TRIGGER$ - June 2011

www. GordonTLong.
com
JUNE 2011
Economic & Technical Analysis for the Active Trader
Issue : BETA-JUNE Vol. : 2011-Pilots
The
Nature of Fibonacci Markets
Understanding Gann Need to Know TA S&P 500 part 2 : trading with Gann denominated in Gold & Silver where are we headed? square of 9 Market Sentiment Applied Fibonacci 2012 S&P Targets VIX / VXO Warnings Market Manipulation
1
Weellccoomee ttoo IIssssuee 22 W m u

Welcome to our 2nd issue of Trigger$. We appreciate your interest in our work and hope that you find it of some value as you try and make sense of the markets. Please feel free to send us a note and let us know what you think so far. In this issue we take a look at Fibonacci. Our Cover Story discusses some possible relationships to both the markets as well as the universe we live in. In our Traders Mentor section we demonstrate some practical application of a common fib tool and discuss its ability to forcast future events. Our first Featured Article continues on with our Understanding Gann series and focuses on the Square of 9 . Our second article discusses the possibilities of Market Manilpulation after 4 major banks pull off near 1 00% perfect trading records for the 1 st quarter of 2011 . Focusing on market sentiment with The All Seeing Eye, we sight numerous different sources to get an overall sense of the markets mood.
TRIGGER$:Need To Know TA section assesses our current position in the markets and offers some possible outcomes for the near future. Looking like another wave up still to go.
Increased volitility looming and other factors to be aware of in our Risk: Assessment. We continue to develop what we are trying to do here - you'll note some aesthetic changes from last issue. Our layout and various sections have been fairly well sorted out and you can expect to see the same organization and types of articles in future issues. If you have any suggestions or ideas on improving what we have started here, please send us your thoughts. Good Trading GoldenPhi
TRIGGER$ Publications For all inquiries, comments and contact please feel free to email us at: triggers@GordonTLong.com Main contributor : Gordon T. Long Market Research & Analytics Publisher & Editor : GoldenPhi Analytical Summaries: GoldenPhi See page 36 for a complete list of our contributors.
Contents
4 17 27 39
The Nature of
Cover Story
Fibonacci Markets
- Golden Selection - Spirals - Fibonacci in the Markets-
8 23 36
On Market & Economic Indicators

- Focus on : Market Sentiment -
The All Seeing Eye
- The Big Picture - The Larger Pattern -
Need To Know Technical Analysis
TRIGGER RISK
The Vault
- Hard Currency - Forex - US Bonds -
Currencies & Metals
- LIBOR-OIS Spread - Housing : Rate of Change - Divergebce - Bank Liabilities - X:VIX/VXO Warnings -
Assessment
Traders Mentor
- Applied Fibonacci -
Technical Analysis & Trading Strategy Education
Open Forums
Letters to the editor Readers Comments Discussions
Featured Articles
20 30
Understanding Gann
Part 2 : Trading with Gann - Square of 9 -
Market Manipulation
Techni Fundamentalism
Techni-Fundamentalism TRIGGER$ publications combine both Technical Analysis and Fundamental Analysis together offering unique (and often correct) perspectives on the Global Markets. The backbone of this research is done by Gordon T. Long, Market Research & Analytics which is subscribed to by Professional Managers, Private Funds, Traders and Analysts worldwide. Every month Market Research & Analytics publishes three reports totalling more then 380 pages of detailed Technical Analysis and in depth Fundamentals. If you dont find our publication detailed enough, we recommend you consider theirs in addition to this one. For the rest of us, TRIGGER$ offers a distilled version of the 380 pages in a readable format for use in your daily due diligence. Read and understand what the professionals are reading without having to be a Professional Analyst or Technician. Successfully navigating todays markets requires information from a broad variety of sources. Triggers examines it all. From Macro Geo Political to daily events; yearly cycles to break out points on a minute chart: we look at and analyze as much of the information as possible, pulling out the relevant and giving you what you need to know to make the right decisions on a daily basis. An initial or beginning publication occurs every month, both in a printable pdf as well as online. From there, the online version is updated daily with current events, charts, news and any relevant information pertaining to trading. The completed version of the publication isnt actually done until the last day of updates which occurs right up until the publication of the next issue. As well as the Traditional Methods commonly used, Market Research & Analytics has developed proprietary analytics for both Technical and Fundamental Analysis and has designed a methodology to combine the two whereby the synthesis delivers a truly unique and forward thinking analysis that gives cutting edge insight. Techni-Fundamentalism
Cover
Story
Nature of Fibonacci Markets

If you have been utilizing technical analysis in your trading, then you are probably familiar with the name of Fibonacci or the term "fib" as it is usually abbreviated. At the very least, most charting software these days come with a 'fib retracement' tool. One of the great "ah-ha!" moments in a traders education comes when they understand what Fibonacci is and then see it in the markets for the first time. Observing this phenomena occur is nothing short of remarkable. The Fibonacci sequence itself is fairly straight forward. 0,1 ,1 ,2,3,5,8,1 3,21 ,34,55,89,1 44... each subsequent number is the sum of the previous two. The most popular origin of the sequence comes from a man known as 'Leonardo of Pisa', or Fibonacci, in his book Liber Abaci (1 202). He proposes a puzzle around the propagation of a rabbit population. Assuming that: a newly born pair of rabbits, one male and one female, are put in a field; rabbits are able to mate at the age of one month so that at the end of its second month a female can produce another pair of rabbits; rabbits never die and a mating pair always produces one new pair (one male, one female) every month from the second month on. The puzzle that Fibonacci posed was: how many pairs will there be in one year? The Fib number sequence was the resulting answer and can be expressed with the formula: Fn = F(n-1 ) + F(n-2) . While the rabbit breeding puzzle may be unrealistic, the Fibonacci numbers (and their
The
significance) actually do appear in nature. Some plants will branch so that they always have a Fibonacci number of growing points. Flowers often have a fib number of petals, daisies can have 34, 55 or even as many as 89 petals.
Golden Section
Closely related to the fib series is an interesting value known as the Golden Section. The value is derived by taking the ratio of successive terms in the Fibonacci series. Plotting a graph of these values you'll see that they seem to be moving to a general average. This average is called the golden section, golden ratio or sometimes the golden mean and is represented by the Greek letter Phi. Hence you also have the term Golden Phi.
Golden Section Golden Ratio Golden Phi
1 .61 8
chart 1
We find this ratio through out all of nature including our own physical proportions. This ratio and its derivatives appear to be the natural ebb and flow of growth and decay for all things - living or otherwise.
Spirals
We can arrange a series of squares and rectangles following the fib sequence, each new square having a side which is as long as the sum of the latest two square's sides. These numbers come up many times in nature, but in the form of a spiral or a curve. When you chart these numbers on a graph (or use squares as described above), you get the Fibonacci Spiral. The swirl of seashells, ridges of pinecones, curve of animals
(cont.)
Cover Story
(cover story continued)
nails, centers of sunflowers, even human teeth curve in the Fibonacci spiral.
So then, what does any of this have to do with the markets?
Fibonacci in the Markets

