Benefit From Japanese Candlesticks Secrets That Most Traders Don't Know

Here is the archive of CandleWave Newsletters going back to May 11, 2007. Judge for yourself, in light of subsequent market action. Were we right, or were we wrong?

This Investment Newsletter covers the major Indexes; Gold; Silver; and Crude Oil. It is powered by CandleWave’s candelaabra© Technical Analysis System for use with the Trade Navigator© platform, a product of Genedsis Financial Technologies, Inc. Japanese Candlesticks price charting analysis is an integral component of candelaabra.

Wednesday Evening, July 2, 2008

GET SHORT AND STAY SHORT. YOU COULD LOWER YOUR SAFETY BUY-STOPS A BIT MORE. KEEP PLENTY OF CASH OR EQUIVALENT IN THE VERY SAFEST PLACES AND FORMS. THIS DECLINE IS THE REAL THING. RIDE WITH THE WAVE.

CASH WILL BE KING.

KEEP ON ADDING TO YOUR DOWNSIDE POSITIONS A LITTLE AT A TIME, LIKE CLOCKWORK. THERE ARE GREAT TOOLS TO ACCOMPLISH THIS. AMONG THEM ARE THE RYDEX INVERSE S&P 500 AND INVERSE NASDAQ FUNDS; “PUT” OPTIONS ON THE QQQQ EXCHANGE-TRADED FUND; AND THE QID ULTRA-SHORT QQQ PRO SHARES.

DON’T BE A “DEER IN THE HEADLIGHTS.” THIS IS NOT COMPLICATED. PROTECT YOURSELF WITH CASH (OR TREASURY BILLS, OR BOTH) PLUS A CONSISTENT PROGRAM TO BUILD A POSITION WHICH GAINS IN VALUE AS THE STOCK MARKET DECLINES.

A. The Indexes

There is no bounce yet. Prices declined right into the close of the market. The Dow Industrials and the S&P 100 already have fallen beneath their lows of earlier this year; the S&P 500 is only about 5 points away from doing the same. As we predicted, the Russell 2000, the S&P 600 SmallCaps, and the NASDAQ Composite are beginning to play “catch-up” on the way down. The Dow Transportation Index fell hard and fast today, losing 208 points. This is not surprising, because its recent all-time high created a classic “Dow Theory Non-Confirmation” in a dance with the Industrials, which pointed to the inability of the Transports Index to maintain its elevated prices. The air went out of that balloon today.

When all of these Indexes have fallen below their 2008 lows, those events may prompt the emergence of a “point of recognition” in the investment community that the highs of last October did, in fact, represent a major turning point. When that point is reached, the market may decline swiftly as fear sets in.

The selling pressure has been so strong that it simply overwhelms the bullish Candle patterns which we mentioned on Friday evening. One or more of our Indicators is at an extreme which we rarely see, calling for an upward correction. It will come, but we don’t know when.

There is nothing very complicated or mysterious about the right way to deal with a market such as we are seeing today. Rule Number One is to keep most of your liquid assets in the form of Cash or equivalent, in safe places; Rule Number Two is to ride the wave; keep on adding to your downside positions, like clockwork.

You know the advice about the right thing to do when you’re swimming in the ocean, and are caught away from shore in a current. Head for shore, but swim with the current, not against it. Much the same applies here: If you will keep most of your liquid assets in the form of Cash, in safe places, and the rest of it in carefully-chosen downside investments as we or your professional Adviser may suggest, you will be in far better shape than those who try to fight the tide, in a battle that cannot be won. You may not wind up a millionaire, but you will almost certainly be comfortable while some folks whom you know will be wiped out for refusing to believe what is going on around them.

B. Gold

Gold is still trying to find a top. This will be a “subsidiary” or “secondary” top, not likely to exceed the major top of last March. There is no sign of a reversal yet, but pressure is building. Aggressive Subscribers might choose to anticipate it by purchasing a Put.

C. Silver

As in the case of Gold, prices are coming into a top and reversal, although we cannot yet point to a Candlestick price reversal pattern. Our Indicators, however, tell a story of pressure building up which would prompt a reversal downward. Aggressive Subscribers might choose to anticipate it by purchasing a Put.

D. Crude Oil

Futures prices for April 2010, April 2012, and June 2015 are all lower than today’s prices. The Candle patterns for September and October 2008 are “Last Bullish Engulfing” patterns, which are bearish in spite of the name. It is interesting to note that on Commitments of Traders charts down through the Weekly, the “Commercials” and the “Speculators” are BOTH “net positive,” being offset entirely by the “net negative” position of the small investors. This circumstance is extremely rare. On the supposition that the small investor is “usually wrong,” that would seem to indicate that prices will continue to rise. The price pattern for the week so far is a “Hanging Man,” which (if confirmed by a lower close tomorrow) would have bearish implications.

We go with the wave. The wave has been up, and it continues to be up. You should be in Calls if you have been following our recommendations, and you should be nicely in the black. Just know the point at which you would sell those Calls. If you are Long in contracts, you might wish to boost your safety sell-stop to a point somewhere within the developing “Island Top,” which began with the gap-up on June 6.

Our Indicators say that prices can rise still higher before the pressure in the tank becomes unbearable and the pressure is released, whereupon prices will fall.

I’m enough of a contrarian to believe that Crude Oil prices are in a speculation-driven mania, which will end, as all manias do.

