Ian Woodward's Investing Blog

Gloom and Doom have set in as Consumer Confidence declined -14% this month and we are hanging on by our finger nails for a solution to the Fiscal Cliff, which at this stage seems inevitable:

The Tell-Tale sign two days ago that the Big Guns were trying desperately to prop this market up was the complete reversal from a sharp drop on all Market Indexes to finish with what I call Spidery-Leg Syndrome where there is a long tail on all the candles for that day:

Then reality set in yesterday, when the rumors persisted that the powers that be were deadlocked and the Markets all took a dive of around three Buckets down for most Indexes on %B, though on light volume.  This indicates that we await Monday’s News before we see the floodgates open or there is a sudden burst of energy to the upside during the half day of trading, when most have already packed up their troubles in their old kit bag and left to celebrate the New Year.  The odds favor  a continued decline at this late stage of the game:

Even the brightest of optimist’s will admit that nine buckets down in five days suggests more pain to come:

Likewise, Grandma’s Pies suggest the Bears have the upper hand as we switch to 60:40 red over green in one day:

The lagging Indicator of the Accumulation vs. Distribution Ratio is also drooping down to 1.65:

But of all of these Indicators we sit up and take real notice when %B x BW has an Upside Breakout on the VIX:

To confirm the predicament the market is in as we toddle into the uncertainty of the new year, we always look for a push up in the Small Caps as defined by the Russell 2000 (RUT) with the so-called January Effect and it is drooping:

…And last but not least we have the new work of Dr. Robert Minkowsky which shows promise when we look at the Normalized Average %B Oscillator for seven different Market Indexes in that we must wait for a potential last gasp bounce at 0.75 before the Markets tank.  With the current reading of (0.55), we should expect to trundle down to at least (1.375) before there is hope of a Bounce Play.  Note also that when there is exhaustion to the downside signified by a reading of (<2.00) for an oversold condition, we should expect a new rally to commence with two Eurekas within a few days of each other.  Meanwhile we practice “Fiscal Cliff Diving”!

So, let me wind up this story for the old year as the HGSI Team wish you all a Happy New Year as we sing “Hi-Ho, Hi-Ho as off the Cliff we may go” to bring in the New Year…2013:

Best Regards to You and Yours,

Ian

Most people have given up investing until this Fiscal Cliff nonsense is behind us.  The Clowns are Back:

I’ll make this short and sweet:

Friday was a 2+ bucket down day:

Seasons Greetings, thanks for your continued support and all Best Wishes for 2013 from the HGSI Team…George, Matt, Ron and Ian.

Enjoy this wonderful video of the Drifters…just click on the link below;  then, when the video is finished, hit the return arrow at the top of your browser.

http://www.youtube.com/watch?v=ddVZOK_9UUI

Best Wishes to you all,

Ian.

I see my supporters over the years are all waiting for the Santa in his Red Car (Morgan or MG?) picture to appear on the front of the Blog Note.  I can’t disappoint them, but hope the Grinch doesn’t have other ideas to pull us in and then lower the boom!

Who would have thought that two days ago we were looking at yet another correction, and inside two days we have two Kahunas and an Eureka which is the sign that this Market is off to the races feeding on the rumor that the Fiscal Cliff Kerfuffle will be resolved…is this a case of buy the rumor and sell the news when it eventually comes out:

…And here are the High and Low Road Targets…thank heavens we have a cushion once more:

The internals are also looking stronger with a 2.5:1 Ratio between Stocks under Accumulation vs Distribution:

Now here is what we look for when we confirm a strong rally in the making.  We need 400 stocks overbought out of the 1500 for the S&P 1500:

Naturally, Grandma’s Pies also show strength:

…And, to round out the picture, here is the one we love to see…big move in two days, make no mistake:

Net-Net…Kahunas and Eureka volleyed and thundered, but play with more care this time.

Best Regards,

Ian.

On this quiet Sunday as we mourn the loss of all those innocent people in Newtown, I turn to happier times when my friends around me over the years have given me a helping hand to help you help yourselves.  My Global Supporters are a trifle starved for new information, and so this Blog Note contains concepts and charts they have probably not seen before, and is my way of thanking my friends for the gems they have given me which include work by McClellan and of course, Bollinger.

Thank heavens we have come down to the last two weeks before this Fiscal Cliff mumbo jumbo is resolved for better or worse, and so I am reminded of the Days of Wine and Roses and also those of Whining and Sniveling:

So, let me pluck two charts which my good friend Mike Scott (Aloha) conjured up many moons ago, one of which tips our hat to Sherman McClellan and his son:

It goes without saying that RIGHT NOW we are Marking Time at the Pivot Point of Bouncing Back or Trotting Down once again as this next chart shows using the NASDAQ Market Index:

The above chart is dedicated to all the friends I have made who are supporters of the HGSI Team over the past 14 Years and to those who were with me at Telescan for the previous six years…time flies when you are having fun and meeting sincere people who help each other.

…And here is the latest Gem from Dr. Robert Minkowsky who has added icing on the cake of John Bollinger and my work with the two examples I show below for the first time hot off the press.  We are almost into the start of the January Effect when the Small Caps like the S&P 600 and the Russell 2000 (RUT) bloom through the first week in January and so I chose these two examples to showcase his work:

I will be discussing the fruits of these charts at the Roundtable on Tuesday afternoon, but suffice it to say that we are at a critical juncture where we either stop the skids and rebound or trot on down into the abyss which would imply that the Market did not react favorably to the Fiscal Cliff News eagerly awaited.

Although this is new work, it has great promise on several scores:

1.  The charts show that we have normalized the %B Readings to swing using Standard Deviations

2.  Options Traders will get excited as they use Std. Devs. in their work

3.  The Movement is magnified and rapid between Tops and Bottoms with hesitations in the 0.5 to -0.5 area

4.  Short Term Traders should love this stuff as Tops > 1.5 Std. Dev signals time to look for a move down

5.  Likewise, look at the sharpness of the bottoms to identify when the Market is about to go up

It won’t take long to wait to see the results based on the two conditions I have given you to look out for.

Remember, that’s what friends are for…what goes around comes around!

My Deep Appreciation to you all in the Autumn of my Years,

Ian.

We are now into the Santa Claus Rally, and it is that time of the year for the HGSI Team to wish you Season’s Greetings and to thank you all for your support throughout the year.  It has been a “mushy” month, but through all the Wall of Fear, the Stock Market has bounced back from the doldrums of three weeks ago and is challenging the High Road Scenario.

I sense we are all fed up to the hind teeth with this Fiscal Cliff mumbo jumbo, but we now have just a couple of weeks to go before we have this uncertainty behind us, one way or another.

Besides discussing the High and Low Road Scenarios, my theme for this month is to give you an update with three signs for when the Jobs Report numbers in 2013 will determine whether the economy has at last turned around.    This month Ron did a quick review of the process he covered last month, the One Step Scorecard view, and then he moves on to show you how you can use the Group Inclusion Report to prospect.

The Roundtable discussion is on Tuesday, 18th December at 4.30pm EST, where we will as usual expand on the ideas in the newsletter.  You must be a Newsletter subscriber to sign up to attend the Roundtable.

Thanks to all of you for responding to the poll of which 35 said they were interested in coming to the Seminar on March 23 to 25, 2013 at the Palos Verdes Library and as always we will have fresh material to cover as we again raise the bar.  We look forward to seeing you.

Best Regards,

Ian.