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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Stock Market Trends Update, Short Down, Medium Up, Long Down

Stock-Markets / Stock Index Trading Dec 06, 2009 - 10:18 PM GMT

By: Patrice_V_Johnson


Best Financial Markets Analysis ArticleLONG-TERM TREND (> 1YR) OF THE MARKETS: DOWN -
(See Long-Term Chart of the Dow Jones Industrial Average since 1974 for further details)

THE J.E.D.I. WAY’S LONG-TERM (or POSITIONAL) HOLDINGS [> 1yr]: ______________
ProShares Ultra Short Gold (Ticker Symbol: GLL)
ProShares Ultra Short QQQ (Ticker Symbol: QID)
ProShares Ultra Short Financials (Ticker Symbol: SKF)
Note: The above portfolio was selected based on my analysis of the MONTHLY CHART below of the Dow Jones Industrial Average.


(See Weekly Chart of the Dow Jones Industrial Average for further details [below the long-term chart of the Dow Jones Industrial Average])
Note: This was based on my analysis of the WEEKLY CHART below of the Dow Jones Industrial Average.


(See Daily Chart below of the Dow Jones Industrial Average for further details [below the Weekly Chart of the Dow Jones Industrial Average])

THE J.E.D.I. WAY’S SHORT-TERM HOLDINGS (less than 3 weeks):
Note: This was based on my analysis of the DAILY CHART below of the Dow Jones Industrial Average.


NOTE: When the major trend was up (that is when prices were trading above the long-term trend-line above), we bought the dips above it and sold the rallies from 1974 to 2007. (vis-a-vis "bought low and sold high")

Since the major trend has changed from up to down, all rallies beneath the major trend line should technically be sold! And then bought back when the market dips. (vis-a-vis "sell low and buy to cover even lower") otherwise invest in ETF stocks whose prices go up when the markets go down like or similar to the ones in THE J.E.D.I. Way’s LONG-TERM PORTFOLIO. This strategy should be used in my opinino until the resitance line on the monthly chart becomes support (or until prices on the Dow Jones Industrial Average closes above 14,175 and stays at or above this price level for at least three consecutive months!!!)

This pretty much explains why THE J.E.D.I. WAY is holding the above-mentioned stocks for the long-term (>1 year and possibly up to 4 years or longer) whose prices goes up when the price of the DOW goes down.


This pretty much explains why THE J.E.D.I. WAY is not holding stocks for the intermediate term (3 weeks to 1 year) whose prices go up when the DOW goes up.

NOTE: If we were long stocks, I would stay long until prices close below the trend line above (or below the 10,000 price level) and then offset 50 shares of a 100 share position during week two if prices closed below the trendline in week 1 (or closed below the 10,000 price level) then sell the remaining 50 shares of the 100 share long position during week 4 BUT ONLY IF PRICES CLOSED BELOW THE TRENDLINE (or below the 10,000 price level) DURING WEEK 3 because technically, we are suppose to be buying the dips and selling the rallies (or buying low and selling high) in an uptrend (divergence or no divergence!) until the trend changes from up to down (as evidenced by prices closing below a significant trendline or below a certain price level).

But with the negative divergence on this weekly chart accompanied by the long-term trend being down (as per the monthly chart), I would utilize the price information in the DAILY CHART (below) to get me out of long postions in stocks that go up when the DOW goes up.



On Monday, December 7, 2009, The J.E.D.I. Way will go long 100 shares of ProShares Ultra Short RealEstate (Ticker Symbol: SRS) at the market then purchase 100 shares of ProShort Ultra Short Industrials (Ticker Symbol: SIJ) at the market.

NOTE: If filled, we will place a protective stop behind our long position at $3.00 for SRS and $10.00 for SIJ (on the close only) that is good till cancelled (or good for 60 days)...whichever is longer. That is SRS has to close at or below $3.00 for us to be out of this position while SRS has to close at or below $10.00 for us to be out of this position.


LONG-TERM (> 1 year) -

The J.E.D.I. Way is bearish long-term since the Monthly Chart (above) of the Dow Jones Industrial Average shows that the long-term trend (>1 year) of the market has changed from UP to DOWN. Therfore we will be maintaining long positions in stocks whose prices go up when the price on the Dow Jones Industrial Average decline.

INTERMEDIATE TERM (3 weeks to 1 year) -

The J.E.D.I. Way is bullish but cautious in the intermediate-term (3 weeks to 1 year) since the Weekly Chart (above) shows a negative divergence between prices and our special indicators (Volume, Stochastics and RSI) which together suggest that it is possible and probable that a downside reaction will take place in one of the upcoming weeks ahead that could decide whether the next intermediate-term trend will be SIDEWAYS or DOWN.

Therefore, The J.E.D.I. Way will not be long any stocks in the intermediate term that goes up when the price on the Dow Jones Industrial Average rise.

SHORT-TERM (less than 3 weeks)-

The J.E.D. I. Way is neutral in the short-term since the Daily Chart (above) shows that the short-term trend has changed from UP to SIDEWAYS.

Therefore, The J.E.D.I. Way will note be long any stocks in the short-term that go up when prices on the Dow Jones Industrial Average rise.

Next week, I will be e-mailing the LONG-TERM, INTERMEDIATE-TERM, AND SHORT-TERM TRENDS AND EQUITY HOLDINGS for a specific list of FUTURES and their respective FUTURES OPTIONS.
Until then, thanks for listening, have a great week and good luck in your trading.

Best Regards,
Patrice V. Johnson

E-mail : if you have any questions about this trade or any other questions or comments.

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Futures, Options, Mutual Fund, ETF and Equity trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in these markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to buy/sell Futures, Options, Mutual Funds or Equities. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this Web site. The past performance of any trading system or methodology is not necessarily indicative of future results.
Performance results are hypothetical. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as a lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.
Investment Research Group and all individuals affiliated with Investment Research Group assume no responsibilities for your trading and investment results.
Investment Research Group (IRG), as a publisher of a financial newsletter of general and regular circulation, cannot tender individual investment advice. Only a registered broker or investment adviser may advise you individually on the suitability and performance of your portfolio or specific investments.
In making any investment decision, you will rely solely on your own review and examination of the fact and records relating to such investments. Past performance of our recommendations is not an indication of future performance. The publisher shall have no liability of whatever nature in respect of any claims, damages, loss, or expense arising out of or in connection with the reliance by you on the contents of our Web site, any promotion, published material, alert, or update.
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© 2009 Copyright Patrice V. Johnson - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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