Today was one of the more fascinating days I’ve seen in the financial markets in a long time.

The gold advanced and exceeded the January and early April double top at the same time the Dollar surged to new 11-month highs.  This flight to safe havens precipitated in large part by Standard and Poors downgrading Greece and Portugal’s credit ratings, was in stark contrast to today’s severe sell-offs in the Stock Market and Crude Oil.

During today’s trade, we just missed adding to long positions on the projected breakout in the Gold.

At the same time, whereas the Crude Oil declined to a new recent low, the Heating Oil and Gasoline are showing incredible resiliency.

We still have orders to add to long positions in the energy complex if the Heating Oil follows the Gold into new highs for the bull market.

In this video, I talk about the line in the sand which I believe is drawn between the commodity bulls and bears.  If it is resolved to the upside, these markets should continue to run away to the upside.  If prices fail from here, the probabilities will decline dramatically for higher prices.  This adds up to the perfect scenario in which we can potentially cut our losses and let our profits run.

This is the recorded live webinar presented on Tuesday January 19 for Gann Global Insiders.

ANNOUNCEMENT: NEW VIDEO SERIES

During the webinar I mentioned a new upcoming “Subscriber-Caliber” video series.

My intent with this webinar and the upcoming Subscriber Caliber Video Updates is to show you the same content our paying subscribers receive.  This content will very closely mirror the content paying subscribers receive on a regular basis.

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Complimentary Webinar Replay

While this 13-minute video is jam-packed with valuable information, it is only a PREVIEW of the “Full Presentation” I’ll be making during my upcoming complimentary live webinar.

Webinar Replay: Watch the full length webinar replay

Please accept my invitation to view this new video, and register for the webinar.

I have scheduled a complimentary live webinar where I am going to provide forecasts in the Stock Market, Commodity prices (including Agricultural markets) and Gold market based upon our key historic precedents.

By attending, you will be privy to “paid quality content” very similar to what our current subscribers are getting.

By virtue of having learned the lessons history teaches, lessons which our competitors could not have learned in the absence of investing 20,000 hours computerizing the historic record, you can look over my shoulder at information available nowhere else.  I consider this to be a huge competitive advantage.

The 60-year “Boom and Bust” cycle continues to dictate the trade in our financial markets. Our projections have determined the most bullish portion of this cycle is on the horizon. Now is the time to prepare yourself for this next phase of the cycle as we approach 2010.

This New “Sneak Preview” video gives you insight into:

• The magnitude of the upcoming correction in the Overall Stock Market
• The next major wealth building opportunity in stocks and commodities
• The potential for Gold to continue its bull market into new all-time highs

I also show you exactly what our advisory service has been telling subscribers with regard to where the markets were headed as this 60-year Boom and Bust Cycle unfolded:

• One month after the Stock Market panic had culminated on March 6th
• When the final low in commodity prices coincided almost exactly with a final low in the Stock Market

Webinar Replay: Watch the full length webinar replay

* Please comment on the video at the bottom of the page *

Today I recorded a new 19-minute video revealing our current research as it relates to the Stock Market, Crude Oil and Soybeans.

The S&P 500, Crude Oil and Soybeans are the three markets we have keyed in on.

All three established highs on June 11.

In each of these markets, we had projections for sharp “corrections”.

In all three of these markets, the sell-offs this past week carried prices to new lows for the moves.

In all three of these markets, we currently have short positions.

How much further do we have to go to the downside?  That is the question we are currently addressing for subscribers.

Risk-Free Subscription Package Options

If you feel the research we provided in this video can help you make investment and trading decisions, take another couple minutes and subscribe to a one-month trial to one of our service packages.

Financial Forecasting Package – $47 per month (Market Coverage: S&P 500, Dow Jones, Bonds, Gold, Silver, Platinum, U.S. Dollar)

Commodity Forecasting Package – $67 per month (Market Coverage: Crude Oil, Energy Markets, CRB Index, Goldman Sachs, Soybeans, Corn, Wheat, Cotton, Sugar, Coffee)

Complete Forecasting Package (Financial & Commodity Markets) – $97 per month (Market Coverage: S&P 500, Dow Jones, Bonds, Gold, Silver, Platinum, U.S. Dollar, Crude Oil, Energy Markets, CRB Index, Goldman Sachs, Soybeans, Corn, Wheat, Cotton, Sugar, Coffee)

One hundred and fifty percent long crude oil positions, those options have just about doubled in price and that market has, in seven days, declined 20%. Seven trading days. The velocity of the move has been quite astounding.

The August beans, now half of our positions are short, half are short the August meal, and the expectation is the meal should be the weaker of the two in that it is in the most overbought position. In shorts from 11.28 in the August soybeans, we closed on Friday at 10.44, and the August meal on shorts from 340 we continue to hold those positions as well.

We should be in great shape as far as the overall cycle in the soybeans being short. Now, in this chart, what I have is the crude oil nearest futures contract and the bull market that led to the 2008 high. I’ve shown this chart before, but I’m going to give you some projections here.

The bull market in the 2008 high is obviously one of the great inflation rate bull markets in history and was led by the energy complex, the crude oil advancing over 1,000% in price. We know from history that every bull market that has experienced that type of a percentage advance has always been followed by a bear market on the order of what we experienced.

