Mar 30th, 2008

Written/Recorded By Matthew Frailey:

Economic Releases for Mar 31 - Apr 4th:

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Hello everyone, this week I'm going to do something different; I'm going to discuss the charts below along with a colleague of my Steve Nelson who goes by the name of dodgerdog on the BLOG.

Our interview/discussion is nearly 45 min long, however we cover a lot of charts and market scenarios, therefore I urge you to listen to it in its entirety. Click on the link below:

However please note that it is also 45 min in length, therefore please leave ample time to listen to it. The file is an MP3 file. Turn up your speakers. However also make sure to read the text below!

Note, if you are having any problems listening to the audio, it will work better if you simply download it to your computer. Simply place your mouse over the audio file link and then click 'save target as', this will save the file directly onto your computer where you can play it in Windows Media Player or whatever MP3 player you want.

***Audio File - Click This File & Turn Up Your Speakers - Audio Recap of the Charts;

First off we must realize that we are in a bear market and the primary trend is to the downside. The 20 month EMA and 89 week EMA clearly defined bull/bear markets or the primary trend. The market will remain in this bear market as long as the SPX remains below these 'key' MA's. Possible long term targets to the downside would be a 62% retracement of the bull market from late 2002 - 2007 highs, this corresponds to approximately 1060 for the S&P 500 and 10000 for the Dow.

Regarding the daily charts, the major indexes are also in downtrends, however over past 2 1/2 months since Jan 22nd, the major indexes have been mostly in consolidating patterns with a slight downward bias. The indexes will eventually breakout of these consolidation patterns either to the upside or the downside, but for now they remain within these consolidation patterns.

This knowledge is very important with respect to swing trading and day trading. Markets are either trending or consolidating and currently the US Market is consolidating. This fact is very important to know because Swing Trading is NOT conducive in a consolidation environment, only a trending environment. Obviously this has not been a Swing Trading environment! You need to take profits relentlessly and if you cannot do this, then it would be wise to sit out until better times manifest. Remember, cash is a position! Therefore please consider that with regard to the Watch List, everything is consider a short term trade for now until we break out of this consolidation range.

Earnings Season will begin in a couple weeks starting with Alcoa. I think this earnings season could be very important for the market, even more important the much of the recent economic news that is mostly already factored in.

Regarding commodities, the main theme of Barron's this week was a top in commodities. I think commodities have either hit an intermediate top or are in the process of doing so. However the area that really intrigues me is the precious metals area especially gold. Gold metal recently topped out just over $1000 an ounce and now appears to be in a 4th wave ABC correction. Gold is still in a long term bull market, therefore this pullback in gold will produce awesome long term and swing trade opportunities to buy gold and hold it. I thing we could see gold pullback to the mid $800's at least, and possibly even to the 65 week MA, which would be a gift from the Gods to load up on gold metal in the form of coins/bars or the ETF's, GLD or DGP ultra long. However it is too early to begin buying back into gold, I think this correction could last sometime. However once this ABC correction is complete, I think gold metal will then rally back to form new highs well past $1000 an ounce.

First, The Big Picture Charts: