01-03-12 Stock Market Trends & Observations

8/3/2019 01-03-12 Stock Market Trends & Observations

1/149

pdfcrowd comopen in browser PRO version Are you a developer? Try out the HTML to PDF API

Stock Market Update 01/03/12Posted January 3, 201 2 by Bob

Categories: DAILY UPDATE

WHAT S HAPPENING?

From Jeffrey Sauts column today :

A s for the tech nicals, by my work we e xperienced another Dow Theory

buy signal last wee k when both the DJIA (INDU/122 17 .56) and the

Stock Market Trends & Observations

Email Subscription

Enter your email address to

follow this blog automatically.

When you signup you must

confirm your subscription in

the follow-up email.

Sign me up!

Search Posts

Search
http://stockmarketobservations.files.wordpress.com/2011/12/dollar1.jpeghttp://stockmarketobservations.files.wordpress.com/2011/12/dollar1.jpeghttp://stockmarketobservations.wordpress.com/http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.wordpress.com/2012/01/03/stock-market-update-010312/http://stockmarketobservations.wordpress.com/category/daily-update/http://stockmarketobservations.files.wordpress.com/2011/12/dollar1.jpeghttp://stockmarketobservations.wordpress.com/


2/149


5019. 9 e ere e r c o er 2011 c os ng reac on

highs. This wee k we may see another positive occurrence called a

golden c ross, that is if the DJIAs 50-day mo ving average

(@11 934.29) crosses above its 200-DMA (@11 946.57 ). That said, the

NYSE McClellan Oscillator is short-term ov erbought and the sto ck

markets internal energy has not yet be en fully recharged. A cco rdingly,

after the eq uity markets pop the ir collective c orks with an early

January upside blow off, it wo uld not surprise me to see a pullback

attem pt. One thing is for sure, the v olatility remains legion, for as the

eagle-eyed folks at the Bespoke Investme nt Group w rite:

Throughout 201 1, w e made numerous mentions of the

record number of all or nothing days in the stoc k market.

We define an all or nothing day as one w here the daily net

Advance/ Decline reading for the S&P 500 is greater than+/- 400. Up until recently, these types o f days were

relatively rare and there w ere some pe riods w here more

than a year went by w ithout any all or nothing days. In

the last few y ears, howev er, we have see n an explosion of

occ urrences, culminating w ith this years record reading

of 70 days! To put that number in perspective, from 1990

through 200 4, there were o nly 67 all or nothing days!

Such a vo latile e nvironment clearly calls for risk management and w ith

these thoughts w e wish you a healthy and prosperous new year.

The call for this week: Since the day after Thanksgiving I hav e stuck

with the strategy that the Santa Claus rally had begun. On November

25th the SPX was ch anging hands around 115 8. We are now 10 0 points

Categories

DAILY UPDATE (73)

EDSON GOULD (21)

GLOSSARY (1)

SELL/BUY ACTION UPDATE

(15)

WEEKLY UPDATE (19)

WORDS OF WISDOM (8)

Recent Posts

Stock Market Update

01/03/12

Edson Goulds 1979 Forecast

(Dec 1978)

Edson Goulds 1978 Forecast

(Dec 1977)

Stock Market Update

12/28/11

Undercut Low Stock Market

Update 12/20/11

Archives

January 2012 (1)

December 2011 (11)

November 2011 (17)

October 2011 (19)

September 2011 (17)

August 2011 (32)
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.wordpress.com/category/daily-update/http://stockmarketobservations.wordpress.com/category/edson-gould/http://stockmarketobservations.wordpress.com/category/glossary/http://stockmarketobservations.wordpress.com/category/sellbuy-action-update/http://stockmarketobservations.wordpress.com/category/weekly-update/http://stockmarketobservations.wordpress.com/category/words-of-wisdom/http://stockmarketobservations.wordpress.com/2012/01/03/stock-market-update-010312/http://stockmarketobservations.wordpress.com/2011/12/29/edson-goulds-1979-forecast-dec-1978/http://stockmarketobservations.wordpress.com/2011/12/29/edson-goulds-1978-forecast-dec-1977/http://stockmarketobservations.wordpress.com/2011/12/28/stock-market-update-122811/http://stockmarketobservations.wordpress.com/2011/12/20/undercut-low-stock-market-update-122011/http://stockmarketobservations.wordpress.com/2012/01/http://stockmarketobservations.wordpress.com/2011/12/http://stockmarketobservations.wordpress.com/2011/11/http://stockmarketobservations.wordpress.com/2011/10/http://stockmarketobservations.wordpress.com/2011/09/http://stockmarketobservations.wordpress.com/2011/08/http://stockmarketobservations.wordpress.com/2011/07/


3/149


higher. Consequently, I w ould not chase the dragon right here since I

anticipate that an upside blow off is due

Thats the the way I see the market too and usually Jeffrey and I dont

disagree. Cy cles point to some ty pe of bottom later in the month (see

charts page 14, #7 1.95 and #7 1.96). If the correc tion lasts late into

the month, it could be deeper than anticipated.

Today (Jan 3) we are getting a new years blast off in the market averages

and when this is spent, we should begin the correction that Jeffrey

mentioned. The surge could be a one day hurray o r it could last all

week. The market was pulling back quickly late in the day and that

might point to a one day upside wonder. Usually the January

correc tions have c arried into mid-January (or later) and I wouldnt

expec t any thing different this time.

CYCLES

The chart below is from Hurst Signals an interesting cyc le serv ice

based on the work o f J.M. Hurst, More in fo at HURST SIGNALS

This serv ice (on o ccasion) c an define future dates for possible market

turns. Its the big cycles that are most interesting.

June 2011 (10)

January 2012

M T W T F S S

Dec

1

2 3 4 5 6 7 8

9 10 11 12 13 14 15

16 17 18 19 20 21 22

23 24 25 26 27 28 29

30 31

Wall Street QuotesThe essence of investment

management is the

management of risks, not the

management of returns. Well-

managed portfolios start with

this precept.

Benjamin Graham
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://hurstsignals.com/http://stockmarketobservations.wordpress.com/2011/07/http://stockmarketobservations.wordpress.com/2011/06/http://stockmarketobservations.wordpress.com/2011/12/http://stockmarketobservations.wordpress.com/2012/01/03/


4/149


01 -03-12 HURST CYCLES

The time of maximum

pessimism is the bes t time to

buy and the time of maximum

optimism is the best time to

sell.

John Templeton

Buy on the cannons,

sell on the trumpets.

Old French Proverb

Rule #1: Never lose money.

Rule #2: Never forget rule #1

Warren Buffett

The four most dangerous

words in investing are

"This time it's different".John Templeton

"This time it's different" was

prevalent during the bubble

of 2000. In 1929 it was called

"New Economics".

Bob

History always repeats, only

the details change.Edson Gould

If you have trouble imagining

a 20% loss in the stock

market, you shouldn't be in

stocks.

John (Jack) Bogle
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.files.wordpress.com/2012/01/01-03-12-hurst.jpghttp://stockmarketobservations.files.wordpress.com/2012/01/01-03-12-hurst-21.jpg


5/149


01 -03 -12 HURST CYCLES-2

As yo u can see by the abov e chart we are heading for a low during

January that will be much less significant than the October 4, 201 1 low.

The October low was a 51 month cy cle low, while the January cy cle is a

16 week cyc le low (green circle and line in the above chart). Ac cording

to JM Hursts principle of synchronicity , cy cles are phased so as to c ause

simultaneous troughs for all cyc les of shorter duration than the cy cle in

question. All cy cles less than the 16 week cy cle will bottom at the same

time as the 16 week cyc le meaning they will all have a co mmon trough

date.

