Ian Woodward's Investing Blog

1. Who’s He?  He’s the CNBC commentator that specializes in the brokers, banks, and financial industry.  He’s the one that announced ABK “might” get a capital infusion to save their AAA last Friday 30 minutes before the bell which caused the big 10 minute complete reversal that gave everyone a sigh of relief.  He also went on this morning to announce the deal has hit a snag.  What lets him and CNBC off the hook is the words “might” and “snag”.   So much for gurus and it again goes to show that this market is so jittery that it has now become a “Catching a Pop or Short on a positive or negative news story” type of Market.  The constant reporting of rumors that subsequently prove to be incorrect by CNBC requires indignation and scorn for that kind of sensational journalism, yet they are the only game in town. 
2. Unfortunately, it also causes havoc with the Technical Analysis to say nothing of your pocketbook, as certain targets are made or broken based not on solid Market Data; but micro-managing price and volume and time periods made by the herd based on phony news is what it has come down to.   
3. In my blog of a week ago, I said “The good stuff on Symmetrical Triangles is still intact for yet another T/A element to watch for next week.  Unless there is again some follow through tangible information that breaks early next week on this subject to continue to drive the Bears to cover their shorts and possibly force the pattern to the upside, the odds still favor a move to the downside with Lower Highs and Lower Lows.”  Just as well I gave you the reasons to be cautious and also the Late Breaking News viewpoint that my good friend Mike Scott cautioned me on the whims and fancies of symmetrical triangles.  At the expense of being repetitive, Types 1 & 2 Traders can enjoy the Volatility to their hearts content; Types 3 & 4 should be patient, prudent and pounce when things look better.  If you haven’t read the blog on Tea Leaf Reading, that’s where you will find all the good words of wisdom which hopefully will save you money. 
4. Here’s a repeat of the symmetrical triangle picture, and it still says my bias is to the downside.  We are currently at 2271. I have updated it to show that the challenge to retest the Base Low of 2203 is a lot easier than to head back up to 2435 and then 2540 by comparing the green and thin pink arrows.  Please also note that once at -23% at the Base Low, the odds are equal going to 2010 as it is to 2435, the 50-yard line of where I suggest the ball-game is being played, until I see a positive turn around from the current fight at the OK Corral, round #3.

Best regards, Ian.

It couldn’t be timelier for us with the theme of this blog for today, but we had another Eureka signal today which at least gives the Bulls the upper hand for the moment.  U.S. stocks rallied into Monday’s close, spurred by news that Standard & Poor’s reaffirmed the credit ratings of two key bond insurers whose financial outlook has been at the center of investor anxiety in recent months.  This exuberance by the bulls, or maybe it was just short covering by the bears spurred a major move back up to safer territory smack in the middle of the symmetrical triangle I featured in my last blog.  Don’t be surprised if the violent volatility in this market continues with swings of 150 points in the DOW as part of the current climate, which is totally EVENT driven.  However, the thrust of where to fish was correct in the blog of Feb 19 as the fishing pond is in the commodities with the usual suspects delivering wolf pack baskets of 4%/day and more as I showed in that blog.  Stocks with high ERG of >240 are favored. I am sure many of you have heard me say “There are no silver bullets when it comes to Stock Market Indicators…but two lead ones are better than none.”  The HGSI Team is pleased to announce that we now have a complete set. Some of you have seen the notice regarding the High Growth Stock Investor Seminar, but for those who do not get the regular bulletins or may have missed it, here is a repeat of what we sent out this past weekend:       

NEW HGSI CAPABILITY ANNOUNCEMENT:  At the last workshop in October 2007, the attendees enjoyed the introduction of the Hindenburg Omen indicator for identifying imminent tops in the market and saw the first glimpse of the Bingo indicator to signify the possibility of a bottom.  In addition, I explained the dove-tailing with the Eureka signal which we have had available for seven years in the product.

What’s New! There is so much volatility in these markets we know it is difficult to find stocks where you can make some reasonable money and wanted to do something about it for our customers. So we set a goal to produce a complete trading and investing strategy by linking the market indicators to stock indicators that would also signal when stocks may be near a top or bottom. If we could achieve this goal we could teach a complete trading/investing methodology to our HGSI customers. To reach the goal a new stock indicator would need to be designed and it would take some innovative thinking.   What better way to design this indicator than to ask customers who are active in using HGSI every day in creative ways for their trading/investing. So a team of HGSI customer was asked if they would accept the challenge of designing an indicator for stocks that would work with the market indicators.  After several months of detailed work on their part, I am glad to report that they were successful!  What the team came up with has come to be known as Bongo and will be introduced for the first time at the March 2008 workshop as a part of a complete HGSI market-stock trading system. Those who attended the October Seminar will immediately understand that Bongo is the “side-kick” to Bingo!  Maybe I will bring out my Bongo Drums once again to show my appreciation and salute the team for their fine effort.