We previously mentioned that most Technical Analysis software these days come standard with some sort of Fibonacci tools. Retracements are the most common, however others would include: extensions, arcs, spirals and time zones. You can even find a couple of TA software packages that have been built specifically for fib analysis. Why all the time and effort? Just a 'fad' or the 'tool of the day'? More marketing gimmicks to sell more software? Possibly. However the evidence speaks fairly well for itself. The amount of correlation and consistency that exists between fib numbers and the markets goes well beyond that of mere chance or coincidence. The Traders Mentor section of this publication offers some education and techniques on applying various Fib tools. For this article, we will continue by showing you some examples of how Fibonacci is used - hopefully you can see that there is a relationship to the markets. The chart below shows us a current view of the S&P-500. This is the same chart shown in our Trigger$ Need To Know TA section, only without the channels present. We can see the blue
Weekly
Successive Fib Squares create a Spiral
pic 1
Fib Arcs
Nautilus sea shell We could continue to give many more examples of Fibonacci and the Golden Selection in nature. We will leave it at these instances so that we may move forward but recommend the reader take some time and effort to confirm what we are saying for themselves. If you were previously unaware of this concept, some of the fundamental mathematics that seem to govern our universe, it warrants further study. Even if only to understand what is going on so that you can relate it to the markets. While the thought of 'mathematics' in relation to the universe may sound daunting, comprehending the basic fundamentals is no more difficult than the fib sequence itself - and first hand study will drive the point home better than any article could.
pic 2
Fibonacci Retracement Levels
chart 2
(cont.)
Cover
(cover story continued)
Story
dashed lines representing the various Fibonacci retracement levels. These were created from the high of 2007 to the low of 2009 and the blue diagonal line from our fib tool starting and stopping at these points is shown. From the low of '09 we can follow the price/time graph as it retraces its move back up and reaches the various fib %. We can clearly see how the 61 .8% retracement level acted as resistance in the first part of 201 0 and the following correction moved down and touched the 38.2% level before moving back up. This leads to the last high from our current down move which occurred at the fib 76.4% retrace. Another item of note from our weekly S&P chart is the yellow ellipse that is containing the p/t graph starting from the low of '09. Ellipses are a part of a Spiral formation.
Fibonacci Fans
chart 4
A Fibonacci Fan is illustrated in the chart above. Again we can see how the graph appears to be following along and respecting the fib %. We'll end with one final example below. If you can get your hands on a charting platform that provides a Spiral tool, more dynamics of what is occurring will be revealed.
Fibonacci Arcs
chart 3
The above chart is an example of Fibonacci Arcs. There are two arcs drawn in - each origin is marked by the solid grey or blue line. In each case you can see how they acted as support and resistance, again demonstrating the Fib and Golden Selection relationship to the markets. This graph (and others) are showing us that movements, either growth or decay, do not just go willy-nilly anywhere at random. They expand and contract according to the same rules that appear to apply to the 'Natural Universe' as well. The arcs, like the ellipse, are another form of the spiral. (See Nautilus (pic 2) opposite page).
Fibonacci Spiral While similar to the Arcs, the spiral shows with more clarity how the markets are moving. It is amazing to set an initial spiral from a small wave and watch the graph re-act on cue as it reaches the spiral and moves along it as it unfolds. After you observe a few examples there is little doubt what is occurring and how the markets are governed. Not much different than the spiral galaxy, pinecones or many other examples that exist in nature. END GoldenPhi
chart 5
Methodology
TRIGGER$, in collaberation with "Gordon T. Long - Market Research & Analytics", have thier own unique approach to Techni-Fundamental Analysis. The material found in TRIGGER$ is the conclusions of a multi-perspective methodology boiled down to its final essence. This methodology includes the following analytical approach: Time Frame short - term Duration less than 90 days Approach Technical Analysis Key Tools Elliott Wave Principal, WD Gann, JD Hurst, Bradley Model, Proprietary Mandelbrot Fractal Gen. Global-Macro Analysis Tipping Ponts - Pivots Financial Metrics
intermediate longer term
1 2 months 1 8 months +
Risk Analysis Fundamental Analysis
The Global-Macro Analysis which is so prevalent in our articles and on our Tipping Points site, plays the critical role of bridging our highly analytic Technical Analysis with our detailed Fundamental Analysis. We have found that in the short term the markets are driven by emotion and sentiment. In the longer term, they are driven by financial fundamentals. As Warren Buffett is often quoted as saying: In the short term the market is a slot machine but in the long term it is a weighing machine. We have found that the transition shows a lagging correlation between changes in the Global Macro, followed by Corporate Earnings, then followed by the sell side analyst community estimates. If you are looking for more detail than is provided in TRIGGER$, consider looking at our primary inspiration: "Gordon T. Long Research & Analytics". We do our best to summarize this information and deliver it in an easy to read format. This by its very nature doesn't allow us to include all the very detailed analysis that takes place in order to deliver us its conclusions. All information and conclusions delivered in TRIGGER$ articles are a product of the methodology outlined above.
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The All Economic Indicators Seeing Eye On Market &

Focus on: Market Sentiment
There are many ways of trying to assess the prevailing attitudes of investors in the effort to accurately anticipate price developments in the markets. This is commonly referred to as 'Market Sentiment'. Here we will look at various Consumer & Investor Confidence analysis to get a sense of what the current sentiment is and what to expect next...
- Conference BoardThe Consumer Confidence numbers dropped significanlty in May. What stands out is that against comparable prints taken at financial crises and tragedies of the past, such as the October 1 987 market crash, Desert Storm, LTCM, the dot com collapse, September 11 th, Katrina, and Lehman - the current numbers are WORSE!
chart 6
(cont.)
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( Conference Board cont.)
Interest rates in twelve months were expected to be higher by a stable 56.6% of respondents while just 1 3.7% expected rates to fall. An increased 35.0% of respondents expected stock prices to rise but that still was down from 37.9% in January. The present situations component of the consumer confidence index slipped 2.2% after a 7.2% April increase. Jobs were seen as hard to get by an improved 43.9% of respondents, though that remained down from the November high of 48.8%. Business conditions were seen as good by a roughly stable 1 4.6% of respondents, double the February 201 0 low.
chart 7
Concern about future business conditions is the big worry on consumers' minds this month. The Conference Board reported that its May consumer confidence index fell 7.9% from April to 60.8, the lowest level since November. The latest decline followed an upwardly-revised 3.4% April increase and it contrasted with Consensus expectations for a reading of 66.5. During the last ten years there has been a 48% correlation between the level of confidence and the three-month change in real personal consumption expenditures.
-Michigan Consumer ConfidenceThe University of Michigan Consumer Sentiment Index plunged from 77.5 in February to 67.5 in March. Drops of this magnitude are rare. But when they happen, they send the message: Look out below!
Since then the index has steadily risen and has ALMOST retraced to its February level, BUT STILL demonstrating lower highs and lower lows. February March April May 77.5 67.5 69.8 74.3
As you can see from the chart below, this indicators history is impressive
chart 8
The expectations component of confidence fell a sharp 9.6% from April to the lowest level since October. Expectations for improved business conditions and employment in six months plummeted to the lowest levels since October. Income expectations fell as well. Consumers expected the inflation rate in twelve months to be an increased 6.6%.
chart 9
(cont.)
10
( Michigan Consumer Confidence cont.)
There was a similar large drop in August 1 990, another in September 2001 , and a third one in October 2008. All three were associated with recessions and turned out to be big sell signals for the stock market.
-American Association of Independent InvestorsSurveys of bullish sentiment from Investors Intelligence (II) and the American Association of Individual Investors (AAII) at year end showed the ninth highest combined reading since 1 987, and it was the sixth period ever where the combined reading was above 1 20%.
chart 1 0
But something has been happening since year end. We have had one geo-political event after another in North Africa and the Middle East, an Earthquake, Tsunami and Nuclear disaster in Japan and continuously worsening news out of the EU and specifically the PIIGS countries. This news and uncertainly in markets typically prompts a flight to safety and fear in investors. Markets don't react positively to uncertainty. We see these factors in the latest AAII numbers.
chart 11
However, the market appears to have shrugged off all this (in the short term) as it reacts to historical flooding of the financial markets with money through QE II.
(cont.)
11
( American Association of Independent Investors cont.)
chart 1 2
Note the rising channel of the Bear/Bull ratio based on a 3 week moving average. The above graph shows that though there has been a growth in Bear Sentiment versus shrinking Bullish sentiment during early 2011 , the market should find support soon with general strength in the markets into early summer. -Investor IntelligenceBullish Percentage as of 02/24: 52.2 03/24: 50.6 04/28: 54.2 05/1 9: 45.6
Has dramatically broke through 50