It was no mystery, this bear market unfolding to the downside like this, down 78% in five months, nine days. By the law of action and reaction, the bigger the bull, the bigger the bear. We of course saw that in the tech sector into the blow off advance into the 2000 high in the Nasdaq. The greatest bull market in stock market history being followed by a 78% decline in the Nasdaq.

This is what happens when markets become extremely overbought. Once the low wasn’t in the crude oil, we looked at the other great inflationary bull markets and wipeout bust cycles in history. The cotton market in 1964 was the leading commodity in terms of the advance into the Civil War inflationary bull market.

Once that market established the final top, experienced a crash in price as we did, there was a huge advance. It was a bear market rally in the cotton into what would have been the equivalent of about $55 in the crude oil, so we are looking at the rallies that took place after these great bulls followed by historic bear markets to get a read.

Trade Action in Crude Oil and What it Means

We’d had this in advance of this rally in the crude oil, so it’s no mystery why we would experience this rally of the magnitude that we have in the crude oil. The silver, this was the advance. The cotton in 1920, this was the advance. The sugar in 1974 led the agricultural markets higher, this was the advance.

Very significant percentage moves to the upside. This overall advance in the crude oil, 136%, is an incredible move in a relatively short period of time as what would be expected based upon history. We have these four historic precedents. These were the markets basically that led the previous great bull market advances.

The cotton in 1864 was the leader in the Civil War bull market into the 1920 high. Sugar was the leader in the great agricultural boom in the early seventies and the 1974 high. Many of you know that the silver market was the leader into the blow off top in 1980. The crude oil is in very good company as far as great historic inflationary boom, blow-offs, and bear markets that followed.

Okay, now moving to the next step. Based upon the June 30th high in the crude oil, the question is what will we expect next? Three of these markets, the sugar in ’74, silver ’80, and cotton in 1864, these were bear market rallies. Actually, the bear market rallies were followed by next legs down in overall bears.

The red represents legs down in bear markets. By contrast, the cotton market in 1920, this was a first leg up in a bull market. That’s why it’s in green. Once the top was in place, we experienced a correction in a bull market and this was followed by the resumption of the bull market.

Forecasting Overall Commodities

What we’ve been telling subscribers is that what we believe is that a final low is in place in commodities. This bust cycle is going to be akin to the 1920 and 1948 bust cycles and not akin to the 1980 and 1864 bust cycles, which were long-term deflationary bear markets.

The 1920 and 1948 were relatively short-lived once all of the deflationary pressure and the panic selling was done, final low culminations took place and then the long-term bull market started from there. I believe that that’s what our market is going to do.

In terms of these precedents, that would place us most closely akin to the 1920 cotton market. Let’s look at this. After the high was established, you can see that the angle of descent in the sugar market in the 1974 was this, cotton in 1864, silver in 1980. Protracted legs down in what were overall bear markets, and none of these markets established final lows, even at this point.

These were lows prior to bear market rallies, then other legs to the downside. Now, the cotton, on the other hand, the correction in the cotton – and it was very significant – bottomed out in what would be basically December first in our market. The top on June 30th, then there was about a five-month correction in the cotton in 1920 before the resumption of the bull market.

However, after the top, this angle here shows the first sell off in the cotton in 1920. It was like this violent sell off, and then there was basically zig-zag trade and ultimately we went to an incremental new low beneath what would be the equivalent of about 55 dollars in the crude oil.

Pretty severe angle of descent here after the final top was in place, and you can see that our crude oil, I mean, seven days of trade, we’ve clipped off 20% of the decline, so we’re definitely oversold on a short-term basis.

Now, in terms of the observation going into Monday, relative to our historic precedents’ prices running ahead of time. On this basis once this emotional sell off is complete, the market would need to experience a rally from the oversold condition, or experience consolidation before the resumption of the decline.

Given this windfall situation in our long put options, it is prudent to look for a point to take at least partial profits. That’s what we’re doing at this point in time for subscribers since we’re extremely oversold. Once this selling pressure is off there should be some backing and filling at minimum and possibly a snapback rally.

Gann Global Proprietary Commodity Index

In terms of this chart, this is the Gann Global Commodity Index (see video) during the Great Depression. This is a daily index that we compiled after accumulating the historic data. The decline that we experienced in our commodity bear market followed this angle of descent. We declined 66% in seven months and seven days after establishing the July or ’08 tie.

During the Great Depression, it was a much more protracted decline. It was more severe in percentage terms, but it took longer. The velocity of our decline is much greater than occurred in commodities during the Great Depression. This is an interesting thing to consider.

Now, one of the reasons I’m showing this chart is that our decline in the stock market, our bear market was the second greatest in history after the Great Depression. Our bear market in commodities was the second greatest in history after the Great Depression. We certainly have to be looking at that precedent for clues as to what can take place in our market.

One of the things I wanted to point out in this chart relates to that. First of all, we’ve already dismissed that we are following the DNA of a Great Depression in our market. We have a severe recession, but our projections show a final low is in place in the stock market and likely in the commodities.

However, notice that once the stock market put in a final low in August of 1932. This is actually a commodity chart, but stocks put out their final lows with the Great Depression in August of 1932. Commodities established this intermediate low about two months before the final stock market bottom. We experienced this pretty sharp rally, the sharpest that we had seen since the bear market started, and then we went to a new low into February of ’33.

