish and usually remain so until the new direction is well underway . Buy signal in October was aborted by a fam ily illness SELL SEPT EMBER 9, 2011 BUY AUGUST 30, 2011 SELL AUGUST 30, 2011 Stopped out, re-bought quickly BUY AUGUST 29, 2011 SELL AUGUST 25, 2011 BUY AUGUST 23, 2011 SELL AUGUST 1, 2011 BUY JUNE 23, 2011 ************************************************************************************ MISCELANEOUS There are useful items throughout this blog. For instance, the Wall Street Quotes can be v ery instructiv e. So make sure and
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look all through the blog.


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Stock Market Trends Weekly Update 10/29/11


P os tedO c tober2 9 ,2 0 1 1 byBob Categories:WE E KL Y U P D A T E

WEEKLY UPDAT E FOLLOWS T HE BREAK PDF FILE If y ou are reading this in a PDF file, click on the following link for better v iewing and formatting. Stock Market T rends & Observ ations CHART S MY CHART LINK (updated constantly ) Im now getting in ex cess of 1 5,000 hits per month on the abov e chart link. This link is my personal chart list and has become my only chart reference. I draw the trend lines and wav e counts on a daily basis (sometimes more often).
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When a market mov e has been going in one direction for a lengthy period of time, y ou will only find the trend lines and wav e counts on charts with longer time frames. This giv es perspectiv e to the lines and counts. Perspectiv e was a fav orite of Edson Gould. I restrict my trend lines and wav e counts to only a few charts, TSX, DJI, SOX and COMPQ. The other charts on the page are usually for confirmation of the trend and wav e structure. Page 1 Index es With 1 Minute Bars Page 2 Index es With 5 Minute Bars Page 3 Index es With 1 5 Minute Bars Page 4 Index es With 30 Minute Bars Page 5 Index es With 60 Minute Bars Page 6 Index es With Daily Bars (candlesticks last 1 3 months) Page 7 Index es With Daily Bars (since Nov ember 2008) Page 8 Index es With Weekly Bars Page 9 Index es With Monthly Bars Pages 1 0 through 1 3 are indicators. The indicators are used to simply look for some ty pe of leading action before a turn or confirm ing action of the wav e count. Page 1 0 is a look ev ery day page. The other indicator pages are less frequently v isited. Page 1 4 through 26 are sector ETFs. They represent most of the activ e sector ETFs and are alway s a good bet when looking for something that is breaking in a new direction. Page 27 through 39 are growth stocks. These are stocks that hav e risen in price since 1 990. One qualification is that they must not be sev erely damaged in a bear market so they cant rise to significant new highs in the following bull market. The growth stocks show daily market action for the last 3 y ears
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and weekly prices since 1 990. This giv es a good perspectiv e of how they hav e behav ed in the immediate past (daily charts) and how they behav ed during good and bad times (weekly charts). WAVE COUNT S SIMPLIFIED Myw avecountsarenotElliottWave!Itsdifferent,simpleand functionsw ithoutamazeofexclusions. T here are 3 peaks (or v alley s) to a com pleted wav e count. A rev ersal of trend takes place after a completed wav e count. Often times its as simple as counting 3 bumps (or dips) on a chart . . . Other times, not so easy . In a downtrend the same rules apply ex cept y ou are counting 3 dips instead of 3 bumps. Each step m ust stay confined to a channel. Lay ing a pen or pencil on the chart will help y ou v isualize the channel. As the trend progresses, all of the steps that make up the ov erall current trend will also be confined to a larger channel. When the m arket breaks a channel (regardless of the perceived wav e count), the current step has been term inated. (Make sure y our channel was correct before calling a termination). The correction following the second step is larger than the correction that followed the first step. Obv iously the correction following the third step will be larger than the preceding two corrections. A single wav e m ay sub-div ide into another 3 wav es. I will call this an ex tension. When this happens (1 ) the trend is still intact, (2) the channel will widened and (3) instead of a total of 3 steps, there will be 5 steps.
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Sometimes I will use the terms step and wav e interchangeably . Reading the glossary helps in the understanding of this blog. Glossary Link ABBREVIAT IONS DJI = Dow Jones Industrials DJT = Dow Jones Transportations SPX = SP 500 ES = SP 500 Futures COMPQ = Nasdaq Composite Index TSX = Toronto Stock Ex change (Canadian blue chips) SOX = Semiconductors XLY = Consumer ************************************************************************************ WEEKLY UPDAT E CLICK ON CHART S T O ENLARGE Short T erm Oct 4, 2011 T o Present Wav e Count Fuzzy But Sm all Step 3 Up Appears Likely Resistance Was Likely Encountered At Friday Highs Possible Short T erm Correction Ahead SHORT T ERM COMMENT S

