For GT Blog January 29, 2009

On Bellwethers:

In order to identify early leadership investors should seek out the important bellwethers.

A market bellwether can be a leader in any given sector be it commodities, interest rates or global equity markets.

The term is derived from the Middle English Bellwether - which refers to the practice of placing a bell around the neck of a castrated ram - (a wether) in order that this animal might lead its flock of sheep.

UPS is a transportation bellwether because it is very economy sensitive.
We need the leadership of UPS - and we need it now!

For GT Blog January 26, 2009

In bear markets some degree of portfolio insurance is a prudent act

We can seek out assets that have a tendency to operate inversely to the broader market direction. The choices could be cash, stock short sales, gold, bonds or one of those fancy inverse exchange traded funds.

In the US we have the DOG (short Dow) and in Canada we have the HXD or the Horizon BetaPro TSX60 Bear

There seems to be a little glitch - they don't seem to work

According to Horizons BetaPro Management Inc. these products are to "PROFIT or PROTECT in Bull and Bear Markets"

Note during the window of Sept 17, 2008 to January 06, 2009 the S&P/TSX declined by 20% - over the same period our double inverse ET F returned only 3%

OUCH!

For GT Blog January 22, 2009

We know that Elliott Wave is an extension of Dow Theory that years earlier identified waves and included one tenet of “confirmation” in that the trend of one average (the industrials) must be confirmed by the trend of another average (the transports).

Our chart this week is that of the daily closes of the Dow Jones Industrials plotted above the daily closes of the Dow Jones Transports. Note the non-confirmation between the two plots with the Transports touching the November 2950 lows and the Industrials holding at least 500 points above the November lows.

We call this positive divergence, a situation that occurs when two lines on a chart move in opposite directions at important junctures. We had similar divergences in September 1998 and again in October 2002. This satisfies one Dow Theory tenant that the averages must confirm the trend.


A Bottom Set-Up?

Non Confirmation of Transports Low - A Higher Low on the Industrials