Saturday, April 7, 2007


From time to time I am going to through something into the mix that does not necessarily follow a specific manner. I have found for myself that by getting at something off the path expected and scheduled will at times help my retention of both the new and the old. With that I give you the classic W bottom and something you will see over and over and over, so it pays to burn this into your brain.
The notes on the chart will walk you through the process.

Educational Update on AGL

Take a look at AGL, which we covered earlier as an educational tool of a Classic Consolidation Zone. These patterns are very reliable and worthy of monitoring. Please click on the chart below.

The Short on the LONG TERM of OIL

As you know, the equity and credit markets pick and choose what they are going to focus on, never able to stay with one for very long. It really is only when something is getting ready for an extended move do these market pay close heed to the matter at hand.

Lately, Oil has come back in vogue as the commodity to watch, so I thought it only fitting that I go over where I think it is going over the intermediate to long term. There is no question that my outlook is in the very small minority of opinions out there, but I try and not to be influenced by outside sources.

With that said, please click on the chart below.

Health of USEC Corp and DVSA

Please Click on the Charts for an Update on the Short and Intermediate Term Health of these two stocks. DVSA is the Three White Soldiers candidate and USEC has been a Uranium play.

Friday, April 6, 2007

Daily Market Commentary

EQUITY - Thursday really looks like a short term high was put into place in the S&P 500 as the market seems to be moving into a weak state. One item to notice is the fact that most of the big money players took the last half of the trading day off and notice that the CBOE Put/Call ratio finished at its lowest level in quite some time. This to me translates into the fact that the weak hands are now short term bullish on the market and the timing could not be any better for a pullback.

Please understand that I remain Intermediate Term Bullish as I expect this decline to be nothing more than a normal pullback in an ongoing intermediate term rally phase.

CORN - Bumping up against some short term resistance here. This may require the price to pull back a bit before completing its counter-trend rally. I remain steadfastly bearish on corn prices over the next few months and I do anticipate sharply lower prices. Just simply to many people thinking the corn market is going to the moon with the Ethanol hype. Please refer to the archives for a more detailed explanation of my long term outlook on the grains.

COCOA - Currently some indecision in the cocoa market that looks to me like it will be decided to the downside. Much like the equity markets, the weak money in cocoa seems to be getting sucked in at precisely the wrong time.

10 Year T Note - 10 year note looks to be in a strong position for a decent rally. It should have the ability to take out its most recent highs at the 109 1/4 area. Should be good timing for a rally with the potential decline in stock prices and an infusion of capital moving over to bonds.

Individual Stocks and Current Educational Module Candlestick Pattern Experiment will be Updated Later During This Long Holiday Weekend.

I do hope all of you have a great holiday and weekend.

Matthew Ash

Wednesday, April 4, 2007

Daily Markets Comment

EQUITY - The short term model deteriorated some today, primarily because of the thinness of the rally. While it was constructive that the market moved up today, I am starting to see signs that this rally is petering out. Look for one more thrust up before the intermediate term correction sets in.

CORN - Had a nice rally today from its deeply oversold levels. I would not be surprised to see Corn rally all the way back to 3.96 before the decline continues. The intermediate term trend remains down for the grains. CAN YOU SEE HOW I GOT THE UPSIDE TARGET FOR CORN?

Cocoa -
Second day of the rally after the Monday slaughter. This rally phase looks to be complete. Look for cocoa to continue its decline from current levels. This will help to confirm that the intermediate trend has truly shifted to down.

10 Year T-Note - Still in Doubt Go Without.

CHCI - Continues its decline and is having a very hard time finding a bottom. I will let the stock tell me when it is clear to enter and that time is not now.

USU - Another nice rally today in USU. USEC Corp. typically follows the pattern of the general market, so with the potential short term trend change possible I have to look for a decline in USU as well. This possible decline in USU will have intermediate term implications which would bring the price back to the $14 area.

GM - I anticipate GM to hold up well if the market reverses course here. I continue to support the theory that GM is in the Second up leg on its long term journey from below $20.

Intermediate Term Rally May Be Very Close To Termination

I am starting to see signs that the most recent Intermediate Term rally off the Panic Lows we saw in Mid-March may be coming to an end and some type of pullback could be in the cards.

I think this rally is about 95% over although we could see one more new high for the move to complete the rally.

Take a look at the chart and tell me what you see. Use some of the tools we have covered in the educational modules. There is no better teacher than Real Time!!

I will be sending my usual update later tonight, I just thought this situation was best discussed before hand.

Tuesday, April 3, 2007

Three White Soldiers Real Time Examples Module #4 Continued

OK, so we went over the Three White Soldiers pattern. Now let us take a couple of examples and monitor them in real time to see how they fare.

Remember to watch the support levels that I have indicated with the Green Line.

