Here are some samples of monthly letters and interim updates.
SEPTEMBER 2007 LETTER
(Sent August 31, 2007)
I do not think many people, including the Fed, fully understand how pervasive this credit crisis really is. Investors all over the world have exposure to mortgages, and when the value of real estate starts to fall--as we are now witnessing--investors do not want to buy mortgages. We keep hearing "subprime" as the problem, but the problem is becoming a lot more than "subprime." No one ever thought the price of real estate would fall, but overbuilding and speculation during the past decade pushed prices to unsustainable levels. When a market--any market--gets overblown on the high side, it will usually decline until prices are at ridiculously low levels on the downside. (The gold market from 1980 - 1999 is an excellent example of such price action.) What we are seeing in real estate is not a normal downturn. Of that I am convinced. For almost 100 years, until around 1995, median home values basically kept pace with inflation. But starting around 1995, prices moved into a blowoff phase as the median price of homes increased well above the inflation rate. And there is no record of any such bubble in all of market history that did not end badly. At some point, in a few years, there should be some excellent bargains in real estate.
* * * *
I have identified the following turning dates for the month of September, plus or minus one trading day:
September 4
September 10
September 17
September 20**
September 26
It looks like we will see a high on September 4. September 17 also looks like a high, and may be significant (if you order the new Market Timing Tutorial, you will know why I think it could be significant). September 20 is market with asterisks because it is the next turning date for the "Old Reliable" cycle, I will keep you posted as the month progresses.
INTERIM UPDATE
(Sent before the open on September 11, 2007)
It appears that the market made its low yesterday. Market geometry is suggesting an upward bias into next week.
INTERIM UPDATE
(Sent before the open on September 14, 2007)
After the big upmove this week, the market found resistance yesterday at the September 4 high. It looks like we are going to see some profit-taking today ahead of next Tuesday's Fed announcement. We have turning dates due September 17 and 20.
Right now, my best analysis is that we are seeing a short-term low forming as we go into Tuesday's announcement, which will be followed by an upmove that will bring in "Old Reliable" as a high, probably on September 19. "Old Reliable" many times comes in one day early, which is why, right now, I see Wednesday as a potential high.
INTERIM UPDATE
(Sent before the open on September 19, 2007)
We did see a short-term low as we moved into the Fed announcement, followed by a rally--a big rally. Both the rate cut and the rally were larger than anyone expected. "Old Reliable" should come in as a high by the end of the week.
INTERIM UPDATE
(Sent before the open on September 26, 2007)
It appears that the low came in yesterday morning. The market should now work its way higher into October 3, plus or minus one trading day.
MARCH 2007 LETTER
(Sent February 27, 2007)
It was 1992 when I first became a believer in the importance of market anniversary dates. Early that year, a very experienced trader told me to expect the Dow Jones Industrial Average to hit a new, all-time high on May 17, 1992, which would be the 200th anniversary of the New York stock market. (Trading began on a sidewalk in New York City on May 17, 1792.) Naturally, I scoffed at this prediction at the time, and I didn't give it much thought for the next two or three months. Lo and behold, on May 17, 1992, the Dow Jones Industrial Average hit a new, all-time high and then turned down. Suddenly, I was a believer! Markets like to remember anniversaries because markets merely are reflections of mass human psychology; freely traded markets are a beautiful example of the "collective unconscious" postulated by the Swiss psychologist Carl Jung. If this were not the case, then markets couldn't be timed; KeyTurningDates would not work; and that wonderful friend, the "Old Reliable" cycle, couldn't be traded.
Many traders are familiar with the Decennial Pattern, in which years ending in "7" usually have large declines at some point, often in the fall. Please understand that I am not predicting a crash for the fall of 2007; crashes are extremely rare phenomena. What I am doing is alerting you to the strong possibility that a large decline, one that could be extremely profitable to trade, may well occur this year. This year, 2007, marks some important anniversaries: the 200th anniversary of the crash of 1807; the 170th anniversary of the crash of 1837; the150th anniversary of the crash of 1857; the 100th anniversary of the "Rich Man's Panic" and crash of 1907; the 70th anniversary of the crash of 1937, when the market tumbled 45 percent in three months; and the 20th anniversary of the crash of 1987, when the market lost 22 percent of its value in a single day. The anniversary history, coupled with the fact that the rally since March of 2003 is the longest upmove in history without at least a 10 percent correction, tells me that this year's market may well see a decline large enough to humble all the bulls.
As this letter is being written, the market is down sharply as we enter the February 27 - 28 turning date. The OEX has now decisively taken out its low of February 12, which tells me that a multi-week correction is beginning. Since July, the market had continued to make higher lows and higher highs. I kept waiting for a break in the pattern, and it now appears to have happened. This decline probably will be limited to a few hundred points and will be similar to the decline we saw last May and June. Going long futures or buying calls is something I would discourage over the next few weeks. I think that the best trading strategy will be to wait for turning dates that are highs and then to sell those highs. For my own personal account, I will only be buying OEX at-the-money puts. When I change my mind, I definitely will let you know. If traders elect to buy the lows over the next few weeks, they should use only a small percentage of their trading capital to do so. I may be wrong, but I believe the real profit tsunami for 2007 is coming later this year--and I want my trading capital intact so I can participate in it.
No one ever went broke taking profits, and the month of February gave us some good ones. While the February 12 low had not been forecast as a KeyTurningDate, I now have isolated the cycle that created it. And our old friend, the "Old Reliable" cycle, came in right on target on February 20. The next "Old Reliable" cycle turning dates show up in April and May. If subscribers chose only to trade the "Old Reliable" cycle turning dates, they could make some very good profits.
