Another Bear turns Bull:
January 16, 2004
· ZENiT has been a BEAR since January of 2000, however, after reviewing available US business and economic data; one cannot ignore the healthy facts. Virtually every US sector is intensifying at an exponential rate. This combined with growing economies in Asia and Europe, mix in the successful realignment of the US Markets by the top 15 US program-trading firms, and we now have the ingredients to lay a solid foundation for the Dow to potentially reach 13,500 and the World Markets to move forward over the coming 3 to 4 years. That being said lets first go back and review some of the program-trading evidence that lurks in the public domain.
· We summarized the contents within the NYSE program-trading website to determine the average of what percentage of trading activities where program trading related: nyse.com
i) 19% in 2000;
ii) 28% in 2001;
iii) 34% in 2002;
iv) 40% in 2003;
v) 45% in 2004, 1st and 2nd weeks;
vi) Using a numerical compounding forecasting method, we have determined that approximately 92% of all trading activity will be program-trading related by the year 2010. In essence, all the Dow’s 30 components will be in the grip of program-trading systems; including, most likely, all the NASDAQ 100 components, and most probability all of the remaining NASDAQ stocks that have a flowing liquid option market. The option market (derivatives) is the key instrument used by program-trading systems to balance the supply/demand of equities using a JIT (Just-In-Time) inventory methodology.
vii) Who are the firms that are using program trading systems?
(1) As first mentioned in our January 3, 2004 commentary, 13 major banks and brokerage firms purchased the ownership of LTCM program trading intelligence in 1998. You can reach your own conclusion by opening up the following NYSE link under Top 15 Most Active: nyse.com
(i) Can people, using program-trading, artificial intelligence (AI), really control the Markets by 2010? Yes, it’s already in progress.
(ii) Can people fly planes using computers (AI)? It’s already done.
(iii) Can people go into space using computers (AI)? It’s already done.
(iv) Can people land a vehicle on Mars using computers (AI)? It’s already done.
viii) What does this all mean? Well, on the assumption that one does not have the complexity and processing power, similar to a fraction of ZENiT, to match the trading intelligence of the majors, then, hence, Micro-cap stocks, under 250 million-dollar market capitalization, continue to offer the highest probability of upside potential and the biggest bang-for-your-buck; for micro-caps are least affected by program-trading systems.
· Looking forward at the markets; after reviewing most available economic and technical data, we have determined that the Dow has been repositioned, realigned and sculpted into a generous large packet-wave, which permits the highest probability of thrusting-power, thus, enabling ZENiT to change its position from a BEAR to a BULL and therefore, changed our Dow target to a potential 13,500 by December 2007 or earlier. We have removed the “Black Hole Zone” in our charts, for it does not apply to the new forming environment, at this stage in time. In addition, the US dollar forecast remains the same, but with a longer timeline. Gold, however, has been recalculated to $350 to reflect the re-evaluation of the physical supply in Gold and the forecasting of the re-deployment of cash from “in-the-money” Gold equities into the potentially upward US equity markets.
· What could affect our new forecasting and timing to the downside? 4 things:
i) Rising interest-rates;
ii) Rising interest-rates;
iii) Rising interest-rates;
iv) Breach of 9000 on the Dow.
· In short, cheap money keeps feeding the US economy, which enables the major program-trading systems to move the pieces around the monopoly board by passing GO at will.
· Stay tuned; same ZENiT time, same ZENiT channel for more on this fast-paced Darwinian financial program-trading atmosphere.
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