PRINCI PLES OF HURSTS CY CLI C T HEORY

The Principle of Commonality All equity (or forex o r commodity ) price

mov ements have many elements in common (in other words similar

classes of tradable instruments have price mov ements with much in

common)

Stock are bought on

expectations, not facts.

Gerald Loeb

Emotions are your worst

enemy in the stock market.

Don Hays

P/E ratio - The percentage ofinvestors wetting their pants

as the market keeps

crashing.

Anonymous

Herd Mentality

Men, it has been well said,

think in herds; it will be seen

that they go mad in herds,

while they only recover theirsenses slowly, and one by

one.

Extraordinary Popular

Delusions and the Madness o f

Crowds

Herd Mentality

Cases such as Tulipomania in

1624--when Tulip bulbstraded at a higher price than

gold--suggest the existence

of what I would dub

"Mackay's Law of Mass

Action:" when it comes to the

effect of social behavior on

the intelligence of individuals,

1+1 is often less than 2, and
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdf


6/149


The Principle of Cyclicality Price mov ements consist of a co mbination

of specific waves and therefore exhibit cy clic characteristics.

The Principle of Summation Price wav es which combine to produce the

price mov ement do so by a process of simple addition.

The Principle of Harmonicity The wavelengths of neighbouring waves

in the collection of cyc les contributing to price movement are related bya small integer value.

The Principle of Synchronicity Waves in price mov ement are phased so

as to cause simultaneous troughs wherever possible

The Principle of Proportionality Waves in price mov ement have an

amplitude that is pro portional to their wavelength.

The Principle of Nominality A spec ific, nominal co llection ofharmonically related waves is common to all price mov ements.

The Principle of Variation The prev ious four principles represent

strong tendencies, from which variation is to be expec ted.

Further information about Hursts Cyclic Principles can be found here.

Lotsa good Hurst info here.

SCARY CHART

CLI CK ON CHART S TO ENLA RGE

sometimes considerably less

than 0.

Extraordinary Popular

Delusions and the Madness o f

Crowds

I made money by selling too

soon.

Bernard Baruch

If all you have is a hammer,

everything looks like a na il.

Bernard Baruch

The main purpose of the

stock market is to make fools

of as many people as

possible.

Bernard Baruch

The hardest part of a bull

market is staying on.

A bubble is a bull market in

which you don't have a

position.

A buy and hold strategy is a

short term trade that wentwrong.

October, this is one of the

peculiarly dangerous months

to speculate in stocks. The

others are July, January,

September, April, November,

May, June, December, August
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://www.sentientcode.com/downloads/SentientTraderHelp/HurstCyclicTheoryII.htmhttp://stockmarketobservations.files.wordpress.com/2012/01/01-03-12-dj-ind-daily.jpg


7/149


and February.

Mark Twain

Economists have predicted 14

of the last 3 recessions.

Market Correction - The day

after you buy stocks.

In 2008 stocks were a good

buy . . . . . Goodbye

Mercedes, goodbye yacht,

goodbye vacation home,

goodbye . . .

Markets can remain irrational

longer than you can remain

solvent.

John Maynard Keynes

Money talks, but all mine ever

says is "goodbye"

Don't gamble. Take all of your

savings and buy some good

stock and hold it until it goes

up, then sell it. If it don't go

up, don't buy it.

Will Rogers

Return of principal is more

important than the return on

principal.

Hope is your worst enemy in

the market.


8/149


01 -03 -12 DJ IND DAILY

Now thats one scary c hart (the red wave c ount). This is just one of those

what if things that bother me from time to time (all the time actually).

It c ould gain credibility if the corre ction running into later January

becomes a lot wilder than anticipated. Ill be keeping an ey e on this

possibility in the days ahead. Incidentally, I always have a scary chart

that I can pull out and show whenever the mo od strikes.

Thank you for the 21 ,37 3 hits to my c hart link last month.

The activity o n my c harts dropped dramatically begining on December

17 th. It seems a LOT of people took off for a v acation during the

holidays. If activity had not dropped off during this period, I would havehad over 31 ,000 hits for the month (averaging ov er 1,0 00 hits per day

earlier). Regardless, 21,37 3 hits ranked among the highest at

stockcharts.com

Interestingly , a significant number of these hits came around 3 AM to 5

AM EST, which co incides with trading in Europe beginning around 3 AM.

It seems that there are two possibilities for location for these hits,

Europe and the east co ast of the USA. 24 hour world-wide trading hasforced a lot of traders to adjust their life cy cle patterns, which could

allow for east c oast v iewing.

MAY BE THIS WIL L HAPPEN?

In the abov e chart notice how nicely the Andrews Pitchforks have

contained the market mov es. We have bro ken to the upside from the

Don't catch a falling knife.

Spend a t least as much time

researching a stock as you

would choosing a refrigerator.

Peter Lynch

When you realize that you

are riding a dead horse the

best strategy is to dismount.

Sioux Indian Proverb

Dont ever make the mistake

of telling the market it is

wrong.

James Dines

Wall Street never changes,

the pockets change, thesuckers change, the stocks

change, but Wall Street never

changes, because human

nature never changes.

Jesse Livermore

Let Wall Street have a

nightmare and the whole

country has to he lp get them

back in bed again

Will Rogers

Bulls makes money, bears

makes money, pigs get

slaughtered.

My Grandfather

Never buy a stock that won't


9/149

df d mi b PRO i Are you a developer? Try out the HTML to PDF API

downward sloping pitchfork and the uptrend pitchfork is performing

nicely. Presently the market is on one of the lesser lines (dotted) and

should stay below that line. If we were to break that line to the upside,

we should move to the upper line and slow the advance. The central line

should restrict any downward movement in the market (as long as all is

OK).

Partialprofit taking can be entertained if you got in quickly after thefalse mov e to the downside on December 1 5th.

Meantime we will stay with an ov erall uptrend theme.

****************************************************************

CHARTS

MY CHART LINK (updated constantly)

These are my personal charts and my playground for doodling

trend lines, wave counts and other ideas.

I draw the trend lines and wave co unts on a daily basis (sometimes

more often). Y ou can find these doodles from 1 minute to

monthly charts.

Yo u will find the best trend lines and wave counts on charts with

longer time frames. This gives perspectiv e to the lines andcounts. Perspective was a favo rite of Edson Gould.

I usually restrict my trend lines and wave counts to the first three

charts on eac h page, TSX, DJI & COMPQ. The other c harts on the

page are usually for c onfirmation of the trend and wave structure.

Page 1 Buy /Sell Signals

go up in a bull market. Never

sell a stock that won't go

down in a bear market.

Wall Street is a street with a

river at one end and a

graveyard at the other.

Never check stock prices on a

Friday, it could spoil your

weekend.

Nobody is more bearish than

a sold-out bull.

The public is right during the

trends but wrong at both

ends.

Humphrey Neill

Those who can, do.

Those who cant, teach.

Those who cant teach, work

for the government.

Never se ll a dull market short.

I sell euphoria and buy

panic.The way he determines that

is to wait until prices start

gapping in the charts.

Gapping on the upside is

euphoria, while gapping on

the downside is panic.

Jimmy Rogers courtesy of Jeff

Saut
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID4485509


10/149

df di b PRO i Are you a developer? Try out the HTML to PDF API

Page 2 Index es With 1 Minute Bars





Page 7 Indexes With Daily Bars

Page 8 Index es With Weekly Bars (since 1 981)

Page 9 Indexes With Monthly Bars (since 1 981)

Page 10 Indexes With 60 Minute Bars, Candlestick

Page 11 Indexes With Daily Bars, Candlesticks

Page 12 Index es With Weekly Bars, Candlestick

Pages 13 through 1 4 are shorter term indicators. The indicators

are used to simply look for some type o fleading action before a

turn or confirming action of the wave co unt. Page 13 is a look-

eve ry day indicator page. The other indicator pages are lessfrequently visited.

