BOT,bling-bling, Google and I think we just got Bernanked

October 27, 2005

Happy Halloween,

I know you ask, what happened to the rally that was supposed to happen? Looks like the market once again has lost its mojo . We got ”Bernanked” I suspect, no it is not the new NBA dress code .It is simply that fact that after 18 years of Greenspeak ,the new chairman of the FED is operating under the Napoleonic code of guilt until proven innocence. Bond markets seem to be looking for a more energetic interest rate increaser. In the world of FED watchers he is well know, and know for his formulated systematic “black box” approach unlike Greenspan’s tinker and see method but in the real world he is hardly a house hold name, if you can figure out how to pronounce it. I prefer to judge him on the “duck test” ,if he walks like a duck ,talks like a duck he is a duck .He looks like a FED chief, sounds like a FED chief so he will probably make a good FED chief.

My fear at the moment is that we have not finished a sell off with a selling climax or rallied strongly from a much oversold position. The market cycle has gotten into a habit of taking a pause at each hurricane and we seem once again to be stuck in no were land. On the plus side financials continue to rally, IPO’s abound and mergers and acquisitions are many fold. If the investment banking business is brisk an Wall Street Profits are brisk then it is usually not long before the markets starts to drive up ward.

Many of you have asked me , “ hey dude why the waves on you’re website” ?

The Elliott Wave Theory was the work of R.N. Elliott, who observed more than a half-century ago that stock market movements unfold in a series of rhythmic patterns which are based on a natural progression of shifts in mass investor psychology. As market participants vacillate between greed and fear, price patterns develop. These price patterns are called “waves”.
I am a practitioner of my own brand of the “Elliott Wave Theory”. I am not a purist but I subscribe to the basic principles behind the Elliott Wave Theory. The Elliott Wave Theory interprets market actions in terms of recurrent price structures. Basically, Market cycles (WAVES) are composed of two major types of Wave: Impulse Wave and Corrective Wave. For every impulse wave, it can be sub-divided into 5 - wave structure (1-2-3-4-5), while for corrective wave, it can be sub-divided into 3 - wave structures (a-b-c).In this fashion the Elliott Wave Theory tracks the ebbs and flows of the market.
The most difficult part of Elliott Wave analysis is correctly labeling and counting the waves, another words trying to figure out what wave pattern you are in and were you are in that wave pattern. Like most forms of investing hind site is always 20/20.
In order to better ascertain were on the wave I am, I have coupled Elliott wave theory with Point and Figure charting ,mind you this is a hybrid trading system : Point & Figure charts consist of columns of X's and O's that represent filtered price movements over time. Their distinctive look may be alien at first to people who are more familiar with traditional price bar charts but once people learn the basics of P&F charts they usually become hooked.
There are several advantages to using P&F charts instead of the more traditional bar or candlestick charts. P&F charts automatically:
Eliminate the insignificant price movements that often make bar charts appear 'noisy.'
Remove the often misleading effects of time from the analysis process.
Make recognizing support/resistance levels much easier.
Make trend line recognition a 'no-brainer'.
Help you stay focused on the important long-term price developments.


James Foytlin
1(888)599-1188 toll free
www.jamesfoytlin.com