For Sunday, January 17, 2010                                         Go to Website
	Current Strategy Positions   2008 Full Year Results Fibtimer Timing + 17.3 % S&P 500 Index    - 39.9 % 2009 Full Year Results Fibtimer Timing + 59.5 % S&P 500 Index  + 24.7 % also SPX Agg Timer        + 84.8% Gold Fund Timer     +102.7%  Smallcap Timer      + 74.0 % FibTimer currently has 12 successful strategies   S&P 500 Position -        BULLISH   Nasdaq 100 Position - BULLISH   Gold Stocks Position -  BULLISH   SmallCaps Position -   BULLISH   U.S. Dollar Position -    BEARISH   Bond 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:

"Those who watch the January barometer, where the first week of the new year predicts the success or failure of the stock market for the rest of the year, should be quite happy. The S&P 500 Index - SPX gained nearly 3% this week, and this was after a profitable two week holiday period. If there is truly any predictive accuracy in this indicator, we should have a good year ahead."

This week:

The S&P 500 Index - SPX lost ground this week, but most of the loss occurred on Friday. By the close the SPX had ended with a bit less than a 1% weekly loss.

Looking at both the daily and weekly charts (below) the uptrend has not been diminished in any way by Friday's sell off, but we should expect to see follow-through weakness early Monday morning.

The SPX did have higher intra-week highs this week and higher intra-week lows, which is bullish, but the loss on Friday took away from the early week strength.

The SPX remains decisively above SPX 1119.31 which, for those who watch support and resistance chart levels, forecasts higher highs until the next resistance level is reached. That next resistance level, and the target for the current advance, is up at SPX 1226.10.

The SPX 1226.10 level is 7.9% above Friday's close at 1136.03. It is also the 61.8% retracement of the entire 2008-2009 bear market decline. The 61.8% level is typically the hardest level to surpass in any advance. That means we should expect to have a difficult time as we approach it. The good news is, if it is surpassed, we can look for substantially higher highs ahead.

There are several Fibonacci market technicians whose advice we value, that we have a close relationship with. Recently, two of them said that after this advance ends, the next leg down would be substantial and could test, or break below, the March 2009 lows.

We always listen to them and will be watching for bearish patterns. We do not see such a decline based on current chart data, though we are certainly overdue for a normal correction and it could begin at any time.

We leave the crystal ball forecasting up to those who enjoy trying to foretell the future. It is enough for us to stay with the trend. But we admit to being intrigued by these doomsday analyses and it will be interesting to see how it all turns out.

Subscribers who read forecasts of imminent declines by other market technicians should take note of this. We do not see this in the tea leaves, but if it happens, we follow price so we will already have changed positions and will follow the market down and profit from it.

One of the important values of trading trends, as we do at Fibtimer, is that if such a catastrophic decline does occur, we will already be in bear funds. When the trend changes, we change.

The SPX remains well above its 50-day moving average, which is considered by many as a short term bullish indicator. The 50-day average is acting as support for this advance and has only been broken twice since March.

Subscribers should note that even though we have now pushed above the 50% retracement level for the bear market, the stock market is still about 50% below its old 2007 highs. Remember that we had a 50% loss in the bear market, but that means we have to have to generate a 100% gain just to get back to break even. We still have halfway to go.

Conclusion:

The early March close below the November 2008 lows, as well as below the 2000-2002 bear market lows, completed a bearish Elliott Wave (5 Wave) pattern.

We have an Elliott Wave confirmation of a new bull market for the SPX. This occurred when the SPX closed above its prior bear market Wave 4 rally high at 934.70 on Monday, June 1st. Accordingly, we are now in the midst of a new advance that will last months and possibly years. How far it will go is unknown, but it should be very profitable and consist of several waves higher, with corresponding corrective waves along the way.

The SPX is above its 50-day moving average and also above its 200-day moving average. Both averages are moving higher.

Looking back to the beginning of this advance, there have been a total of nine breadth surges of better than 9 to 1 up volume vs. down volume which have occurred during the early weeks or at the start of each new rally. These predictive days have already been proven correct. They have no upside limit though so higher highs can still be ahead.

On November 9 we had another breadth surge. This time it was a 16 to 1 up vs. down volume rally on the NYSE. We are watching for a second such day to confirm a bullish signal based on this indicator but that day must occur before February 9.

The target for this rally is now SPX 1226.10 which is 7.9% higher based on this week's close.

The SPX portion of this strategy is in a BULLISH position and in the Rydex Nova S&P 500 Fund - RYNVX (or other bullish S&P index fund).

S&P 500 Index (SPX) Daily Chart

S&P 500 Index (SPX), Weekly Chart

Nasdaq 100 Index (NDX) Chart Analysis

Last week we wrote:

"The Nasdaq 100 Index endured several days of strong selling pressure this week but still ended with a gain of 1.7%. The NDX did manage to end the week on a new rally high, but spent most of the week trading sideways while the big caps rallied non-stop. Friday's late day rally pushed the index back into positive territory."

This week:

The Nasdaq 100 Index - NDX lost about 1.5% this week, most of it in the Friday sell off. As is usually the case, the NDX exceeds the SPX both on the upside as well as on the downside.

Ending the week on a bearish note is likely to result in a bearish start on Monday.

The NDX has made a decisive close above the NDX 1772.07 resistance level. This forecasts a run to the next resistance level up at NDX 1977.53. This is 6.1% above Friday's close.

The NDX is well above its 50-day moving average line. That line was tested in the late November sell off and it held. This adds to the bullish picture for the NDX along with solid support below and a close above 1772.07 again confirming the rally.

The NDX is still in positive territory for year 2010 but not by much. Friday's selling loped some 1.3% off the index.

Note that the past three weeks have seen mostly sideways trading with increasing volatility. The NDX 1900 level is causing the bottleneck. If we can close above 1900 the advance should resume.

Conclusion:

The NDX has a Wave 5 Elliott Wave low in place at its November 2008 lows. The NDX has closed above NDX 1378.40, the Wave 4 high, which confirms this as a bear market bottom based on Elliott Wave theory. The SPX has also confirmed this as a bear market bottom.

The NDX is above its 50-day moving average and that average was tested and has held in several correction attempts over the past months. The NDX is far above its 200-day moving average. Both of these averages are rising.

The NDX has closed decisively above the critical 61.8% retracement resistance level at 1772.03 and also the 1800 level. The new target for this advance is now NDX 1977.53.

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).