Page 15 Hurst FLD Projections

Page 16 Indicators, Long Term

Page 17 International Indexes

Page 18 through 30 are sector ETFs. They represent most of the

active sector ETFs and are always a good hunting ground when

looking for something that is breaking in a new direction.

Page 31 through 45 are growth stocks with indicators (new).

These are stocks that have been in an uptrend. One qualification is

that they must not be sev erely damaged in a bear market so they

cant rise to significant new highs in the following bull market.

The growth stocks show daily market action for the last 3 y ears

and weekly prices since 1992. This gives a good perspective of

how they have be haved in the immediate past (daily c harts) and

"Cut your losses and let your

profits run."

Don't marry a stock. Every

stock must be sold.

Often times WHEN you take a

position can be more

important than WHAT you

take a position in.

"If Santa fails to call the

bears will roam on Broad and

Wall!"

About This Blog

Observations of Stock MarketTrends uses several

proprietary technical

indicators discovered by the

author. The object of this blog

is to notify you (preferably in

advance) of the important

tops and bottoms in the stock

market. We know that's

impossible, but nevertheless,

it's attempted in this blog.

"Observations of Stock

Market Trends" is published

on an irregular schedule but a

daily update is likely when we

are near a stock market

inflection point.


11/149

df di b PRO i A d l ? T t th HTML t PDF API

how they behaved during good and bad times (weekly charts).

Page 46 Junk Pile

WAVE COUNT SSIMPLIFIED

My wave counts are not Elliott Wave! Its different, simple and

functions w ithout a maze of exclusions.

T here are 3 peaks (or valleys) to a com pleted wave cou nt.

A rev ersal of trend takes place after a completed wave count.

Often times its as simple as counting 3 bumps (or dips) on a chart .

. . Other times, not so easy .

In a downtrend the same rules apply ex cept y ou are co unting 3

dips instead of 3 bumps.

Each group of 3 steps must stay c onfined to a channel.

Laying a pen or pencil on the c hart will help yo u visualize the

channel.

As the trend progresses, all of the steps that make up a larger

trend will also be co nfined to a larger channel. Sometimes the

channel is not rev ealed until the surge phase has ended.

When the m arket breaks a channel (regardless of the

perceivedwave cou nt), the current step has been

terminated. (Make sure your c hannel was correc tly drawn

before calling a termination).

The correction following the second step is larger than the

correc tion that followed the first step. Obv iously the correc tion

following the third step is a reve rsal.

A single wave m ay sub-divide into another 3 waves. I will

call this an ex tension. When this happens (1) the trend is still

intact, (2) the channel will widened and (3) instead of a total of

If you find the blog

interesting, please become a

follower by entering your

email address in the section

"Email Subscription" (top of

this column). You must also

confirm your email

subscription by clicking on a

link in the confirmation email,

otherwise you ain't

subscribed.

Disclosure

The content on this blog is

meant to be entertaining

information and should not be

construed as investmentadvice.

No statement by the blog's

author should be interpreted

as a recommendation to buy

or sell any security, financial

instrument, or to participate

in a trading or investment

strategy.

Any investment decision by

anyone that results in losses

or gains based on information

from this blog is not the

responsibility of the blog's

author.

The blog's author will make


12/149df di b PRO i A d l ? T t th HTML t PDF API

3 steps, there will be 5 steps.

Sometimes I will use the terms step and wave interchangeably .

Reading the glossary helps in the understanding of this blog.

There are many other important facts in the glossary.

Glossary Link

ABBREVIATIONS

DJI = Dow Jones Industr ials

DJT = Dow Jones Transportat ions

SPX = SP 50 0

ES = SP 500 Futures

COMPQ = Nasdaq Composite Index

TSX = Toro nto Stock Exchange (Canadian blue chips)

SOX = Semico nducto rs

TXX = Technolo gy

****************************************************************

Long T erm UP

Uptrend

Mar 2009 To Present

Step 2 Up (of 3) Com pleted

Has Step 3 Up Begun ???

From the bottom in March 200 9

Large step one up ended in May 2010

Large step two up ended in May 2011.

Significant break abov e the May 20 11 highs should signal that Step

3 up is o fficial

statements about certain

investment vehicles and

strategies, but It's s imply the

author expressing his

opinion, or action, regarding

his own investments. These

opinions are never to be

construed as investment

advice.

About Me

With 55 years of studying and

investing in the stock market,

I am sharing these

experiences and knowledge

by writing a stock market

blog. This blog relies on

several unique and

proprietary indicators.

I have been correct at some

of the biggest market turns in

the last 40 years. I was short

for most of 1973-1974,

reversed course and became

a buyer during the week

before Christmas 1974. I wasalso short for most of the first

half of 1982 but became a

buyer on August 4, 1982. This

was five days before the

August 9, 1982 blast off on

the historic bull market run of

the 1980s and 1990s. In

1999 I began tolling the bell
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://wp.me/p1DRwF-d1http://stockmarketobservations.files.wordpress.com/2011/12/12-28-11-long-term1.jpg


13/149df di b PRO i

Are you a developer? Try out the HTML to PDF API

on the stock market knowing

that the end was near (no

one listened). In March 2003,

prior to the beginning of the

Iraq war I became very

bullish when it was obvious

that there was not one good

reason to own stocks

(contrary opinion) and wehad also achieved a double

bottom. Shortly after the

October 2007 peak I became

a seller and bear. Days prior

to the March 2009 bottom, I

bought stocks in anticipation

of a very good rally that

turned into a bull run. In the

later stages of the February-May 2011 topping process, I

began warning of an

important market correction.

Since then my record is in this

blog.

To illustrate how things don't

go perfectly for any analyst

(such is life). My key indicator

began changing in characterduring 1987 and led to some

large losses based on

excessive leverage and

incorrect market

interpretations. When I had

enough, I bailed out o f the

market on October 6, 1987,
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.files.wordpress.com/2011/12/12-28-11-long-term1.jpg


14/149df di b PRO iAre you a developer? Try out the HTML to PDF API

1 2-28 -11 LONG TERM

****************************************************************

Very Long T erm DOWN

DowntrendJan 2000 T o Present

Step 2 Down (of 3) Com pleted

Currently In Rally Phase From Step 2 Down

just days before the 1987

crash. But I had been

severely damaged before the

crash. It took me several

years to begin a recovery and

restore my faith in my key

indicator with a modified

interpretation. Since then,

using the new method, thekey indicator has worked

correctly.

One man was responsible for

my education, Edson Gould,

the greatest technician that
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.files.wordpress.com/2011/12/12-28-11-very-long-term.jpg


15/149df di b PRO iAre you a developer? Try out the HTML to PDF API

1 2-28 -1 1 VERY LONG TERM

VERY LONG T ERM COMMENT S

We have 3 possibilities for the future.

We have entered a very wide swinging m arket

(megaphone formation) sim ilar to that of 1966 to 1974.

During that era we had three bear markets with two intervening

the greatest technician that

ever lived.

After reading many of the

books on stock market

technical analysis, I found

that all of these methods had

high failure rates. I searched

for a formula that worked

consistently and in 1973 I

subscribed to Edson Gould's

"Findings & Forecasts". Here I

struck gold with the master

technician of the 20th

century. Extending his

methods I discovered several

indicators that I use today.

If you find my observations ofinterest please add your

email address to the section,

"Email Subscription".

