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CGTS DAILY - FOR THURSDAY 21 OCTOBER 2009


Clark's
Gate Timing System
Thursday 21 October
2009
 

 

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crises should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

 - Ludwig von Mises.

 

INDEX VIEW

In the midst of this landmark Bear Trap Rally, we have indexes that seem to be stretched fairly thin, with most showing deteriorating momentum.  None more so that the BKX (Banking Index).  The BKX has NOT been able to really break overhead support and establish a new leg up.  It has been trying to get through resistance at around 48, and has not been able to do so.  It is now looking to test support on the downside at 43.72.  Interestingly, M2F Alt Sum Plus (bottom pane) has gone negative for two successive days, this for the first since early July.  This may mean nothing more than that we are approaching a trading bottom.  If the trend deteriorates, along with M2F ALT Sum Plus deterioration, then we'll have something to get excited about.



The DJI (Dow Jones Industrial Index) is a very positive chart EXCEPT for what M5 is doing (top pane, black line).  Look how anemic M5 has been through the last leg of this rally.  This seems to be the sign of an exhausted rally.

 
The CAC (FCHI-French Index) is another positive chart, except M5.  Long-term momentum is not confirming this rally.


The FTSE (British Index) tells the same story: a leg up; but why is momentum (M5) so involuted?  Usually this kind of non-confirmation is a sign of trouble.


The HGX (the Housing Stock Index) is one of the uglier indexes we follow.  It is a negative chart at the moment, having broken through support, creating a new low.  This last rally was not very significant -- if it's over, then it puts together the second part of a bear trend: lower highs.  M5 really does not look good in this chart either.


KS11, the Korean Index, is now trying to collapse back through near-term support (1590.47), which, once it does, will qualify also as a near-term bear trend -- UNLESS it can reverse itself and rally back up to and through resistance at 1723.17.


N225, the Nikkei Index, Japan, is also trying to top here, short of resistance, with a chance of crashing back through support at 9627.67, which would make this a VERY negative chart.


The rally in the OEX (S&P 500 Index) has been much better -- from an M5 perspective -- than some other indexes, especially the European indexes -- but M5 seems to be topping at the moment, with a chance of breaking back down.  Otherwise this chart looks quite good.


The RUT, Russell Small-Cap Index, has hit overhead resistance and seems to be bounding back down.  M5 is especially signalling a decline is at hand.  If the short-term trend (red line, top pane) turns down, this will become a short-term negative chart.


SOXX, the Semicondutor Index, is a pretty handsome chart since early August.  But M5 is predicting selling here. 


SSEC, Shaghai Index, has hit overhead resistance and seems ready to fall back.  It is not really clear that this is the end of the rally back toward the old high; it might just be a pause.  The next few days will tell us quite a lot.


The TYX, 30 year TBond Yield, seems ready to continue its rally.  M5 has declined; but is now trying to put in a bottom so it can continue higher.  TBond yields climbing SEEM to be the opposite of what Ben Bernanke wants...so this is a very interesting index to watch.  TBonds have no buyers apparently EXCEPT Ben Bernanke.  All the buying for the past several months has been by the Fed as a way of keeping interest rates low to create more borrowing (obviously the last thing we need, given the fact that we are insolvent, and insolvency is what triggered our crisis.)

The UTY, the Utility Index, is one of the clearest pictures of an index in a consolidation pattern I've ever seen.  Can UTY get through resistance and takes this rally to a new plateau?  M5 is suggesting it can; M2F Alt Sum Plus is declining, suggesting we'll have a pause, at least, here, or a decline.


XCI, Computer Index, is the best-looking chart I follow.  Is Financial leadership in this rally ending, and technology picking up the rally?


XAU, Gold and Silver Stock Index, is trying to pull back -- however, as you can see, there is very little selling.  Expect more upside for this one.


The XOI, Oil and Gas Index, has been very strong -- but M2F Alt (pane two, green line) and M2F ALT Sum Plus (bottom pane) are suggesting some selling might come in to the picture.



The energy issues -- DBO here, Oil ETF -- have all rallied as of late -- one wonders if this is based on demand or simply an inverse of the dollar decline.  Nothing in this chart is suggesting a change in trend.  If you look at the US Dollar -- here UUP, Dollar Up ETF -- you'll see the Dollar is giving no indication of turning back up.



We've been watching three Ultrashorts to look for an indication that this rally is ending.  Two of the three -- Industrials and Health-Care -- broke through support over the last week; one did not, Real Estate.  All three seem to have ended their pullbacks and have M5 patterns suggesting more upside is coming -- this would mean bad news for stocks.



TODAY'S NEW TRADES

We closed 20 trades, 16 winners, 4 losers.

M2F ALT Trades

Issue Close @ Position Open @ Date % Gain                          
SAMPLE 58.13 Exit Long 56.75 10/2/09 2.43%                          

M5 10 Trades
Issue Close @ Position Open @ Date % Gain                          
UTY 401.01 Exit Long 399.55 9/28/09 0.37%                          
BLK 233.81 Exit Long 213.1 10/5/09 9.72%                          
PG 57.49 Exit Long 57.03 10/6/09 0.81%                          
GAZ 15.89 Exit Long 15.85 9/30/09 0.25%                          

M2F ALT Sum Plus TR ST                                  
Issue Close @ Position Open @ Date % Gain                          
PG 57.49 Exit Long 57.44 10/16/09 0.09%                          


M4 Plus ST Sytem Closed Trades                                
Issue Close @ Position Open @ Date % Gain                          
FNM 1.23 EXIT SHORT 1.46 10/16/09 18.70%                          
FRE 1.39 EXIT SHORT 1.72 10/16/09 23.74%                          
PG 57.49 Exit Long 57.03 10/6/09 0.81%                          
HPQ 48.22 Exit Long 46.07 10/5/09 4.67%                          
ECH 49.48 Exit Short 47.24 10/5/09 -4.53%                          
GAZ 15.89 Exit Short 15.33 10/15/09 -3.52%                          


M2F ALT Sum Plus SystemClosed Trades                              
Issue Close @ Position Open @ Date % Gain                          
SLGLF.OB 0.02 Exit Long 0.018 9/28/09 -11.11%                          
C 4.42 Exit Long 4.42 9/17/09 0.00%                          
GE 15.53 Exit Long 13.45 9/3/09 15.46%                          
EDU 73.54 Exit Long 81.3 10/19/09 -9.54%                          





More information on this system can be found at

home.mindspring.com/~mclark7/CGTS09.htm

A draft of the book Turn Out the Lights can be found at the website below.  This book is a description of the metaphysical causes of the economic cycles of expansion (Day) and contraction (Night).

www.hoalantrangallery.com/Turnoutlights.htm

 

Michael J. Clark's Gate Timing System
Hanoi, Vietnam

84 4 221 92210