That decline coincided with a bull market correction in stocks. It’d be great if I had the stock market side by side. In other words, the commodities made a new low, whereas stocks were making a higher bottom. There was bullish divergence in commodities.

The reason I show this is that we do have to appreciate that at a potential final low in the stock markets. Commodities still struggled in 1932, and obviously we are bearish over the short and intermediate term in commodities, although we’ve already seen a very significant decline. The 1932 precedent does lend itself to adding additional credence to our expectation to lower prices and commodities.

Goldman Sachs Analysis

Now, looking at the Goldman Sachs index, this market has come down very quickly. One of the things I did was in setting up the shorts in these markets, particularly in the crude oil, was kind of to lambast the popular opinion. These are comments that I’ve made previously with regard to coming out and talking about $85 crude oil when it’s at $70 a barrel. In a sense, lambasting the media for beating the drumbeat, I said here. This was back on July 3rd, right up towards the highs here.

This was on June 20th, just after the top, I said, “This is at a time when prognosticators, economists, the media, and the public are talking about the perpetuation of the current advance. Yes, I’m bullish, but short term and intermediate term, not in your life!”

So in the aftermath of that, we’ve seen this dramatic sell off. Not a surprise.  This is by virtue of the markets conforming to my expectations. The odds continue to favor more downside, and selling by those on the wrong side of the markets fuels additional selling.

The decline on the Goldman Sachs is one day shy of being one month long. My expectation is for this projected correction to consume more than that. Typically, corrections do. However, on a short-term basis we are oversold.3

August Crude Oil Analysis and Forecast

Now, moving out to the August crude, you can see here’s the seven day decline that we’ve experienced into Friday’s lows at 58.72 basis the August. This was on July 8th, I said “Anyone betting on the economy by holding either long positions in the stock market or long positions in commodities is receiving a rude awakening.”

They can be assured there are investors and speculators who have a commitment to long positions in both and are getting hurt in both simultaneously. This increases the probability the declines will be sharp, potentially short-lived, as these ill-fated longs exposing people to greater risks than they could have intended will likely be unwound at the same time due to panic margin call selling.

This is providing an ideal playing field for our current short positions and increases the odds the projected higher bottoms in the S&P 500 and crude oil will be completed at approximately the same time.

So we have the stock market put on its top on June 11th, the crude oil put on its top on June 11th, the soybeans put on their top on June 11th, so we are seeing the commodities continue to move, the board move together. This deflationary move is a negative omen for the stock market, and any weakness in the stock market is a negative omen for the commodities.

They should be moving hand-in-hand to the downside. Now, the comment that we had in the aftermath of Friday’s trade, we have declined 20% in seven days. Given the velocity of the decline, it is reasonable to expect the market to run stops beneath the minor low at 57.52.

Here is this minor low, which was followed by the final surge to the upside. We’re coming down at great velocity as well, and so we can be assured that there are some sale stops beneath that low. If this takes place in short order, and that appears likely, it would make sense to take partial profits. At this point, if we can see the market break below this 57.52, obviously we’re going to be watching to see what the stock market is doing as well.

If we can break that 57.52 in a relatively short period of time, based upon the oversold condition it’s likely it’ll be prudent to take at least partial profits. Then if we see consolidation over rally, we would look to re-enter put positions and likely buy some further out of the money option since we do expect that definitely this April low would be broken at approximately $51, and a very good possibility that the 43 low will be broken.

The contract low went through in one of our previous videos, the huge carrying charge premium annualized at 30% suggests that this market, once it comes down, could take this 43 out, but would still be well above the nearest futures low, which was at approximately $32 a barrel.

If you understand carrying charge premiums, sometimes they can be excessive, in other words, distant contracts trading way above the front month contracts. That’s the case in the crude oil, and usually in those situations, it means the market does need to experience a basing pattern and that sets the stage for, in this case, what would be a second leg up in a bull market.

This correction, believe it or not, could carry and even break contract lows, establish a higher bottom basis the nearest futures, and then we would be off to another leg up in an overall bull market. In looking at the cash, the comment that I made and related to the both overbought and high carrying charge situation, my expectation is the cash comes down, it could break this 45.88.

If that were to happen in the cash, then our futures contracts would be very close to breaking contract lows. You can see that the cash low for the bear market was all the way down at 31.81, so a decline to 45.88, while it would take out potentially contract lows in the futures, it’s still way above the lows basis the cash.

The comment here “Relative to the 136% advance, the current decline has been relatively modest having retraced as much as 31% of the overall advance.” That’s where we’ve come to so far as of Friday. “Probabilities are greatly in favor of this correction being more severe and more complex than what we’ve experienced thus far.”

Analyzing the Greatest Bear Market Declines in Stock Market History

Drafting down to the S&P 500, in the aftermath of first legs up in the great bear markets in history, the greatest bear market declines in history. The first legs up were uniformly quite violent, snapback rallies from extreme oversold conditions, and then the secondary corrections took place in the S&P 500.

Our projections ideally would be to see the S&P 500 drop down to the 835, 840 level, minimum basis the cash. That would replicate the 1938 decline. The 1932 decline was much more extensive in terms of time consumed and percentage retracement of the first leg up. You can see that these corrections were at times very short-lived, very violent.

