For Sunday, February 8, 2009                                          Go to Website
	Current Strategy Positions FibTimer currently has 11 successful timing strategies          2008 Results Fibtimer Timing   + 17.3 % S&P 500 Index      - 38.5 % Nasd 100 Index    - 41.9 %   S&P 500 Position -        BEARISH   Nasdaq 100 Position - BULLISH   Gold Stocks Position -  BULLISH   SmallCaps Position -   BEARISH   Bond Fund Position -    BEARISH These positions were started over previous weeks. You need a paid subscription for real time signals. Sector Funds, ETF and Stock positions are not included above.

Last week we wrote:

"After last week's losses, we were looking for some buying to come into the financial markets this week. We had just that early on with gains that began to look like a breakout rally by Wednesday's close."

This week:

A great deal to discuss this week as the stock market has showed some strong bullish indications and moved towards a breakout.

In the case of the Nasdaq 100 index - NDX (discussed below) that breakout has already occurred. Midweek the NDX had a buy signal, but because we already were in a bullish position for the NDX, there was no need to send an emailed alert.

You can see in the stats above that there are now gains in both the bullish Nasdaq position as well as the bearish S&P 500 Index - SPX position. This is because the Nasdaq has been considerably stronger over the past two weeks and our split position was able to take advantage of this.

More strength next week will reverse the SPX and put this strategy into a 100% bullish position.

Note that it has to happen first. We remain bearish in the SPX for now.

Importantly, while the NDX has broken above resistance, the SPX has not. We expect it to this time, but until it does, the chances of a failure at resistance remain in place.

In the below daily chart you can easily see the nice rising trend support line for the SPX, as well as thetwo very important resistance levels. Yes, there are two of them and this is why we must wait for a breakout to turn completely bullish.

The SPX must close above its prior rally high as well as critical Fib resistance at 889.21. So mark SPX 889.21 as the most important target for this advance.

It is also important to mention that our trend indicators factor in a combination of indicators so we could see a buy signal while still just below 889, but more likely it will be surpassed first.

Friday's close is fractionally below the 50-day moving average for the SPX. A close above this moving average will be bullish.

We see the huge government inflow of cash into the markets as a positive, at least for coming months. What the markets do is what we need to do, so if the markets see the government's actions as unable to stop the economic slide, we may be due for some more problems ahead. However, if the passage of the stimulus bill is seen as a positive, we will see higher highs in coming weeks.

The stimulus bill in congress appears ready to pass, and though there are many differences of opinion on it, the stock market is going to benefit. Next week we will have the Wall Street verdict, and it looks like it will be positive.

Last week we wrote, "Our unconventional split position may be different, but it is not losing ground and that puts this aggressive strategy well ahead of the markets. Avoiding losses is a huge part of the profit game."

We had many emails about our position, so we feel that we should be able to take some credit for the results, and they are substantially positive as you can see in the stats above.

A concern is the current rally in gold (the gold timer is up over 29%). This points to a possible inflationary scenario ahead.

Certainly the Fed cannot consider raising rates anytime soon, so the gold rally is worrisome. Whether this will affect the markets in the short term, or only in the long term, remains to be seen.

As long as we do not close below the November lows, the Elliott Wave count forecasts that we have seen a Wave 5 bottom, the final wave down in a major trend. A close below the lows would invalidate this wave count and also point to considerably lower lows.

A close above the prior Wave 4 is needed to confirm a new uptrend, at least according to Elliott Wave rules. That is all the way up at SPX 1005, so there is plenty of room to rally before this strong resistance level is reached.

Conclusion?

We still see the closing lows in November as a likely bottom. A close below those lows would be a very bearish event considering how far the market has already declined. We have seen forecasts projecting a decline to SPX 400 by very respectable analysts. This seems almost an impossible number, but so was SPX 800 when the selling began a year ago.

The downside appears to have solid support around SPX 800. This round number was tested in December and again in mid-January. Both times it held.

The upside resistance looks to be around SPX 920, which was surpassed for only a few days in the failed early January rally. This level will likely be tested in coming days.

We remain in a split-position, with the SPX in bear funds and the NDX in bull funds, though we expect the position to change next week.

For subscribers who overly worry about short term swings in the financial markets, remember that you do not have to be an aggressive timer to be a profitable timer. This strategy can and does incur small losses on occasion. Money is made in both aggressive and conservative style trading. Our Conservative S&P Timer strategy trades only the long term trends but that means it profits without the numerous buy and sell signals that active and aggressive traders take. The Conservative S&P Timer has been in cash since January 7th.

The SPX portion of this strategy is in a BEARISH position and in the Rydex Inverse S&P Fund - RYURX (or other bearish SPX index fund).

S&P 500 Index (SPX) Daily Chart

S&P 500 Index (SPX), Weekly Chart

Nasdaq 100 Index (NDX) Chart Analysis

"The Nasdaq 100 Index - NDX rallied early this week and looked to be setting up for a breakout after Wednesday's huge gap-open advance. But the very next day that rally collapsed and the losses, which extended into Friday’s trading, wiped out all the gains and put the NDX back into negative territory."

This week:

The Nasdaq 100 Index - NDX has become the leader in this advance and midweek it turned bullish for this strategy. We were already in a split position with the NDX bullish, so no alert was sent.

The strengthin the NDX is obvious with gains already exceeding 3% while the SPX, still in bear funds, remains positive. Obviously a rally next week based on the passage of the stimulus bill would change that and also reverse the SPX to a bullish position.

Last week we wrote that a reversal to the upside must be accompanied by strong volume. This time we did have strong volume and if you look at the chart below, you can see the NDX has closed above its prior closing rally high as well as critical Fib 61.8% resistance.

The NDX is also now well above its 50-day moving average line and now that line itself is rising. All contributing to a bullish scenario going forward.

This is all bullish and adds evidence for potential gains in coming days and weeks.

The NDX also has a likely Elliott Wave 5 low in place just as the SPX does. If this low holds, we would expect to have a long term advance ahead. If not, we will have a new leg down with several waves of declines to lower lows.

The NDX portion of this strategy is in a BULLISH position and in the Rydex NDX 100 Fund - RYOCX (or other bullish NDX 100 index fund) for both active and aggressive traders.