Spam Blocked

81spam comments

RSS

RSS - Posts

RSS - Comments

bull market rallies Each bear market had a lower low than the
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.files.wordpress.com/2011/12/12-28-11-very-long-term.jpghttp://akismet.com/http://stockmarketobservations.wordpress.com/feed/http://stockmarketobservations.wordpress.com/comments/feed/


16/149

Are you a developer? Try out the HTML to PDF API

bull market rallies. Each bear market had a lower low than the

previous b ear. The interve ning bull market rallies saw new all

time highs before the nex t bear market began.

We also have formed a huge head and shoulders formation since

1998. If this formation is valid, the downside measurement calls

for a bottom around Dow Jones Industrials 1,0 00.

We began a long term bull market in March 20 09. Each

subsequent min-bear market will result in higher lows than theprior major low.

I favor the m egaphone formation as the m ost likely

scenario.

Since 2000 we have had two bear markets, 2000 to 200 3 and 2007 to

2009. Like 1966 to 197 4, the recov ery from the first bear market saw a

new all time high (2007 peak). Its possible that we may ex perienceanother all time high during the present recov ery period. This would

support the megaphone formation. A failure to make new highs would

support the head and shoulders argument. In both formations the

conclusion of the present recov ery would call for a third and final bear

market. An estimated time for the conclusion o f the final bear market is

approximately 20 18.

The lesser downside target of both formations is the megaphone

formation as it likely calls for a bottom 1,0 00 to 2,000 points below the

2009 low, which would be around Dow 5,00 0.

In the head and shoulders formation the measurement calls for a bottom

around Dow Jones Industrials 1,0 00. This is almost an unimaginable

eve nt regarding the possible fundamentals to c reate this scenario. If this

did happen, ev ery thing that could go wrong would have to go wrong.

The reasons range from the absurd to the absurdly absurd This scenario


17/149

pdfcrowd.comopen in browser PRO version Are you a developer? Try out the HTML to PDF API

The reasons range from the absurd to the absurdly absurd. This scenario

is so dark that it doesnt seem possible but nev ertheless, the head and

shoulders formation is there and will be waiting until we pierce the all-

time highs of October 2 007 .

Remember these are simply possible scenarios and are not embedded in

fact. Whatever the outc ome, it never hurts to be a little cautious with

some of your money . But in the worst case scenario, every thing that wetake for granted as being safe . . . . would not be safe. This is something

to never forget in the event things go v ery badly.

Hopefully we will never have to think about worst case sc enarios other

than to have a go od laugh at them presently.

****************************************************************

EDSON GOULD

Edson Gould, Premier Stock Market Strategist Edson

Gould had a profound influence o n the dev elopment of my

techniques and indicators. Prior to me subscribing to his

advisory servic e, I was just one of the crowd.

After 40 y ears I still have many of the publications from his

advisory servic e, Findings & Forecasts. Fearing the loss of these

hard copy reports I hav e recently scanned and created pdf files ofthese reports. Now I have hard copies and computerized ver sions

of the reports.

I hav e used a technique of his that I found in an obscure reference

in one of his reports. It was only mentioned once and never

again. I believe that he used this tool extensiv ely and never told

the world its importance. Prior to my finding this tool, I had been

try ing unsuccessfully to find a different way to c hart the market


18/149


try ing unsuccessfully to find a different way to c hart the market.

When I read about his technique I knew instantly that this was

exac tly what I had been seeking. I have charted this method back

to 1 939 and found it to be v ery useful. There is no mention of it in

the reports that I posted below as I have deleted any reference to

it. Its a super secret indicator and Id have to kill you if I told y ou

about it.

Edson Gould was truly a legend in his own time. Its too bad thattoday most people have forgotten or nev er heard of him or his

discov eries. Below y ou will find only the first page of these

reports. A teaser is what yo u might call it. The rest of the reports

are available upon request. This is a man that deserves to be

remembered throughout technical analysis market history.

T he following are links to Edson Gould reports.

My Most Im portant Discov ery by Edson Gould

It was also my most important discov ery , for it ex plained the

irrational volatility o f markets that had my stified me in my early

years. During those early y ears I found nothing worked in

predic ting these irrational market swings. But the fog lifted after

reading this report and I began to understand how to begin

predicting the market.

Edson Gould Profile by MT A

Edson Gould Conc epts by William Scheinm an

Decade Cycle by Edson Gould

Decade Cyc le Update by Ned Davis

Swing Principle by Edson Gould

A measuring indicator
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.wordpress.com/2011/10/28/my-most-important-discovery-by-edson-gould/http://stockmarketobservations.wordpress.com/2011/10/28/edson-gould-profile-by-mta/http://stockmarketobservations.wordpress.com/2011/10/28/edson-gould-concepts-by-william-scheinman/http://stockmarketobservations.wordpress.com/2011/10/28/decade-cycle-by-edson-gould/http://stockmarketobservations.wordpress.com/2011/10/28/decade-cycle-update-by-ned-davis/http://stockmarketobservations.wordpress.com/2011/10/28/swing-principle-by-edson-gould/


19/149



Utilities by Edson Gould

A forecasting indicator

Dividends by Edson Gould

Bonds by Edson Gould

Speed Lines by Edson Gould

Sentimeter by Edson Gould

With companies failing to pay dividends c ommensurate with theirearnings, this indicato r has failed. As the market climate

continues to deteriorate in the coming years, I would expec t

dividends to return to their former lev els and this indicator will

once again become useful. Prior to the late 1990s, it had 100

years of success.

Bottoms by Edson Gould

This was written and directed at the upco ming bottom in 197 4 but

it applies to all major bottoms.

T hree Steps by Edson Gould

Where do y ou think my three steps principle came from? Straight

from this report although I modified the concept through the

years.

Edson Gou lds 1974 Forecast

Goulds 197 4 forecast kept me bearish and short throughout 197 4

until the week before Christmas 197 4, during which I began

making long term purchases. After that it was ride the bull phases

that transpired from 197 5 to 1982. 1982 to 2000 was the greatest

bull market of all time.



Edson Goulds 197 7 Forecast

Edson Goulds Five Y ear Forecast 1977 to 1982
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.wordpress.com/2011/10/28/utilities-by-edson-gould/http://stockmarketobservations.wordpress.com/2011/10/28/dividends-by-edson-gould/http://stockmarketobservations.wordpress.com/2011/10/28/bonds-by-edson-gould/http://stockmarketobservations.wordpress.com/2011/10/28/speed-lines-by-edson-gould/http://stockmarketobservations.wordpress.com/2011/10/28/sentimeter-by-edson-gould/http://stockmarketobservations.wordpress.com/2011/11/07/bottoms-by-edson-gould/http://stockmarketobservations.wordpress.com/2011/11/07/three-steps-by-edson-gould/http://stockmarketobservations.wordpress.com/2011/11/07/edson-goulds-1974-forecast-feb-1974/http://stockmarketobservations.wordpress.com/2011/11/07/edson-goulds-1975-forecast-nov-1974/http://stockmarketobservations.wordpress.com/2011/11/08/edson-goulds-1976-forecast-nov-1975/http://stockmarketobservations.wordpress.com/2011/11/08/edson-goulds-1977-forecast-nov-1976/http://stockmarketobservations.wordpress.com/2011/11/07/edson-goulds-five-year-forecast-1977-to-1982-may-1977/


20/149


977 9

This was a remarkable forecast in 197 7 , where the Dow Industrials

had nev er been higher than 1,0 00 . NO ONE predic ted a rise o f this

magnitude in 197 7 . Most were waiting for a resumption of the

bear market.