On that basis, if we have completed a first leg up in a long term bull market in the stocks, then there is no expectation that the correction would be this shallow to 869.32, which is our low so far. We should see more downside here. Obviously, with the crude oil dropping 20%, that should be a negative reflection on the stock market that there should be a sell off of a higher order than what we’ve seen so far.

In looking at the September S&P 500, which is the trading contract this last week, we did break below all of this consolidation area since the May 15th low. That was 873.10, we dropped to 865½, so a little less than eight points into new lows. A lot of sell stops hit down there, no follow through to the downside, but if we break this low decisively by approximately 400 points, the likelihood that we’d get confirmation that the down trend is still in effect.

However, keep in mind that what we have here in terms of our shorts, this is a countertrend play in our estimation. We are short the market. Generally we want to be on the long side of the market in favor of the trend, once a bull market is in force which we believe is the case here. But all of our work showed us that this correction should be violent and therefore playable on the short side.

It’s going to be very interesting to see how it plays out. My expectation is that we have shorts, expecting to see lower prices here. We shorted right at this 917 level so I’ll have a huge breakaway the day that we got short with some follow through here. It’s just going to be interesting to see how things play out. This is a moving target from the standpoint of how the trade is playing out day to day. Crude oil is extremely oversold here. Obviously that plays into the equation as well since all these markets are moving in tandem basically. So we’ll be updating you as far as the returns and additional trade comes in. Have a good day and profitable trading.

We would fully expect that based upon the 1920 precedent, 1932, the Great Depression precedent, 1948 precedent, 1974, and 1980 precedents that there would be a very close association between what’s taking place in the stock market and what’s taking place in overall commodities. We’ve not been disappointed by what’s taken place in the markets. They are moving in tandem, even to the point that they have exactly the same highs in place. As we’ve seen, the crude oil drop to new recent lows, the Goldman Sachs dropped to new recent lows, and the S&P 500 closed on Thursday just 900 points from the recent low.

The break of the low will give us confirmation. We’ve seen this shift, not just in commodity trading and expectations and commodities, but this shift in the stock market and expectations. This is as we would expect during this portion of the economy. One of the things as far as the psychology of the markets, as we had had all of this bullish talk at the top of this rally in both commodities and in the stock market, which was very problematic. I’m going to go into that briefly in this update.

Currently for subscribers, we entered short positions on the electronic session on Wednesday going into Thursday at 917.20. The S&P 500 closed at approximately 893. We have buy stops in place for current subscribers. The risk-reward for this trade is 8:1.

Expectations in Entering S&P 500 Trade

This is what we expected going in. This was the day that we had recommended the trade. This should be the market’s last stand if we’re to move lower. If we are right in our forecast and successful in the trade, the risk-reward stands at 8:1. That was written as of July 2nd.

Also, on 150% long December crude oil put options, we entered those with the market trading at approximately 71.00. We closed into new lows on Thursday. The electronic session carried prices into the mid-65 level, so we are approximately eight dollars off the highs in a heartbeat, in less than a week.

In looking at the S&P 500, the pattern has been quite remarkable. The rally which we experienced off the final low on March 6th exceeded the January 6th bear market rally high. That was our last rally before the final decline into the culmination low on March 6th.

In this rally we experienced a one, two, three minor breakout above that January 6th bear market rally high, followed by a failure to the downside. A ton of buy stops would have been hit on the rally above that January high. It was a defining high on the chart, and technicians placed their buy stops above previous highs so we can be assured a significant number and significant contingent of shorts would have been stopped out and also would have resulted in many people entering long positions on the “breakout.”

On June 30th, this was our comment with regards to, then this minor rally which we experienced which also was a one, two, three above these minor highs. We said “We ran stops above the minor retracement high of 2480 without follow-through,” again, running stops in the market. Meanwhile, in light of today’s reversal, our exit point has become more decisive. In other words, in light of this third failure we entered short positions right here at 917.20, and they pulled the carpet out from underneath this market. It’s going to be very interesting to see what Monday’s trade brings since we’re within a stone’s throw of the low for the move at 884.30.

The comment that we made for subscribers was “The rule of three has now played out twice in the S&P 500, and this market should be in a weak position.”

Stock Market Forecast Using At Cash Prices

In looking at the cash chart here of the S&P 500, what we have is the June 11th high, as I mentioned, at 956.23. These were the corrections which took place in the aftermath of the greatest first legs up in history going back to 1886. Ours is the second greatest legs up in history behind the first leg up from the 1932 lows, the Great Depression low, which was followed by a correction.

That correction in 1932 is represented by this green projection line. What we have and what you can see here is that if we are going to experience a correction in an overall bull market, which is what I believe that we’re in, then the market should hit at least the 830 level based upon the 1938 precedent.

What we’re showing on our short positions, since we have just a 1200 point risk on these shorts, is that if we hit the 830 level, which is a minimum objective, then we would have approximately a 7-8:1 risk-reward on this trade. We would make eight times what we’re risking. That type of a multiple is ideal.

What I wanted to point out, and what we pointed out to subscribers is that while it’s true that in 1932 the correction was much more complex than occurred in these other six precedents, and I’m showing in this chart the S&P 500 from 1932, the first leg up rally high September 7th to the February 27th low, this decline from here to here is what is represented by this projection line in our market.