I have identified the following turning dates for the month of March, plus or minus one trading day:
March 5
March 9
March 15
March 19 or 20
March 23
March 28 or 29
March 5 and 9 look like highs, and I believe March 9 will offer the best short if indeed it is a high. March 19 - 20 looks like a low, and could be significant. I will keep you posted as the month of March progresses.
INTERIM UPDATE
(Sent before the open on March 5, 2007)
We should let this market find a short-term bottom, rally, and then try to establish shorts. I want to see for certain that the March 5 turning date (probably a low today or tomorrow) has occurred so I can better gauge the polarity of the March 9 turning date. There is plenty of opportunity still ahead. I will keep you posted.
INTERIM UPDATE
(Sent intraday on March 9, 2007)
The market appears to be working toward a high as we enter the March 9 turning date. I want to point out that Monday is the 4-year anniversary of the major market low that occurred on March 12, 2003, so any further rally later today or on Monday should provide shorting opportunities. An early spike on Monday would probably be a great short. The next turning date is March 15, plus or minus one trading day, which I expect to be a low. Keep in mind that next week is an options expiration week.
INTERIM UPDATE
(Sent intraday on March 13, 2007)
Today's big downmove has been very profitable. Traders need to decide for themselves when to exit this trade. I want to reiterate that this is options expiration week, so the remainder of the week could be volatile. Here is one possible scenario: The March 15 turning date could be just a one-day bounce, and then the market could continue to move down into the next turning date, due March 19 or 20. I want to see what the market does over the next few days. I will update again early next week.
INTERIM UPDATE
(Sent at the open on March 19, 2007)
Aggressive, nimble traders may want to establish long positions today, as it looks as though we may see higher prices over the course of the coming week. Any rally, however, could be interrupted by a sharp pullback, if only for a day. I am still not ready to buy calls for my own account. If the March 23 turning date is a high, as I now expect, then I will look to buy puts again for a decline into the March 28 turning date, when I will start buying calls. If the market did make an important low on March 14, it should attempt to re-test that low, probably next week. I will update again later in the week.
INTERIM UPDATE
(Sent before the open on March 23, 2007)
Any rally today or on Monday should provide shorting opportunities. There is an unfilled gap on the daily OEX chart between February 26 and 27 measuring .86 of a point (from 661.96 to 661.10), and that gap should be filled at some point. It could be filled today or Monday -- or it could be filled in a few months. But the odds are higher that it will be filled now and that the market will then reverse, declining into the March 28 turning date. Let's expand March 28 to March 28 or 29, allowing for possible weakness into the end of next week.
MAY 2006 LETTER
(Sent April 30, 2006)
The KeyTurningDate of April 17 brought in a low that resulted in a powerful--and very profitable--upmove on April 18. April 17 was a very lackluster day in the market. I was talking on the phone on April 17 with a trader friend who lives in Chicago, and I reminded him of the old adage, "Never short a dull market!" I was looking for a turn to come shortly, I said, and the market likes to bore traders to death before a big move comes. I went on to say that I had no way of knowing whether a big move would come, but a quiet and boring market-- one with low volatility--often presages powerful moves.
Well, we got our big move on April 18! Days like that one--if we remember them and how profitable they were--can teach us, over time, to have tremendous patience; and, good money-management skills notwithstanding, I think patience is one of the greatest skills a trader can have. Sitting on the sidelines, without an open position, and waiting for the market to tip its hand really IS the same thing as having a position. Many traders have to be in the market all the time; they enjoy the excitement of living on the edge, which is fine if you're making money. I personally don't see how you can stay sharp when you put on position after position day after day. Not many day traders make money, and that is why it is important to ask yourself why you're really trading: Do you want to be right or do you want to be rich? That's a good question to ask yourself every time you wake up in the morning.
I have identified the following turning dates for the month of May, plus or minus one trading day:
May 8 or 9
May 23**
May 26
May 8 or 9 looks like a top. The market is very overbought, and therefore a decent downmove is needed to correct this overbought condition. Markets can correct overbought conditions by going sideways, however, which is why I like KeyTurningDates to tell me WHEN to expect a reversal. May 23** is denoted with asterisks because it is part of a highly reliable cycle I discovered several years ago; the cycle brings in seven KeyTurningDates every year. They are usually not more than one day off on either side. However, there is another KeyTurningDate due only three days later, on May 26. Therefore, the May 23 date may only produce a short, sharp move. (An interesting note: This same cycle made a peak on January 10 of this year, and we got a one-day, 200-point downmove in the Dow Jones Industrial Average just a few days later!)
I will keep you posted with interim updates as the month of May progresses.
INTERIM UPDATE
(Sent intraday on May 10)
This market appears to be putting in a top. Take a look at the action: The Dow is the only index making any headway; the S&P 500 and the OEX are going nowhere. This type of action usually means that the smart money is short and using the Dow--which the public watches the most--to mask the real action and buy extra time to put on more shorts. I will be very surprised if we don't get a downmove shortly.
INTERIM UPDATE
(Sent intraday on May 16)
The market looks ready to sell off again, probably as early as tomorrow.
INTERIM UPDATE
(Sent intraday on May 23)
We are in the timeframe for a low. Even if we get a soft market tomorrow, the cycle bottoming right now is highly reliable, so an upmove shouldn't be far off.
INTERIM UPDATE
(Sent intraday on May 26)
Once again, "Old Reliable" came in and gave us an upmove. Today is another KeyTurningDate, and we have a long weekend ahead of us. Tuesday's market could be down.
INTERIM UPDATE
(Sent intraday on May 30)
I expected a downmove today, but the magnitude really surprised me. The market is oversold after today's decline, so we could see a rally tomorrow.
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