January - look beyond what is in front of you - Thu, 05 Jan 2006

The AFR reported 19th December, front page, that stock broking firm Pattersons is facing a class action from clients after one of its brokers speculatively traded many of his clients discretionary accounts in an unauthorised fashion. I do urge you to follow such events as and when they occur, and dissect what is reported and relate it to the charts. It seems this guy was selling call options not covered by stock, betting over the past year that our stock market would fall by as much as 10 percent. Interesting is it not ? Trading against the trend. Let me repeat that: trading against the trend and against the overbalance position as well. Absolute suicide. As you can see in the article, he lost the bet.

Never trade futures and options against the trend unless you have an exceptionally good and valid time reason.

You should always note such heavyweights losing because: perversly, markets cannot fall whilst this is happening. This guy, and others, are providing the liquidity for the buyers on the way up. Only once the shorts are all done and finished can the market fall substantially. In other words, we have to be all in at the top. Gann said this, but in another way: he said that at the end of important time frames, volume comes into the market. Study the charts the way he askes you and you will see this.

To be good at trading and forecasting, you need to get to the cause. As Gann said, the cause of an event has effected markets a long way before it is manifest in any public announcement. It is the same with what you see around you. Next time you see yet another African nation in the depths of starvation, pity will drive the world to send food aid. Sounds a good thing to do, and relieves our conscience, but it is wrong. What should happen is this:

the relevent aid agencies should step in and buy food from the _local areas and nearby farmers_, or nearby countries.

This apparantly not-so-blindingly obvious behaviour doesn't happen because it challenges the political basis for food aid, the vested interests. Most countries especially say the US, insist that food aid provided as famine relief, if coming from the US, must be grown in the US, and shipped on US vessels. Only four US agribusinesses and five US shipping companies share most of the funds the US provides to ship famine relief. And just in case you think the food agencies and so called charitable organisations have nothing to do with this game, they promote the behaviour further since they all depend for much of their budget on payments for the food relief and getting it to where it is allegedly needed. Worse, it is sometimes these agencies themselves that actually end up selling the government donated (but bought from US agribusinesses) food relief on local markets in these same very poor countries, to generate dollars for their anti-poverty programs. Third world poverty is now an entrenched profit generator, via government granted hand-outs. Poverty is not a natural state of affairs, and always indicates the presence of government granted licences.

I have included a scan for your reading about the urge to conform. Something to keep in mind as the markets approach the end of large timeframes - another due around 2009. (Next email now, I want to get this one away with the charts.)

Packer snr has passed on. Descriptions come to the fore of all the papers like "a great Australian", "Larger than life", "successful business man"... and on it goes. Note, and this is essential if you are to see things the way they really are, most of Packer's business ventures were not even remotely successful: what he was good at is operating government granted monopolies - Channel 9, most of the casinos in Australia and pay TV. All government granted. These were very successful. What he was good at was of course cultivating close - very close - government ties in order to protect the value of those licenses; a value the government could at any time redirect into the public purse if it chose to. He cared not which side of politics was in power, and had both sides of the political pendulum working for him.

The value of these licenses is not wealth, but claims upon wealth. Their price (but not value) rises and falls with the business and real estate cycles. (And the cycle occurs because we allow those values to capitalise into readily tradable privileges.) These values do not add to the produced wealth of the country. Remember that at the top of the current real estate led cycle. If memory serves me correctly, he passed on very close to 15 years from his first (publicly diagnosed at least) health related issues.

Stock watch, ics, see attached.
Again, this is trying to see what could lie further ahead beyond just the left hand side of the chart. At the same time, we are trying to use all the patterns and shapes, time, price, overbalance and volume to maximise our chances of success, _and also not guessing_, which we achieve by simply allowing others in the market to confirm the buy if, and only if, the stock crosses accumulation points as Gann so ably pointed out in his examples. This helps us avoid having our precious capital tied up in stocks going nowhere. It also means we don't have to try and be smart, or to prove we are smarter than the market, which we can never be. Patience, wait for the breaks.

(This company management say they have some great technology for health care pyts system. The latest company release would have us believe it is the greatest thing invented. As you can see, the chart is telling you that the market has not yet made up its mind. Never believe what management tell you, wait for the rest of the market to confirm it with a clear uptrend. Then just trade the trend. Pretty simple n'est pas ? Aahhh if only...) See blt for a similar break, if it trades above 20, the next mid point it should go to is 30 for starters.

I have included a few more examples of how time and price come together, just like Gann used to show, see jum, wss, adi, bdm sbm. There are plenty of others doing the same at present, eg, bkp

Notice how coe came back to its mid point, and is now just about to complete the repeat range. Expect news at repeat runs. Learn from past examples like this, as other stocks do the same.

Therefore, along the same lines, have a look at sen. Watch now for a move back to between 55 and 62 cents. 62 would be an ideal price for the next low, cause then you could add the weekly range of 59 cents, to get 121, repeat range, which is exactly the mid point of the monthly extreme prices. That would be pretty neat, and prove how the stock is working constantly to mid points - as they all do. Good days for the 62 cent low to happen would be Jan 18th, or Feb 9 or thereabouts. If this happens, you have yourself a buy zone, ready for the next run into the mid point of the monthly extremes. (Trade the chart as it happens though, not the forecast.)

Just out of interest, - dec 31 extreme temp,then the change, bushfires in Victoria's north. Add 42 to 45 days and we have Feb 12 to 15. See email of dec 13 for more on the weather extremes noted before. Mid Feb could be interesting for weather events and other things perhaps.
Previous highest recorded Dec 31 temperature was 1862 - 143/144 years ago.

Print This Page
Home ----- Contact Us