There seems to be ample gasoline in the market, but at a price. The cost of heating oil and gas this winter will be punitive if prices continue as they are. Homeowners may resort to rather severe measures in order to reduce their consumption of heating oil and gas, such as alternate fuels (fireplaces), setting the thermostat significantly lower, and combining shower times and clothes-washing times. Washday may indeed be a once-a-week affair again, and the dishwasher may see less use. Hand-washing and drying the dishes may come back into vogue. The demand for jet fuel will fall off as the airlines reduce their schedules after Labor Day. School districts may do some drastic things to school bus schedules, such as inviting children to attend the school which is closest to home rather than miles away in order to fulfill some sort of perceived socially desirable end. “Neighborhood Schools:” What a remarkable concept. Schoolchildren may have to wear a couple of sweaters to class and carry mittens at all times. Deliveries of food staples to stores may be less reliable than we have gotten accustomed to, because truck drivers cannot afford Diesel fuel at current prices. Remember, too, that Diesel fuel and heating oil are very nearly the same thing, so that trucks and houses essentially compete for the same product. Jet fuel is essentially kerosene, which is a little lighter, and gasoline is lighter still.

The whole ethanol craze is rapidly turning into a gigantic fiasco, with worldwide negative effects. The fallout from this national self-delusion will be felt in the food supply and in our money affairs for a very long time to come.

William Kurtz

For CandleWave, LLC

Paid Subscribers may Press Here in order to link to the Login page for SPECIFIC buy-sell-hold position recommendations.

Always use protective stops. Always. No exceptions.

When you purchase options, always buy them in two’s, or in units of two.

Friday Evening, June 27, 2008

The Newsletter will not publish on Monday because I will be in transit back to home base.

GET SHORT. STAY SHORT. LOWER YOUR SAFETY BUY-STOPS. KEEP PLENTY OF CASH OR EQUIVALENT IN THE SAFEST DEPOSITORIES YOU CAN FIND. THIS DECLINE IS JUST A TASTE OF WHAT’S COMING. IT WILL RUN ROUGHSHOD OVER EVERYTHING, LIKE A RAMPAGING ELEPHANT.

ALL OF THE TALK IS ABOUT INFLATION. THE SPIKES IN THE COST OF FUEL AND FOOD ARE HURTING EVERYONE; BUT THIS IS THE LAST GASP OF THE MANIA WHICH TOPPED IN 2000 AND PEAKED EVEN HIGHER LAST OCTOBER. THAT WAS THE TURNING POINT. INFLATION WILL PASS AND DEFLATION WILL ARRIVE. IT’S ALREADY HERE IN HOUSING.

CASH WILL BE KING. KEEP IT SAFE, IN FDIC-INSURED ACCOUNTS. 100% TREASURY-BILL FUNDS IS ANOTHER GOOD CHOICE. YOU CAN ALSO BUY TREASURY BILLS DIRECTLY FROM THE U.S. TREASURY; RECORD-KEEPING IS TOTALLY ELECTRONIC.

CONTINUE TO ADD TO YOUR DOWNSIDE POSITIONS A LITTLE AT A TIME, LIKE CLOCKWORK. WE SUGGEST FOR YOUR CONSIDERATION THE RYDEX INVERSE S&P AND INVERSE NASDAQ FUNDS; “PUT” OPTIONS ON THE QQQQ EXCHANGE-TRADED FUND; AND THE QID ULTRA-SHORT QQQ PRO SHARES.

A. The Indexes

The Dow Industrials Index has fallen through its lows of March and January. We have been expecting it. The S&P 100 has broken through its March low. We expected that, too. These are powerful confirmations of the return of the bear market. It is probable that the S&P 500 will follow along soon. The May “Double Top” in the Dow Weekly chart is having its effect, as are the “Bearish Engulfing” patterns in the S&P 500 and 100. There are also Double Tops in both the Weekly and the Daily charts of the NASDAQs. The NASDAQs, the Russell 2000, and the S&P SmallCaps 600 will probably begin to play “catch-up” quite soon.

We have been calling for a Bounce, not that we want to see it (because we are Short, and the market has been “going our way”) but only because the Indicators tell us that it is due. Now we see signs in the Daily Candle patterns themselves which throw off clues that the Bounce is getting closer, namely: variations of “Hammers” in the NASDAQs and in the Russell 2000, and “Spinning Tops” in the S&P 400, 600 and in the NYSE Composite and a “High-Wave Harami Spinning Top” in the Transports. If you’re familiar with Candle patterns, you should be able to spot them on your charts.

The downmove has been so persistent that the arrival of the Bounce may be delayed further. We think it is prudent now to lock in paper profits by lowering your safety buy-stops a bit.

When this decline gets rolling, it will wreck everything in its path. Don’t fight it; ride it. Make it work in your favor. When it’s done, the Dow Industrials will be at or below 7500. Do you think that’s impossible? Bear in mind that – in terms of real money, which is Gold – the Dow is already off 70% since year 2000!

B. Gold

Subscribers who are (or were) Short should have been stopped out for safety on Thursday. There is nothing smooth or consistent about this market at all; rather, it is hugely volatile. The gap-up price movements of the last two days reflect a knee-jerk reaction to the slide in stocks. Gold appears to be searching for a top again, not that it is likely to exceed the top that we saw in March, which marked a major turning point. We suggest waiting a bit for a sign that Gold is topping and getting set to reverse to the downside before making a recommendation. Subscribers who are Long should elevate their safety sell-stops.

We think that those commentators who are strongly recommending a flight into the perceived safety of Gold are mistaken. Gold already topped, in March. When deflation takes hold in earnest, the price of Gold will fall too, along with everything else – except Cash.

C. Silver

Silver is trailing along behind Gold, but at a distance. Our suggested safety buy-stop in the September contract may have stopped out Subscribers on Friday. Silver seems to be searching for a top, along with Gold. We suggest that you stand aside from new commitments until we can find evidence of an impending top and reversal. Those who are Long in Silver should elevate their safety sell-stops.

