As I post this on Friday January 30th at 8:17 am the dow is off 114 point adding to the over 200 points + loss from yesterday and we have some real selling here.  The S&P is off 14 points now and adding yesterdays loss of 30 points that’s 44 points of selling  since my call, -5%. 

If you look at the S&P you will see that it needs to stay above the purple line across the bottom. That is the line in the sand. I think it will hold for now. Look at the purple line from above and you will see a wedge forming. That formation can last for quite a while, bouncing in between those 2 lines, it could be a few months. As it gets strung out, it will have built up a lot of pressure getting people to establish positions on both sides of the market and the struggle will continue. After that point, a break to the downside will have resolved the struggle and a very large wave of selling will kick in pushing the Dow, S&P, NASDAQ and other major indexes to the downside taking with it more of America’s wealth.  That is just one man’s opinion and is not to be considered investment advise. Everyone needs to choose for themselves what is best for them in their own investment plans.

What I see is a web being laid out, like what a spider would do in order to catch his prey. He lays the web, one string at a time until his trap is set and he waits for the victim to walk into it, of its own free will.  Investors have been trained to buy the dips, thinking that the market has fallen so far that it can not fall any farther, so they buy. I am speaking of long term investors and not traders here. Just keep an eye on the two purple lines and let a little time go buy and let’s see what happens. I would say that for us to be prudent, we need to interpret what is happening and not so much predicting it. I to need to remember that although it makes for some interesting reading.

This is what is happening right now. We are in a consolidation phase trying to put in a bottom but need to stay above that bottom purple line. I have seen it a thousand times, once that support gets broken we will be going down at least to test the previous low. For now, it remains in tact and we can expect sideways to up over the weeks to come.

Let me give everyone a little more perspective on the long term trend. I will post a monthly chart of the S&P with my method attached to it. My method works on all time frames as you can see in the daily and now monthly charts. We have had 4 trading signals since 1995 and I caught all of them exactly as laid out on the chart. If you had positioned yourself at these turning points with your 401 k’s and IRA’s you would be at the top of the heap, instead of the bottom of the barrel.

Don’t mean to be insensitive here, but with all the experts out there, I have learned to trust myself instead, by getting educated. Who could blame you for staying invested during those big down periods? I could go back to the 1930’s and the charts on the screen will look exacting the same, giving excellent buy and sell signals, telling you when to stay invested and when to step aside in cash waiting for the right time to get back in.

As you can see, it is not the right time to get in yet for the long term investor. You are trying to catch a sharp falling knife. Do you know what happens when you do that? That’s right, you get cut. Just say no, for very long term money, its not time yet. When the two lines cross to the upside, that will be a different story.  In time you will learn to read price action, or you should strive to do that with no indicators at all, other than the price charts themselves. I can show you how to get the same entries as I have posted on the monthly.

Ask yourself, if you had invested in 1995 and got out at the high of 2000, what would your portfolio look like?  Then, to stay in short term treasuries until July of 2003, when you re-entered the market as it took you fully invested to January of 2008. You would be doing well.

People have been told that you cannot time the market. That is what they want you to think. Who is the “they” you ask? It is anyone who has a whole lot more money than we do. You will get a pretty long list from that. To answer that question,  I would say, that’s a bunch of ______, well, you know what I mean. The public has been trained / conditioned / manipulated etc. to believe this and so it is why they get fleeced time and time again. Don’t let that happen to you. Get educated and put the odds back on your side.

Very important: look at the long term monthly chart of the S&P.  Using my method I have been able to call every major market move since the early 1980’s when I started following the markets. I will post more of those charts in the future to help you see what I see. Again, my method works in any time frame. I currently trade a very small time frame, 100 tick S&P e-mini, unless the volume changes drastically. These charts are based on volume and not time. That is why I say, “I have seen the daily chart setup that we are now looking at a thousand times”, because those are the same looking setups on any time frame and you can expect similar market reactions.

O.K. that is it for now. I wish everyone the very best.