What you can see here is that initially after this high, this market experienced a very severe decline between September 7th and October 10th. From there the market experienced some sideways trade, then finally the bottom of that trading range was broken and the market moved lower into what was a final capitulation low, a higher low in the overall bull market, a secondary higher bottom.

That, by the way, led to 120% advance to the upside – a secondary higher bottom – but you can see this decline was very painful coming on the heels of the bottom of the Great Depression. The stock market and the economy were still very problematic. We have to understand that our bear market at 58% was the second greatest behind the Great Depression. Our first leg up off the lows was the second greatest behind this first leg up, so it is very possible that our overall decline is going to be a complex and difficult affair for us.

The initial decline relative to the 1932 market is this blue line here. What we have is that this decline from September 10th to October 10th, if we were to unfold in similar fashion, then our market would have the kind of weakness that would carry us down to this level. Now, obviously the market has not confirmed that we are in that same kind of a weak position, but what we’ve conveyed to subscribers is that this market is running behind time. There’s no question that, if indeed we’re in the midst of a correction, gravity can take hold of this market and we need to play catch-up with these other markets.

It’s going to be very interesting this week starting on Monday, July 6th, just to see how this market responds. I believe that Friday’s trade was decisive with respect to the fact that we are in the midst of what should be a very sharp, but possibly short-lived correction prior to what will be a second leg up in an overall bull market. That’s buying at the bottom of a correction prior to a resumption of a bull market. I said this before, and if you’ve not heard our stuff before I’m going to say it for the first time; the reality is that in looking at history, the history of markets, we have over 500 years of daily price data going back, cotton going back to 1812.

We’ve looked at bull markets. Our lowest risk point to enter long positions is once a final low is in place and it’s confirmed that the final low is in place, which we have in the stock market right now, the initial first leg up is followed by a secondary correction, and it’s the secondary correction which is a correction in a bull market that sets the stage for what is the lowest risk opportunity.

In the words of W.D. Gann, the legendary teacher and trader, he said:

“Always look for that secondary correction to be a buyer. That’s the lowest risk point at which to enter long positions in a market.”

That’s because bottom-picking is a much more difficult affair than it is once a market confirms a low is in place and buying on weakness. Just so you know, the great promise that we have held out to us from the markets, if our projections continue to play out, it will be that this will be a sharp correction and sets the stage for a continuation of the bull.

No question, at the top is where you get all bullish news. The media was talking about the recovery and that things were getting better, all the news items coming out as bullish, all the news items coming out down here as negative. If we see a severe correction the news is going to get negative again and that is going to be the perfect point in terms of psychology for us to enter long positions, to go opposite the crowd.

Commodity Price Analysis and the Goldman Sachs Index

Now in looking at the Goldman Sachs index, I want to give a couple of observations here. This was as of June 20th, when we were approximately just after the highs here on June 11th, so this is the observation.

What stock market analysts are unaware of by virtue of not having access to a historic commodity price index during other boom and bust cycles is that stock and commodity movements during this portion of the cycle are joined at the hip. This is what makes a potential importance to this June 11th high so intriguing. This is at a time when prognosticators, economists, the media, and the public are talking about the perpetuation of the current advance. Yes, bullish long term, but short term and intermediate term? Not on your life! That was said prior to recent decline into new lows.

On July 3rd, I said “I view the new low on Thursday in the Goldman Sachs as an omen. We are in the midst of a severe correction. If so, I would expect the media to start pounding the drumbeat of bad news. The media always plays on the investing public’s emotions which are fear and hope, causing them to do the wrong thing at the wrong time

“Not that the media’s at fault. The public demands to hear the why of what is going on which forces the media to give an answer that appeals to the public’s appetite and therefore sells advertising.

“My role is to help prevent you from getting caught up in what I view as a ‘tabloid mentality.’”

Learn to Trade Commodities and the Stock Market

One of the first things that we learn as speculators, and to a lesser extent it’s critical as investors, is that bullish news comes out of the highs, bearish news comes out of the lows. The discounting of mechanism of the market is the stock market. It anticipates what’s happening in the future, so news is simply looking in the rearview mirror. It’s already been factored into market price. That’s the situation as it stands right now. This should be a fascinating week to see whether the stock market does break its low for the move.

The crude oil has the bulls on their heels, both of these markets having established June 11 highs. This is very important. The other thing is that I’ve just produced a video that you can go to. If you’ve not seen it yet, it’s discussing the soybean complex; specifically where the soybeans and soybean meal are which also have a June 11th high and there is an imminent shorting opportunity in those markets.

Stock Market Trading – Current Positions

We are short the S&P, we’re short the crude oil, if all plays out according to plan, these are corrections, albeit severe corrections in what should be sell-offs into what would be higher bottoms. Our information will become most valuable as a publisher if these corrections unfold according to plan, because we fully expect the point at which the secondary low is in place to issue all-out buy signals for investment purposes both in commodities and stocks since they’re both going to be doing the same thing.