D. Crude Oil

Crude was up 57 cents per barrel on Friday, closing at 140.21 in the August contract. Crude is still riding along in an uncompleted Island Top formation. To repeat the gist of a prior comment, I’m very suspicious of this market. I’m not ready to go along – at least, not yet – with those who say that $180 or $200 Crude Oil is inevitable. I’m in the minority. I see a “Last Bullish Engulfing” pattern (which is actually bearish) on the Weekly chart and a very nice variation on a “Doji Shooting Star” (which is bearish) on the Daily. So I think the odds are that Crude will head at least a little lower before it resumes an upward path (if that is what actually happens). It is a mistake to project past and present prices linearly into the future. Economists do that all the time, and they get burned all the time. I hear all of the noise about increasing demand in India and China, just as you do. But I also look at the calendar and see the heating season approaching, and the prospect of many cold houses in the US and in Europe; I read the reports of truckers here and elsewhere simply unable to afford Diesel fuel, and some of them refusing to take on cargo; the airlines continuing to hemorrhage cash; school districts scrambling to pay for fuel to operate school buses – with the heating season approaching for them, too, in the face of increasing demands for a cap on school taxes. The school districts are in a terrible fix, especially those which are located in the colder climates.

Is this a rubber band getting ready to snap? Maybe so. Maybe the only question is “When.” In the face of oncoming deflation, which will not be limited to the United States, it seems quite certain that the price of Crude will fall.

We all know that the cure for high prices is high prices. I just have a sneaking suspicion that the breaking point will come sooner than most commentators think.

William Kurtz

For CandleWave, LLC

Paid Subscribers may Press Here in order to link to the Login page for SPECIFIC buy-sell-hold position recommendations.

Always use protective stops. Always. No exceptions.

When you purchase options, always buy them in two’s, or in units of two.

Wednesday Evening, June 25, 2008
(with updating shortly after market opening on June 26)

HOLD YOUR GROUND. THE MARKET CONTINUES ITS DECLINE.

CONTINUE TO ADD TO YOUR SHORT POSITION(S) A LITTLE AT A TIME, LIKE CLOCKWORK.

KEEP PLENTY OF CASH ON HAND IN THE SAFEST DEPOSITORIES THAT YOU CAN FIND IN YOUR OWN COUNTRY.

DISPOSE OF ANY REMAINING “JUNK” IN YOUR PORTFOLIO.

THE BOUNCE WHICH WE EXPECT HAS NOT YET ARRIVED. WHEN IT COMES, IT WILL MOST LIKELY BE AN UPSIDE CORRECTION, NOT A RESUMPTION OF THE OLD BULL MARKET.

A. The Indexes

Where, or where, is that Bounce? It’s not that we’re pleading for it, because we’re Short and are making money as the market declines; it’s just that our Indicators say that it’s due. We think that the persistence of the decline is additional evidence that we are in a bear market, and have been since last October. We are perfectly happy to ride this decline for as long as it cares to go. Our past, and continual, suggestions are to keep on adding to your Short position, a little at a time like clockwork. The market will do whatever it chooses to do; our job is to ride the wave, protect our Cash, and profit from
the decline. We will call out an upside correction as soon as we see evidence that it is about to happen. At that point, aggressive Subscribers might choose to try to capture profit from it; but you will need to be very nimble, and you should recognize that, in a bear market, surprises are most likely to occur to the downside.

Across the markets, it is almost as though everyone is waiting for the other shoe to drop. Will the Saudis really raise production – and if they do, will it make a difference? The Dollar is down again, against the Euro and the Pound, wherefore Gold is up. There is a great deal of uncertainty in the financial markets. The Banks’ troubles are not over yet. Bank of America has a tiger by the tail with its plan to take over Countrywide, which is a black hole of trouble. Merrill Lynch has been in a downslide since May 5. And, as we mentioned earlier and as Mr. Buffett warned a long time ago, the entire derivatives market is a ticking time bomb. The very large money-center banks are up to their eyeballs in credit default swaps and other exotic devices, which could collapse like a house of cards. If that happens, the subprime mortgage mess may look like a Sunday picnic.

B. Gold

Gold gapped up on opening this morning (June 26) and at this moment is more than $26 higher. Subscribers who are Short (or were) may have been stopped out for safety early in the trading. Even with the bounce, Gold is still about where it was on May 16, and has been trading essentially sideways for more than a month. Even so, there have been strong swings within the approximately fifty-dollar range in this volatile market. This has been, and continues to be, a very difficult market to trade. There is nothing consistent about it. Unless you are extremely nimble, it might be better to stand aside from Gold until (hopefully) a clear pattern emerges.

C. Silver

Together with Gold, Silver also gapped higher on opening. It is still within the range that has been in effect for over a month, and has not touched our suggested safety buy-stop. This, too, is a very volatile market, and reflects indecision on the part of traders in the face of various news about the state of the economy. It may be the better choice to stay aside from this market if you do not already have a position; and if you do, mind the safety stops. We will take a good look at Gold and Silver after Friday’s closing to see whether there are any clear signs of the next direction of these markets.

D. Crude Oil

Crude continues in its half-completed “Island Top” pattern. The press made much of Crude’s rise yesterday, in connection with price action on Tuesday; but in the big picture, nothing changed. Prices fell on Wednesday and are up about three dollars this morning. Crude is still operating within a range that began 16 days ago. I cannot yet begin to prove it; but I continue to have a sneaking suspicion in the back of my mind that Crude prices could take a meaningful drop; perhaps not yet, maybe after Labor Day when the “driving season” ends. When the “heating season” begins and homeowners begin to feel the huge wallop in home heating oil costs which is soon to hit home, there may be some exciting events in the public press and on the floor of Congress when the fury of the protests takes hold.

Already, we read of school districts’ budget difficulties stemming from the increased cost of fuel with which to operate school buses; and now the heating season will soon come crashing down on school systems, too. This is a particularly difficult time, in the face of tax-payment defaults and the increasing clamor for a cap on school taxes. This is going to be a fun time all around.

William Kurtz

For CandleWave, LLC

Paid Subscribers may Press Here in order to link to the Login page for SPECIFIC buy-sell-hold position recommendations.

Always use protective stops. Always. No exceptions.

When you purchase options, always buy them in two’s, or in units of two.