chart 1 3
12
( Investor Intelligence cont.)
chart 1 4
There's an increasingly widespread view in the market that investors are becoming complacent and that all this bullish sentiment is a negative signal for stock prices. We are clearly seeing undisputed facts that investors are becoming less bullish as stock prices rise. The chart to the right compares the S&P 500 to the Investors Intelligence weekly survey of advisor bullish sentiment. For most of 201 0, the two moved step for step with each other. When the S&P 500 rose, bullish sentiment increased, and when the market declined, advisors turned less bullish. Curiously though, towards the end of 201 0, bullish sentiment stopped rising even as the S&P 500 kept on chugging along.
chart 1 5
The big question now is, are investors correctly anticipating a correction, or will they be sucked (or as bears would say suckered) back in at higher prices? Our belief is YES
A FINAL RALLY & THE LAST PART OF AN ENDING DIAGONAL
13
( Investor Intelligence cont.)
Difference as of 02/24 is 52.2 - 1 9.6 = 32.6 as of 03/24 is 50.6 - 22.4 = 28.2 as of 04/28 is 54.2 - 1 9.2 = 35.0 as of 05/1 9 is 45.6 - 1 9.2 = 26.4
chart 1 6
-National Association ofActive Investment Managers (NAAIM)-
The National Association of Active Investment Managers (NAAIM) shows that on average they are 58.93% invested. This is down significantly from the 66.99% average of last quarter. The red line shows the close of the S&P 500 Total Return Index on the survey date. The bars depict a two-week moving average of the NAAIM managers' responses.
chart 1 7
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-Smart Money / Dumb Money Confidence-
chart 1 8
We have had a protracted period of Divergence with the Smart Money Index. This suggests the Smart Money does not believe this rally is real. They have insufficient confidence in its underpinnings to put capital at risk.
The best assessment is that the market is being driven by Federal Reserve buying, Momentum Traders and Trading Programs. This is a chart of an unhealthy and artificial market.
-Mutual Fund Cash Levels v S&P 500There does not appear to be a lot of reserves left in cash for the funds to place. It is more likely that the cash % level will increase in the future - the corresponding expected effect would be to drive the S&P down as funds sell stock for cash. It is showing us currently an extreme level of optimism that will correct sometime in the future.
chart 1 9
15
-Consumer Staples versus S&P 500 RatioOn page 9 we said: "The University of Michigan Consumer Sentiment Index plunged from 77.5 in
February to 67.5 in March. Drops of this magnitude are rare. But when they happen, they send the message."
Before this Consumer Sentiment number was available, a hedge fund manager was indicating that the chart below is what he's really worried about:
chart 20
"This chart is far more worrisome ratio of consumer staples to the S&P500 (check out the RSI measuring how oversold/underbought staples are vs. the broader market at the top)...follow the little dotted lines downward to the black S&P 500 line... The question is is this more like the 2000/2007 tops or the temporary pause in 2004?"
16
- S&P Year End Price Targets The chart below lists the year-end price targets for the S&P by various institutions. The average of which suggest we have more up to get to before the end of the year. This aligns with our current thinking and targets as well: we are expecting one more lift from the rise that started in 2009.
chart 21
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Need To Know Technical Analysis
In last months issue we showed you a chart of the Ellipse we have been in since 2009 and the Rounded Top we are currently going through. That pattern is part of a larger one displayed in the chart below.
Monthly
The Big Picture
DOW 1
Head Right Shoulder
Left Shoulder
Neckline
chart 22
Note blue dashed line 1 is parallel to black line 3. Black line 3 is the neckline for our head & shoulders set-up. Grey dashed line labelled 2 is parallel to lines 1 and 3 and is at the 50% point between the two. Line 4 connects the last two highs and shows us the overall wedge we have been moving inside of. Watching for one more fractal wave up to complete the right shoulder of a Head & Shoulders pattern we have potentially been in since the beginning of the last decade. We would expect that the 'topping process' will be similar to that in '99/2000 - what we refer to as a 'rounded' or 'rolling' top. This is a different process than the sell-off we experienced in 2008. If our analysis holds true, we can expect the next sell-offs in the markets to last several years and bring our price-time graph back down to line 3 (neckline) sometime in the future. This would bring the DOW down below 6,0000 - more than a 50% contraction from present levels. If our Head & Shoulders pattern is correct, then we would also expect that our neckline would be broken and the markets to decline even further.
18
The Weekly view of the S&P has S&P been included (chart right) to give us Weekly some perspective in the larger chart below of the Daily S&P. We can see the origins of the Green channel set (last major low) as well as where the Blue Channels come from. Highlighted in yellow, we can also see the Ellipse pattern the price/time graph has been following. Note how the Ellipse allows for further moves up before we 'crest' the top and start our way back down the other side. This coincides with our previous DOW chart that also is allowing for chart 23 more movement up. Also marked in are the Fib Retracements from the last major sell-off in '07 / '08. The Daily chart (below) has us zoomed in to look at a little more detail. We have the 200ma and both sets of channels coming together currently and are looking for support in this area. We would expect to find some sort of consolidation along the channels and 200ma - however the larger pattern is suggesting that we will move down to the green highlighted section which aligns with two major tops and the 61 .8% fib retracement from the '08 sell-off. From here we expect another lift.
The Big Picture (continued)
S&P
Daily
Divergence
Divergence
chart 24
Divergence Signalled the Last Sell-Off Watching for support on the 200ma and channels. Final Support to be found in the green A clear Divergence marked the last sell-off.highlighted area - expect another lift from this point
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In our previous analysis " The Big Picture", we reference a 'larger pattern' indicating a move down to the Fib 61 .8% retracement (highlighted by the green horizontal bar). The chart below is a closer look at the S&P Daily and you should recogonize it from the opposite page - it is exactly the same graph, only zoomed in to get a closer look at the more recent activity.
The Larger Pattern
Do we have the EW pattern of an 'Expanded Flat' occuring?
Daily
23 pts start of wave A
will we have the pullback from the channels and 200ma also be the 89ma before we continue down to C ?
89ma pullback?
89ma pullbacks
23 pts
GoldenPhi
chart 25
For those of you familiar with Elliott Wave patterns, we are seeing what is known as an 'expanded flat' potentially unfolding. In an expanded flat, each wave is larger (or expanding) than the previous. Once both waves A and B are complete, wave C can be predicted with some accuracy. In our chart above, we have wave B extending up past the start of wave A by 23 points. Wave C then should extend 23 points past the low of wave A. Coincidentally, this target also lines up with our Fib retracement level of 61 .8%. We have also drawn on the chart the 50% level of the bottom blue channel (blue dashed line). We would expect the meeting of the 61 .8% Fib level and the 50% level of the blue channel to be the area of wave C's termination before we head back up. We are guessing on a short-term pullback inside of wave C to the 89ma.
If our pattern is correct, it is saying we can expect more down in to the end of the summer end of August, beginning of September - and then we can expect to be in an upward trend for the rest of 2011 . As the larger picture has shown us, this will likely be the last rise, or the first of a double top expected as we touch the top of, or 'crest', the ellipse we are in. The down side of the ellipse is looking like what we can expect for 201 2 and beyond...
NOTICE:
For those of you following Gordon T Long Market Research & Analytics, you'll note that the count and labelling here is a little different than what has been originally proposed. GTL MR&A suggests that we are currently in an "Megaphone Top". Both ultimately have us looking for another lift in to the top of the ellipse formation - it is a matter of labelling and how much higher before the top is reached. GoldenPhi END
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Feature Article Gann
Understanding Gann
Part 2 : Trading With Gann - Square of 9 -
Last month, in Part 1 of Understanding Gann we showed you the 'Wyckoff Interview'. There is some speculation with regards to Ganns trading record as well as his financial status - the interview speaks for itself and should clarify any doubts. The subject of Gann is extremely vast - he wrote numerous books and courses himself discussing his methods. However, he was not exactly straight forward nor forthcoming with many details about his methodology. Add to this the manner in which he wrote several of his books they are presented as 'allegories'. Since much of his method is not laid out for the student to follow and it does require some serious study to understand, you subsequently have an untold number of 'experts' giving you their thoughts on what Gann was trying to teach - each having their own ideas as to what it all means. Since there are so many interpretations and so much information, it can be hard to know what to look at and what to disregard. The truth however is that most of them do have it right, at least partially... or what they have correct is actually a piece of a larger whole. Regardless, studying numerous interpretations and applications of Ganns methods can be beneficial in helping to understand his work. The issue is that there is so much of it, and it crosses several 'disciplines' of study - all of which have been reduced down to basic math to apply to the markets. Learning and understanding (as
well as believing) where it is all derived from, the 'foundation' or 'origins' material, can take several years to learn. Some have spent most of their lifetimes researching Gann and continue to learn and discover something new. However it is a great trip. Much like discovering Fibonacci for the first time, Gann's methods likewise give you a new appreciation and understanding of the universe we are living in. Just as Fib showed you some of the 'mechanics' behind nature, so too does Gann. While trying to unravel Gann, the student is exposed to information that they may not normally pursue, exposing the mind to new concepts of reality itself - in our opinion this is half the fun of Gann. In this article we are not going to focus on the origins so much as we will try and demonstrate one of the more common trading methods that is being called Gann these days. We may delve in to them (the origins) in future articles, but for now we recommend the reader explore this for themselves - you will not be disappointed.
Square of 9
Probably one of the most known applications associated with Gann would be the Gann Wheel and Squares. These could be considered one of the cornerstones of what Gann is all about. At the same time they hold great significance to understanding Gann, they also only just scratch the surface as to what the methodology is all about. Much like learning the alphabet before
(cont)
21
reading, the squares help set the foundation for further study. The Square of 9 is also referred to as a square root calculator. Part of Gann's methodologies have to do with the idea of "squaring price and time". When trying to graph using a Gann tool, the charts should be set to a 1 x1 ratio or your results will not be true. The results from your Square of 9 are telling you the next most likely resistance price levels up and / or down from the price measured. This would be your basic calculator which we will explain how to create in a moment. Another item to understand along with the "square roots calculator" concept is what is referred to as "squaring the circle". The box containing the square of nine should also have a circle around it, so that each corner of the box touches the inside of the circle. This allows us to divide the square up in to degrees of 360 0.
square up in to 45 0 increments. You may have read before "1 3 is 45 0 from 11 " or something similar while researching Gann. Squaring the circle and representing it through degrees of movement is a concept you need to learn and understand to apply Gann. We are going to focus on price at this time, but this is only 1 /2 of what the square is representing. The degrees are also associated with time. Look for us to explain this (time) in future articles.
Square Root Calculator

