For Sunday, January 29, 2012                                       Go to Website
	Current Strategy Positions 2012 Results  results are all realtime   S&P Aggr.   Nasdaq Aggr.   S&P Cons.   Small Cap   REIT Timing   Stocks Avg + 10.1 % + 5.8 % + 9.3 % + 10.5 % + 8.1 % + 14.4 % FibTimer currently has 12 successful strategies   S&P 500 Position -        BULLISH   Nasdaq 100 Position - BULLISH   Gold Stocks Position -  BEARISH   SmallCaps Position -   BULLISH   U.S. Dollar Position -    BULLISH   Bond Position -              BULLISH 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:

"The U.S. markets again had a "normal" week with lower volatility and a trading range that did not put fear into the hearts of investors. The S&P 500 Index - SPX finished the week with a solid 2% gain. Trading in the Nasdaq 100 Index - NDX was especially bullish and is discussed below."

This week:

The S&P 500 Index - SPX ended another week with gains though the markets did struggle to hold on to them. Early week bullishness was somewhat tarnished by a lower than expected GDP number released on Friday.

Four weeks of upside for the SPX is bullish. The odds of this continuing without some profit taking are zero, but the longer we move up, the less will be the decline as bulls should quickly take advantage of lower prices when we eventually do correct.

The markets held up well this week and even Friday's initial substantial losses turned into only a small loss by the close while the Nasdaq 100 Index - NDX, discussed below, closed with a Friday gain.

Last week we wrote about the CBOE Volatility Index - VIX has now closed well below 20. This week it closed at 18.53, close to unchanged. A VIX below 20 is long term bullish for the markets. It tells us less investors are buying options to protect against declines.

Typically a bull market is led by small caps and the Nasdaq. Up until this week that has not been the case as the S&P 500 Index has been the strongest index. However, this week the small caps, as followed by the Russell 2000 Small Cap Index - RUT, outperformed all the major indexes. Though this was only one week, if it continues, we would expect it to add to the evidence that considerably higher highs remain ahead for the stock market.

The daily chart shows a clear breakout to the upside. The SPX is well above the October rally closing high at SPX 1285.09 and the index is at its highest level since the August selloff.

The SPX is solidly above its 200-day moving average, a level that had acted as a market top since October.

The SPX is also well above both the 50% (at 1232.51) and 61.8% (1259.53) retracement resistance levels that were surpassed two weeks ago.

The 50-day moving average and 200-day moving average are closing in on a bullish crossover. It has not yet happened but it should occur soon, possibly next week.

The breakout above the October rally high is especially significant. It points to the strong likelihood that this is a wave 3 advance within a bullish 5 wave pattern. The daily chart has this pattern on it and we have now added this wave pattern on the weekly chart.

A wave 3, if that is what we are in, is typically the largest of the waves and should eventually break out above the old highs at SPX 1363.61. This remains to be seen, but there is a strong case to be made for continued gains using Elliott Wave Theory.

Also affecting the markets:

The unemployment rate is down to 8.5% and has now fallen for four straight months. Most economists are now looking for a continued slow but consistent increase in growth over the coming year.

Gross Domestic Product - GDP came in this week at +2.8%. Economists had been looking for +3.0%. The markets initially sold off when the numbers were released but then erased most of the losses. A 2.8% GDP is not too shabby considering where the economy has been for the last three years.

The markets now have had six days with better than 9 to 1 up volume vs. down volume on the NYSE all in the past two months. One was all the way up at 37 to 1. This would appear to be pointing to a huge advance soon. Days with volume at better than 9 to 1 are unusual and often occur before a sustained advance.

This is also a presidential election year and the incumbent president has vast power to push money into the economy. No president wants to run for reelection with a declining stock market and poor economy. Obama may have been saying he wants a better economy for the last three years, but you can be certain all is being done to ensure that this year.

Conclusion:

The SPX is above its 50-day moving average and above its 200-day moving average. These averages are approaching a bullish crossover.

The SPX declined 17.6% at its lows for this decline. On a closing basis it did not reach bear market status (20% loss).

The SPX appears to have put in a double bottom and panic low.

The SPX has broken above all of the important short-term resistance levels possibly pointing to a sustained advance in coming weeks.

The SPX rose in the first trading week of the year. This is a bullish indicator for the rest of the year. It looks like there will be a bullish month of January also.

The SPX portion of this strategy is BULLISH and in the Rydex Nova S&P 500 Fund - RYNVX
(or other bullish S&P index fund). The Exchange Traded Fund (SPY) can be used instead.

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 led the advance this week and even Friday's technology selloff was unable to keep the index from posting a solid gain of 2.8%. The most bullish event though was the breakout of the NDX to new highs. The index closed above its May 2011 rally high and interestingly, is at its highest level since back in the very beginning of 2001."

This week:

This week the Nasdaq 100 Index - NDX confirmed its breakout above the prior July rally highs and posted strong gains again as the NDX outperformed the S&P 500 Index.

We mention again that the NDX is at highs not seen since the great bear market decimated the index back in 2000 to 2002. In fact, we have not been this high in the NDX since all the way back on February 6, 2001.

Before and during 2001 the index was in a huge bear market that resulted in a loss of 80%. The index has never recouped this loss and may not for a very long time, but the current breakout is at least a small victory long term and a big victory short term.

The NDX continues to trade well above its 61.8% retracement resistance level at 2284.25

The chart is labeled as wave 1 and 2 of a potential bullish 5 wave pattern. The close above the wave 1 makes this a wave 3 which typically is the strongest wave of the pattern. Wave 1 closed at NDX 2401.29 on October 28. The breakout points to a new long term advance ahead.

The NDX has a very well defined double bottom in place. It may even be a triple bottom based on the daily chart (below). This bottom occurred right at the 61.8% retracement support level for the entire previous bull market advance.

Conclusion:

The NDX has made a major breakout by closing above its October high. The index is now trading at its highest level since February 2001.

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

There is a bullish crossover of the 50-day moving average line and the 200-day moving average line.

The NDX has closed above all of the major resistance levels we have been watching.

The NDX portion of this strategy is BULLISH and in the Rydex NDX 100 Fund - RYOCX (or other bullish NDX 100 index fund).