Also for speculative purposes in anticipation of second legs to the upside which should be very aggressive based upon the law of action and reaction. The fact that we’ve completed the second greatest bear market in history should lead to a very significant reaction with the market experiencing a very sizeable second leg to the upside. That’s the great promise that I hold out to you as a potential subscriber in looking to that potential buying opportunity. That’s what we have our sights on and we are in a position where we do want, as best we can, to encourage those that are intrigued by what we’re doing.

Stock Market and Commodity Market Analysis Using Historical Data

You’re not going to see this information anywhere else, we know that. It’s not available. Nobody does it. There are elements of it, sure, but not to the degree that we do it in terms of looking at history. We have a research engine, a computer software application that we use that compares the DNA of our market to the DNA of history. We are able to glean from history what the madness of crowds have done, what people are capable of in pushing markets to extremes of optimism and extremes of pessimism. It got a short prior to the bust cycle on July 22nd, 2008. We issued an all-out sell signal in commodities at this level right here.

That was in the crude oil, saying “This will be one of the greatest runaway declines in history,” and that is what has unfolded from here. This rally did not take us by surprise, and this turning point, if we’re correct, and the probabilities of that have gone up significantly as of Friday’s break to new lows. That correction is going to set the stage for a higher bottom, and then up we go in a bull market. So with that, I will let you go. Have a good day and profitable trading. May God bless you.

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The media’s bent to publish bullish news at market highs and bearish news at market lows never fails to amaze.  Of course they are only providing what the public demands.  Tragically, this causes untold losses as people clamor in and out of the markets based upon the emotions of euphoria and despondency – buying close to or at the highs or selling close to or at the lows.

Case in point…what is taking place as I write these words.  The Crude Oil has advanced 112% off the December lows.  The Stock Market has advanced 42% off the March lows.  The Soybeans have advanced 46% off the March lows.  The inflationary surge so far across the board has been one of the most elite in history, but by no means unprecedented.  Content in this video brings to bear 200 years of price history in providing a perspective on what is taking place.  Buying into the markets at this juncture or continuing to hold even profitable long positions makes no sense to me.

Bottom Line: The probabilities favor our being at a culmination point in these 1st inflationary legs to the upside prior to what should be violent corrections.  At this time, we are recommending what actions to take for subscribers.  We use tools available nowhere else (blueprints based upon past historic moves) which demand the application of contrary opinion to market analysis.  In other words, doing the opposite of the “crowd”.

We’ve seen this dynamic inflationary move to the upside with the S&P 500. The stock market advancing 42%, the crude oil advancing over 100%; all of the markets inflating together, but our projections are calling for a major correction to take place. We are at, what could be, a very key inflection point for that correction to start.  At present, up until coming into yesterday, we had been long the soybean complex believing that that was going to be one of the leaders in terms of this inflationary push to upside, which we anticipated.

Soybean Futures Analysis and Trading

In looking at the soybean cash chart, these were the projections that we had placed on the market based upon the historic precedents which had the same DNA as our market; the 1974, ’78, 1949, 1976, & 2005 markets.

These were the angles of ascent during those advances in those years, and we had put these angles on the chart back somewhere in April so you can see that the price curve has followed it almost perfectly, rallying to as high as almost 1228 on June 1st. The target zone with all four of these four particular markets called for a push possibly up to 1264. We are basically in the neighborhood with respect to the final top in the soybean, so we took all of our profits in up to yesterday.

We are completely out of the soybean complex at this point in time, but more than that, we are looking to reverse positions and go short. I’m going to give you the rationale for that. In this table (see video) I show every runaway move to the upside in soybeans in history, since 1936. This move that we’ve had off the March 2nd low to the June 1st high has been a runaway move defined as a very aggressive move with only minor corrections on the way up.

These are the most profitable moves that history has to offer in any market. When you see very aggressive runs to the upside, in this case to the upside, you can see that on the way down that this was a runaway move to the downside before you experienced a correction. Runaway moves are really the prize in any market whether to the upside or the downside. We’ve cataloged every runaway move in history in the soybeans.

In this table (see video) we sorted by the length of time with which the time periods, or advances, took place. Our advance off the March 2nd low, which is the start of the runaway at 841, to the June 1st high at 1227, experienced a 46% advance in two months and 30 days. Almost three months. We show the time periods that we have equaled or exceeded in our market. The shortest time period was one month, three days; and the top of this was three months, one day, which as of June 3rd, today, we would be three months and one day from the lows.

You can see here that there are only 12 markets, 12 occasions in history, out of 45, approximately 25%, which exceeded three months and one day. You can also see that the next five were complete within three months and five days; that would be June 7th.

What am I saying? We are very mature in this runaway move and we would be looking to be very cautious about long positions which we have taken profits in as a result. This is one of the reasons that we did that. Yes, we can see some higher trade. Four of the precedents advanced as much as three months, 20 days, and these were the aberrant moves which exceeded three months. We know that we’re very mature in this runaway advance. In other words, in our case, we are looking to take profits but now looking to get short.

In looking at the percentage advances, we sorted that same table by the overall percentage advances during those runaway moves; our advance being 46%. You can see that there are only 12 advances which have exceeded ours in terms of percentage terms. This is a very pricey move, so to speak; an overbought situation.

Based upon both price and time, it’s time to look for a turning point. In this case we would look at it in anticipation of a bull market correction, to see a significant correction.
That being said, the next question that we want to ask in history is, of our five historic precedents what were the declines which took place once the top was in place in the runaway advance?