As part of the 197 7 to 1 982 forecast: On Wednesday A ugust 4,

19 82 I went long the market for the first time in months. By

Friday, August 6 I was worried that I had made a mistake as I wasdeep in the red (I was long the Kansas City Stock Market

Contracts). The Kansas City Stoc k Market Contract was the first of

the stock index co ntracts (February 1 982). It was based on the

Value Line Arithmetic Index , margin requirement were quite low,

and it had a multiplier of 1 00 times the Value Line Arithmetic

Index , which meant the leverage was very high. On Friday (A ug

6), my wife and I went to dinner and I told her my tale of woe and

whether I should sell my long positions. I ex plained that my key

indicator had reversed and c ontinued higher on Thursday and

Friday but the market had continued lower. Since the key

indicator was usually correc t, we decided to stick it out for a few

days more (I was crazy in those days). My key indicator w as

mentioned by Gould only onc e in his market letters. If y ou didnt

catch its importance, too bad, because he only gave y ou a peek.

Prior to Gould writing about this indicator I had been loo king for

one that had similar characteristics without success. Thus when

Gould wrote about it, I recognized instantly that I had struck

gold. I have modified this indicator slightly and researched it

back to 1939. This was a lot of work as it was before co mputers

and online data (remember when Barrons was available only on

paper, still is for the distant past). Meanwhile on Monday A ugust

9, 1982 the market took off like a rocket and never lo oked back. I

skyroc keted out of the red and had a big profit. In August 1982
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.wordpress.com/2011/11/07/edson-goulds-five-year-forecast-1977-to-1982-may-1977/


21/149


y g p g 9

the only people that were bullish were Edson Gould, Robert

Prechter and myself (probably a c ouple of others but I didnt know

them). Ever yo ne else was extremely bearish. It was a perfect

example of crowd behavior.

Sign Of The Bull by Edson Gould

****************************************************************

TRANSACTION SIGNALS

All actionable signals are only for short term time frames. These

signals are not designed for intermediate or long term time frames

BUT . . . . .

After a short term buy signal, long term tax status can beachieved by a continuation of the upward trend, which causes

short term actions to morph into long term holdings.

See more details in the glossary under Tax es, Futures Contracts

and Money Management.

Glossary Link

T RANSACT ION RECORD

In this blog a warning of an impending botto m (or top) is often

issued well in advance o f the formal buy or sell date. This allows

thoughtful consideration prior to a formal action signal. To get a

sense of how this works, you should read a few days prior to a

formal buy /sell signal. I often buy/sell in my personal account

based on the early warnings.

The transaction record near stock market bottoms will show that I
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.wordpress.com/2011/11/07/sign-of-the-bull-by-edson-gould-nov-1979/http://wp.me/p1DRwF-d1


22/149


Share this:

The transaction record near stock market bottoms will show that I

am ve ry skittish and usually remain so until the new direction is

well underway .

Qualified buy signal given from December 5th to

Decem ber 20th, 2011

Buy signal in October 2011 was never issued due t o a

SERIOUS family illnessSELL SEPTEMBER 9, 2011

BUY AUGUST 30, 2011

SELL AUGUST 30, 2011 Stopped out, re-bought quic kly

BUY AUGUST 29, 2011

SELL AUGUST 25, 2011

BUY AUGUST 23, 2011

SELL AUGUST 1, 2011

BUY JUNE 23, 20 11

****************************************************************

MISCELANEOUS

There are useful items throughout this blog. For instance, the

Wall Street Quotes can be v ery instructive. So make sure and

look all through the blog.

Comments:Be the first to comm ent

Twitter2 Facebook LinkedIn Reddit

Digg Email Print
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.wordpress.com/2012/01/03/stock-market-update-010312/?share=twitter&nb=1http://stockmarketobservations.wordpress.com/2012/01/03/stock-market-update-010312/?share=facebook&nb=1http://stockmarketobservations.wordpress.com/2012/01/03/stock-market-update-010312/?share=linkedin&nb=1http://stockmarketobservations.wordpress.com/2012/01/03/stock-market-update-010312/?share=reddit&nb=1http://stockmarketobservations.wordpress.com/2012/01/03/stock-market-update-010312/?share=digg&nb=1http://stockmarketobservations.wordpress.com/2012/01/03/stock-market-update-010312/?share=email&nb=1http://stockmarketobservations.wordpress.com/2012/01/03/stock-market-update-010312/http://wp.me/p1DRwF-Iuhttp://wp.me/p1DRwF-Cqhttp://wp.me/p1DRwF-Cqhttp://wp.me/p1DRwF-BNhttp://stockmarketobservations.wordpress.com/2011/08/25/daily-stock-market-update-%E2%80%93-part-three-%E2%80%93-082511/http://stockmarketobservations.wordpress.com/2011/08/23/breakout-buy-signal-082311/http://stockmarketobservations.wordpress.com/2011/08/01/short-term-sell-finalized-080111/http://stockmarketobservations.wordpress.com/2011/06/23/big-down-day-a-reversal/http://stockmarketobservations.wordpress.com/2012/01/03/stock-market-update-010312/#respond


23/149


Edson Goulds 1979 Forecast (Dec 1978)Pos ted December 29, 201 1 by Bob

Categories: EDSON GOULD
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.wordpress.com/2011/12/29/edson-goulds-1979-forecast-dec-1978/http://stockmarketobservations.wordpress.com/category/edson-gould/http://stockmarketobservations.files.wordpress.com/2011/12/edson-goulds-1979-forecast.jpg


24/149


Edson Gould's 1 97 9 Forecast - Page 2

I was a subsc riber to Edson Goulds Findings & Forecast from 1 97 4 to

197 9. Impressed by the quality o f information, I kept Goulds special

reports, y early forecasts and important portions of his semimonthly

market letters.

Having nev er written a b ook, Edson Goulds stock market memoirs are

contained in his market letters and special reports. Searching the

internet Ive found a c ouple of his reports and none o f his market letters.Exc ept for the po stings here, its certainly possible that Goulds stock

market observations have been lost.

Some may say that these publications are old and not relevant. I would

suggest those believers read One Way Pockets. This little stock market

gem was written in 1917 and contains a wealth of important information.

One Way Pockets certainly prov es how human behavior doe snt

change. I wish I had found this book when I was beginning my stoc kmarket education, but believing that nothing of genuine importance

could co me from the distant past, I restricted my reading to current

publications. A c ondensed version of One Way Poc kets is posted on

this blog.

Gould believed that the stoc k market was mov ed by the emotions of the

crowd, fear, panic and greed. Those emotions combined with the

pendulum of swinging from one emotional extre me to the other formed


25/149


the foundation of Goulds predictions. Crowd behav ior in the stock

market is a timeless factor that will never change.

The ultimate book on crowd behav ior is Mem oirs of ex traordinary

popular delusions and the m adness of crowds by Charles

Mackay (1852). It is available for free from Google Books (click on the

link abov e).

Because o f the timelessness of cro wd behavior yo u will find that Goulds

indicators still function v ery well in predicting the stock market.

Recently I scanned Edson Goulds y early forecasts and many of his

market letters. There remains a significant number of pages and subjec ts

that have not been scanned.

To receiv e this report (pdf format), please co mplete the following form.