Monday Evening, June 23, 2008

A. The Indexes

This is interesting. The Dow Industrials and the S&P 500 exhibited limited price movement today. The Candlestick pattern of the Industrials is a “Doji” or small “Gravestone” formation, which shows indecision and the possibility of reversal to the upside. The pattern of the S&P 500 is nearly the same in its effect. In each case, the closing price today was almost exactly at the closing price of last Friday, which is a “tweezers” formation. The Dow and the 500 seemed to be milling about today. Our Indicators tell us that they seem to be trying to find a bottom. There is pressure underneath each of them, impelling a move to the upside soon; and if it happens, that may be the bounce which we have been expecting.

The other side of the coin is that the NASDAQs, the S&P SmallCaps 600, and the Russell 2000 had no trouble at all moving lower today; and in each case, there seems to be some – but not much - additional “room” for them to move even lower before bottoming. In addition, the Transports were off more than 100 points today. The Utilities were off today, as well.

The disparity between the action of the Industrials and the Transports might be read as a “Dow Non-Confirmation.” In any event, we read all of this, together, as a negative for the market. It may be that investors in the “blue chips” are awaiting the action of the Fed Open Market Committee, which meets tomorrow and Wednesday, with its report due on Wednesday afternoon.

It may be that the NASDAQs, the S&P 600, and the Russell are one step ahead of the Industrials and of the S&P. That would not be unusual; oftentimes, it is the lower-capitalization issues which lead the market. We want to note, in passing, that the S&P 600 and the Russell 2000 have left behind very beautiful “Head & Shoulders Top” formations, which have bearish implications.

In any case, we do not see a compelling reason to make a special investment at this time. There are no clear reversal patterns that we can find. The major operative underlying trend is Down, and has been so since last October. Subscribers’ portfolios should be strongly Short, except perhaps for special situations which catch your fancy and which we do not deal with.

B. Gold

We had said earlier that Gold appeared to be coming into a top. Precisely so; the top occurred on Friday, and Gold declined $16.70 today (August contract), all of it (and more) occurring within the first ten minutes of trading. We would be skeptical of jumping on board on the Short side at the opening of the market tomorrow, because it appears that Gold is ready to make a try at recovering some of today’s decline. If you are able to follow the market continuously, it might be better to see whether Gold continues its slow rebound from today’s initial ten-minute selloff before making a decision. Longer-term, we do see a very nice “Evening Star” formation over the last three days of trading, which is bearish. Aggressive investors might consider acquiring a Put option, if they have not done so. We suggested as much to our Paid Subscribers on Friday evening; and it turned out to be a good suggestion. This market, and Silver, may continue their volatility for a while.

C. Silver

Silver followed Gold’s path quite closely today. It may be that Silver spiked upward through our suggested safety-stop for Longs, as we predicted might happen. Gold and Silver may be extra-volatile over the next few days. For those Subscribers who are in either of these markets, we would suggest minding your safety-stops; and for everyone, it might be best just to stand aside for the moment until we see evident reversal patterns that offer some justification for reliance. If you are aggressive, you might buy Put options. We made just such a suggestion to our Paid Subscribers on Friday evening, which turned out well.

D. Crude Oil

Crude continues in its sideways pattern. All eyes and ears are on the meeting which was called by the King of Saudi Arabia. If it is true that the only remaining unpumped capacity is in Saudi Arabia and that such unpumped capacity is nowhere near as much as the King might like the world to believe, then no matter what decisions might – or might not – be made there this week may have little effect on the continued
advance in prices. If you own Calls, we suggest that you retain them. Keep an eye on your safety sell-stops, and bear in mind that we have an incomplete “Island Top” formation; whereby if prices gap lower, leaving a completed Island Top in place, that would be a bearish signal.

William Kurtz

For CandleWave, LLC

Paid Subscribers may Press Here in order to link to the Login page for SPECIFIC buy-sell-hold position recommendations.

Always use protective stops. Always. No exceptions.

When you purchase options, always buy them in two’s, or in units of two.

Friday evening, June 20, 2008

STAND FAST. CONTINUE TO MAKE MODEST INSERTIONS OF CAPITAL TO THE DOWNSIDE, REGULARLY LIKE CLOCKWORK.

KEEP MOST OF YOUR LIQUID ASSETS IN THE FORM OF CASH OR EQUIVALENT, IN THE SAFEST REPOSITORIES WHICH ARE AVAILABLE TO YOU IN YOUR OWN COUNTRY.

HUNKER DOWN. THOSE ARE STORM CLOUDS OUTSIDE YOUR WINDOW.

YOU SHOULD BE “SHORT;” BUT MAKE SURE THAT YOU HAVE SAFETY BUY-STOPS IN PLACE.

ACTIVELY MANAGE YOUR INVESTMENT ACCOUNT. MAKE YOUR OWN INVESTMENT DECISIONS. BE AWARE OF THE VARIOUS METHODS WHICH ARE AVAILABLE TO “INSURE” YOUR PORTFOLIO AGAINST A MARKET DECLINE – AND TO USE THOSE METHODS TO EARN PROFIT, AS WELL.

A. The Indexes

The Dow Industrials declined about 113 points in the first minute of trading today, and lost 220 points on the day. It moved essentially sideways until about 1:30 PM; then swooned until closing, and ended on a down-note. The S&P 500, 400, and 100 followed almost identical paths. The NASDAQs, the Russell 2000, and the S&P SmallCaps 600 were more chaotic, lost ground on the day, but ended with upbeat movements during the final 15 minutes – especially the Russell and the 600, which are typically more volatile.