The June 1st high was 1227. That’s the high for the move basis the nearest futures. Is that going to be the high for the move? We could move incrementally higher, that’s a possibility, but we’re running out of time, at least based upon history, to do so. At least the probabilities would be very low for that.

If indeed we do have a high on June 1st of 1227, what we have here is the price curves of the five closest fit precedents based upon 1936.

You can see in the video, I’ve whited out what the objectives were to the downside. I’ve also whited out a specific trade recommendation for subscribers, but what we have is what I believe is a very high probability that this market is, if we don’t have a high at 1227 then we are very close.

We are sitting on the edge as far as recommendations for our subscribers to enter short positions. In fact, I have a recommendation today, Wednesday.

One of the comments I make here is, “Given the extreme velocity of the moves we continue to experience, I believe the odds greatly favor an angle of descent reminiscent of 1949, 1974, and 1976.” That is these angles of decent right here. In fact, there are two that exactly overlap one another, and that’s why it’s dark here.

“This is especially true if a serious correction is in the offing for the stock market once the current leg up is complete. As you know, that is my expectation.”

Looking at the soybeans, it is within context of what is taking place in the other markets. If a correction occurs in the stock market from what is also extremely overbought condition, up 42%; also in the crude oil which has advanced off the lows in December over 100%, if we see corrections in these markets, they should move in tandem and that would also reflect negatively on the soybeans, and the soybeans would be subject to that deflationary psychology. That is a favorable fundamental with regard to the context within which soybeans are trading.

Now, looking at the November soybeans, this is the new crop which is always important to watch at this point in the season. We rallied to as high as 1088, and we regained this low on September 18th.

We pointed out to subscribers that that would be a logical objective to having regained that low. If we reversed lower from here the market could be in serious trouble.

The July soybean meal, which has been far and away the leader, the strong sister in the soybean complex, this chart actually issued a sell signal in the last couple of days. We exceeded this 392.20 high, initially hit 392.40 then exceeded it fractionally to 393.90 on June 1st.

You can see that as of the close on Tuesday, June 2nd – I’m coming to you before the opening on June 3rd – we sold off a little bit, but this has just been an incredible aggressive move to the upside.

These are the comments that we made the day of the high. “Important pit had broken in the 392.20. The only resistance above that is the all-time high of 434.90. This would be a logical point for the market to fail.” In other words, our current price point is a logical point for the market to fail.

“However, we must contextualize what is taking place.” So what I was telling subscribers was “Yes, looking at the soybean meal in isolation we have a sell signal, but we have to understand that given the extreme moves that we are seeing across the commodity board in all of the markets as well as the financials and the stock market, we are subject to all of these markets moving together in tandem.”

Our final comments today; “We experienced a second rally into new highs above the 393.20 high. If price fails from here an important price could be in place.” That was as of the high. We’ve seen the market come off to 384.70 when this chart was captured, and so it will be very interesting to see what happens Wednesday with regard to whether that sell signal at the high winds up being valid.

Stock Market Trading For Subscribers

As I speak, this is a critical, critical juncture with regard to specific recommendations to subscribers.

In looking at the S&P 500, we’ve pushed above a very critical high, this January 6th high, which was the last bear market rally high. The DNA of this advance, what we’ve experienced off the March 6, 2009, low, is a bull market first leg up. All the DNA points to that based upon price patterns in the 1886 stock market. The logical point for us to have targeted was a move above the January 6th high, so we triggered all the buy stops of overextended shorts.

Those on the short side are betting on a depression, or whatever psychology was motivating them, while the logical place for technicians to place stops above a previous high so we have fractionally exceeded those highs based upon the June contract, which I believe I have. We exceeded the high by about 1150 points so we can be assured that a significant number of shorts have been run out of the market.

That being said, if the S&P turns lower from here that is going to be very favorable to our targeted short position in the soybeans.

The same can be said of the dollar index. The other day we dropped to 7837; that was on June 2nd, so we broke this December 18th nearest futures low. We haven’t broken the cash low. If we reverse higher from here, that would be negative presumably for commodity prices. Again, that’s a very tactical price point which was reached.

A lot of technicians or technical analysis practitioners would have been blown out of the market on the break of that low.

The crude oil has been advancing as expected. We’ve had these price curves based upon other historic bull markets on the order of what occurred on the crude oil. Implosions took place in all of these markets; sugar in 1974, silver in 1980, cotton in 1960, 1864, and corn in 1864.

The culmination point led to significant leg to the downside so we’re becoming very mature as far as this leg up in crude oil is concerned, plus there is a significant carrying charge premium on the distant contracts which is going to be playing very favorably into short positions if a sell signal is given.

Once the first leg up was complete, this was the percentage retracement which took place. You can see that during these six bust cycles, the post-depression depression what they called it in 1938. Obviously, in 2003, that was after the culmination low in 2002, we’ve all lived through that one.

1904 was also a great decline and economic contraction; the crash of 1987, and then also 1974 when the stock market declined approximately 50% during the bust cycle; then the first leg up occurred and these were the corrections which took place.

As we’re moving towards this webinar, the key question for us is, should a correction unfold on the order of the great corrections in history, and that is the expectation, what were the second legs up once those corrections took place?

