Best of the Week
Most Popular
1.Stock Market in DANGER of Strangling the Bears to Death - Nadeem_Walayat
2. Germany Pivoting East, Exit US Dollar, Enter Gold Standard - Jim_Willie_CB
3.Flight MH17 – Kiev Flash Mob's Last False Flag? - Andrew_McKillop
4.Stock Market Crash Nightmare! - Nadeem_Walayat
5.Gold - The Million DOLLAR Question... - Rambus_Chartology
6.Gold And Silver – BRICS And Germany Will Pave The Way - Michael_Noonan
7.The Jewish Selfish Gene, People Chosen by God, Everyone Else is Goyim to Kill - Nadeem_Walayat
8.The Israeli Promised Land Dream - The Criminal Roadmap Towards “Greater Israel”? - Felicity Arbuthnot
9.Which Way is Inflation Blowing? Watch Commodities - Gary_Dorsch
10.U.S. Economy Quarterly Review and Implications for 2014-2015 - Lacy Hunt
Last 5 days
Stock Market Parabolic Collapse - Sowing the Seeds of the Next Depression - 30th July 14
How to Profit from the Russia Ukraine Conflict - 30th July 14
Greenspan: U.S. Economy Running Out of Buffer; Stock Market to See Significant Correction - 30th July 14
Rogue States And Loony Tunes - 30th July 14
Anne Elk’s Theory On Brontosauruses - 30th July 14
Our Totalitarian Future - Totalitarianism NOW! - 30th July 14
Stocks Bear Market Formation Revealed - 30th July 14
We Just Found “The Future” - 30th July 14
What the “Steak Bandit” Says About Asset Values - 30th July 14
Designer War By Default - Seven Types of Elite Madness - 30th July 14
Death of the U.S. Dollar? Gold an Inflation Hedge? Really? - 29th July 14
We’re Ready to Profit in the Coming Gold Price Correction—Are You? - 29th July 14
Their Economy Will Collapse, Including Ours - 29th July 14
Silver Prices – Megaphone Patterns - 29th July 14
Real U.S. Interest Rates - Fed Exit a Blue Pill? - 29th July 14
Why Israel Should NOT Exist, Just Like Any Other Rogue State - 29th July 14
Gold Still Looking Good - 29th July 14
Silver Price Set To Star - 29th July 14
Our Population Growth Totalitarian Future - 29th July 14
World War 1 Cause and Consequences - The Planned Destruction of Christendom - 29th July 14
Will Crashing Commodities Crash the Stock Market? - 29th July 14
Ukraine MH17 - Washington Thinks Americans Are Fools - 29th July 14
Stock Market Bubble Warning - 29th July 14
Gold Price and U.S. Dollar’s July Rally - 28th July 14
Second Quarter Corporate Earnings: Marching Toward a Strong Economic Recovery - 28th July 14
Time to Put a New Economic Tool in the Box - 28th July 14
Mossad in Gaza, Ukraine and the Cult Of The All-Powerful Elite - 28th July 14
Elliott Wave Gold Price Projection Since 1970 - 28th July 14
Investors Remain Uncertain As Stock Fluctuate Near Long-Term Highs - Will The Uptrend Extend? - 28th July 14
The Mass Psychology Of Decline - 28th July 14
Will the US Destroy the World? - Don’t Expect to Live Much Longer - 28th July 14
GDM and GDXJ Gold Stocks In-depth Look - 28th July 14
Stock Market One FINAL High? - 28th July 14
What It Means - Paradigm Collapse And Culture Crisis - 27th July 14
Wall Street Shadow Banking: You Can’t Taper a Ponzi Scheme: “Time to Reboot” - 27th July 14
6 Tips for Picking Winning Gold Mining Stocks - 27th July 14
Israel's War on Children, Exterminating the Palestinians Future - 27th July 14
Guilt By Insinuation - How American Propaganda Works - 26th July 14
Surprise Nuclear Attack On Russia To Liberate Ukraine - 26th July 14
Use "Magic" Of Gold/Silver Ratio To Greatly Increase Your Physical Holdings - 26th July 14
Derivatives Market Species Origins - Abuse, Props and Risks - 26th July 14
Stock Market Manipulation and Technical Analysis - 26th July 14
China’s Stock Market Finally Looks Like A Buy - 26th July 14
Ed Milliband Fears Israel Jewish Fundamentalist Gaza War Massacres Backlash - 26th July 14
The Big Energy = Power Battle Is Coming - 25th July 14
USrael - Zionists in Control of America's Goyim Brainwashed Second Coming Slaves - 25th July 14
More Weakness Ahead for Gold Miners - 25th July 14
Gold Price Strong Season Starts - 25th July 14
Geopolitics and Markets Red Flags Raised by the Fed and the BIS on Risk-taking - 25th July 14
Gold Lockdown Until Options Expiry - New Singapore Gold Contract Threatens Price Manipulation - 25th July 14
The Bond Markets, Black Swans, and the Tiny Spirit of Santo - 25th July 14
No Road Map For Avoiding The Future - 25th July 14
Israeli War Machine Concentrating Women and Children into UN Schools Before Killing Them - C4News - 25th July 14
Israeli Government Paying Jewish Fundamentalist Students to Post Facebook Gaza War Propaganda - 25th July 14
Why the Stock Market Is Heading For A Fall - This Time Is Not Different - 25th July 14
An Economic “Nuclear Strike” on Moscow, A “War of Degrees” - 25th July 14
BBC, Western Media Working for Israeli Agenda of Perpetual War to Steal Arab Land - 25th July 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Biggest lie in Stock Market History Revealed

Time to Buy Stocks, End of Year Santa Rally is Setting up!

