Nov 8 Weekend Report

The late day strength on the stock market did not surprise me after selling off on the Obama speech. I posted on traders-talk that I was expecting late day strength about 30 minutes before the close. My Timer Trac signal closed out longs initiated at the RYDEX AM NAV Friday and closed those longs out to go to MMF (money market fund) with only a slight profit. My original thinking was to short the close, but I changed my mind in the last hour. If you went short the close, I believe you will be vindicated.

I'm looking for strength in the early going Monday with a target of SPX 941 based on the Equality of Waves Principle. The 4 day cycle top ideally occurs late Monday, but looks to occur early this time. I am shorting the AM RYDEX NAV Monday morning (10:30 EST).

Using e-wave principles, I believe we will see the final wave -c- down hard into Monday/Tuesday and possibly hit the 848/849 SPX target, wave -b- being this fake-out rally I believe we are in now. Since we are in a C wave of larger dimensions coming off the Tuesday top near 1004 (which was a B wave itself), -c- of C should be hard and fast and nearly as long if not longer than its predecessor -a-.

The overall look with e-waves and cycles examined suggests that after this current bout of selling is through, we should see a wave up with the strength of the Oct 10-14 rally. The full moon last topped on Oct 14th and we could easily see a repeat of that performance from Tuesday to Thursday next week with a possible slight variance of dates (that is like instead e.g., Monday to Wednesday).

This should set up a bear flat flag of larger proportion (a continuation pattern) with more downside expected to my target of 788 SPX (the March 2003 low). Ideally, this final low should occur around the 23 week cycle low projected for late Dec around just before XMAS.

The GDX ETF is looking like it could do one of two things: either fall into Nov 11 or rally into that date. A rally would set up for a short, a decline for a long. So for now I am neutral there. My best guess is we see some rally in the GDX early Monday followed by a sell-off into Tuesday and then a rally with the stock market into the full moon expected top Nov 13+/-. That should set up an irregular B Wave top in GDX and then a decline into the seasonal low due between Nov 17-21.

Overall, I expect the mining sector to bounce from those projected dates into an expected top just before XMAS. My target there is 38/39 from its low of just under 16 set on October 24, quite a potentially large move coming as we are now about $21 after tagging the $24 area in recent days with further weakness expected after this week.

Longer term, the stock market is about to put in an important bottom late this year, which should hold SPX 788 and rally toward my expected target of around 1590/1600 by Mar/Apr 2010. The mining shares have already put in their bottom around Oct 24/27, (IMO, at least with the blue chips in that sector), and the 8 year cycle projects higher into around Xmas and perhaps the first day of the New Year. From there we should see increasing focus on the stock market going up and selling in the mining shares into about mid February 2009.

What I'm saying is, we should soon see a decoupling soon of the mining shares with the stock market, with the gold and silver mining shares acting inversly to the stock market. The 8 year cycle in the mining shares suggests strength into about May/June 2010 from a higher low around mid/late Nov 2009. There is a strong surge expected from mid Feb to early/mid March 2009 and again from early April 2009 to about the third week of May. After that, an expected a-b-c type of decline into Nov 2009 should set up the strong Nov '09-May/June '10 rally I see coming.

The top I see in Mar/Apr 2010 in the stock market should set up a severe decline to SPX 443 expected by as early as July 2010/Oct 2010 to as late as Mar/May 2011. This should be the most severe decline since the 1929/32 depression crash that wiped out 89% of the value of the Dow Jones Industrials. Caveat Emptor!