Name (required)

Email (required)

Comment (required)
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://books.google.com/books?id=NmEOAAAAQAAJ&printsec=frontcover&dq=Extraordinary+Popular+Delusions+and+the+Madness+of+Crowds&hl=en&ei=KKzGTvCUAqz_sQK0uLhJ&sa=X&oi=book_result&ct=result&resnum=4&ved=0CEsQ6AEwAw#v=onepage&q&f=false


26/149


Share this:

Submit


Edson Goulds 1978 Forecast (Dec 1977)Pos ted December 29, 201 1 by Bob

Categories: EDSON GOULD


Digg Email Print
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.wordpress.com/2011/12/29/edson-goulds-1979-forecast-dec-1978/?share=twitter&nb=1http://stockmarketobservations.wordpress.com/2011/12/29/edson-goulds-1979-forecast-dec-1978/?share=facebook&nb=1http://stockmarketobservations.wordpress.com/2011/12/29/edson-goulds-1979-forecast-dec-1978/?share=linkedin&nb=1http://stockmarketobservations.wordpress.com/2011/12/29/edson-goulds-1979-forecast-dec-1978/?share=reddit&nb=1http://stockmarketobservations.wordpress.com/2011/12/29/edson-goulds-1979-forecast-dec-1978/?share=digg&nb=1http://stockmarketobservations.wordpress.com/2011/12/29/edson-goulds-1979-forecast-dec-1978/?share=email&nb=1http://stockmarketobservations.wordpress.com/2011/12/29/edson-goulds-1979-forecast-dec-1978/http://stockmarketobservations.wordpress.com/2011/12/29/edson-goulds-1979-forecast-dec-1978/#respondhttp://stockmarketobservations.wordpress.com/2011/12/29/edson-goulds-1978-forecast-dec-1977/http://stockmarketobservations.wordpress.com/category/edson-gould/http://stockmarketobservations.files.wordpress.com/2011/12/edson-goulds-1978-forecast.jpg


27/149


Edson Gould's 1 97 8 Forecast - Pag e 2

I was a subsc riber to Edson Goulds Findings & Forecast from 1 97 4 to

197 9. Impressed by the quality o f information, I kept Goulds special

reports y early forecasts and important portions of his semimonthly


28/149


reports, y early forecasts and important portions of his semimonthly

market letters.

Having nev er written a b ook, Edson Goulds stock market memoirs are

contained in his market letters and special reports. Searching the

internet Ive found a c ouple of his reports and none o f his market letters.

Exc ept for the po stings here, its certainly possible that Goulds stock

market observations have been lost.

Some may say that these publications are old and not relevant. I would

suggest those believers read One Way Pockets. This little stock market

gem was written in 1917 and contains a wealth of important information.

One Way Pockets certainly prov es how human behavior doe snt

change. I wish I had found this book when I was beginning my stoc k

market education, but believing that nothing of genuine importance

could co me from the distant past, I restricted my reading to current

publications. A c ondensed version of One Way Poc kets is posted on

this blog.

Gould believed that the stoc k market was mov ed by the emotions of the

crowd, fear, panic and greed. Those emotions combined with the

pendulum of swinging from one emotional extre me to the other formed

the foundation of Goulds predictions. Crowd behav ior in the stock

market is a timeless factor that will never change.

The ultimate book on crowd behav ior is Mem oirs of ex traordinary

popular delusions and the m adness of crowds by Charles

Mackay (1852). It is available for free from Google Books (click on the

link abov e).

Because o f the timelessness of cro wd behavior yo u will find that Goulds

indicators still function v ery well in predicting the stock market
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://books.google.com/books?id=NmEOAAAAQAAJ&printsec=frontcover&dq=Extraordinary+Popular+Delusions+and+the+Madness+of+Crowds&hl=en&ei=KKzGTvCUAqz_sQK0uLhJ&sa=X&oi=book_result&ct=result&resnum=4&ved=0CEsQ6AEwAw#v=onepage&q&f=false


29/149


Share this:

indicators still function v ery well in predicting the stock market.

Recently I scanned Edson Goulds y early forecasts and many of his

market letters. There remains a significant number of pages and subjec ts

that have not been scanned.

To receiv e this report (pdf format), please co mplete the following form.

Name (required)

Email (required)

Comment (required)

Submit


Digg Email Print
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.wordpress.com/2011/12/29/edson-goulds-1978-forecast-dec-1977/?share=twitter&nb=1http://stockmarketobservations.wordpress.com/2011/12/29/edson-goulds-1978-forecast-dec-1977/?share=facebook&nb=1http://stockmarketobservations.wordpress.com/2011/12/29/edson-goulds-1978-forecast-dec-1977/?share=linkedin&nb=1http://stockmarketobservations.wordpress.com/2011/12/29/edson-goulds-1978-forecast-dec-1977/?share=reddit&nb=1http://stockmarketobservations.wordpress.com/2011/12/29/edson-goulds-1978-forecast-dec-1977/?share=digg&nb=1http://stockmarketobservations.wordpress.com/2011/12/29/edson-goulds-1978-forecast-dec-1977/?share=email&nb=1http://stockmarketobservations.wordpress.com/2011/12/29/edson-goulds-1978-forecast-dec-1977/


30/149



Stock Market Update 12/28/11

Pos ted December 28, 201 1 by Bob

Categories: DAILY UPDATE

SEASONALITYfrom Mike Burke

A verage returns for the coming week (12/26 to 12 /30) have bee n

positive by all me asures and stronger during the 3rd year of the

Presidential Cycle than other years.

Next year is the 4th year of the Presidential Cycle and, on ave rage,second (a distant seco nd) to the 3rd year in average returns.

Since 1 964 the OTC has been up 7 5% of the time in the 4th ye ar of the

Presidential Cycle w ith an average gain of 7.6%. The best 4th ye ar for

the OTC was 1 980 (+33.7% ), the worst 2008 (-40.5%) followed by

2000 (-39.3%).

OTC is Over The Counter, whic h is now known as NASDAQ.
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.wordpress.com/2011/12/29/edson-goulds-1978-forecast-dec-1977/#respondhttp://stockmarketobservations.wordpress.com/2011/12/28/stock-market-update-122811/http://stockmarketobservations.wordpress.com/category/daily-update/http://stockmarketobservations.files.wordpress.com/2011/12/dollar1.jpeg


31/149


If next y ear is going to be a distant second to the 3rd y ear of a

Presidential Cyc le, were going to have some problems. This year

(2011 ) the SP500 is ev en to slightly down . . . and this was supposed to

be a good y ear???

CYCLES

The diamonds on the lower part of the chart signify cy cle lows. On

October 4, 2 01 1 there were numerous diamonds stacked on that date.

This was a cyc le low of significanc e. The chart below is from Hurst

Signals a fee based serv ice at http://hurstsignals.com/order-now/

CLI CK ON CHART S TO ENLA RGE
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://hurstsignals.com/order-now/http://stockmarketobservations.files.wordpress.com/2011/12/12-28-11-hurst-cycles.jpg


32/149


1 2 -28 -1 1 H urst Cy c les

The next cy cle low of importance (but not on the degree o f October 4) is

in late January 201 2. Following that, the next cy cle low of importance is

in May 20 12. The cyc le low in May is of unusual interest to me because I

have another chart that has shown something happening around May

2012 (next chart).
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.files.wordpress.com/2011/12/12-28-11-hurst-cycles.jpghttp://stockmarketobservations.files.wordpress.com/2011/12/12-28-11-ind-week.png


33/149


1 2-28 -11 DJ Industria ls Weekly Bar

The abov e c hart is a Fibonacc i time relationship to significant highs and

lows in the past (page 8 of my charts). We have two different cy cles

producing a common date around May 20 12 (red v ertical line). I think

this bears close watching to see what develops.

WHAT NOW?
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.files.wordpress.com/2011/12/12-28-11-ind-week.pnghttp://stockmarketobservations.files.wordpress.com/2011/12/12-28-11-dji-5-min.png


34/149


1 2-28 -1 1 DJI 5 Min

We hav e begun a co rrec tion and if all is well, it should finish soon and

resume the uptrend. A tip off that the correction was co ming was in the

following chart. This chart can be found on page 1 of my c harts.
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.files.wordpress.com/2011/12/12-28-11-dji-5-min.pnghttp://stockmarketobservations.files.wordpress.com/2011/12/12-28-11-interest-rates-vs-stocks-15-minute.jpg


35/149


1 2-28 -1 1 Interest Rates Vs Stocks 1 5 Minu te

Notice how interest rates began declining on December 2 3. This was the

tip-off that a market decline should follow. Since 1998s Asian currenc y

crisis, interest rates have mov ed in lock step with the stock market.