Stock-Markets / Stock Markets 2012 Nov 11, 2012 - 10:59 AM GMT

By: Bob_Clark

Stock-Markets

Best Financial Markets Analysis ArticleWorld stock markets are dropping.
This time of year traditionally sees a rally. It is called the year end rally, or the Santa Claus rally. What is going on?
Investors are worried, they want to know if Christmas is cancelled this year. In this article I look at how cycles will effect the outcome.


Buy low, sell high.
Now that the election is over, the media is doing their job and sparking fear in the hearts of traders and investors around the world.  Right now it is all about the fiscal cliff.  Tax increases. Spending cuts. Large layoffs. I won’t even mention Europe.

As investors, we have to understand one thing. The big trading houses like Goldman Sachs and JP Morgan control where prices go and when.  I call them the Fat Boys. They have all the money and if you have ever played monopoly, you know the difference being well capitalized makes.

They have one problem, they need the other side to place their trades. They want to buy low and sell high like everyone else but unless the managers running large funds are willing to sell to them on the lows, they can not go long.  They need to create fear, as a motivator.
How do they do that?  By moving the price down.

Right now they are moving it down. The media responds with negative comments to explain why prices are falling. Investors and money managers listen to them and sell.
 
Bam!!  The FBs have the other side of their trade. Understand, the big fund managers are not immune to the emotions of fear and greed. They are the ones the FBs really target. Sure they will take our money but it is a drop in the bucket compared to the money the hedge funds throw the FBs every day.

What does that have to do with Santa Claus?
The FBs have become so big and powerful that the government uses them to keep the markets orderly. It is the fox and the hen house but that is another story.  They can move the market at any time.  Remember the flash crash.
Here is the thing. Christmas is very important to the economy. The FBs are responsible for generating a rally every year in the stock market, like clock work.  So to stimulate that “warm and  fuzzy, lets spend more than we can afford feeling”. They ramp up stock prices.

They will do it again this year. The new year may go all to hell but this year will end near the highs.

Bold statement and a good question.
Can I back it up?  If there is a big rally coming why are all the funds selling right now?
It is because many portfolio managers trade on fundamental data and it is not looking good.
It is also because many technical analysts use methods that don’t work any better than rolling dice, or throwing darts. If prices are falling then they sell.

Something interesting has happened cyclically. 
It is the reason for much of the technical selling.
For the first time in four years,  we have a very bearish signal in the stock market . An early translation top in the 4 month trading cycle. That is never a good sign for the bulls. Many funds employ technical analysts and they are looking at the fact that we have fallen below the low made in October and are getting very nervous. They should be nervous, this means we are going down until February.  If that is the case, then how can we have a Christmas rally?

The portfolio managers are not waiting around to find out, they are getting out now. This negative signal, combined with the president talking about the fiscal cliff is working right into the hands of the FBs.
Remember the FBs have to do two things. They have to create a year end rally but before they do, they need to buy some inventory.  They need something to sell higher when the funds come back and buy. That is how they get paid.  There is no remuneration from the Government.

Let me explain translation.
An early top in the smaller cycle means that a larger cycle has turned down. That is bad.
You see the small cycle always revolves around a bigger cycle. An early top in the small cycle can only happen if the bigger cycle is going down.  That is a bad sign. 
That is what just happened to the stock market. There are many cycles working at the same time.

The chart below has the 4 month trading cycle at the bottom. The arrow shows the early translation that has just occurred, which is the bad sign. The pink boxes show the time frame when the year end rally happens.  There are bigger unmarked cycle lows that stand out on the chart, which occur on a yearly basis. When a 4 month trading cycle breaks a previous low of the same duration, we see that a larger cycle is dominating.  Leading to a yearly low. That is what is happening now.

There is one other thing to point out on the chart. The space in 2011 where we shifted the cycle by two months. Cycles do shift. Once in Four years is not a bad record when it comes to a variable. Also notice that it happened when a yearly low was due and in the summer.

The bottom line.
There are some very important things that we see on the chart.
I have marked the pink rectangles with a blue dot, to show the low we always get this time of year as the FBs hammer prices lower, to shake the tree and get the other side of their trades.  They are doing that now. Right on schedule.

There is another factor and it tells us how they will take prices back up soon.  Notice that every 4 month cycle has a half cycle low in the middle (blue dot again). It happens approximately every 2 months.  That is coming up at the end of November.  We are building that low now and it will become the clean out spike before the rally.

What about the shift I mentioned earlier? What if we shift again now.  Let’s factor it into our analysis. First of all it should not shift now. They usually only happen at yearly lows.
Right now we expect a strong year end rally that takes the price back up near the highs but does not go to a new high.  Followed by a drop to a new yearly low in late January, or early February.
If we do shift, then the low we make this month will become the new 4 month trading cycle low. We will go to much higher levels than the last high at 1475.
Either way, we buy this dip.  Just  do not over stay.

I can teach you how to use the Fat Boy’s algorithms. (The algorithms are not cycles.)
I have taught fund managers, floor traders to be more profitable. I have taught  pipe fitters and welders to trade professionally.  It does not matter what your education or background is. When  you learn way the Fat Boy’s computers control the markets,  you will be able to join them instead of being their victim.
I teach in a step by step, easy to understand way.  Get my videos, or better yet, take my full course. I have never had a failed student and I guarantee my training works.
Stop being a victim. Let me help.

Bob Clark is a professional trader with over twenty years experience, he also provides real time online trading instruction, publishes a daily email trading advisory and maintains a web blog at www.winningtradingtactics.blogspot.com  his email is linesbot@gmail.com.

© 2012 Copyright Bob Clark - 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


© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014