That’s what we’re going to be looking at. The key for us in terms of profitability is first of all saying, “What is the timing of entering long positions?” We always want to be a buyer on weakness. That is the rule of thumb.

By definition, the greatest profits are made when you buy low and sell high. The closer you can get to the turning point low, the greater your profits. Rather than doing what much of the public does, which is buy on the way up after a sizeable advance. In the case of our market we’re up 39%.

It makes no sense at all to be a buyer in the stock market right now given this “overbought” condition. That doesn’t mean we can’t go higher from here but the market is living on borrowed time. As far as a correction, it will come. It’s imminent. By definition it will come, and once it does we will have our calculations for the extent of that correction and then also we’re going to be presenting, as I say in this free webinar, what those second legs look like. Some of those second legs are remarkable in terms of percentage movement. We’re going to be taking an in-depth look at those.

I’m going to be showing you the actual charts during those six different cycles. You’re going to see the daily Dow, or the daily S&P charts of exactly what took place. Our desire is to find out if there is uniformity from market to market. If there is a geometric pattern that is dependable, which allows us to a high degree of probability to enter long positions, and I can tell you right now that there is.

In looking at the Goldman Sachs commodity index, we had made the projection basically at the lows, that there was a high probability that this would be a bust cycle but would be completed very quickly and that a bull market would unfold from there. The projections that we’ve had on this chart we’ve had for quite a while. I want to read a couple of the observations which we made back in the middle of April, so about a month-and-a-half ago.

I said, “In the aftermath of the greatest commodity bust in US financial history, volatility remains high but the price range in the Goldman Sachs index has remained narrow.”
This was only when we were down in this price range here before the recent breakout.

“This is as we had forecasted based upon our closest fifth historic precedence in 1920 and 1949. Based upon the velocity of the decline, the probabilities favor a final bear market low being in place similar to what occurred in 1920, 1949, and 1974. The most important of these cycles is the 60-year cycle which has demonstrated nothing short of an astounding parallel to price moves in our commodity index over the past ten years.

“Based upon history, at the completion of historic bust cycles, the dates of the final bear market lows in both the stock market and commodity markets coincide very closely to one another. I believe this argues for final lows being in place as of February 19th in commodity prices, and March 6th in the stock market.”

Those lows in both the stocks and commodities occurring within 16 days of one another, and that has historic precedent. If you’ve listened to past videos we know that at these bust lows like in 1920, 1948, the lows in both stocks and commodities coincide with one another, but the key for us here is that we’ve seen this flurry now to the upside in commodity prices.

Our closest precedent is 1949, and so there is going to be a correction in these commodities in that we’ve seen tremendous percentage gains in some of these markets.

I mentioned the crude oil, which has more than doubled off its lows. We are in an overbought condition but that doesn’t mean we can’t continue higher from here but the clock is ticking for a correction.

We want to see a correction in these commodities and we are going to be selectively looking at the commodities that have the best DNA for potential major second legs up in a long-term bull market.

That is going to be a part of what is on the agenda for this upcoming webinar. I want to give you the details with respect to the webinar.

You’re invited, and it’s a no strings attached webinar. It is going to be a 60-75 minute free live webinar presentation.

In advance of that we are going to be asking for questions from you. We want to get some questions as far as what is on most people’s minds and hearts as far as what they want to know in terms of what is happening in the markets. We do want to be able to address our audience during the webinar.

It’s going to take place on Wednesday, June 3rd. That’s next week. I’m coming to you on Thursday, May 28th so it’s next Wednesday. It’s going to take place at 4pm Pacific time, 7pm Eastern time. You do have to register to attend. Just click the registration link on this page and you’ll be taken to a page where you’ll fill out the webinar registration form. It will take you all of 20 seconds to get yourself set up.

Also, in terms of the recording, if you cannot attend the live event register anyway. We’ll send the recording the following day to those who register. If that 4:00pm time doesn’t work for you, the following day we’ll have the webinar come out and you can take advantage of it.

My desire is that it would be very illuminating with respect to where we are in the financial markets. Needless to say if we are now on the bull side of the cycle in these markets and in Gann’s words, “If the secondary correction is the lowest risk point at which to enter long positions we want to prepare you for that eventuality.”

One of the things that’s going to take place, getting back to the psychology, undoubtedly, when that correction takes place there is going to be a lot of negative news. I want to prepare you for it right now.

In the financial markets, if you’ve been in the markets for a period of time and you’re seasoned, you know that the most money is made when you’re going opposite the crowd; when you’re buying while others are selling and losing their heads and being emotional about the markets.

Right now there has been a big sigh of relief in the aftermath of the second greatest bear market in the history of the stock market, and now we’ve seen this 39% surge in the S&P 500, extreme overbought conditions of 39% in just a little over two months which also puts it in a very elite first legs up after culminating bear markets.

We do expect the volatility to continue but the psychology undoubtedly will turn negative once that correction is under way so steel yourself against that psychology and against that fear and against those emotions.

The market has all ready confirmed, and I’m going to go through this in the webinar, that the bear market low is in place. Trust me. Bull markets are not complete in two months and three days. That’s how old ours is so do expect that there is going to be a very favorable set of dynamics setting up for us which could be within the next four to six weeks.

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