Previously they mov ed in opposite directions (inverted chart). The

degree of interest rate move ment doesnt necessarily c orrespond to the

stock market but the direc tion is the important factor.

I would c ertainly look for a b ottoming in interest rates before thinking

we have a so lid bottom in stocks. The following chart says we hav e

finished 3 steps up in the rally c oncluded on Tuesday. If the correction

finds support on any of the Fibonacci lines we should remain in good

shape. Currently we hav e found support at the 50 % level but a v iolation

of the 61.8% level would not be co nstructive.

Today was a 95% down day and possibly it was climactic. We would

definitely not want to string back to back 90% down days together. That

would mean run quickly to the nearest exit.
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.files.wordpress.com/2011/12/12-28-11-interest-rates-vs-stocks-15-minute.jpghttp://stockmarketobservations.files.wordpress.com/2011/12/12-28-11-tsx-15-min.jpg


36/149


1 2 -28 -1 1 TSX 1 5 Min

REAL ESTATE

Heres an updated chart to give y ou nightmares. And y ou thought y our

house value had bottomed??? Not according to Robert Shiller. Thisindicates another 25% decline in home prices by 20 18 (my date).
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.files.wordpress.com/2011/12/12-28-11-tsx-15-min.jpghttp://stockmarketobservations.files.wordpress.com/2011/12/12-28-11-case-shiller.jpg


37/149


1 2-28 -1 1 Ca se Shiller Real Estate Values

****************************************************************

CHARTS

MY CHART LINK (updated constantly)

These are my personal charts and my playground for doodling

trend lines, wave counts and other ideas.

I draw the trend lines and wave co unts on a daily basis (sometimes

more often). Y ou can find these doodles from 1 minute to

monthly charts.

Yo u will find the best trend lines and wave counts on charts with

longer time frames. This gives perspectiv e to the lines and
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.files.wordpress.com/2011/12/12-28-11-case-shiller.jpghttp://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID4485509


38/149


counts. Perspective was a favo rite of Edson Gould.

I usually restrict my trend lines and wave counts to the first three

charts on eac h page, TSX, DJI & COMPQ. The other c harts on the

page are usually for c onfirmation of the trend and wave structure.

Page 1 Buy /Sell Signals






Page 7 Indexes With Daily Bars

Page 8 Index es With Weekly Bars (since 1 981)

Page 9 Indexes With Monthly Bars (since 1 981)

Page 10 Indexes With 60 Minute Bars, Candlestick

Page 11 Indexes With Daily Bars, Candlesticks

Page 12 Index es With Weekly Bars, Candlestick

Pages 13 through 1 4 are shorter term indicators. The indicators

are used to simply look for some type o fleading action before a

turn or confirming action of the wave co unt. Page 13 is a look-

eve ry day indicator page. The other indicator pages are less

frequently visited.

Page 15 Hurst FLD Projections

Page 16 Indicators, Long Term

Page 17 International Indexes

Page 18 through 30 are sector ETFs. They represent most of the

active sector ETFs and are always a good hunting ground when

looking for something that is breaking in a new direction.

P h h h k Th k h h


39/149


Page 31 through 43 are growth stocks. These are stocks that have

risen in price since 1 990. One qualification is that they must not

be severely damaged in a bear market so they cant rise to

significant new highs in the following bull market.

The growth stocks show daily market action for the last 3 y ears

and weekly prices since 1990. This gives a good perspective ofhow they have be haved in the immediate past (daily c harts) and

how they behaved during good and bad times (weekly charts).

Page 44 Junk Pile

WAVE COUNT SSIMPLIFIED

My wave counts are not Elliott Wave! Its different, simple and

functions w ithout a maze of exclusions.

T here are 3 peaks (or valleys) to a com pleted wave cou nt.

A rev ersal of trend takes place after a completed wave count.

Often times its as simple as counting 3 bumps (or dips) on a chart .

. . Other times, not so easy .

In a downtrend the same rules apply ex cept y ou are co unting 3

dips instead of 3 bumps.

Each group of 3 steps must stay c onfined to a channel.Laying a pen or pencil on the c hart will help yo u visualize the

channel.

As the trend progresses, all of the steps that make up a larger

trend will also be co nfined to a larger channel. Sometimes the

channel is not rev ealed until the surge phase has ended.

When the m arket breaks a channel (regardless of the

perceivedwave cou nt), the current step has been

terminated. (Make sure your c hannel was correc tly drawn

b f lli t i ti )


40/149


before calling a termination).

The correction following the second step is larger than the

correc tion that followed the first step. Obv iously the correc tion

following the third step is a reve rsal.

A single wave m ay sub-divide into another 3 waves. I will

call this an ex tension. When this happens (1) the trend is still

intact, (2) the channel will widened and (3) instead of a total of

3 steps, there will be 5 steps.

Sometimes I will use the terms step and wave interchangeably .

Reading the glossary helps in the understanding of this blog.

There are many other important facts in the glossary.

Glossary Link

ABBREVIATIONS

DJI = Dow Jones Industr ials

DJT = Dow Jones Transportat ions

SPX = SP 50 0

ES = SP 500 Futures

COMPQ = Nasdaq Composite Index

TSX = Toro nto Stock Exchange (Canadian blue chips)

SOX = Semico nducto rsTXX = Technolo gy

****************************************************************

Long T erm UP

Uptrend

Mar 2009 To Present

Step 2 Up (of 3) Com pleted

http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://wp.me/p1DRwF-d1


41/149



From the bottom in March 200 9

Large step one up ended in May 2010

Large step two up ended in May 2011.

Significant break abov e the May 20 11 highs should signal that Step

3 up is o fficial
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.files.wordpress.com/2011/12/12-28-11-long-term1.jpg


42/149


1 2-28 -11 LONG TERM

****************************************************************

Very Long T erm DOWN

Downtrend

Jan 2000 T o Present

Step 2 Down (of 3) Com pleted

Currently In Rally Phase From Step 2 Down


43/149


1 2-28 -1 1 VERY LONG TERM

VERY LONG T ERM COMMENT S

We have 3 possibilities for the future.

We have entered a very wide swinging m arket

(megaphone formation) sim ilar to that of 1966 to 1974.

During that era we had three bear markets with two intervening

bull market rallies. Each bear market had a lower low than the

previous b ear. The interve ning bull market rallies saw new all



44/149



We also have formed a huge head and shoulders formation since

1998. If this formation is valid, the downside measurement calls

for a bottom around Dow Jones Industrials 1,0 00.

We began a long term bull market in March 20 09. Each

subsequent min-bear market will result in higher lows than the

prior major low.

I favor the m egaphone formation as the m ost likely

scenario.

Since 2000 we have had two bear markets, 2000 to 200 3 and 2007 to

2009. Like 1966 to 197 4, the recov ery from the first bear market saw a

new all time high (2007 peak). Its possible that we may ex perience

another all time high during the present recov ery period. This wouldsupport the megaphone formation. A failure to make new highs would

support the head and shoulders argument. In both formations the

conclusion of the present recov ery would call for a third and final bear

market. An estimated time for the conclusion o f the final bear market is

approximately 20 18.

The lesser downside target of both formations is the megaphone

formation as it likely calls for a bottom 1,0 00 to 2,000 points below the2009 low, which would be around Dow 5,00 0.

In the head and shoulders formation the measurement calls for a bottom

around Dow Jones Industrials 1,0 00. This is almost an unimaginable

eve nt regarding the possible fundamentals to c reate this scenario. If this

did happen, ev ery thing that could go wrong would have to go wrong.

