MARKET OF 5'S-DOW INDUSTRIAL TIMING UPDATE MARCH 6TH

I will post two charts tonight that once again, lend additional evidence of a major market top process in place.

This one is of the DOW Industrials. I have counted out 5 month increaments that show major highs and lows.

March 2012 is 5 months; lets see what happens.

Here is a good chart from Gann360; showing the previous high low relationship to the current high low relationship.

Conclusion:

The evidence of a historical high keeps mounting. From FIB WEEK counts, to low/high symmetry, monthly symmetry, etc.

Again ask this question: What would surprise everyone? (Other then us Jedi Master Traders)

I got to believe the answer might be a historical top, not to be seen again for a long time to come. Bulls are so conditioned to buying dips and being rewarded; Bears are so used to Bulls buying dips and getting bailed out by the FED.

What if this time was different-nobody would be expecting that.

Tim Kathlina

TIMING UPDATE: SIGNS TO WATCH FOR FEB 29TH

On Feb 15th, I posted this chart of GOLD and indicated the FIB ENDING WEEK OF  FEB 21; the week ending FEB 24TH, was a significant time to watch for change in GOLD.

I indicated the move out of this FIB week would be of importance going forward for 34 weeks after.

Today, exactly 3 trading days beyond the FIB ending week of the 24th, GOLD DECLINED $100 dollars. The decline was on heavy volume, filling up gaps and creating a BEARISH ENGULFING PATTERN.

On FEB 15TH, I also pointed out the close relationship between EURO investment and GOLD investment. I also indicated that it is my belief, that a credit event either with a bank or country, could force the hand of banks or countries to unload their GOLD stock.

The EURO today saw heavy selling on increased volume, creating a lower high on daily chart.

The US Dollar found solid support at the 200 sma on daily; creating a bullish engulfing pattern.

It is my contention based on history, markets can not find bottoms unless the DOW:GOLD ratio moves closer to 1 to 1 or 1 to 2.  Currently it takes 8 Oz's of GOLD to buy ONE SHARE OF THE DOW.

This chart divides GOLD by the DOW and shows the relationship is testing an uptrend line of significance.

Conclusion:

The DOW/GOLD ratio is directly affected by the action in the EURO and the US dollar.

The parabolic move in GOLD has been quickly taken back and might foreshadow the next move in the indexes.

FIB WEEK analysis suggest the move by GOLD  after 21 FIB WEEK ending 24th, could  foreshadow the next leg in GOLD.

GOLD/DOW ratio shows the broad indexes can not move higher; if the commodity indexes are moving lower. A compression in GOLD, will mean a compression in stocks.

The EURO and US dollar play a pivotal role in the direction of GOLD and the DOW. Both currencies are at make or break pivot areas.

Will GOLD/DOW be supported at the up sloping trend line? Will the EURO hold its pivot?  Or will the US Dollar break higher and DOW/GOLD break below its upward trend setting up a new trend?

Tim Kathlina



After The Bell-S&P Target Update Jan 4th

On Dec 16th I used pitchfork analysis to indicate pattern of trend for SPY and my low side price target of 1290.

On Dec 13th amidst much negative press I used Gann time analysis to indicate an upside minimum price target of 1290 to 1320 to be completed in January 2012.

On Dec 21st I used volume by price to show current overhead supply resistance and hypothesized that this would soon become support; restating my price target minimum of 1290 to 1320 to be completed in January 2012.

Today Jan 4th, a day that started lower again on negative news, ended up being very constructive for the bull case. The last two candlesticks have formed a Bullish Piercing Line Pattern. This pattern is defined as: 

Bullish Piercing Line Pattern is a bottom reversal pattern. A long black candlestick is followed by a gap lower during the next day while the market is in downtrend. The day ends up as a strong white candlestick, which closes more than halfway into the prior black candlestick’s real body.

Notice volume by price has now become a support area; as speculated on Dec 21st.

Using Square of 9 calculator expect SPY up side resistance at: 129.39, 132.35, if real bullish 135.14. These target areas will bring about the extreme bullishness required to put in a solid top.

Just for confirmation sake, I have included the DIA etf, which tracks the DOW JONES 30. DIA formed a Bullish Engulfing Pattern, which is defined as:

Bullish Engulfing Pattern is a pattern characterized by a large white real body engulfing a preceding small black real body, which appears during a downtrend. The white body does not necessarily engulf the shadows of the black body but totally engulfs the body itself. The Bullish Engulfing Pattern is an important bottom reversal signal.

Conclusion: Despite a very choppy and difficult Santa Claus December, filled with many fits and starts, my price targets remain the same. Even though the world wide data and news does not support the targets, and many times on big down days the targets looked in doubt, technically we did not get any signal to change our position.

Stock trading will always try and shake out both bull and bears with extreme fear and greed. It is very difficult to stick with a position as your resolve will be tested many times before getting paid.

Tim Kathlina