Monday, January 19, 2009


Things Are Getting Worse: ROYAL BK SCOTL GR (RBS.L) down 62% today!!!!!!!!! Best to be prepared over the next couple of weeks!

Special Alert from MMA
To All MMA Subscribers

It is not often that I issue a special alert, but the technical formation of a weekly "Pat’s Combo Down" in all three U.S. stock markets we track necessitates such an alert, especially given the fact that the last SOS Report was issuing bullish signals at the time it was written. The high and low of the DJIA, SPH, and NDH were above their respective lows and highs of the prior week. And then all three closed below a proprietary support level. This is known as a "Pat’s Combo Down," and is usually an indication of a sharp decline to follow.

It is not a 100% indicator (nothing is), but I would guess it works 90% of the time. As an example of previous instances of this indicator on the weekly charts, observe the Nikkei cash index on the week ending September 26. The high of that week was 12,264. It closed at 11,893. That index then crashed, with a bottom not completed until the 6994 low of October 28, five weeks later. The opposite indicator, a "Pat’s Combo up," occurred in the Euro currency on the week ending December 5. The low of that week was 1.2548. Two weeks later it made a high at 1.4719.

Named after the late Patrick Shaughnessy of Scottsdale, AZ, with whom I had the pleasure of studying about 20 years ago, this is one of the most reliable indicators that I am aware of. As you can see from the examples above, the formation of such a set-up usually leads to a very sharp move that usually lasts 1-6 weeks. We must also keep in mind that such technical signals can occasionally be false signals in the current mixed market environment, so that is one factor that may lead to this being a false signal. But don’t discount it.

This is a powerful and quite reliable signature historically. If the market does crash down hard, it may last into our January 23 three-star [Bradley] critical reversal zone, or perhaps even into the next 'turn' date, which is February 5, the date of the next Employment and Payroll report. A retest of the November lows, or even lower, is possible if the recent 'crest' turns out to be the primary cycle crest. If it was only a 'half-primary' cycle crest, then this move could be completed with a 'half-primary' cycle trough by the January 23, +/— 3 trading days, critical reversal zone. In that case, a decline that only tests— but does not take out the November lows— could be a good buying point.

If long, traders and investors need to be very careful this coming week. If not long, aggressive traders could look to sell short. Once again, we may see huge price movements either way and/or both ways for the next two weeks— reminiscent of September and October. Once again, we may see great stress and strain in the efforts of our government and economic— and maybe even military— leaders to respond to demands for decisions before they have truly come to grips with what is occuring. Seeming gridlock in government and sharp polarity reversals in market positions may again result in a deteriorating lack of faith in ALL governments and leaders, still further roiling the financial markets.



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