What’s going on? Well, the news is terrible, that’s what. Fifth Third Bank is searching for capital to replace some of the money that it lost in the subprime loan craze; Washington Mutual and Wachovia are on the prowl for replacement capital too; bank CEO’s are being pushed aside; the two main bond insurers lost their triple-A ratings, which means that the bonds which they insure may not retain triple-A ratings, either; Citigroup issued a profit warning yesterday; Merrill Lynch is in trouble; two Bear Stearns hedge fund managers are in difficulty with the law; Lehman Brothers’ problems are much more severe than was indicated earlier; the US automakers have been placed on credit watch; and Crude Oil jumped about $2.70 per barrel. On top of all that, today was a “quadruple witching day” in Options trading. Other than these minor disruptions, everything is fine.

We are still looking for a bounce, but it hasn’t happened yet and it still may be some time away, although it could occur at any time. When the bounce does come and then tops, that should be a good occasion to make a special insertion of capital to the downside.

It is interesting to note that the Associated Press characterizes today’s price declines as a “pullback.” The necessary implication is that the underlying major trend is still Up, and that what happened today is a “correction.” Old beliefs and biases die hard. The common wisdom is that the basic trend of the market is always “Up,” and that declines are merely “pullbacks” or “corrections.” Ladies and Gentlemen, it is essential to your financial health that you come to understand and accept that we are approaching 100% certainty that this is not a “pullback;” rather, that it represents a continuation of the true underlying major trend, which is Down. We are almost certainly in a Bear Market. If so, it is the upside moves that will be “corrections.” If and when prices fall below those of the March lows and then the January lows, that will be the clincher.

We have yet to see the collapse of the derivatives market, which is enormous in size. So-called “credit default swaps” are a large part of that market. It’s built on confidence that the opposite party to the transaction can perform. When one of these trades fails, there is a real risk that the entire house of cards may collapse in a gigantic cascade of defaults. And that’s exactly what it is: a house of cards. Quite some time ago, Mr. Warren Buffett characterized this game as a “nuclear time bomb,” or something close to that. We are not inclined to argue with Mr. Buffett.

In passing, it is extremely interesting to note that the path of disasters, so far – house sales, mortgages, banks, other financial houses, employment numbers, popularity of the President, for example - closely follows the predictions of Robert Prechter. I urge all Subscribers to acquaint themselves with his work. His book “Conquer the Crash” should be required reading.

The bottom line is that all of us should keep a very large proportion of our liquid assets in the form of Cash or equivalent, in the safest repositories available. Get rid of “junk” issues in your portfolio. With respect to “golden” securities which you want to retain, recognize that you can buy “insurance” against declines in their market value, and also that – beyond “insurance” - you can realize profit from a declining market, totally legitimately and legally. You absolutely are not condemned to being a “deer in the headlights,” helpless and without recourse when the market falls. If you are not familiar with these devices, you should learn about them.

B. Gold

We have been saying that Gold appears to be coming into a top. We continue to think so. Gold’s Candlestick pattern today is bearish. Our other Indicators which are part of the “Candelaabra” technical analysis system confirm that the price pressure of Gold is approaching a point at which the pressure will seek release. Gold was down only very slightly today, while the dollar lost ground against the euro and the British Pound. Mind your safety stops in Gold. Prices may make a dash above our suggested safety buy-stop for Subscribers who are Short; but as we read the evidence, Gold should be turning down soon.

C. Silver

Silver is in much the same position as Gold: specifically, it appears to be coming into a top. The Candlestick pattern today is bearish. It may be that Silver will dash upward through our recommended safety buy-stop (for Subscribers who are Short); but the weight of all of the evidence is that Silver should top and turn down soon. The upward move is beginning to run out of fuel.

D. Crude Oil

Crude Oil has been trading essentially sideways for 11 trading days, having gapped up that long ago. The gap has not been filled. If prices decline and leap over that gap, then an “Island Top,” which is a very bearish formation, will have been completed. There is indecision in the market. Prices could go either way from here. We do not have any particular new trade to suggest. Subscribers who have been following our suggestions will own Call options now (having already lightened up and realized profits), and will have owned them for quite some time. Our best advice is to keep the ones that you still have, but to mind your safety sell-stops. You might consider moving up those stops a bit, at least on a portion of your remaining Calls.

William Kurtz

For CandleWave, LLC

ALWAYS USE PROTECTIVE STOPS. ALWAYS. NO EXCEPTIONS.

Paid Subscribers may Press Here in order to link to the Customer Login.

When you purchase Options, always purchase them in two’s, or in multiples of two.

CandleWave – Newsletter, June 19, 2008 – Special Edition

To our Subscribers –

I apologize for the brevity of last evening’s edition. I know that there were some typos. I am away from home base, and my computer was having difficulty in “talking” with the local Net provider. On top of that, the computer is afflicted with “square electrons” of its own, plus my Webmaster had his own difficulties with the Web, and he is very skillful and knowledgeable about such issues as these.

The markets MAY be getting ready for a bounce. Gold and Silver may be approaching tops. Crude Oil may be getting set to decline through the gap.

Make sure that your safety stops are in place.

Barring further electronic difficulties, we intend to issue our typical full report tomorrow evening.

William Kurtz

For CandleWave, LLC

Wednesday evening, June 18, 2008

STAND FAST. THE MARKETS ARE SLOWLY DECLINING IN A GENERAL DOWNTREND, AND CAN BE EXPECTED TO BOUNCE, THE TIMING OF WHICH IS UNCERTAIN.

THE BEST PLAN IS TO KEEP MOST OF YOUR LIQUID ASSETS IN THE FORM OF CASH OR EQUIVALENT, IN THE SAFEST REPOSITORIES YOU CAN FIND.

MAINTAIN YOUR SAFETY STOPS.

CONTINUE TO ADD TO YOUR DOWNSIDE PORTFOLIO A LITTLE AT A TIME, LIKE CLOCKWORK.

A. The Indexes

The financial markets continue to suffer repercussions from the subprime loan misadventures. Fifth Third Bank went to the well for capital today, following a long list of larger banks which have been that route before. Northwest and United announced further cuts in capacity. Oddly, Southwest (which has not instituted a “bag-charge” policy) is considering retaining 10 airplanes which it had planned to retire – and adding 14 more, to boot. What’s going on here? Part of it has to do with knowledge of the hedging process and the commitment of sufficient funds to make the program work; and the second part may simply be Good Management.

