Sunday, February 17, 2008


The near 20% decline from peak to trough in the October 2007 - January 2008 period, marked a potentially devastating turnover for Bulls. After throwing a near interception back in August, Bulls held steady, recovered, then fumbled critically at the October ‘07 highs.

Bears handily took possession thereafter, and have scored an undeniable first-down with the lows hit in January. Despite the aid of statist intervention along with surety of more where that came from, the Bullish contingent finds itself in the very rare and awkward position of playing defense.

Not without a fight
Though Bears may have scored a first-down, they are not very far along in advancing their ultimate campaign. It is likely they are still at their own 10-yard line - with a gargantuan 90-yard battle to win for a touch-down bottom to victory. Not only do Bulls still maintain mountains of steroidal-muscle and influence over the grid-iron at large, but they also have a formidable army of fans and officials working overtime to skew favor back to their collective multi-generational interests. On the other hand, it will be interesting to see the resultant outcome of official’s attempts to reflate what has yet to be adequately deflated.

As the above page extraction from Elliott Wave Technology’s Interim Monthly Forecast clearly reflects, the time for pro-active traders and investors to have gotten defensive was in the summer and fall of 2007. Going forward, participants may get second chance to get defensive at higher levels, or it may also turn out such that the bullish contingent somehow prevails – prompting us to lift our currently defensive posture.

Gaming the System with Options and Futures
Short-term leveraged trading is a highly speculative endeavor that entails significant levels of risk along with extraordinary levels of reward. To prevail in such an arena, one must not only adopt and stick with a winning discipline – but one must also accept that taking ones share of managed losses is a basic element of such engagement.

Below is graphic summary of previous week’s short-term trade-triggers identified via Elliott Wave Technology’s Near Term Outlook .

Elliott Wave Technology’s short-term market forecasts provide an outstanding roadmap of the dynamic price action landscape five days per week. The Near Term Outlook provides an excellent platform from which speculative short-term traders may better execute their strategies, mitigate risk, and maximize profits.

Short-Term Trading Environment: Week ending 15-Feb.
Ironically, the faster markets traverse amid their expanded daily ranges, the slower the larger degree wave counts take to unfold. As the stakes get higher, the premiums and risk to participate in these moves rises accordingly – and so do the rewards.

Re-Capping last week’s trading points:
Following the mayhem and hi-jinks incited by the crisis intervention and emergency rate-cuts some three weeks ago, markets have settled down – albeit in a much larger, more volatile version of its former self.

Sparing the blow-by-blow details of the previous two weeks, our non-discretionary short-term trading discipline has captured over 500 points in the Dow in the week past, recovering most all of the losses experienced earlier in the month.

We are going to begin this broad market outlook from the value perspective of Gold - one of the last remaining stable benchmarks of equal weight and measure. The chart below translates the value of the Dow Jones Industrial Average when measured against the Gold value.

Should one have interest in acquiring access to our long-term technical analysis and/or utilizing our proprietary short-term market landscapes, we invite you to visit our web-site for more information.

For immediate access to our broad market coverage in all time-horizons, one may subscribe directly to the Near Term Outlook which includes our Global Millennium Wave Quarterly reports, Interim Monthly Forecasts, and ongoing coverage of the short-term Dow, S&P, and NDX five-days-per-week, while issuing near-term updates for the US Dollar, Gold, Crude Oil, and the HUI two times per week.

Trade Better / Invest Smarter…
Joseph Russo
Publisher & Chief Market Analyst