Daily Market Comment

EQUITY - The short term model turned up strongly today from its buy signal yesterday. To remain constructive the rally will need to continue somewhat tomorrow. We don't need a whole lot just a positive close.

CORN - Grains continue to decline, but seem to be getting deeply oversold so I would not be shocked to see some type of rally in here. This should be a short term rally only as the intermediate term trend turned lower 2 weeks ago.

COCOA - Staged a rally today after the sharp sell-off yesterday. Looks like a dead cat bounce. Tomorrow will be the telling sign. I still think we have entered an intermediate term decline.

10 YEAR T-NOTE - On the weekly chart the 10 year note looks like it needs to decline, however on the daily it looks as if it should rally. Yin and the Yang. As the saying goes "When in Doubt, Stay Out"

CHCI - Stock simply cannot find any level of stabilization. It might be frustrating the buyers of the stock though as today looks like they finally threw in the towel. This is usually an indication of an intermediate term bottom. Time will tell on this one.

DVSA - Broke through the 39 day moving average with strong volume and price conviction. While I had anticipated a pull back of some sort it seems the stock has something else in mind. As usual, THE MARKET IS ALWAYS RIGHT!!

USU - Nice break above the previous high and a new high for this intermediate term advance. Very constructive and has more latitude to rally.

GM - The intermediate term advance is still in effect and should lead to much higher prices.

Monday, April 2, 2007

Educational Module #4 The Most Neglected CandleStick Pattern and The Most Useful

If you are not familiar with CandleStick charting there is a multitude of free resources available on the Internet to enlighten you. These charts have been around for quite some time and have become very popular, almost to popular.

While the effectiveness of CandleStick patterns has eroded because of such wide spread use, they still remain a valuable tool in our pursuit of trend changes or trading patterns. There are a great many patterns that steal the spotlight and are used quite regularly by many investors. Morning Star, Evening Star, Doji, Bullish and Bearish Engulfing, Piercing Line, Dark Cloud Cover, the list goes a little further than that, but you get the picture.

There is however a CandleStick pattern that seems to be the red headed stepchild of the family and quite honestly I do not see why that is the case. I have used this pattern over and over and over with great results and it continues to do well in the current market environment. Like anything else, it will not work all the time, but with a few rules put in place along with the pattern it offers great results.

OK, enough of my rambling. The CandleStick pattern I am talking about if the Three White Soldiers.

Typically this pattern is an intermediate term buy signal that tells us the trend has changed from down to up. There are some qualifications however.
- Works Best On Stocks Selling Over $5 per Share
- Based Upon Volume Analysis, Sometimes the Stock Price Will Test the Lows Before a Major Move Begins
- This Larger the Bars are In the Pattern, Typically Indicates How Strong the Move Will Be

I have attached a couple of charts here to get you familiar with the pattern and show you the 50% rule I just spoke of. I will be posting more charts on this pattern, including some that will show what happens when the pattern goes astray. Like I said, It does not work all the time.

We will also follow a few stocks in real time with this pattern and see what comes of it. We will use the pattern along with some technical indicators to tell us the whole story.

For now though study the charts and surf the net for candlestick web sites and learn. You can even go to and do a market scan for the THREE WHITE SOLDIERS pattern.

I realize that I did not finish the moving average modules, but I thought I should give that concept a break so you could fully absorb what had been talked about already. I will cover the other moving average uses in the not to distant future.

Daily Markets Comment

EQUITY - Short term model turned from negative to positive today as Friday the model dictated an upside reversal was eminent. Model is still quite weak, but will improve with some follow through or a light consolidation on Tuesday.

CORN - Continues its hard decline with another near limit down day. Market is very close to oversold but still could see more short term weakness. I continue to be Intermediate Term Bearish on Corn.

COCOA - Timing could not be better as cocoa looks like it has begun its collapse today. Should be the start of an intermediate term decline.

10 YEAR T-NOTE - Looks like it wants to rally in here. I continue to look for rates to move lower over the next 6 -9 Months.

CHCI - Looks like it is starting to stabilize but it still needs to prove itself a little more.

DVSA - Having trouble with the 39 day moving average as suspected. Looking for a pullback to the low $7 area.

USU - Stock is behaving pretty darn strong. Perhaps its pullback is done. While I thought it might get to $15 before working higher, it may have made a short term low.

GM - Continue to look for higher prices, especially after this most recent pause that refreshes.

Just Proof that You Never Know Which Way a Squeeze Will Break

Good educational module in real time.

Take a look at the chart and tell me what you see.

The Squeeze is On!!

Short Term the S&P Looks like it is going to make a fast break as it gets squeezed.

The quiet action, along with the nullification of the mini crash pattern makes me lean
to a thrust downward, but these squeezes are unpredictable. We know it is going to break
hard, we just don't know which way.

I am leaning towards one more thrust down to complete this current corrective wave that I thought was completed on Friday.

Time will tell....
Have a Great Day and I will be updating this evening.

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