The reasons range from the absurd to the absurdly absurd. This scenario

is so dark that it doesnt seem possible but nev ertheless, the head and

shoulders formation is there and will be waiting until we pierce the all-


45/149


g p

time highs of October 2 007 .

Remember these are simply possible scenarios and are not embedded in

fact. Whatever the outc ome, it never hurts to be a little cautious with

some of your money . But in the worst case scenario, every thing that we

take for granted as being safe . . . . would not be safe. This is something

to never forget in the event things go v ery badly.

Hopefully we will never have to think about worst case sc enarios other

than to have a go od laugh at them presently.

****************************************************************

EDSON GOULD

Edson Gould, Premier Stock Market Strategist Edson

Gould had a profound influence o n the dev elopment of my

techniques and indicators. Prior to me subscribing to his

advisory servic e, I was just one of the crowd.

After 40 y ears I still have many of the publications from his

advisory servic e, Findings & Forecasts. Fearing the loss of these

hard copy reports I hav e recently scanned and created pdf files of

these reports. Now I have hard copies and computerized ver sions

of the reports.

I hav e used a technique of his that I found in an obscure reference

in one of his reports. It was only mentioned once and never

again. I believe that he used this tool extensiv ely and never told

the world its importance. Prior to my finding this tool, I had been

try ing unsuccessfully to find a different way to c hart the market.

When I read about his technique I knew instantly that this was

exac tly what I had been seeking. I have charted this method back


46/149


y g

to 1 939 and found it to be v ery useful. There is no mention of it in

the reports that I posted below as I have deleted any reference to

it. Its a super secret indicator and Id have to kill you if I told y ou

about it.

Edson Gould was truly a legend in his own time. Its too bad that

today most people have forgotten or nev er heard of him or his

discov eries. Below y ou will find only the first page of these

reports. A teaser is what yo u might call it. The rest of the reports

are available upon request. This is a man that deserves to be

remembered throughout technical analysis market history.

T he following are links to Edson Gould reports.

My Most Im portant Discov ery by Edson GouldIt was also my most important discov ery , for it ex plained the

irrational volatility o f markets that had my stified me in my early

years. During those early y ears I found nothing worked in

predic ting these irrational market swings. But the fog lifted after

reading this report and I began to understand how to begin

predicting the market.

Edson Gould Profile by MT AEdson Gould Conc epts by William Scheinm an

Decade Cycle by Edson Gould

Decade Cyc le Update by Ned Davis

Swing Principle by Edson Gould


Utilities by Edson Gould

A forecasting indicator
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.wordpress.com/2011/10/28/my-most-important-discovery-by-edson-gould/http://stockmarketobservations.wordpress.com/2011/10/28/edson-gould-profile-by-mta/http://stockmarketobservations.wordpress.com/2011/10/28/edson-gould-concepts-by-william-scheinman/http://stockmarketobservations.wordpress.com/2011/10/28/decade-cycle-by-edson-gould/http://stockmarketobservations.wordpress.com/2011/10/28/decade-cycle-update-by-ned-davis/http://stockmarketobservations.wordpress.com/2011/10/28/swing-principle-by-edson-gould/http://stockmarketobservations.wordpress.com/2011/10/28/utilities-by-edson-gould/


47/149


Dividends by Edson Gould

Bonds by Edson Gould

Speed Lines by Edson Gould

Sentimeter by Edson Gould

With companies failing to pay dividends c ommensurate with their

earnings, this indicato r has failed. As the market climate

continues to deteriorate in the coming years, I would expec t

dividends to return to their former lev els and this indicator will

once again become useful. Prior to the late 1990s, it had 100

years of success.

Bottoms by Edson Gould

This was written and directed at the upco ming bottom in 197 4 but

it applies to all major bottoms.T hree Steps by Edson Gould

Where do y ou think my three steps principle came from? Straight

from this report although I modified the concept through the

years.


Goulds 197 4 forecast kept me bearish and short throughout 197 4

until the week before Christmas 197 4, during which I began

making long term purchases. After that it was ride the bull phases

that transpired from 197 5 to 1982. 1982 to 2000 was the greatest

bull market of all time.



Edson Goulds 197 7 Forecast

Edson Goulds Five Y ear Forecast 1977 to 1982

This was a remarkable forecast in 197 7 , where the Dow Industrials

had nev er been higher than 1,0 00 . NO ONE predic ted a rise o f this
http://pdfcrowd.com/http://pdfcrowd.com/redirect/?url=http%3a%2f%2fstockmarketobservations.wordpress.com%2f&id=ma-120104140803-c8ef6c2ahttp://pdfcrowd.com/customize/http://pdfcrowd.com/html-to-pdf-api/?ref=pdfhttp://stockmarketobservations.wordpress.com/2011/10/28/dividends-by-edson-gould/http://stockmarketobservations.wordpress.com/2011/10/28/bonds-by-edson-gould/http://stockmarketobservations.wordpress.com/2011/10/28/speed-lines-by-edson-gould/http://stockmarketobservations.wordpress.com/2011/10/28/sentimeter-by-edson-gould/http://stockmarketobservations.wordpress.com/2011/11/07/bottoms-by-edson-gould/http://stockmarketobservations.wordpress.com/2011/11/07/three-steps-by-edson-gould/http://stockmarketobservations.wordpress.com/2011/11/07/edson-goulds-1974-forecast-feb-1974/http://stockmarketobservations.wordpress.com/2011/11/07/edson-goulds-1975-forecast-nov-1974/http://stockmarketobservations.wordpress.com/2011/11/08/edson-goulds-1976-forecast-nov-1975/http://stockmarketobservations.wordpress.com/2011/11/08/edson-goulds-1977-forecast-nov-1976/http://stockmarketobservations.wordpress.com/2011/11/07/edson-goulds-five-year-forecast-1977-to-1982-may-1977/


48/149


magnitude in 197 7 . Most were waiting for a resumption of the

bear market.

As part of the 197 7 to 1 982 forecast: On Wednesday A ugust 4,

19 82 I went long the market for the first time in months. By

Friday, August 6 I was worried that I had made a mistake as I was

deep in the red (I was long the Kansas City Stock Market

Contracts). The Kansas City Stoc k Market Contract was the first of

the stock index co ntracts (February 1 982). It was based on the

Value Line Arithmetic Index , margin requirement were quite low,

and it had a multiplier of 1 00 times the Value Line Arithmetic

Index , which meant the leverage was very high. On Friday (A ug

6), my wife and I went to dinner and I told her my tale of woe and

whether I should sell my long positions. I ex plained that my keyindicator had reversed and c ontinued higher on Thursday and

Friday but the market had continued lower. Since the key

indicator was usually correc t, we decided to stick it out for a few

days more (I was crazy in those days). My key indicator w as

mentioned by Gould only onc e in his market letters. If y ou didnt

catch its importance, too bad, because he only gave y ou a peek.

Prior to Gould writing about this indicator I had been loo king for

one that had similar characteristics without success. Thus whenGould wrote about it, I recognized instantly that I had struck

gold. I have modified this indicator slightly and researched it

back to 1939. This was a lot of work as it was before co mputers

and online data (remember when Barrons was available only on

paper, still is for the distant past). Meanwhile on Monday A ugust

9, 1982 the market took off like a rocket and never lo oked back. I

skyroc keted out of the red and had a big profit. In August 1982

the only people that were bullish were Edson Gould, Robert

Prechter and myself (probably a c ouple of others but I didnt know


49/149


them). Ever yo ne else was extremely bearish. It was a perfect

example of crowd behavior.

Sign Of The Bull by Edson Gould

****************************************************************

TRANSACTION SIGNALS

All actionable signals are only for short term time frames. These

sign

01-03-12 Stock Market Trends & Observations

Documents