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Strategies & Market Trends : Moomin Valley (formerly Troll-free Zone)

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To: Moominoid who started this subject	4/27/2002 1:41:55 AM
From: Moominoid	of 2852

New Troll Free Report Macro Scenario: The strength of the US economy growing at 5.8% in the first quarter and the technical patterns on the charts suggest that a new scenario is needed. I am abandoning my view that we will see a double dip recession. Rather we are near the end of the bear market on the NASDAQ and in the Dow the bear was over in September. Interest rate rises may now come a little sooner than expected and put pressure on the USD. With the large debt in existence a smaller rise in interest rates is needed to slow the economy than in the past. The beginning of the turn around in the US Dollar is being sensed with the clear completion of a multi-year zig-zag correction in the AUD and bottoming and upmove in AUD, Canuckdollar and the Euro, and the uptrend in gold in the last year. We are hearing discussion of the falling USD in the mainstream media. Consolidation in the gold sector, reduction in gold hedges, buying by Japanese and other gloomy investors etc. will help raise the USD price of gold. However the Yen is falling and could fall some way and this is where the currency markets are focusing for the moment. In the long-run Sterling needs to decline relative to the Euro in order for the UK to enter the Euro system and BOE cannot sell further gold for the same reason. Thus I see interest rates rising fairly soon and stocks falling and the USD ending its up move. However, as interest rate rises will be modest none of these moves will be dramatic. When the NASDAQ index begins to recover in the second half of 2002 the bull market will be weak as the US Dollar will be expected to falling slowly then and foreign investors will be withdrawing money from the US in a process of circular causation. They will capitulate when they see the NASDAQ repeat its lows of September 2001. The market may be supported more by domestic saving resulting from the strong growth and switching out of property which may cool with rising interest rates. Gold too will look like a good investment especially in the light of the falling USD. Technical Analysis Scenario: NDX/NASDAQ The new Elliott Wave Scenario is that we are now in wave C of the main crash in the NDX. This wave is an ending diagonal and we are just completing wave 3. Wave 4 should peak within the next couple of weeks. Monthly stochastics support the view that that waves 2 and 3 of the ED in February to April 2002 are just as significant as waves 1-5 of A and ABC of B. The major B wave is a running correction. I see the ED terminating at about the same level as the 21 September bottom at the end of June. This level of 1100 gives a normal return since the 1994 bottom. Also the bottom will coincide with the 4 year low. My own autoregressive TA method shows limited signs of bottoming here. As the correction is not expected to be to below normal rates of return since 1994 the subsequent bull market should be fairly weak initially which fits with the macro scenario above. Dow The Dow hit new highs since the September low at the top of the recovery out of the January-February bottom. It seems now most likely that the bear market in the Dow is over. It took the form of a 5 wave triangle with wave E ending in September 2001. The Dow is now in wave 2 of 3 in the new bull market. The new bull interpretation is supported by the McClellan Summation which is strongly positive, while the NASDAQ McSummation is not. Gold The gold price seems to have completed a 20 year ABC correction and now has completed a 5 waves up in the last year and has begun to correct, perhaps completing waves A and B of the correction. The phase is such that the gold price tends to move opposite to stocks. This suggests that the C wave is going to be short and sharp.while the NASDAQ is rising in wave 4. The wave 3 gold rally will then get underway as the NASDAQ enters the final phase of the bear market in wave 5 of C. Currency Complete EDs exist in the AUD, Canuck, Euro, and Swiss Franc and they are now recovering against the USD. Yen shows no sign of bottoming yet. The USD index also appears to be in an ED, but 5 of 5 is still to come over the next few months. This can be accomplished by a decline in the Yen and perhaps sideways movement in the AUD, Canuck and European currencies. This move up (a triple wave) matches nicely the remaining 3 waves up required in stocks. But it will need to be short and sharp to match the wave in stocks before stocks begin to decline again. Individual Stocks KKD has completed 5 waves up and now is in 3 of A down. LOOK/LOK has just completed B of the decline after putting in 5 waves up. Mayne completed an expanding flat correction and is now recovering. NDS seems to have finally completed a huge multiyear ABC correction and a final 5 wave 5 of C down to below $10. ADSX has completed a possible 4th wave triangle and an overthrow and should move up.

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