As mentioned, the Square of 9 is also known as a square roots calcualtor. The reason for this should be apparent as we discuss how to construct our own. It should be noted that there are a variety of ways to use the Square of 9 calculator. How you are going to use it will dictate to some degree how you are going to create it. Our example of a Square of 9 (left column) starts with a 1 at the centre and then spirals outward, clockwise, increasing by an increment of 1 . The centre number can be something other than 1 and the increment, or step, can also vary depending on the market. Continuing to look at our example left, we noted that the significant numbers occur every 45 0. Lets look at the diagonal yellow Ordinal that has the numbers 9, 25, 49 and 81 . We chose this line for the ease of the example, but all the squares are calculated in the same manner. The roots of our numbers are 3, 5, 7 and 9 . Each time we move up a level, or move around the square a complete 3600, our roots increase by 2. Since we know that a complete 360 0 rotation is equal to an increase of 2 pts (to the root number), we can now figure out any and all numbers in relation to any starting point. If a 360 0 rotation is equal to adding 2 to the root of a number, then a 1 0 movement would be equal to 2/360 0 or 0.0056 added or subtracted to the root number. Using this information you could now set up your
(cont)
'Squaring the Circle' with the Square of 9
chart 26
You will note that there are highlighted areas of the square, forming a blue cross (called the Cardinal Cross) as well as along the yellow diagonals (called the Ordinal Cross). These are considered the important numbers when looking for the next moves up or down and divide the
22
own Square Roots calculator using a simple excel spreadsheet. The Cardinal and Ordinal numbers however are our primary interests as we know they are important via Gann's instruction. As these numbers occur every 45 0, we can create a simple table giving us these values in relation to any starting point. The table below shows us this along with the calculations to demonstrate what we have discussed. Starting value = 1 300 Root of 1 300 = 36 (aprox.) Increments of 45 0, add 0.25 (to root) 0 0 = (36)2 = 1 300 45 0 = (36.25)2 = 1 31 4.06 90 0 = (36.50)2 = 1 332.25 1 35 0 = (36.75)2 = 1 350.56 1 80 0 = (37)2 = 1 369 225 0 = (37.25)2 = 1 387.56 270 0 = (37.5)2 = 1 406.25 31 5 0 = (37.75)2 = 1 425.06 360 0 = (38)2 = 1 444 These would be the significant levels found on the Crosses every 45 0. If you wanted to know the levels below our starting value, then you would subtract the 0.25 increment instead of adding it. This could be considered one of the basics of Gann. What is missing is also the time element to match up the prices with. When both time and price are squared the technique becomes even better at forecasting likely outcomes. As it stands it is just giving us the next levels most likely to be reached, or potentially important support and resistance areas. An obvious trade strategy could be to buy at one price and exit on or near a significant Gann value. Our example above has 1 300 as the start - a target of 1 31 4 would then be the trade you would
be looking for. This is not an endorsement to trade, just an obvious example for a methodology. The table we created could be designed to be a Square of 9. Some use this along with significant high/lows or obvious turning points as the center number to start. Others have modified for intra-day trading and claim that using the number 1 and not 2 for the calculation of a full 360 0 works better. Once you become more familiar with the process and what is occurring, then you can start experimenting on your own. It is said that each market, stock, index - all have their own special 'tweaks' that set the squares up for each specific market. You now have the means to start your Gann education in earnest. As we have stated several times, this is just the very basics of what Gann has to offer. If you continue your pursuit, you will find that much is still waiting for you to discover. The Gann angles we have discussed along with their degrees become predictable as the price chart you are familiar with turns in to a 3 Dimensional map of the future. For those of you who are really keen we suggest you do some reading and study on the basics of what is known as Sacred Geometry. Consider that: (1 ) Gann published "Tunnelling Through the Air" which is an allegory of what is going on, and; (2) "Air" is represented in Sacred Geometry by a Octahedron (made up of 8 triangles). Can you find any triangles in your charts? (See our chart 24 on page 1 9).
Octahedron
8 sided figure made of triangles
pic 3
GoldenPhi
END
23
The Vault Currencies & Metals

