The Weekly JDV Market Timer - December 7, 2008

Depression Beater Portfolio: - See below for updates

(This portfolio is just a sample of my own portfolio - no recommendation to others is implied or intended)

12/07/08 (Commentary for Sunday evening) - The market made an outside reversal day on Friday and momentum divergences have been noted on several indices. Still the market rallied into a Turning Point Window (12/5-12/8) and could reverse down on Monday. The Bollinger OEX PVI indicator increased from .71 to 1.60 and showed some Fear on a rally day - this is constructive. Also the daily chart of the SPX indicates a bullish descending wedge pattern which should be resolved by a sharp rally sometime - however, the pattern does allow for another lower low which could happen in the 12/15-12/19 time frame according to Major Cycle Lows.   The 5-day MA of CBOE put/call ratio remains at the lowest level since the 11/4 high but the TRIN value of ~ 10 last Monday will provide support at the SPX lows of 12/1. Gold is tracing out a large bottoming formation from the late October lows - looking for a reversal up in the Full Moon timing window this week.       

 

Stock Markets:    The projected target low of SPX=650 is less likely now going into mid-December -  there were signs of bullish divergence recently on various daily charts - however, we are expecting at least one more test of the lows by mid-December.  Taking out the 11/4 high on the SPX negates a bearish EW wave counts for the short-term but only for the short-term. SPX=650 will be seen at some point next year if not by mid-December.

 

PM Complex:  Gold made its low on 10/27 and retested it on 11/23 - Gold appears to be coiling for a huge move up and is tracing out an impressive bottoming [pattern. Settlement concerns on the Com ex December contract could be a catalyst at some point. Use weakness going into the Full Moon on 12/12 to add to core gold and PM stock positions.  

 

THIS WEEK INCLUDES IMPORTANT TURNING POINT WINDOWS IN STOCKS – read new comments below in blue.

TURNING POINT WINDOWS:

·         Gold/Silver–  Gold is tracing out a large bottoming pattern. Look for Starkey 1-Day Reversal Timing on Tuesday. Weakness going into the Full Moon Time Window on 12/12 should be bought for a trade.  Strong physical gold demand argues for a potential settlement problem in the December Comex  Gold Futures contract at some point  - the disconnect between the paper and physical markets may be heading for a collision. 

·         Stocks – The cluster of Turning Point Days recently (11/29, 12/1, 12/4 & 12/6) has turned the market on queue at each occurrence - a decline on Monday would be the next logical move.  More concerned at this point in selecting stocks for the Large Wave B rally that will soon commence  than in catching the Crash Wave Low if it hasn't already occurred.

·         Crude Oil – Crude oil trying to put in a bottom here - 11 consecutive weeks of decline argue for selling exhaustion soon  - our target of $40 by mid-December is coming up quick. The breakdown in Natural Gas last week is a short-term negative. 

·         Grains – Looking very weak here still.

·         Bonds – Bonds have gone parabolic and appear to have finished a 5-wave move up on the daily. Still look for confirmation of a top before assuming bearish posture again. 

·         Currencies -  The US Dollar may be completing a Head and Shoulders top on the daily chart.     

TURNING POINT DAYS:

The last day of the recent  Turning Point Cluster is 12/6  - could see a reversal down on Monday.  

Depression Beater Portfolio: No changes today

(This portfolio is just a sample of my own portfolio - no recommendation to others is implied or intended)

 

Holdings:

 

1) Long 100 shares of SDS at an average price of 103.2249 on 11/18 - roughly 15% of portfolio.

 

2) Long 1000 shrs of SLW at $2.73 on 11/24.

 

3) Long 200 shrs of CHK at $16.00 on 12/1.

 

4) Long 2000 shares of SNG at 1.20 on 12/2.

 

Strategy: Looking for the market to pullback to retest the 11/21 lows one more time by 12/19. Favor adding to PM stocks, buying natural gas stocks SNG & CHK and adding integrated oils like COP. I plan on scaling out of SDS (2 X short S&P500  ETF) by mid-December at a confluence of major cycle lows.