My Grand Strategy was outlined in August as the months of September and October are renowned as months for major market turning points. This year it was not to be as the markets have been exceptionally stable.  I was looking for a move whether it be up or down with my expectancy being that weakness was more likely than strength. However, our actions are not dictated by views but by actual market actions.  

My premier consideration is to follow the market. In the event there have been some remarkable moves countermandingpractically all the signals over the past two months. Actions are taken as prices move away from pre-determined decision levels yet during this period practically all were overruled by market moves contrary to requirements on the decision day.

To explain:

Gann’s techniques allow us to anticipate future levels and timings where markets turn and where decisions are taken. When the levels are hit at the predetermined time we apply Gann’s entry rules such as trend indicator lines recommended for the medium risk players and signal day confirmation for aggressive traders.

Over the last two months we have been monitoring 221 investments 127 being possible buys and 94 possible shorts This relationship between buys and shorts did not fall in line with the ‘Grand Strategy’ comments of August. The strategy was then put on the back burner until the market decides the time is right.

To explain such a change of heart it is necessary to understand that WTFH reports are not ‘predictions’ but are ‘awareness’ statements in order to anticipate ‘possible’ scenarios and then provide answers should they materialise. Few investors fail to understand this approach but those who do have the pre-determined answers when unexpected events take hold. My appreciation of the strength of this approach was formed by following Bob Beckman in the 1970/80’s in his newsletter Investors Bulletin. His timing of events was not of the highest calibre but the knowledge he imparted in order to deal with future events was invaluable. It is my hope that I have been of value in this respect over the last four decades and can help in a similar way in the future.     

IF the ‘Grand Strategy’ was to be initiated it demanded the accumulation of shorts and preferably the informed buyers selling against a rising market. Neither was evident confirming the possibility of a stagnant market although our ‘Buy Set Ups’ were predominant suggesting the possibility of a break above resistance levels. The market soon put that to rest.  

In reality before a strategy is activated individual chart analysis isolates possible opportunities notwithstanding WTFH observations. Gann has provided us with tools to provide times and prices where turning points are likely. These are ‘set ups’ or ‘decision points’ where actions are considered.

A recent example of this approach to provide a ‘Set Up’ is well illustrated by the gold mining stock Coeur D Alene Mines Corp.

The first chart under is the analysis which suggested an opportunity to trade this share in mid to late September. In the event of a  break above the decision level at 19 this would indicate a buy signal on strength over 19. Contrary to this there could be a chance of a short on weakness under 19 and the falling angle. It was therefore anticipated that the share would show strength on weeks following the analysis culminating on a trade being signalled at 19 one way or the other.

The chart below was brought to my attention when the price had reached the projected price and projected time. Now was the time to access whether to trade. The chart showed a break above 19 indicating a buy subject to a confirmed action rule. In this case this would be a higher bottom as shown by the white line. The signal to buy on strength that day was distributed and was later confirmed by strength followed by e-mails to gconfirm the signal.

As can be seen on the chart under the share price grounded sideways throughout October but advanced rapidly in November when we took profits bang at the top on the 8th November with the help of our signal day rules. As anticipated the price of the share has weakened since our sell signal.

My current analysis under is suggesting a fall to 20 culminating in a possible buy subject to the usual action rules on the 10th December 2010. This is determined by the information we have to hand at the moment but continuous surveillance is essential. As always the movement of the market itself finally dictates the action.

When such opportunities emerge they are only triggered if our ‘actions’ rules are confirmed. Over the past two months there have been some remarkable outcomes from these final checks which I have not experienced in 30 years of analysis. During the past two months I have been waiting for buys or shorts to trigger but to no avail although dozens of alerts have been created but with no follow through. There were dozens of alerts isolated yet on the day when strength or weakness was necessary the required moves on the day did not materialise. This is a remarkable response from so many alerts. Click here for full details.

 Throughout this period the world markets in general were hovering below heavy resistance which normally precedes weakness. A daily vigilance was undertaken on the informed buyer’s index but no divergence was exposed against the FTSE so no help was to be found here. This is still the case to date with no weakness against a rising market but there is a recent sniff of a rising informed buyer’s index against a falling market. There is not yet sufficient evidence of a buy indication just yet but should this continue a bullish scenario could be signalled.

So what of the Future? - (To follow within the next few days)

Regards,

Fred Stafford

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