Fed Ex lost money in the quarter, too; so the paid of high fuel prices is not limited to the passenger airlines. It may be that Fed Ex has some ability to “administer” increased prices to a greater extent of a passenger airline; but that ability may now be in testing light of deteriorating business conditions across the board.

We do not see any signs of a reversal of trend. The market may continue to the downside; but eventually there will be a bounce. We doubt very much that any bounce will take prices to levels above those which were reached in May. The most prudent course is to continue to add to your downside positions, a little at a time, like clockwork.

B. Gold

Gold continues to trade in a broad sideways range. I think that, very slowly, Gold is working its way toward a top and a rollover. The price bar today could be interpreted as “Hanging Man Doji,” which has bearish connotations, and we would be looking for confirmation tomorrow. On balance, we think you might better be “flat” in Gold for the time being. If in fact you do have a position or positions, make sure that safety stops are in place.

C. Silver

Silver is in much the same position as Gold. Prices seem to be coming into a top and reversal. We think you ought to be flat; but if you do have positions, be very certain that your safety stops are in place.

D. Crude Oil

Crude continues in a generally sideways position, while making an extended “island top.” We are very reluctant to recommend taking any new positions; but past on our past recommendations you should be Long. Consequently, you should have safety sell-stops in place underneath present price levels.

William Kurtz

For CandleWave, LLC

Friday evening, June 13, 2008

There will not be a newsletter published on Monday evening, inasmuch as I will be in transit.

STAND FAST. ALLOW THE BOUNCE TO DEVELOP; TRY TO IDENTIFY THE PEAK AND ROLLOVER AND THEN MAKE A SPECIAL INSERTION OF CAPITAL TO THE DOWNSIDE.

CONTINUE TO ADD TO YOUR SHORT POSITIONS A LITTLE AT A TIME, LIKE CLOCKWORK.

MAINTAIN YOUR SAFETY BUY-STOPS.

KEEP PLENTY OF CASH ON HAND IN THE SAFEST REPOSITORIES YOU CAN FIND IN YOUR OWN COUNTRY.

A. The Indexes

Price action on Thursday and today provided the “bottoming and upside reversal,” and the bounce, that we were looking for when we wrote on Wednesday evening. As we said, it would probably be foolhardy to chase the bounce. Let’s wait to see whether we can come close to identifying the peak, and take that as a signal for a “special” insertion of capital into a downside position.

Prices could very well move higher from this point. Our Indicators on the 10, the 30- and the 60-minute charts tell us that prices will likely peak shortly within those time frames; but the Daily chart says that prices could move higher. Perhaps we will see a rapid up-down-up move.

Yesterday, the Candlestick patterns showed indecision and a possible change of trend after the large decline on Wednesday. That display did indeed prove correct today, as prices moved up.

We see very imperfect “Morning Star” patterns in the Dow Industrials and in the S&P charts. Even though they are far from ideal, we pay attention to them as having bullish significance. Additionally, we see fairly good “Hammers” in the Weekly charts of the S&P 500 and of the S&P 100, which we take as bullish clues.

The critical highs are those of May 19 in the Dow Industrials and in the S&P 500 and 100; and those of June 5 in the S&P 600 and in the Russell 2000.

On balance, the chances are good that the bounce will continue to develop. Protective buy-stops should be in place and must be monitored.

B. Gold

Gold moved essentially sideways today. We see a small “Inverted Hammer,” which warns of a possible change of trend to the upside. A higher close on Monday would confirm it. We have no opinion with respect to Gold’s prospects on Monday; except to say that, on balance, all of the evidence together says that it should rise. We see no reason to jump into this market; and those investors who do own positions should monitor their safety stops closely.

C. Silver

July Silver left behind an imperfectly-formed “Hammer,” in good position, which is bullish. Prices have gone nowhere since May 1. Prices are coming into a low. Silver probably will want to make a little expedition to the upside soon. Watch your stops.

D. Crude Oil

Crude could move either way from here. It has been marking time for the past six days. I do not see any definitive shorter-term patterns. Retain your Calls. This is a manic market, so be careful.

William Kurtz

For CandleWave, LLC

Wednesday evening, June 11, 2008

STAND FAST. STEADY AS SHE GOES. THE MARKETS ARE BEHAVING EXACTLY AS WE HAVE BEEN PREDICTING FOR A LONG TIME.

WE ARE IN A BEAR MARKET. TAKE ADVANTAGE OF IT.

ONE MORE TIME: IF YOU HAVE ANY “JUNK” REMAINING IN YOUR PORTFOLIO, SELL IT.

CONTINUE TO ADD TO YOUR SHORT POSITIONS A LITTLE AT A TIME, LIKE CLOCKWORK.

MAINTAIN YOUR SAFETY BUY-STOPS.

KEEP PLENTY OF CASH ON HAND IN THE SAFEST REPOSITORIES YOU CAN FIND IN YOUR OWN COUNTRY.

A. The Indexes

Whereas the major Indexes declined today in unison, there is an important distinction to be made in the shape of their individual declines over the past few days. The Dow Industrials held on tenuously after Friday, and gave up the ghost today; whereas the S&P 500 and 100 were less certain of their handhold, and the NASDAQs, the Russell 2000, and the S&P 600 had no resistance at all and went into a pretty fair imitation of a free fall.

The difference is significant. The NASDAQs, the Russell 2000, and the S&P 600 are typically more volatile than the others, and often lead the pack, whether up or down.

We do not see any signs of a bottoming or of an upside reversal anywhere. Prices fell hard right into the close today. There will be a flattening out and a bounce, we know that; but the Indicators tell us that there is ample room for prices to continue to move down before that happens. The markets today had something of the look of a moving freight train.