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1 0 -2 9 -1 1 DJI - 6 0 Min

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1 0 -2 9 -1 1 T r en d Lin es & W a v e Cou n t s

The abov e charts (with trend lines and wav e counts) can be found at page 4 and 5 on my chart link. I labeled step 3 down (February to October) as completed in my charts well before I commented on that ev ent in this blog. Thats a good reason to check the charts frequently . Make sure and stay up to date by watching the current counts and trend lines in my chart link. I am constantly fiddling with the lines and counts try ing to find the best fit. This blog requires work while a chart update only take a minute or two. Interpretation of the charts can take the longest. Tim Hay es, chief inv estment strategist of the widely ready institutional serv ice, Ned Dav is Research, said last week that he thought the market could surpass the 2007 all-time market highs. This has been a contention of mine for almost 1 0 y ears, wide swinging markets. See megaphone formation under V ery Long Term Comments below. Other than my own, I hav e not heard a meaningful prediction of bettering the 2007 highs until this week. Tim Hay es also said that he thought we were in an ongoing bear market that began in 2000. This corresponds ex actly with my long term thoughts. As I hav e said in V ery Long Term Comments, I believ e the ev entual bottom will occur in 201 8 (cy clical projection) but any time after 201 5 seems possible.
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Tim Hay es also thought we could ex ceed the May 201 1 highs before y ear end. That would be nice and if it happens, it would certainly mark the bottom on October 4th as the beginning of large step 3 (counting from March 2009). Large step 3 could match or ex ceed the 2007 highs. Lotsa profits to be made if that happens. Will y ou be on board???? Currently we could be faced with a short term correction beginning on Nov ember 1 st. Institutions will be window dressing through the 31 st. The most desirable outcome is for this ov erbought market to stay ov erbought. This is the best sign to the kickoff to a big market surge. ************************************************************************************ Interm ediate T erm 3 Steps Down Are Com plete (February 2011 T o October 4, 2011) October 4, 2011 to Present Step 1 Up Is Underway

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1 0 -2 1 -1 1 INT ERMEDIA T E T ERM

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1 0 -2 1 -1 1 INT ERMEDIA T E T ERM ($T SX )

************************************************************************************ Long T erm Uptrend Mar 2009 T o Present Step 2 Up (of 3) Com pleted Has Step 3 Begun ??? From the bottom in March 2009 Large step one up ended in May 201 0 Large step two up ended in May 201 1 . Ex ceeding the May 201 1 highs will signal that Step 3 up is official

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1 0 -2 1 -1 1 LONG T ERM

************************************************************************************
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Very Long T erm Downtrend Jan 2000 T o Present Step 2 Down (of 3) Com pleted Currently In Rally Phase From Step 2 Down