If you haven't already, we recommend you read Market Research & Analytics recent article: "Debt Saturation & Money Illusion". It illustrates the fact that it is critical to consider the market denominated in real terms. As such we need to look at the market priced in hard assets. Additionally, we need to consider the direction of the US dollar as well as interest rate differentials which directly affect the movement of the US dollar.
-Hard CurrencyThe S&P 500 when denominated in Gold shows that the market is actually down from its nominal low in October 2008.
chart 27
On a weekly basis the S&P 500:Gold ratio maintains a close correlation with its 40 week moving average.
24
(Hard Currency cont.)
The S&P 500:Silver ratio demonstrates a much different profile since August 201 0 when Chairman Bernanke signaled Quantitative Easing II was in the works. The plunge has been dramatic with the parabolic move in Silver. Silver as both a precious metal and industrial product has a much different demand / supply profile.
chart 28
On a weekly basis the S&P 500:Silver ratio usually holds a close relation to its 40 week moving average. We can see that it has come away from this and now appears as if it is trying to correct back to it.
chart 29
25
-FOREXThe US dollar has decisively broken through support levels. The dollar however is still above its long term neckline within a major head and shoulders topping formation pattern. When the neckline is broken we can expect the US dollar to plummet to below 40.
US DOLLAR INDEX
chart 30
We would expect to see near term support to soon be found and a temporary rally to occur in the US dollar. A dollar rally will likely push down precious metals in a corrective / consolidation. The S&P 500 will also likely fall.
26
US 10 YEAR TREASURY BOND
chart 31
A critical driver of the US dollar index is US interest rate differentials. The difference between the rate on the US 1 0 year treasury and other sovereign treasuries is a critical element in determining the direction of the US dollar. Presently, all indications are that though near term rates have weakened to below 3.00%, interest rates for the US treasury are headed higher. Higher rates IF they create a differential and are not simply reflected in other global sovereign rates will affect the dollar. The differential in sovereign bonds yield is determined by a number of factors, but risk of default, government fiscal policy and central bank monetary policy are critical drivers. Presently, all these factors are considered poor in the US relative to other sovereign nations. The downgrading of the US AAA US treasury to "Negative Watch' recently is indicative of this.
CONCLUSION
As we mentioned last month were are presently experiencing Margin Debt falling off significantly. This is highly unusual and a strong precursor of "risk off' beginning to creep into the market. This 'Risk Off' is underpinning the 'rounded top' we expect before the market resumes its secular bear market which it began in real terms in December 1 999.
27
RISK Assessment
LIBOR-OIS Spread
When the LIBOR-OIS Spread is increasing, it tells us that banks believe the other banks they are lending to have a higher risk of defaulting on the loans, so they are charging a higher interest rate to offset this risk. It also tells us that the credit markets are not functioning as smoothly as they could bewhich is sign of potential economic contraction. Though the levels are not alarming the TREND IS A MYSTERY as illustrated to the right.
chart 32
Housing - Rate of Change Prof. Robert Shiller (one of the creators of the CS Index) pointed out that when 6 out of 20 US cities in the index have hit new lows (even lower than in early 2009) that the economy would face serious worries if house prices kept falling this fast
Why did he say this fast? To understand, you have to look at the annualized rate of change of the last 3 month. And it is not a pretty picture. While the 1 0-city index dropped an annualized 8.8% in the three-month period from July to October 201 0,
chart 33
28
One of the things to watch for in the markets is divergence. Divergence are one of the best warnings that something is wrong somewhere. It often tells you that there are unbalanced forces at play in the market. These forces will resolve themselves, but often do this via gradual reversal in trend or a sudden surprise shock to the markets. The ECRI Weekly Leading Index is presently showing a divergence with the S&P 500 Index. While the S&P 500 is setting a higher high, the ECRI on a longer term weekly basis is setting lower highs. This suggests that the stock market may be pricing in more economic good news than it should.
Divergence
chart 34
Bank Liabilities The Shadow Banking System as the prime pusher of toxic debt instruments collapsed in the 2008 financial crisis and so far it simply has not re-emerged in some sort of hybrid fashion. The Federal Reserve desperately needs this to happen and this has been another reason for the Fed's "Extend & Pretend" policy.
To the right is the latest figures from the Federal Reserve's Flow of Funds report for Q4 201 0. The report was startling since Q3 201 0 was even worse than thought after final adjustments were made. We had aQ4 201 0 decline of $206.4 Billion in Shadow Banking liabilities with $440 Billion in combined Shadow and Conventional Banking System Liabilities. This almost guarantees that the Federal Reserve must continue QE.
chart 35
29
X-VIX / VXO Warnings
chart 36
chart 37
The Weekly VIX chart above show a wedge with the slopes of the sudden change in volatility getting steeper but shorter in duration. If they were to be getting shorter but not as steep we could see this as good news with the system becoming more stable as it decayed. Instead we have 'shock' reactions. This is a bad omen for stability - whether an up market or down market follows. The daily VIX shows the banding of the 50, 1 00 and 1 00 day VIX moving averages. Tightening bands are an indication of a pending break in pattern, whether up or down. We have a 1 00 DMA cross of the 200 DMA which is sign of a potential trend reversal.
30
Feature Article Market Manipulation
Market Manipulation
The first quarter of this year proved to be extraordinary for four major banks as they made perfect trading records. There is an exception one of the banks had one day with a loss the rest of the days, including the trading days of three other major banks, had a quarter (3 months) of 1 00% profitable trading. Statistically, given that we are in a completely random and chaotic market, this should be impossible. Not just one bank having three months straight of not a single day with a loss (except noted exception which is literally just one day), but Four banks simultaneously accomplishing it. It is recognized that these banks are not just your ordinary trader. The have virtually unlimited resources, hire PhDs and other brilliant minds to work on sophisticated automated trading algorithms, use the best technology and have extremely large pools of cash from which to draw from. It would be expected that they would do well, or not be in the business at all. However, given that we are supposed to have a completely random market, to do well would fall in an 80%-90% range. The four banks had approximately 240 trading days combined with one loss or a 99.58% positive daily trading record. Or, to express it yet another way: you had one bank with a 98% daily trading record over three months plus three banks with 1 00% daily trading records during the same time period.. In a random market, this should be impossible, yet it has occurred.
JP Morgan
In the 1st quarter of 2011, JP Morgan averages $112million profit per trading day. Over the 3 month period they have No
loosing days.
chart 38
31
Bank of America
chart 39
What are the odds of trading everyday for a quarter and not having a single losing day? What are the odds of all four major banks doing it and none of them having a losing day? JP Morgan and Bank of America are shown here. Citi (not shown) is the 3rd bank with a 100% profitable daily trading record over the same three month time period.
Goldman Sachs
chart 40
It turns out that only Goldman Sachs of the four major banks recorded a single trading day loss. That single day's loss was even then negligible compared to their average day's gains.
32
So what does this mean? It seems that either (a) the markets are not completely random and chaotic as we are told, or, (b) the four banks somehow managed the market through inside information or by sheer force. That the four banks were just lucky combined with their superior resources goes beyond all realms of rationality. For every 1 0 trading days, we would expect 1 or 2 of them to be non-profitable. In our real life example with four banks and 60 trading days each, we could expect 24-48 unprofitable days out of the combined total of 240. There was only 1 . Option (a) suggests that there is more to the markets than just the random-walk theory we have all been taught about. If you are using any Technical Analysis in your trading then this possibility is nothing new to you. We suggest that if the markets were completely random many TA techniques would not be present, useful or predictive. That a market moves to a certain level and support or resistance can be predicted before hand based on previous moves, says the markets can not be random. The definition of random does not allow for any predictability - soon as there is any, then it isn't random any more. In this issue we have a focus on Fibonacci. We have demonstrated its existence in nature as well as the markets. Fibonacci levels have proven to be reliable and consistent across all markets and timeframes. If they (the markets) were all completely random, we would not notice anything. That these techniques work across all time frames suggests a Fractal nature to the markets as well - again, not random. We could go on at length discussing various technical analysis techniques, but the bottom line remains the same for each of them. None of them would have any value or demonstrate any predictability if the markets truly were completely random.
Having said all this and shown that the markets are not a complete random walk as we have been lead to believe, we also know as traders that just because you may be able to accurately predict a markets next most likely move, it does not mean that you can also automatically trade it properly and be profitable. TA does not guarantee profits. (But it sure helps! :-) ). Option (b) suggests that the banks somehow 'cheated'. Inside information is one possibility. Forehand knowledge of upcoming economic announcements doesn't necessarily guarantee profits. As any experienced trader will tell you, the market doesn't always act as anticipated even when the released numbers are as predicted. Having information about a specific company (ie earnings or pending bankruptcy) probably would give you an advantage ahead of the herd. How about actual market manipulation? Is it possible? Www.marketmanipulation.com claims " Over
85% of Retail Traders lose in the Markets WHY? Because all markets are Manipulated by the "Smart Money" Professional Syndicate Traders who see both sides of
the Market.
Technical Analysis and Fundamental Analysis are not able to detect the Manipulation, which is why the success rates in the Retail Trading Community are so low."
The story is told that after he had been deported to Italy, Infamous New York City gangster Lucky Luciano granted an interview in which he described a visit to the floor of the New York Stock Exchange. When the operations of floor specialists had been explained to him, he said, "A terrible thing happened. I realized I'd joined the wrong mob"
33
Feature Article Market Manipulation Great Depression
Market Manipulation
How a Group of International Bankers Engineered the 1929 Crash and the Great Depression
"I realized I'd joined the wrong mob!" The banks do have market makers and specialists who have access to both sides of the market and can see what is coming down the pipe and adjust accordingly.
They also have vast amounts of capital at their disposal. By buying and selling at the right times and playing with volumes they can help direct the 'prints' on a chart thereby creating different technical situations - knowing these patterns will be perceived by others in certain ways they can create their own opportunities to take money from the public. We know that things like cartels exist - these do so to for the purpose of 'regulating' markets like Oil. Is regulation not just another word for manipulation? Ultimately it comes down to trying to control the market - it follows that they would try and profit from this. If we go searching for historical evidence of market manipulation we can find lots to read. A Google search gives over 1 .6 million hits to the reference. At the end of this article is another one relating to the Federal Reserve and thier part in market control. We will leave the evidence as presented for the reader to conclude for themself what is going on. Possibly a little of all that has been mentioned? Regardless, if the reader is honest with themself, they will see that there is much more transpiring in the markets than is presented up front via the mainstream media or our common educations. The actual means that are being employed by the banks in question are anyones guess.
Lucky Luciano
From Gary Allens None Dare Call it Conspiracy, Chapter 3:

How successful has the Federal Reserve System been? It depends on your point of view. Since Woodrow Wilson took his oath of office, the national debt has risen from $1 billion to $455 billion. The total amount of interest paid since then to the international bankers holding that debt is staggering, with interest having become the third largest item in the federal budget. Interest on the national debt is now $22 billion every year, and climbing steeply as inflation pushes up the interest rate on government bonds. Meanwhile, our gold is mortgaged to European central banks, and our silver has all been sold. With economic catastrophe imminent, only a blind disciple of the ... could believe that all of this has occurred by coincidence. (see note E1 ) When the Federal Reserve System was foisted on an unsuspecting American public, there were absolute guarantees that there would be no more boom and bust economic cycles. The men who, behind the scenes, were pushing the central bank concept for the international bankers faithfully promised that from then on there would be only steady growth and perpetual prosperity. However, Congressman Charles A. Lindberg Sr. accurately proclaimed: From now on depressions will be scientifically created. Using a central bank to create alternate periods of inflation and deflation, and thus whipsawing the public for vast profits, had been worked out by the international bankers to an exact science.
34
Having built the Federal Reserve as a tool to consolidate and control wealth, the international bankers were now ready to make a major killing. Between 1 923 and 1 929, the Federal Reserve expanded (inflated) the money supply by sixty-two percent. Much of this new money was used to bid the stock market up to dizzying heights. At the same time that enormous amounts of credit money were being made available, the mass media began to ballyhoo tales of the instant riches to be made in the stock market. According to Ferdinand Lundberg: For profits to be made on these funds the public had to be induced to speculate, and it was so induced by misleading newspaper accounts, many of them bought and paid for by the brokers that operated the pools The House Hearings on Stabilization of the Purchasing Power of the Dollar disclosed evidence in 1 928 that the Federal Reserve Board was working closely with the heads of European central banks. The Committee warned that a major crash had been planned in 1 927. At a secret luncheon of the Federal Reserve Board and heads of the European central banks, the committee warned, the international bankers were tightening the noose. Montagu Norman, Governor of the Bank of England, came to Washington on February 6, 1 929, to confer with Andrew Mellon, Secretary of the Treasury. On November 11 , 1 927, the Wall Street Journal described Mr. Norman as the currency dictator of Europe. Professor Carroll Quigley notes that Norman, a close confidant of J. P. Morgan, admitted: I hold the hegemony of the world. Immediately after this mysterious visit, the Federal Reserve Board reversed its easy-money policy and began raising the discount rate. The balloon which had been inflated constantly for nearly seven years was about to be exploded.
On October 24 [1 929], the fan. Writing in The Unresolved Monetary Problems, William Bryan happened:
feathers hit the United States and Political describes what
When everything was ready, the New York financiers started calling 24 hour broker call loans. This meant that the stockbrokers and the customers had to dump their stock on the market in order to pay the loans. This naturally collapsed the stock market and brought a banking collapse all over the country because the banks not owned by the oligarchy were heavily involved in broker call claims at this time, and bank runs soon exhausted their coin and currency and they had to close. The Federal Reserve System would not come to their aid, although they were instructed under the law to maintain an elastic currency.
The investing public, including most stock brokers and bankers, took a horrendous blow in the crash, but not the insiders. They were either out of the market or had sold short so that they made enormous profits as the Dow Jones plummeted. For those who knew the score, a comment by Paul Warburg had provided the warning to sell. That signal came on March 9, 1 929, when the Financial Chronical quoted Warburg as giving this sound advice:
If orgies of unrestricted speculation are permitted to spread too far the ultimate collapse is certain to bring about a general depression involving the whole country.
Sharpies were later able to buy back these stocks at a ninety percent discount from their former highs. To think that the scientifically engineered Crash of 1 929 was an accident or the result of stupidity defies all logic. The international bankers who promoted the inflationary
(cont)
35
policies and pushed the propaganda which pumped up the stock market represented too many generations of accumulated expertise to have blundered into the great depression. Congressman Louis McFadden, Chairman of the House Banking and Currency Committee, commented:
It [the depression] was not accidental. It was a carefully contrived occurrence The international bankers sought to bring about a condition of despair here so that they might emerge as the rulers of us all.
which way the Federal Reserve policy is going to go, you can make a ton of money. The members of the Federal Reserve Board are appointed by the President for fourteen year terms. Since these positions control the entire economy of the country they are far more important than cabinet positions, but who has ever heard of any of them except possibly Chairman Arthur Burns? These appointments which should be extensively debated by the Senate are routinely approved. But, here, as in Europe, these men are mere figureheads, put in their positions at the behest of the international bankers who finance the Presidential campaigns of both political parties. And, Professor Quigley reveals that these international bankers who owned and controlled the Banks of England and France maintained their power even after those banks were theoretically socialized. The American system is slightly different, but the net effect is the same: ever increasing debt requiring ever-increasing interest payments, inflation and periodic scientifically created depressions and recessions. The end result, if the Insiders have their way, will be the dream of Montagu Norman of the Bank of England that the Hegemony of World Finance should reign supreme over everyone, everywhere, as one whole supernational control mechanism. (Montagu Norman by John Hargrave, Greystone Press, N.Y., 1 942.)
http://hidhist.wordpress.com/banksters/howagroup ofinternationalbankersengineeredthe1929crash andthegreatdepression/
Although we have not had another depression of the magnitude of that which followed 1 929, we have since suffered regular recessions. Each of these has followed a period in which the Federal Reserve tromped down hard on the money accelerator and then slammed on the brakes. Since 1 929 the following recessions have been created by such manipulation:
1 936-37 : Stock Prices fell fifty percent (50%) 1 948 : Stock prices dropped sixteen percent (1 6%) 1 953 : Stock declined thirteen percent (1 3%) 1 956-57 : The market dipped thirteen percent (1 3%) 1 957 : Late in the year the market plunged nineteen percent (1 9%) 1 960 : The market was off seventeen percent (1 7%) 1 966 : Stock prices plummeted twenty-five percent (25%) 1 970 : The market plunged over twenty-five percent (25%)
Chart 5 (not shown), based on one appearing in the highly respected financial publication, Indicator Digest of June 24, 1 969, shows the effects on the Dow-Jones Industrial Average of Federal Reserve policies of expanding or restricting the monetary supply. This is how the stock market is manipulated and how depressions or recessions are scientifically created. If you have inside knowledge as to
Editors Note: E1 . As of the middle of 2011 , the U.S. debt to the bankers exceeded $1 4,350,000,000,000 ($1 4.35 trillion), and is increasing at the rate of $3,900,000,000 ($3.9 billion) per DAY. See the current Treasury report of the national debt.
36
Traders Mentor
Technical Analysis & Trading Strategy Education
See the Cover Story in this issue "The Nature of Fibonacci Markets" for an introduction to Fibonacci and its relation to the markets.
It is hoped that you are able to see that there does appear to be some sort of relationship between Fibonacci and market moves. We have proposed a theory for its cause... why the fib % seem to be applicable. It is now up to the reader to decide to pursue the information themselves in order to try and understand why they (the fibs) behave as they do. In this article we will discuss a useful approach to utilizing a common fib tool. We will demonstrate a practical application in our current market so that you may then study and further test Fibonacci theory for yourself. This article is for education purposes only, to verify the validity of the theory and demonstrate its relationship with market moves. It is in no way a suggestion to trade based on this theory alone. While very useful, it should be one of many tools used in your daily due diligence. We hope you take the information here and use it as a starting point for your own research. Very easy to apply, it is probably one of the more powerful tools you have at your disposal. Using this tool you can accurately predict support and resistance levels, size of the next wave and even where corrections will most likely end up before the trend continues on. When combined with other methods, such as Elliott Wave, it adds another dimension to the forecasts that can take your trading to the next level. Lets take a quick look at a method for predicting the next wave. The following chart is of the OEX and the 1 st fib %'s are marked in using the fib tool. You can see that the market pulled back at the end of the 1 st wave by 38.2% - touching the 61 .8% line. This line represents 61 .8% of the Original Wave, or the original wave less 38.2% (our retracement)
Applied Fibonacci
Fib Retracements & Extensions (Tool)