When prices do stabilize and bounce upward, whenever that comes, we think that it would be foolhardy to try to chase them to the upside. It would be better to wait for a peak in a bounce and take that as a “gift” to make a special addition to your downside portfolio.

Meanwhile, stay Short, mind your protective buy-stops, and continue to add modestly to your downside positions a little at a time, like clockwork. Make the bear market work in your favor; don’t try to fight it.

B. Gold

Gold prices are about where they were ten days ago. We do not see any sign of a reversal pattern; Gold seems to be just milling around, trying to make up its mind which way to go. Bear in mind that Gold (and Silver too) almost certainly peaked in March, and that the major trend is Down. On balance, it would seem that prices ought to rise a bit before resuming their major downtrend; but there are no strong signals upon which to base an opinion. Accordingly, we suggest that the best stance at the moment is to refrain from taking new positions now. If you are Long or Short, make sure that appropriate safety stops are in place.

C. Silver

Silver is in much the same position as Gold. We cannot predict which way it is likely to go from here. So, as with Gold, we suggest that the best stance at the moment is to refrain from taking new positions; and if you are either Long or Short, make sure that appropriate safety stops are in place.

D. Crude Oil

In accordance with prior advice, you should own Calls. Retain them. There is a large gap below current prices, which might act as a magnet. You might wish to have safety sell-stops in place just below that gap. A bearish “Hanging Man” pattern appeared in the Weekly chart; but it is out of place, so we do not place as much credence in it as we would if it were classically located. We think that there is ample room for prices to move higher; and wave patterns suggest that they will probably do so in a final manic paroxysm. Lower crude oil prices are surely coming – but not yet. There is going to be a lot of money made – and lost – in crude oil over the next weeks. This is a gigantic game of musical chairs.

William Kurtz

For CandleWave, LLC

Monday evening, June 9, 2008

STAND FAST. MAINTAIN YOUR SHORT POSITIONS. CONTINUE TO ADD TO THEM LIKE CLOCKWORK, A LITTLE AT A TIME.

MAINTAIN YOUR PROTECTIVE BUY-STOPS.

KEEP PLENTY OF CASH IN THE SAFEST REPOSITORIES THAT ARE AVAILABLE TO YOU.

A. The Indexes

Important aspects to bear in mind are that (1) the highs of last October marked significant individual tops which will not likely be exceeded for a very long time; and that (2) the tops of May 19 were correction highs which probably will stand.

There is room for the Dow Industrials (and most of the others) to move lower; but on balance I think there is a tiny bias in favor of a price rise. Here’s why: (1) after such a severe downmove on Friday, it is reasonable to expect a bounce; (2) our Indicators suggest it; (3) the S&P 500 and 100 formed “High-wave Doji” patterns, which reflect indecision and a possible change of trend; (4) the NASDAQs caught a whiff of fire in the final 45 minutes of trading, which conceivably could carry through to tomorrow. On the other hand, the Dow Industrials and the S&P 500 and 100 showed “Shooting Stars” in their 10-minute charts, which is bearish. If prices do move up, it does not seem likely that the move will be substantial. My suggestion is to stay put with Short positions.

B. Gold

Gold’s immediate short-term direction is indeterminate. There is no great pressure on it, either from above or from below. The very long-term trend is Down, ever since March; but there is a chance that Gold could move a little higher before turning down again. We do not see any clear reversal signals. Gold’s Candle pattern today is slightly bearish. We suggest that you stay Flat until the signals become more pronounced.

C. Silver

Silver’s position is much the same as Gold, but a little more bearish. We do not see a new trading opening here yet. We think it would be a good plan to be Flat in Silver until clearer signals emerge.

D. Crude Oil

Everyone would like to know “where’s the top?” It’s probably not here yet. There is room for Crude to move higher. It may be in the last stages of a manic move which has been fueled by speculation rather than by the supply-demand equation. Crude may first move down in order to try to fill a price gap between Thursday’s and Friday’s price action; but we doubt that any such movement would represent a massive change of trend. If you are Long or own Calls, hold on to those positions for now. Likewise, you should take another look at your safety-stop placement.

William Kurtz

For CandleWave, LLC

Friday evening, June 6, 2008

MAINTAIN YOUR SHORT POSITIONS. CONTINUE TO ADD TO THEM LIKE CLOCKWORK, A LITTLE AT A TIME.

MAINTAIN YOUR PROTECTIVE BUY-STOPS. YOU COULD LOWER THEM A BIT NOW.

KEEP PLENTY OF CASH IN THE SAFEST SANCTUARIES YOU CAN FIND.

A. The Indexes

Dow 10,700. What?

No, that’s not where it wound up today; that’s where I think it is headed: - toward the lows of July 2006. First it will have to drive past the lows of this past March and January. Those waypoints may be breached within weeks. The picture of the ten-minute Dow Industrials chart for yesterday and today reminds me of my teen years and of the iconic “Cyclone” roller coaster at Coney Island, an old “woodie:” a steady click click click yesterday, as the cars climbed to the top of the first rise, followed by a heart-stopping descent, a series of lesser drops, and a final neck-twister before a screeching stop at the end of the ride today. The Transports, the Utilities, the S&P 500, 100, 400, and 600, and the Russell 2000 all fell in step behind the Industrials.

The Weekly chart reveals that there is plenty of room for the Dow (and the others) to fall further. Ostensibly, the 395-point falloff today was a reaction to a poor employment report, a continuing rise in mortgage foreclosures, a decline in the dollar as against the euro, and a 10.75 dollar-per-barrel spike in the price of Crude Oil.

The personal implosion at the CEO level in the Banks continues apace. Take heed: Don’t ever buy a bond, even one with a so-called “AAA” rating attached, if it doesn’t also have a recognizable name printed on it. This is exactly what happens when greed overcomes common sense. The shame of it is that these former corporate heroes of the go-go days are walking away as millionaires.

