October stocks on time - Mon, 11 Oct 2004

amm has a good pattern, showing everything for a move higher over coming months, though it could be slow to happen. Gann showed these sorts of patterns, breaks out of accumulation at low prices. What I liked about his examples is that it gives you a clear point at which to buy - on the break. This is so much better because you avoid the necessity of having to hold on to a stock for ages waiting for a move up. Just buy after someone else has identified what they think is an undervalued stock, or stock in recovery mode (fund managers often) and get on board in the direction of the trend. Now there are no guarantees of course, the stock may not always continue up, but hey, at least I was not holding a stock going nowhere, and tying up capital. Stop is in place to limit the risk and preserve capital for the next buy if the chart proves uncooperative.

(Do note, on the same premises as above, I accept one might already have bought amm toward the end of 2003 on the first break, then the stock went up a few cents and stalled. That's how it goes. It is an even better break now.)

Always give these patterns a watch. Also, if you are able to see the saucer forming, you may sometimes get the chance to get in on the right hand side of the shape prior to the break of accumulation. Up to you. Me, I prefer the actual break.

done similar, (see weekly) I have been saying to watch that all year, if you had bought on the break you would even have a dividend by now, though i don't buy for dividends. emi held its recent dividend, ie the price moved up immediately after going ex div - this is a bullish sign for the longer term.

rrs, one to watch, read the news out. if you want to learn about such prospective mining stocks and their drilling reports, and try to trade them, do so on this one. Volume showed this news was not unexpected.

kmn "we know nutting"

stocks that could be watched
anx, triangle
ebt (activity after its annual report release)

and this, the charting lessons at IBD can be worthwhile www.investors.com/dsa
i believe the owner of this paper - a good one for investors I have found - made his first money thru chart study and good buying, but don't quote me on that one

for those interested:
http://www.corpwatch.org/article.php?id=11551 illustrating the borrowing of money by the US for the war and where some of it is spent. Plenty of other interesting stuff there too, eg article 11556, 11555, and for vested interests, 11525. We are being conned with the war in Iraq. A few souls in the US are becoming immensely wealthy supplying the arms - and that's the way it is wanted. Very much history repeating I might add. 1776, 1812, 1862, 1896 (a manufactured war against Spain if ever there was one), 1914, 1965-74 and now Iraq, where tomorrow's leaders made vast sums of money supplying arms today. Alas, few study history these days.

Home loans from Wizard about to start in Aust where the bank shares in the profits on any sale of the property - a government effort to get more affordable housing. New ideas every cycle as land price hots up, but repeating history into the second stage of the property cycle. As forecast.

worth a read

for the fuller version:
www.imf.org/external/pubs/ft/weo/2004/02/index.htm chapter II

The IMF have never yet forecast anything accurately, despite the 1000 or so economists who work there. Fret not, this sort of report just serves to bring in more players, or have existing players cash in and move money to other world hot spots.

http://money.guardian.co.uk/houseprices/story/0,1456,1322555,00.html when it is this obvious, it means cash is kept on the sidelines, so things rarely turn down when that is the case; we have to be all in up to the eyeballs - then you have a peak. At least that is my view anyway. Eyes on credit growth and the yield curve, not rates themselves.

Had a good question this week, worth repeating to all class attendees; question was:

what do you make about the rising oil prices and effects on the economy?

well of course i don't see it the way a conventional economist might...

first look at history ala Gann, in degree counts, 30 60 etc 30 years ago, 1974 was the oil crisis, so one expects some sort of repeat at this time. Back then though there was an emotional fear the oil supplies were about to run out, fueled you might say by that old Club of Rome report about world shortages. This time reserves are not in jeopardy - there is plenty of oil.

For me, something had to happen to keep interest rates low so that the 18 year or so property cycle can complete properly. Looks to me like oil prices will do the trick - since US is oil dependent, higher prices are a bit like a tax increase or rate hike, but that won't effect land speculation or bank lending too much, at least not yet.

also, something needs to happen to take the worlds focus away from the speculation in land, so that when the land price does peak, no one will know, at the peak some real estate turkey will come out and say (for example) that land is immune from all the troubles etc etc or some such thing, but then the secondary banks will have a bit of trouble increasing lending, interest rates will rise a bit (watch the yield curve to go negative, not the actual rise itself of short term rates) and before you know it, recession. Some years to go yet though for mine. Whilst everyone is nervous, things rarely turn down. This is what all markets do actually when going up - they climb a wall of worry

credit creation and the yield curve are the things to watch

thanks for the question

also worth a read, goes hand in hand with land price rises www.rba.gov.au/Speeches/sp_ag_280704.html

Finally, may I say:
Guys it is like this, whilst we all continue to think the same way as yesterday, things must repeat, and repeat they will. The brilliance of WD Gann, he found that the repetition is according to time cycles - and he showed they can be forecast well in advance. He said it is dependent on the birth date of anything, so finding the correct starting date is crucial. The current up trend in our stock market, if i have understood Gann correctly, should peak in mid January 2005 (with the usual retracements along the way, it doesn't go there in a straight line), then have 90 days down as a retracement of the prior year or so's move, then after mid April 2005 it will be back up again. So there you go, let's see.

To see something like a Gann forecast as he sent to his subscribers of the time, (and he charged a lot of money, a years fee was the price of a model T) go to www.webtrading.com/gannforecast.htm

his 1929 forecast, completed and mailed to his subscribers 23/11/1928. Note particularly what he said about September. I can't of course vouch completely for the authenticity of what is on the web these days, however the fact that Gann issued his annual stock forecasts well before actual events (his forecasts for the year were issued in November of the year prior) is not disputed by any market followers today, and some of his forecasts were remarkable. No one seems to have been able to repeat it exactly.

For those who have done a gann course with me, I do urge you to continue your circle work and study one or two stocks with it as best you can. Gann's circle and counting of degrees leads to much more interesting things I can tell you.

I have attached a copy of the 1929 Dow chart so you can compare things. If you compare his monthly indications section (industrial stocks), you will see he did not get it all anywhere near right - but his call to buy late march and sell August were spot on. Usually where he was wrong, the market inverted, ie his time for the trend change was exact, but proved a high not a low, or vice versa. Despite this though, he quite clearly called 1929 for the panic, and to be on the short side after august. For those interested, there will be a small class next year sometime, one class only, to show you how he did this, and apply it to 2005 markets.

The real estate cycle should run out 18 years or so, to peak around 2007/9. Events will occur to make this happen in my view. It is timed that way. But we will let our indicators and Gann timing tell the story as it unfolds.

When all eyes are on one substance (at present oil) best to watch something else. I'd be watching gold and gold stocks. If the price of gold goes above $440 and can hold this price in the next year, then I think one would be looking at a major bull market in gold. First target would then be 508 (254 * 2) - percentages of the lows give highs on the way up - 762, 1016, 1270, and yes it is that simple. A high 30 years from 1979 would be too obvious (?) but is likely if the bull market develops. Gold moving up would tend to indicate tough news on the war front and in economics. But price has to go above $440 first. Stronger gold stocks have already made their mid point retracements (eqi in spectacular fashion, so too ttr to name two - mid points are amazing aren't they) further adding to the bullish possibilities.

more to follow later.

so to finish with a good laugh, planning ahead for the interstellar land rush

get in early

the boom has even gone virtual


but watch the wild card Guanxi of China. Very hard to get reliable and accurate info from this country.


Click below for the PDF files...

Gold Monthly

Print This Page
Home ----- Contact Us