For Sunday, February 14, 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 + 54.8 % S&P 500 Index  + 23.4 % also SPX Aggres Timer   + 84.8% Gold Fund Timer     +102.7%  Smallcap Timer      + 74.0 % FibTimer currently has 12 successful strategies   S&P 500 Position -        BEARISH   Nasdaq 100 Position - BEARISH   Gold Stocks Position -  BEARISH   SmallCaps Position -   BEARISH   U.S. Dollar Position -    BULLISH   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:

"Another losing week for the S&P 500 Index - SPX, but considering the huge 3% decline on Thursday, the weekly loss was not that bad. The SPX was down about 0.8%."

This week:

An extremely volatile week for the S&P 500 Index - SPX ended with fractional gains (+0.9%) for the big cap index.

We note that the advancing days this week did not have the strong advancing volume we would expect if a bottom was in place and this was the start of a new sustainable advance.

Last month the SPX was above the 1119.31 level, the 50% retracement for the entire bear market decline. This is a strong resistance level and one that was likely to result in at least a normal correction.

A normal correction after a long term advance is expected to be in the 10% to 15% range. At the lows of this correction the SPX had declined about 8%. This would indicate that there are still more corrective declines ahead.

The weekly chart (below) shows this was an inside week. Lower intra-week highs and higher intra-week lows than the previous week's trading ranges. Such weeks are considered to be indicative of a lack of conviction in either direction by traders.

We have labeled the daily chart as a 3 wave pattern with the final Wave c having completed late last week.

This will either result in continued gains next week or possibly another leg down that would also consist of three waves. We consider some additional gains to be the most likely event, followed by another leg down as the NDX chart appears to have only a single down wave in place with the expectation that there will be additional corrective waves yet to come.

Several Elliott Wave services are labeling this as the probable start of a Wave 5 decline to new market lows. The final collapse of a huge multi-year bear market pattern and possibly as a second great depression.

Such forecasts sell a lot of books and subscriptions. Fear always does. But there is no way to be sure such apocalyptic forecasts are correct. Following "all" trends will keep us out if we continue lower and put us back in if the market is ready to again advance to new highs.

Our strategies are designed to let the markets tell us what to do. If the stock market rallies in the face of all this bad news we will jump on board. If not, we will stay in cash for this first leg down and once we see signs of a continued decline, take bear fund positions in future declines.

Our exit to a cash position instead of to bear funds is a strategic choice. Typically when the stock market reaches a top there are declines followed by strong rallies that fail. If indeed this is a top, we will have opportunities to enter bear funds. Market bottoms usually have the familiar V pattern, but not market tops.

If this is not a top, we do not want to take losses from a rally that eventually breaks out to new highs. We will see how this choice plays out over coming weeks. Meanwhile we are protected from losses and not losing capital in the declines and can reenter if the market turns positive.

The stock market continues to be oversold. When such oversold conditions exist there is the potential for a snap back rally at any time. Yet oversold conditions can get worse.

The SPX is well below its 50-day moving average, which is considered by many as a short term indicator. The 50-day average was acting as support for this advance and had only been broken twice since March. Now we are below it for the third time.

There is support at the November 2, 2009 lows at SPX 1042.88. We may have come close enough to this level last week to cause the bounce, or we may yet have to reach it. The SPX has also closed below its rising trend support line that has held all declines since back in August 2009.

The likely supports for this decline are at SPX 1008.64 and then critical support at SPX 975.75. If the SPX breaks below 1000 there is also the emotional factor that would have a bearish effect on prices.

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 below its 50-day moving average but still above its 200-day moving average. The 50-day average has turned down. The 200-day moving average is at the SPX 1008.64 support level, offering a very strong support level. If it is broken, it would likely result in n increase in selling pressure.

The SPX portion of this strategy is in a CASH (money market funds) position.

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 - NDX had three days of advances before stepping off a cliff on Thursday. The sell off Thursday spilled over into Friday but then the markets rallied late in the session and by the close, the NDX had erased all Friday's losses and even closed the week with a very small gain."

This week:

The Nasdaq 100 Index - NDX closed higher this week after reaching its corrective lows at the end of last week.

At the lows the NDX had corrected about 9% from its rally highs, reached in early January.

While we have labeled the SPX losses to date as a three wave (abc) decline, the NDX is labeled as just a Wave a decline. We are expecting the markets to continue a bit higher after this week's gains, but if the NDX is going to have a normal 3 wave decline, there will still be lower lows ahead.

If this turns into a new bearish trend to the downside, there will be more complex waves ahead, but all resolving to the downside.

At the close this week the NDX was again above 1772.07, the 61.8% retracement of the entire bear market decline. The NDX was above this level for most of December and into January. The real resistance level appears not to be 1772.13, but the NDX 1900 level which turned prices lower.

The NDX 1900 level stopped the advance and will likely be a problem for some time. If we can close above 1900 the advance should resume, but with this sell off it could be months before we make up lost ground and retest 1900.

Likely support levels if the NDX continues lower are at the 50% retracement for the July January advance at NDX 1643.36 and then the 61.8% retracement at NDX 1584.39.

The NDX is now well below its 50-day moving average and the average is now moving lower.

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 now below its 50-day moving average. The NDX is above its 200-day moving average.

The 200-day moving average is right at the 50% retracement support level so this should offer very strong support if reached in coming days.

Considering the apparent wave pattern for the NDX, any buying next week is expected to be limited and the selling should eventually resume.

We discuss the reasons for a cash position in the SPX analysis above. We do not yet see this as the start of a new bear market. If it is, there will be several opportunities to take advantage of the declines.

The NDX portion of this strategy is in a CASH (money market funds) position.