Friday, February 26, 2010

Feb2010 3-month Forecast

U.S. stock market (all segments):
Peak 1/5, bottom 1/22 at I1 3/22 qualifying as a strong sell on 1/5
Peak 2/5 at I1 4.23
Bottom 2/15 at I1 3.34, peak 3/5 at I1 5.76 qualifying as a strong buy on 2/15
Bottom 3/19 at I1 3.40
Peak 4/2 at I1 3.94, bottom 4/12 at I1 2.74 qualifying as a strong sell on 3/5 or 4/2 at trader's discretion. 
Traders will want to short 3/5 through 3/19 and stand aside.  The bottom 3/19 provides a very weak bounce of .5 in the I1 and thus should slow down the decline to the 4/12 bottom, not provide a strong rally.
Longer-term traders will want to short 3/5 and stay short through 4/12. 
I will be splitting my position in half, one a trading position and another longer-term.  Thus I will carry only a 1/2 short position from 3/19 to 4/2.

** I1 turn dates in April are to provide continuity for potential trade on 3/5 and 3/19.

Trade dates are at market on close.

Extended forecast:
March 8 will usher in the new bear trend lasting through May, 2015.  2010 will see a sharp decline into the beginning of November.
The next sustained rally will occur in December, 2010 into April, 2011. There will be several sharp countertrend rallies in the interim which will only serve to flush out longer-term short positions. These will occur April 13 for 2 weeks and July 6 through August 13. Both will be followed by severe declines via strong sell signals rule 2. The strongest decline will occur 8/16 into the beginning of November.

The intermediate-term technical composite just completed (2/19/2010) it's round trip to 0 from the stratospheric high of 24 reached February, 2009.  The fact that it took a full year to wear off the profoundly oversold condition is a testament to how bad things got.  It also clears the deck for a new downtrend.

We are entering a position short silver using ETF ZSL double-short.  Target bottom is 4/24.  However, there is a high expected in the Dollar at end of March.  Since this coincides with a short-term low in the stock market on 4/2 we will look to exit 1/2 the silver short between 3/30 and 4/2.

The trading rules, conceptual framework, and historical charts are provided Intro and Concepts

Introduction and Concepts

Welcome to Animal Spirit Forecasts.  My name is Steve Koteles and I have been a trader for 40 years and a professional Software Developer nearly all of that time. I gravitated toward an instinctual interpretation of market behavior and began the quest for a forward-looking guage of animal spirits 20 years ago. I have been a full-time trader for 3 years and live in the New Mexico mountains with my wife.

The trading rules, conceptual framework, and historical charts are provided on the following page:
I1 concepts, rules, and history