Probably the most common fib application to be found in most charting software is some variation of the fib retracements / extensions tool.
chart 41
37
We would expect that our next wave up would have a relationship to our 1 st wave by some measure of fib %. For our next chart, all we have done is moved the tool from the start of the 1 st wave to the start of the next wave up. Changed no settings or size, literally just slid the whole fib tool (marking the bottom to the top of the 1 st wave) over to the start of the next wave up.
Should the market continue to contract at the same rate it has done for up waves 1 and 2, then we could expect the 3rd wave up to also contract at the same rate and be 61 .8% of the size of the previous, or 2nd wave, up.
chart 43
We have used our current position at the time of this chart to represent the end of the consolidation and start of the 3rd wave up. chart 42 However this has not been confirmed and we are using the point for demonstration purposes only. In order to get an accurate We can clearly see that the 2nd wave up was forcast you must know the correct position from which the 3rd wave started up - which is 61 .8% of our 1 st wave up. not known at this time. When we have verified that the consolidation is in and the next wave up has begun, we can Using this example we have a target of then make some predictions as to where the around 650 on the OEX for the end, or top of the 3rd wave up. 3rd wave up will end. The same process is applied. We start over resetting our tool to measure the size of our 2nd wave up. Then move the tool over to the start of the 3rd wave up. The market appears to be contracting, or the waves are 'shrinking' as opposed to expanding or 'growing larger'. We can make this observation because of the fact that our 2nd wave up was only 61 .8% of the size of our 1 st wave up. This same method can be used in a variety of ways. As mentioned earlier, adding these ratios to your EW (Elliott Wave) counts can add a new dimension (and accuracy) to your analysis. Consider that the waves in EW act in a similar manner to our example above. Start measuring them with your fib tools and see if you notice anything. Look for more Fib applications in future issues of TRIGGER$. GoldenPhi END
38
IIn last months issue we discussed channel theory and constructed an analysis that gave us guidelines for months out in to the future. This month we offer an update to this so that you may see what has transpired and continue to analyze this method for yourself.
Traders Mentor Up date
chart 44
Channel Theory Analysis. We showed you the construction of these channel lines in last months issue. These lines could have all be set up as early as November 201 0. They continue to provide some perspective as the chart above (from last month) and the updated chart below demonstrate.
chart 45
39
Open Forums
Letters to the Editor Readers Comments Discussions
Looking for readers feedback. Please let us know hat you are thinking. If you have an article or an analysis you would like to be considered for Trigger$ publications, please contact us with your ideas. TRIGGER$ : triggers@gordontlong.com We would like to acknowledge and thank the following for their contributions to this issue. FreeStockCharts.Com Chart 2,3,4, 22,23,24,25,41 ,42,43,44,45 Haver Analytics Chart 6,7,8 ClusterStock Chart 11 HaysAdvisory.com Chart 1 2, 1 4, 1 8 InvestorsIntelligence.com Chart 1 6, SentinmenTrader.com Chart 1 9 StockCharts.com Chart 20,27,28,29 PFS Group Chart 34 Zero Hedge Chart 35
www.GordonTLong.com
Gordon T. Long has been publically offering his financial and economic writing since 201 0, following a career internationally in technology, senior management & investment finance. He brings a unique perspective to macroeconomic analysis because of his broad background, which is not typically found or available to the public. Mr. Long was a senior group executive with IBM and Motorola for over 20 years. Earlier in his career he was involved in Sales, Marketing & Service of computing and network communications solutions across an extensive array of industries. He subsequently held senior positions, which included: VP & General Manager, Four Phase (Canada); Vice President Operations, Motorola (MISL - Canada); Vice President Engineering & Officer, Motorola (Codex - USA). After a career with Fortune 500 corporations, he became a senior officer of Cambex, a highly successful high tech start-up and public company (Nasdaq: CBEX), where he spearheaded global expansion as Executive VP & General Manager. In 1 995, he founded the LCM Groupe in Paris, France to specialize in the rapidly emerging Internet Venture Capital and Private Equity industry. A focus in the technology research field of Chaos Theory and Mandelbrot Generators lead in the early 2000's to the development of advanced Technical Analysis and Market Analytics platforms. The LCM Groupe is a recognized source for the most advanced technical analysis techniques employed in market trading pattern recognition. Mr. Long presently resides in Boston, Massachusetts, continuing the expansion of the LCM Groupe's International Private Equity opportunities in addition to their core financial market trading platforms expertise. GordonTLong.com is a wholly owned operating unit of the LCM Groupe. Gordon T. Long is a graduate Engineer, University of Waterloo (Canada) in Thermodynamics-Fluid Mechanics (Aerodynamics). On graduation from an intensive 5 year specialized Co-operative Engineering program he pursued graduate business studies at the prestigious Ivy Business School, University of Western Ontario (Canada) on a Northern & Central Gas Corporation Scholarship. He was subsequently selected to attend advanced one year training with the IBM Corporation in New York prior to starting his career with IBM.

