GML - Where to from Here? - 28th October 2008

This report is written with a great deal of trepidation with the promise that if markets do not stabilise shortly I will need to swiftly revise my current conclusions. Over the past few weeks I have made several attempts at writing this report with a view to providing some sane words for insane markets. Each time I thought I had something to say then along came market madness forcing me to think again. However the satisfactory position is that we have been for several weeks 90% in cash with a 10% holding in a profitable 'short' for Cocoa UK.

After recent falls and a period of comparative restraint I now have a clearer if still muddy picture as a number of markets fall to support but most subject to caveats. Despite this the markets that look particularly interesting are the UK, the US, France, Germany, South Africa and Gold Mines. However, a word of warning our support levels are 'decision' levels only and Buys still have to be triggered. So far we have not seen any sign of the short term trend turning to the upside which is always an essential requirement before action is taken.

THE DECEMBER 2007 SPECIAL SEMINAR

To support the FTSE 100 analysis my analysis from October 07 onwards was that the FTSE 100 would drop to 4000. This assessment was considered to be so important that I felt it necessary to give two special seminars in mid December 2007. The chart for the FTSE used in the seminars is shown under clearly suggests a fall to 4000 and eventually a subsequent probable fall, after a rally, to 1737.5.

An important factor in my bearish stance at that time was the behaviour of the informed buyers index. Subscribers are fully aware this index has not let me down since being included in my analysis in the 1970's. During all this time the index has been a major reason why subscribers have been pre-warned of every bear market since the 70's

The charts under clearly illustrate that since 2006 whenever the market advanced it was accompanied by a falling Informed buyers index and was then followed by weakness. In fact on every advance in the market since early 2006 the informed buyers have been shouting out BEWARE. The reason…when informed buyers sell and the rest buy this constitutes a warning of falls ahead. Rises following informed buyers selling are likely to be dead cat bounces or at best a rise with a short term duration.

This indicator has still not yet shown any sign of an upturn as the FTSE continues to fall. Until this happens I will not be convinced that the Bear market will be bottoming out.

In view of the Informed Buyers warnings we converted from medium term investors to short term traders in the pursuit of safety.

YOU ARE NEVER SURPRISED WITH GANN MANAGEMENT

The world has just experienced the most remarkable financial destruction seen since the 1929 crash. We are told by the establishment that this could not have been anticipated even though they are the crooks who caused it. This opinion will be refuted by all those who attended my December seminars with their warnings of dire future events which have subsequently proved to be remarkably accurate. As I always emphasise it takes as much wisdom to accept good advice as it does to give it so I attempted to present a clear and uncluttered picture of the future as was possible. All delegates had a fair chance to accept what to most would be a crazy maverick mouthing off against the establishment, which is my want after watching them for over 50 years.

A further seminar is in the offing to look deeper into problems ahead. This after what I consider to be the craziest world shattering actions ever taken by world leaders. They will have far reaching effects on crumbling world asset and debt markets…accompanied by outstanding opportunities for those who anticipate events with knowledge and belief in that knowledge followed by the guts to act.

Over the years I have presented Gann's techniques to perhaps 10's of thousands of investors with the vast majority spurning the chance to fully understand the way markets truly work. This is not surprising as modern man suffers from the need for instant gratification this not being in the nature of acquiring true knowledge. A true knowledge leads to simplicity of thought and the ability to know where one stands in the nature of what seems an untold number of complicated issues. For instance, my first suspicion of the Credit Crunch stems from adverts on TV several years ago. Bankers were imploring proven bad dept payers to take money off their hands and mortgage lenders allowing applicants to confirm their OWN incomes…madness personified. These simple observations lead me to fear the future especially as they were being formed by astonishingly greedy bankers encouraged by politicians from the pretty faced con man, old soar face and all their cronies to buy, buy and buy again to keep a failing economy afloat. The disastrous results emanating from this madness are now upon us. Unfortunately so are the politicians, bankers and soft uneducated populous who created the crisis in the first place.

KNOWLEDGE MUST BE CHAPERONED BY BELIEF

Many investors accumulate a great deal of knowledge but do not have the faith in that knowledge to build up the courage, persistence and discipline to put it into practice. This is where Gann management reinforces knowledge with daily support and regular direction accompanied by explanatory seminars.

The value of our seminars in predicting events can be clearly demonstrated by revisiting the Dec 2007 seminars.

1 - An assessment was presented that a fall to 4000 was on the cards with possible falls over time to the 1737.5 level. See the chart above and note that such a fall has been now been achieved.

2 - It was shown that the informed buyers were selling whilst the public were selling. This is a sure fire sign that worse was to follow from this 100% true warning system.

3 - Liquidity was felt to be important and that although cash was king there were real severe problems in the Banking system.

5 - A warning that looking to the top best performers in Bull markets was the worst possible place to be in falling markets.

6 - Knowing how to trade currencies were placed as a high priority over the next few years.

