Chairman Bernanke and the Federal Reserve

On Monday morning, March 17, 2008, the Fed didn't change the world nor did it solve the financial mess.  It simply "stopped the bleeding".  It changed investor/trader perspectives and expectations.  And the psychological changes are evident nearly everywhere I look, in just a few short days.  Even mortgage rates are dropping and mortgage credit restrictions are loosening. 

As the Fed begins to raise rates late this year, or early next year, the USD will begin to rise in a resumption of a long term upward movement.  That will make it difficult for gold to make progress against that headwind without inflation or external market events helping it along.  Before that, the USD has another potential downward move and our extreme target is 48 using the thinly traded U.S. Dollar Index (a weighted basket of currencies).  The EUR/USD has a slightly different extreme target of 1.8800.

The final thrust of all the above is simple.  Gold is correcting and quickly. The USD is bouncing.  It will be over very soon.  Inside of 60 days, an intermediate top will be set in.  Future corrections for gold will be even more dramatic from higher prices. 

Our view is that this is a 4th in nested 5th.  If the next leg up in this nested phase is $300-400 that gets gold to the $1,200 to $1,300.  Then the next nested phase upward should take over after a correction.  At that point, $1,700 to 1,950 is not much of a leap, nor is $2,500 when the subsequent nested phase unleashes an even more sensational blowoff from a more spectacular correction.  We expect this $2,500+ high just as the equity markets complete the bear market in 2011 or 2012.

As I have said before, I would not want to be the next President of the United States. 

W. B. Busin

17 March 2008

Predictions?  Not here.

Anyone can do projections and predictions.  Ours projections are based on our algorithms that have the unfortunate habit of being right and yet, sometimes too conservative.  You may think I have forgotten to change targets for gold or oil or TNX.  I have not, even when they are exceeded.  Those targets stand until the volume and patterns change the structure.  That is the way you make money.  You take profits at those targets.  You take losses quickly. 

We don't predict anything.  We simply look at the data, the current environment and see what is probable and what is less probable.  We look at the memories of events and times past and associate them and apply the lessons learned.  Just calling it experience, denies the more important part of lessons learned. 

W. B. Busin

16 March 2008

Why subscribe?

You should only subscribe if you know how to lose and how to take a profit without noticing any difference in your emotional state while doing either.  You should be subscribing for the objective data we produce, such as the Time Loci dates, the Index Sentiments charts, the support and resistance levels, etc.

To those who have subscribed and to those who will, you won't believe what is coming.  But if you can't trade with the current tools, then you should not subscribe here.  Subscribe to a Dow Theory writer or some other narrow esoteric formulae.  We try to combine familiar methods of technical analysis and our proprietary sentiment indexes with our Time Loci to produce a potential or projection for the coming day and near future in the Swing trades. 

If you have better methods or projections, send them in.  We will set up a page for your 'predictions' to be published to the world.  But you must do this every single market day and it must be clearly stated what you expect.  Even if you don't know what to expect, that too must be clear.  So there is your challenge.  Not many will jump at the opportunity to be right AND wrong before the world.  Being wrong is a huge part of trading. 

In fact, being wrong is the game.  The "wrong" game is what do you do when you are wrong to lose the least.  Your plan will tell you what you should do when your trade is right - take a profit.  Most people who write about the market are discussing the past.  We are focused on the here and now, and the next move, regardless of timeframe.  We expect to be wrong, but that's what trading is about - making money.  Wrong small - right large.  Simple.

W. B. Busin

16 March 2008

Trade with a plan

The essence of an effective and profitable trading plan is the discipline of what to do when you are wrong.  One of the most criticized and ridiculed people in the business of market analysis is Robert Prechter of Elliott Wave International. He has been wrong for 13 or 14 years about the market's structure.  Most of the criticism is justified.  Ask yourself, does he sleep well?  I am sure he does.  Why?  Think about what business he and his company are in.  It isn't the business you think it is. Then you will understand that he is not in the Elliott Wave prediction business.  He definitely is not a trader or trading/investment advisor.  He isn't a market newsletter writer either.  The newsletters are his products.  What business is he in, and very good at, I might add?

We are now in the business of selling highly useful data to traders who know how to use it to enhance their trading and investing.  We are not a trading advisory service.  We aren't market predictors or forecasters.  We use our data and decades of trading experience to take profits out of the markets.  That is what we write about.  We are writing what we think and believe.  With the shortness of swings in recent months, volatility of price, a turn from Bull to Bear market for stocks, we have applied the same strategy over and over with the S&P 500 trading at TimerTrac, with all the unreal restrictions there.  In spite of the inability to exit and reverse when we are wrong during a trading session, we still made "money", hypothetically, in the trading. 

Inside the member site, we will trade live without those restrictions when the opportunities are ripe and reward to risk is high.  Trading with an unrestricted view, accounting for each trade, we will show even larger profitability.  We will still continue to enter our Swing trades at TimerTrac as we have for nearly three years.  It is difficult to trade with all of our tools here, but without our timing and sentiment, mechanical systems are the only answer.  Mechanical systems work poorly because they force huge drawdowns.  Drawdowns require nerves of steel and the bank account of Bill Gates if you are trading futures.  Most people don't have either the capital or the nerve to trade futures.  That's why they invented options and ETF-type vehicles.

Just look at the numerous notes on the left panel in the TimerTrac Broadcast emails about the timers who are discontinuing this strategy and now starting a new one.  They are searching for the Holy Grail of strategies when it is sitting there staring back at them in the mirror.  You are the strategy, the technique, AND the technical flaw in your trading. 

Fix yourself, fix your biases, fix your emotional reactions, then rebuild your plan.  Begin with this:

"The rest of the trading world does not, will not ever care about what you believe or think is true or false, right or wrong, fair or unfair in the markets." 

Clear your vision and then trade what you see, not what you believe, not what I believe.  Just what you objectively see happening on the chart.  What do you see?

None of these thoughts or writings are new and original.  They have been written many times in many ways.  But they will seem absolutely original when you 'discover' them in you and apply them to your thoughts and plans for trading. 

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My trading is based on this simple phrase.  "Right the wrongs with a smile."  It means this.  Exit the wrongs now!  Smile because you just found the actual direction.  Now, enter and target the right price for profit. 

As you know, I expect to be wrong until proven right when entering a trade.  The trade must prove itself. 

W. B. Busin

14 March 2008

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