The team is comprised of Robert Minkowski as the Team Leader, assisted by Jeffrey Scott, Dave Steckler, Lou Powers and David Galardi.  If you read the HGSI Stock Market Forum these customers will not be strangers to you.  All of them will be at the March 29, 30, 31 workshop where attendees can meet and interact with them to find out first hand exactly what they did.  You don’t want to miss the introduction of Bongo!  We still have 10 seats available on a first-come, first-served basis.  Hurry-hurry-hurry!    www.highgrowthstock.com/order 

In Summary, the HGSI product now offers a complete suite of Indicators that compliment Market Phases and Industry and Stock Rotation:

1. Hindenburg Omen with Bongo on the Market and Stocks at Tops  

2. Bingo(s) that indicate one is treading at a Bottom.  Whether it is “a” or “the” bottom is dependent on the severity of the Market decline as it fades from an Intermediate Correction into a Bear Market   

3. Eureka(s) that indicate the Bulls are stirring again with irrational exuberance for a Rally 

4. Bongos that usually follow Eureka for both the Market and Stocks

5. There are always Rotational Opportunities and these are best observed with “Wolf Packs”, Industry Group Rotating up and down, and Bongo gives a heads-up as to when and where to look for potential candidates 

Those of you who have faithfully followed this blog know that the Hindenburg Omen, Bingo and Eureka combination has helped us understand the pulse of the market as I have explained when addressing the various phases in real-time in the various notes.  The subsequent drop in the Market to a Bear Market Correction is also shown evolving ever since my first and subsequent notes on the blog since October.   We now look forward to Eureka and Bongo to give us further insight in this Volatile Market. Best Regards, Ian.

This week every short term trader has been mesmerized by one question which had Bulls and Bears still wondering which way this market will break…up or down.  As part of their repertoire of tools rhey had the old favorite of Technical Analysis Symmetrical Triangles as the center of attention.

With Triangles uppermost on our minds, let’s review the bidding one more time, where I have now expanded the playing field from the High on October 31 at 2860 to a low which would take the next down leg to 2010 on the Nasdaq, as shown below.  This would imply a 30% correction:

  As the headline above says, it is once again Nail-Biting Time for Round #3 at the OK Corral to stay with the theme I set in an earlier blog.  Last week I showed you my assessment as we have watched the saga from February 8 to 15 and Now Feb 22.  Victory was snatched one more time from the Jaws of the Bears where with only about half-an-hour to go to the close on Friday, just like clockwork there was a surprise EVENT relating to bailing MBIA out of their Credit Loan Crunch problems.  That news drove the Dow up over 100 points and the Nasdaq about 40 points and left a long spidery leg with a Hammer for the day.  Technical Analysts were licking their chops that at least the decision on which way the market was headed was down, but at the close the question of which way next week is still in the balance. However, this is the fourth Friday in a row where it has closed up…net, net we do not have conviction one way or another to drive this Market with explosion to the upside or to the downside.  If it breaks to the upside we drive for 2540 and if to the downside, we retest the Base Low at 2203. 

The good stuff on Symmetrical Triangles is still intact for yet another T/A element to watch for next week.  Unless there is again some follow through tangible information that breaks early next week on this subject to continue to drive the Bears to cover their shorts and possibly force the pattern to the upside, the odds still favor a move to the downside with Lower Highs and Lower Lows.   

1. The bias to the downside is reflected by the number of NYSE New Highs being only 15 and New Lows 97 on Friday…not good.  The weakness to the upside is exacerbated by the fact that since December 27 we have not had a single day with more than 68 New Highs over 57 trading days.   

2. From past readings of failed rallies in Bear Markets, the longest that the rally has held is 18 trading days from the Eureka signal and we are right at that period.  This coming week is critical.

3. The 200-dma has peaked and started to roll over.

4. % B of the Bollinger Bands has broken down through the Bandwidth, again signaling weakness.

Late Breaking News:  My good friend, Mike Scott, reminds me “that the closer to the apex of the triangle that the market or stock gets the more likely to get a head fake…A short false move prior to the real move.  This tends to sucker punch a lot of traders and those with stops placed close into the formation.”  Next week will be interesting to see how this unfolds.

Best Regards, Ian.

The market opened with a bang to the upside buoyed by the overnight markets in both Asia and Europe being up, and the DOW shot up to the High of the Day at the Open at 14498.8, tried a valiant attempt to hold it by mid afternoon and then slithered to finish 11 points for a swing of roughly 160 points.  The Nasdaq didn’t fair any better but it dumped its high of 2350 down to 2306 at the close for a loss of 16 points.  Yet the opportunities within the day were plentiful if you know just where to look.  Most of the Smart Groups and StockPicker Groups featured under Woodward and Brown in the HGSI software gave you excellent fishing holes, and were right up the alley I left you with at the weekend. 

On Sunday I showed you where to do your homework and fishing for worthwhile candidates.  Just to remind you here is the Family Tree I offered you of where the best opportunities lay with Bottom Fishing being the primary theme:

Shown below are some snapshots of our favorite Smart Groups and StockPicker groups to show you where the emphasis was and also the very reasonable results for a day’s fishing, especially when the market closed down today.  As we well know, tomorrow can be different, but that is up to how good you are at fishing even when the wind is in your face.  What I am implying is that the High Growth Stock Investing Process can help you find you opportunities in good times and in bad, and we have simplified the process for you to select the best from the top 10 stocks in various favored approaches.  The bottom line is that there is nothing better than a High ERG stock in times like these.

 Obviously many of the same stocks appear in these different Smart Groups, but with the Group Inclusion Report function in HGSI you can quickly establish the best of the bunch!  Best Regards, Ian.

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