1 0 -2 1 -1 1 V ERY LONG T ERM

VERY LONG T ERM COMMENT S


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We hav e 3 possibilities for the future. We hav e entered a v ery wide swinging m arket (m egaphone form ation) sim ilar to that of 1966 to 197 4. During that era we had three bear markets with two interv ening bull market rallies. Each bear market had a lower low than the prev ious bear. The interv ening bull market rallies saw new all time highs before the nex t bear market began. We also hav e formed a huge head and shoulders formation since 1 998. If this formation is v alid, the downside measurement calls for a bottom around Dow Jones Industrials 1 ,000. We began a long term bull market in March 2009. Each subsequent min-bear market will result in higher lows than the prior major low. I fav or the m egaphone form ation as the m ost likely scenario. Since 2000 we hav e had two bear markets, 2000 to 2003 and 2007 to 2009. Like 1 966 to 1 97 4, the recov ery from the first bear market saw a new all time high (2007 peak). Its possible that we may ex perience another all time high during the present recov ery period. This would support the megaphone formation. A failure to make new highs would support the head and shoulders argument. In both formations the conclusion of the present recov ery would call for a third and final bear market. An estimated time for the conclusion of the final bear market is approx imately 201 8. The lesser downside target of both formations is the megaphone formation as it likely calls for a bottom 1 ,000 to 2,000 points below the
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2009 low, which would be around Dow 5,000. In the head and shoulders formation the measurement calls for a bottom around Dow Jones Industrials 1 ,000. This is almost an unimaginable ev ent regarding the possible fundamentals to create this scenario. If this did happen, ev ery thing that could go wrong would hav e to go wrong. The reasons range from the absurd to the absurdly absurd. This scenario is so dark that it doesnt seem possible but nev ertheless, the head and shoulders formation is there and will be waiting until we pierce the alltime highs of October 2007 . Remember these are simply possible scenarios and are not embedded in fact. Whatev er the outcome, it nev er hurts to be a little cautious with some of y our money . But in the worst case scenario, ev ery thing that we take for granted as being safe . . . . would not be safe. This is something to nev er forget in the ev ent things go v ery badly . Hopefully we will nev er hav e to think about worst case scenarios other than to hav e a good laugh at them presently . ************************************************************************************ REAL EST AT E Here is a PDF report on the cy clic nature of real estate prices. Any one interested in cy cles and real estate should find it of interest. Real Estate Cy cles ************************************************************************************ EDSON GOULD
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Edson Gould, Prem ier Stock Market Strategist Edson Gould had a profound influence on the dev elopment of my techniques and proprietary indicators. Prior to my subscribing to his adv isory serv ice, I was just one of the crowd. After 40 y ears I still hav e many of the publications from his adv isory serv ice, Findings & Forecasts. Fearing the loss of these hard copy reports I hav e recently created pdf files of these reports. Now I hav e hard copies and computerized v ersions of the reports. I hav e used a technique of his that I found in an obscure reference in one of his reports. It was only mentioned once and nev er again. I believ e that he used this tool and nev er told the world its importance. Prior to my finding this Edson Gould tool, I had been try ing unsuccessfully to find a different way to chart the market. When I read about his technique I knew instantly that this was ex actly what I had been seeking. I hav e charted this method back to 1 939 and found it to be v ery useful. On occasion I may post one these charts. This man was truly a legend in his own time. Its too bad that today most people hav e forgotten or nev er heard of his discov eries. Because of this I hav e posted some of his adv ice from the 1 97 0s. Its my small contribution to memorializing a giant of technical analy sis. My Most Im portant Discov ery by Edson Gould Edson Gould Profile by MT A Edson Gould Concepts by William Scheinm an Decade Cy cle by Edson Gould Decade Cy cle Update by Ned Dav is
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Swing Principle by Edson Gould Utilities by Edson Gould Div idends by Edson Gould Bonds by Edson Gould Speed Lines by Edson Gould Sentim eter by Edson Gould ************************************************************************************ T RANSACT ION SIGNALS ALL ACTIONABLE SIGNALS (buy or sell) ARE ONLY FOR SHORT TERM TIME FRAMES. These signals are not designed for intermediate or long term time frames BUT . . . . . After a short term buy signal, long term tax status can be achiev ed by a continuation of the upward trend, which causes short term actions to morph into long term holdings. See more details in the glossary under Tax es, Futures Contracts and Money Management. Glossary Link T RANSACT ION RECORD In this blog a warning of an impending bottom (or top) is often issued well in adv ance of the formal buy or sell date. This allows thoughtful consideration prior to a formal action signal. To get a sense of how this works, y ou should read a few day s prior to a formal buy /sell signal. I often buy /sell in my personal account
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based on the early warnings. The transaction record near stock market bottoms will show that I am v ery skittish and usually remain so until the new direction is well underway . Buy signal in October was aborted by a fam ily illness SELL SEPT EMBER 9, 2011 BUY AUGUST 30, 2011 SELL AUGUST 30, 2011 Stopped out, re-bought quickly BUY AUGUST 29, 2011 SELL AUGUST 25, 2011 BUY AUGUST 23, 2011 SELL AUGUST 1, 2011 BUY JUNE 23, 2011 ************************************************************************************ MISCELANEOUS There are useful items throughout this blog. For instance, the Wall Street Quotes can be v ery instructiv e. So make sure and look all through the blog.
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Identifying Bear Market Bottoms & New Bull


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Markets by Paul Desmond


P os tedO c tober2 8 ,2 0 1 1 byBob Categories:WO RD SO FWI SD O M

Identify ing Bear Market Bottom s & New Bull Markets by Paul Desm ond.pdf
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Utilities by Edson Gould


P os tedO c tober2 8 ,2 0 1 1 byBob Categories:E D SO N G O U L D

Utilities by Edson Gould.pdf


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BlogatW ordPre ss.com .The m e :Sapphire byMichae lMartine .

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