State of the Market Analysis and Big Picture GOAX Bias Update (Part 5)

January 7, 2008

98

US Dollar 75.82 -.06% – Needless to say, here is another established long-term downtrend. LOL! Been following textbook TA action for years. Near term I rate it a W&S chart because gut feel is that we might go sideways in a 74/79 for some time before the next move up or down starts.

TLT 20 Yrs Treasury Bond 94.27 +.02% – This market sell-off triggered another run to safety. Too bad for bulls because it was about to break the trend line of this bearish pattern (bullish for stocks). A note of interest is the fact that despite the big market sell-off on Friday, TLT traded in a tight range all day and closed flat. Totally in line with the VIX analysis above showing that there was not much fear on that market dump. Hmmm… The same observations on this behavior than mentioned above for VIX would apply here.

IBB Biotechs +79.94 –1.49% – The Biotech sector is showing a potential long-term bearish but unconfirmed pattern and is on a wait and see bias . Levels to watch are 75 and 90.

SYMBOL	PPS	EOD BIAS	Level to watch for possible EOD bias change		COMMENTS
SYMBOL	PPS	EOD BIAS	Positive (above)	Negative (below)	COMMENTS
AAPL	180.05	Downgraded to Unconfirmed Bearish	195	175	Not looking good but itÕs a tech leader so if the market stabilizes it should bounce back up.
GOOG	657.00	Downgraded to Unconfirmed Bearish	680	650	Not looking good but the relatively low volume might hint at a near-term recovery, we never know.
BKX	83.25	Downgraded to Confirmed Bearish	88	82	Always a POS. Need to watch a possible bounce on the falling wedge support.
VIX	28.06	Wait and See	25 (bearish for market)	22 (bullish for market)	Still in the triangle. Hinting at some market consolidation in the coming days but China is the wild card.
200MA	34.07	Wait and See	40	30	Still in the wide 30/70 triangle. Need to watch the action on the 30 level very closely now.
FXI	163.61	Wait and See	180	160	Downtrending channel but could be a bullish handle.
NAMO	-41.47	Wait and See	N/A	N/A	Also supports a near-term market stabilization/recovery
SOX	372.85	Confirmed Bearish	400	N/A	Ugly.
HGX	128.38	Wait and See	160	126	Gut feel is it might be the start of a long basing process in the 125/160 range.
EEM	144.67	Wait and See	160	140	Confusing chart. No clue.
OIL	97.91	Wait and See	102	94	Ask the oil crooks or watch these levels!
GOLD	865.70	Confirmed Bullish	N/A	830	Bullish as hell!
US $	75.82	Wait and See	79	74	Could be start of a basing process in a 74/79 range
TLT	94.27	Wait and See	96 (bearish for market)	94 (bullish for market)	Flat on big down day in line with VIX behavior support the stabilization thesis for the near- term with China is the caveat. Below 94 could be sign of the start of a nice mid term market rally.
IBB	79.94	Wait and See	90	75	Bearish looking long-term pattern but no need to jump the gun.

Not sure about you, but in light of the above review of the partners and the S.O.M.A. indicators, my take is that I feel that the recent action since the last BPG update on 12/7/07 and the 9/13/07 S.O.M.A. which downgraded the market to bearish with a downtrend resumption no later than 10/13/07 with a bear market to have started at EOD on 7/19/08 continues to cook very well for the mid and long-term period.

For the near-term, VIX, 200MA, NAMO, TLT,and to a lesser extent GOOG all hint at a possible market stabilization/consolidation/retracement process starting in the coming days possibly jumped started on a minor positive news such as an upgrade for AAPL or GOOG, oil turning south, etc. That is IF China doesn’t collapse! As said, ad nauseum for months, I believe that the China bubble’s bursting will be the tipping point to send the market in an established downtrend when combined with the sub-prime mess. This might happen anytime, Monday morning or in 6 months, but gut feel it’ll be sooner than later.