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

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To: At_The_Ask who wrote (611)	5/21/2002 9:36:14 AM
From: Moominoid	Read Replies (1) of 2852

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 which already seems to be falling against all currencies as measured by the USD index. 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 has been 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. 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. As interest rate rises will be modest none of these moves will be dramatic in the near term. The returning 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. 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 nowin wave 2 with wave 1 complete on 7th May. Wave 2 should peak within the next few weeks. Monthly stochastics support the view that that wave 1 of the ED in December to April 2002 is 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 not much below the 21 September bottom by the end of the year perhaps. This level of 1100 gives a normal return since the 1994 bottom. Also the bottom may coincide with a 4 year low. 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/SPX have now completed 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 is now in a new bull market. Which wave we are in is unclear. The phase is such that the gold price tends to move opposite to stocks. 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 appears to maybe have completed an ED and begun its decline. Individual Stocks KKD has completed 5 waves up and now possibly in wave B of the down move? LOOK/LOK has possibly completed its decline or is in wave 4 of C. 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 flat correction and now should make a 5th wave up. NCP may have completed its C wave is already complete – an ED from August 2001 – it is now performing much stronger than NDX since leaving the ED whereas previously the two were closely coupled.

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