Four Pillars Finance Newsletter

Issue #110 (20 January 2011)

Hello everybody.

Today we take a look at the medium term perspectives for the markets we cover.
Some interesting situations are arising.
We have been mostly in one-way markets since last summer, but it is not going to stay like that.
It would make life too easy.

Here is the FPF prediction chart for the Nasdaq in 2011.

(Predictive chart made with FPF 1.1 software, available at http://www.fourpillars.net/finance/fpf.php)

Nasdaq

Current level: 2725

The Nasdaq is now very close to the price levels we pictured as an ideal selling area in our previous newsletter (Dec.13)
As you can see in the FPF prediction chart for Nasdaq, a top is likely in January or early February, but then we will enter
more dangerous waters.
Metal months are coming up for February-March, which means increased odds for a market decline or at least some serious
consolidation.
Also May-June does not look too good in our cycles.

So, take some profits, buy some protection for your portfolio, or just stay out...
Possible downside targets: 2400, then 2100

Here is our updated prediction chart for Nasdaq

Also notice the massive divergence that my momentum indicator is currently showing.
This usually signals a change of trend is about to start:
Gold

Current level for XAU index: 205

Gold stocks are down almost 10% since our last newsletter.
We have been warning for weakness in this market (for which I got some angry letters), but really the gold stocks are doing
rather poorly given that gold and silver prices are at or near record highs.
The XAU index is now back to where it was in early 2008 (see chart)

We are still in Earth months, typically a bottom period for gold stocks, so we stick to our downside target of 190 for this
market. If we drop below that, then watch for 170, next 150.

Here is the updated chart:

US 20 Year Treasury Bond Fund (TLT)

Current level for TLT etf: 92

Bonds have continued to be rather weak (= interest rates going up).

We are close to major support level near 89 on the TLT (see chart), so I think there is room for some upward bounce here.
Also my momentum indicator is showing a large positive divergence.

I would cover short positions in bonds, and wait for a bounce back up to 100-105 (TLT) in the next couple of months.

Here is the chart:

Euro – US dollar

Current level for Euro-US$: 1.34

The Euro is now recovering some of its recent losses.

Our cycles suggest that we will get another leg down into the April-May expected bottom period for Euro.
So I would look for an opportunity to sell Euro around 1.38

Here is the updated chart:

Happy trading, Danny

Blog site
Feel welcome to visit the Four Pillars Finance blog, where you can give comments or ask questions:

http://fourpillarsfinance.wordpress.com

LunaticTrader
For more short term stock market direction based on moon cycles, visit our Lunatic Trader site and blog.
There we offer our weekly comments.

http://lunatictrader.wordpress.com

http://lunatictrader.com

Four Pillars Finance software - Free trial download

For more detailed daily prediction charts you are welcome to download the Four Pillars Finance 1.1
software on our site : http://www.fourpillars.net/finance/fpf.php
The program calculates the Chinese cycles and shows you in advance the best days , months or
years to buy or sell stocks, gold, bonds, currencies, commodities...
No experience in Chinese astrology is needed in order to use this program.

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Disclaimer: Investing in stocks, commodities or currencies is risky. No guarantee can be given that the above prediction will be correct.
Fourpillars.net cannot in any way be responsible for eventual losses you may incur if you trade based on the information
given in this article.
Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record,
simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may
have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated
trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No
representation is being made that any account will or is likely to achieve profits or losses similar to those shown. This
information should not be considered as a recommendation to engage in the purchase and/or sale of any futures contract
and/or options. Trade at your own risk.