7 - Property and Debt was highlighted as 'NO GO' areas.

8 - As a last resort consider Treasury Bills.

SO WHERE NEXT?

Special seminars in London -18th November / Cheshire - 11th November.

SEPECIAL SEMINAR - HOW TO MAKE A FORTUNE OUT OF THE CRISIS

You will be shown how to float through a depression by avoiding risk. It will then be possible to take full advantage of the extraordinary opportunities which will emerge from the current credit crunch malaise. (For example it was possible in the 1930s to make profits by buying from the stock markets of 400% over a 3 year period). The possibility of stagflation will also be addressed. Alternatively Hyper Inflation and its consequences will be discussed with answers to offsetting the consequences of this worst of all economic scenarios.

However, this will not be solely a Doom and Gloom presentation as practical answers will be provided to address the problems involved in order to make a friend of whatever type of scenario emerges. Anticipation, preparation and action will be the order of the day as the rest of the world will wallow in despair and gloom for want of knowledge on how to survive in anything other than the 'good' times. Control will be the central issue used to avoid the mental upset of not anticipating the future with sound, practical economic answers no matter what outcome emerges. Learning the clues will not need the intelligence of a rocket scientist but just an open mind with reasonably simple solutions.

The seminar will be conducted by Fred Stafford, our 70 year old doddering idiot, with 55 years of financial services experience behind him…this is not the time for Dons and Fellows with Hi IQ's. no common sense and a series of complicated conflicting and confusing second guesses. It will be directly to the point answering the questions leaving little room for conjecture. The main object of the seminar will be to highlight future possible devastating scenarios followed by practical solutions with exciting possibilities.

CLICK HERE TO RESERVE YOUR SEAT

WORLD STOCK MARKETS

This week's world market survey highlighted the UK & US markets as of interest supported by Gold Mines, France, Germany and South Africa. The trend of the markets are of course all down, the informed buyers is still looking horrible so all we can expect from these markets if and when they signal is either a 'dead cat bounce' or at best a short term rise. This suggests that only short term trades should be considered without gearing but with possible potential for worthwhile short term profits. See the charts under showing floors and ceilings.

UK/US/EURO SECTOR ANALYSIS

Our weekly analysis of sectors has revealed a considerable number of sectors also now being on support. This could be substantiating the conclusions drawn from the world market analysis that buying from current levels might support a short term buying opportunity. Again confirmatory evidence in the form of higher short term trend indications is necessary.

THE DEBT MARKETS

UK GILTS

The predominant feature on the long term chart for Gilts is the proximity of the angle from the early '80s. Currently this is providing support but any break under would be catastrophic as it would be a sure fire sign of future HYPER inflation. A break on the upside of 150 would confirm lower interest rates and place the odds being on deflation rather than inflation. Whilst the price is within the triangle all bets are off.

UK INFLATION LINKED

The chart for Inflation Linked stocks is near to signalling a further Buy after our exit at the recent extreme top. However, there are some doubts as to how far the next move will rise. The reason being that Gann says that when the last fall is larger than falls throughout the rising market then there is some evidence to suggest that the Bull market could be coming to an end. Therefore it would be wise to treat any purchase as short term only until new highs are in evidence.

US TREASURY BONDS

I am somewhat reluctant to comment here as US T Bonds are trading at the bottom of a trading range which indicates a possible short term rally with the prospect of turbulence within the range. Notwithstanding these reservations there could be a short term opportunity here.

BUNDS

A much sounder proposition would the purchase of Bunds on a breakout over 119 for a rise to the top of the next square at 128. This would be worthy of being at least a 33.33% main plank for a defensive portfolio in the event of the breakout above the rising angle.

THE GOLD MARKETS

Weakness over the past 10 days brings the bullion price down to 700 support and the mines indices falling in line again to support. Strength from current levels would suggest short term trades could prove profitable…don't rush in…wait for the signals.

WTFH UPDATE - 10.30 am - 06/11/2008

Our last report looked for short term gains with special emphasis on the UK, the US, France, Germany & South Africa. Gains as per the chart below have accumulated (10%/25%) for the more aggressive traders taking advantage of our analysis supported by triple bottom formations and being triggered by signal days.

We now expect a correction followed by an advance up to the FT 5000 area which will allow more considered buys on a higher til bottom forming. On reaching FT 5000 short positions will be considered which could be on the 18th November or less likely the 1st December 2008.

THE EU/UK/US SECTORS

As anticipated most sectors advancing. No change since the last report.

THE BOND MARKETS

No change since last report

THE GOLD MARKETS

Gold held in the 700 area and could signal shortly.

COMMODITIES - THE METALS

A quick look through the metal markets show a number near to decision levels for both longs and shorts. I continue to monitor closely.

COMMODITIES - SOFTS

The softs are also lining up but here there is a preponderance of Buys with just a few Shorts.

INTEREST RATES - US/UK

The chart for interest rates in the US suggests that rates should fall to 2.75.