TRIGGER$ - June 2011

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Economic & Technical Analysis for the Active Trader

Issue : BETA-JUNE Vol. : 2011-Pilots

Nature of Fibonacci Markets

Weellccoomee ttoo IIssssuee 22 W m u

On Market & Economic Indicators

The All Seeing Eye

- The Big Picture - The Larger Pattern -

Need To Know Technical Analysis

- Hard Currency - Forex - US Bonds -

Currencies & Metals

Technical Analysis & Trading Strategy Education

Economic & Technical Analysis for the Active Trader

Nature of Fibonacci Markets

Economic & Technical Analysis for the Active Trader

So then, what does any of this have to do with the markets?

Fibonacci in the Markets

Successive Fib Squares create a Spiral

Fibonacci Retracement Levels

intermediate longer term

Risk Analysis Fundamental Analysis

The All Economic Indicators Seeing Eye On Market &

Has dramatically broke through 50

A FINAL RALLY & THE LAST PART OF AN ENDING DIAGONAL

-National Association ofActive Investment Managers (NAAIM)-

-Smart Money / Dumb Money Confidence-

Need To Know Technical Analysis

The Big Picture

The Big Picture (continued)

The Larger Pattern

Do we have the EW pattern of an 'Expanded Flat' occuring?

Feature Article Gann

Square Root Calculator

'Squaring the Circle' with the Square of 9

Economic & Technical Analysis for the Active Trader

Feature Article Gann

8 sided figure made of triangles

The Vault Currencies & Metals

US 10 YEAR TREASURY BOND

X-VIX / VXO Warnings

Feature Article Market Manipulation

Feature Article Market Manipulation

Economic & Technical Analysis for the Active Trader

Economic & Technical Analysis for the Active Trader

Feature Article Market Manipulation

From Gary Allens None Dare Call it Conspiracy, Chapter 3:

Economic & Technical Analysis for the Active Trader

Feature Article Market Manipulation Great Depression

feathers hit the United States and Political describes what

Feature Article Market Manipulation Great Depression

Economic & Technical Analysis for the Active Trader

Technical Analysis & Trading Strategy Education

Fib Retracements & Extensions (Tool)

Traders Mentor Up date

Letters to the Editor Readers Comments Discussions

Economic & Technical Analysis for the Active Trader

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