The collapse of the Derivatives market hasn’t arrived yet. When it does, run for the bunker.

More than ever, it does appear that the highs of last October were very significant, and are unlikely to be breached for a very long time. I think the May highs, too, marked a significant turning point and probably will stand.

On Wednesday evening, we said “Watch for a bounce from current levels. If it does develop, watch for a peak, because that ought to be an excellent signal to sell.” Right on target. But there were no Candlestick signals or other signals at all yesterday, which might have warned of an imminent reversal. It had to have been the news this morning that knocked the legs out from under the stool.

The Dow’s 200-day moving average was significantly breached on May 21, and the 100-day was left far behind today. The 200-week moving average is about at the level of the March lows, and is within striking range now.

We can expect a reaction bounce in the Dow, and in the other Indexes too. That does not mean that it will happen on Monday or even within days; only that the prospect is there, and in the natural course of things it will happen. When it comes, we doubt that it will exceed the high of May 29, and it’s very unlikely that it will exceed the double top of May 2 and 19.

We are in a bear market. It will be with us for quite a while. Don’t try to fight it; make it work in your favor. Maintain Short positions; add to them a little at a time; and keep your cash in safe places.

B. Gold

The bounce which we foretold on Wednesday evening came to pass today. You should have become short some time ago, and your protective buy-stops should be in place. There is a good chance that Gold will continue higher from here. The dollar lost ground against the euro today, which has the effect of elevating the price of Gold. On Monday and Wednesday, we said that “you might elect to ‘exit and wait.’” We think that’s a good plan - i.e., “get flat.” You might wish to go one step further and buy a Call.

C. Silver

It appears that Silver may be headed higher too, together with Gold. We think it would be a good plan to exit Short positions (“get flat”), or even go the next step and acquire a Call.

D. Crude Oil

On Wednesday evening, we said that “Crude should very soon reach the point at which it should reverse, to the upside.” It did so, the very next day, and carried through with a vengeance today. If you owned a Put, it should have been taken out by a protective buy-stop. We had also suggested (although with lesser conviction than we might have wished, in retrospect) that you might buy a Call. If you did so, whether yesterday or early today, that would have been a good move. Keep it, and place a protective sell-stop underneath it.

_ _ _ _ _ _ _ _

In passing, and in anticipation of our planned new service to be called “Stealth Predator,” I wanted to show you that candelaabra works with great precision on Stocks, too. For example, before noon on May 5, 2008 we sent an e-mail to an outside Investment Adviser, telling him that Merrill Lynch looked like “a prime candidate for shorting.”
Look what happened:

candelaabra excels at calling reversals of trend!

William Kurtz

For CandleWave, LLC

Please see my new article “It’s Going To Be Hard To Make Lemonade Out Of These Lemons” at http://tycoonreport.tycoonresearch.com/past_issues.

Wednesday evening, June 4, 2008

STAND FAST. RETAIN YOUR DOWNSIDE POSITIONS AND YOUR SAFETY BUY-STOPS.

WATCH FOR A BOUNCE FROM CURRENT LEVELS. IF IT DOES DEVELOP, WATCH FOR

A PEAK, BECAUSE THAT OUGHT TO BE AN EXCELLENT SIGNAL TO SELL.

A. The Indexes

The major Indexes did in fact top and reverse. The Industrials have lost 165 points since Friday’s close, and ended today slightly down from yesterday, as did the S&P 500 and 100; whereas the NASDAQs, the S&P SmallCaps 600, and the Russell 2000 ended higher. The Transports and the Utilities were higher. So, we have a fractured market.

The Industrials, the S&P 500, and the S&P 100 all display a “High-Wave Doji” pattern, which indicates indecision.

The bounce (in the Industrials and the S&P 500 and 100) of which we spoke on Monday evening should begin right about now. We doubt that it will exceed the May highs, and probably won’t exceed the highs of May 29.

The Industrials, the S&P 500, and the S&P 100 have been on a path of normal retracements of the decline which has followed the change of trend last October. Unless they break upward through the May highs, the downtrend will remain in force and we recommend that you stay Short in those Indexes, with appropriate buy-stops. The NASDAQS, the S&P 600, and the Russell 2000 may remain more volatile.

B. Gold

Gold has edged lower over the past two days. It has declined to the point at which we should see a bounce; but it does not appear quite ready to do so. We do not see any clear reversal signals. You should have become Short some time ago. We think you short be Short, with protective buy-stops. We had said on Monday that you might elect to “exit and wait.” The same condition exists tonight.

C. Silver

We had said that “Pressure is mounting on Silver to move higher,” and that pressure is having an effect. We think you short stay Short, with protective buy-stops. As with Gold, if you have accumulated unrealized profits in Silver (gained from the previous substantial downturn) you might elect just to exit and wait.

D. Crude Oil

I hope that you really did cash in your paper profits in Crude. Crude should very soon reach the point at which it should reverse, to the upside. We suggest that you keep your hands in your pockets and watch for the bottoming and reversal. We had suggested a Put some days ago; if you did buy it, congratulations; because it should be worth more today. A longer-term Investor of contraries bent might even consider purchasing a Call of one of the later months of the year.

William Kurtz

For CandleWave, LLC

Monday evening, June 2, 2008

STAND FAST. RETAIN YOUR DOWNSIDE POSITIONS AND YOUR SAFETY BUY-STOPS.

IF YOU PURCHASED A PUT OPTION OR WENT SHORT EARLY TODAY BEFORE THE FALLOFF, RETAIN IT, BUT WATCH YOUR STOPS. IF A BOUNCE DEVELOPS (and it may have begun) WATCH FOR A PEAK, BECAUSE THIS MAY BE AN EXCELLENT OPENING IN WHICH TO SELL.

KEEP A “TOE IN THE WATER” TO THE UPSIDE IN CRUDE OIL.

KEEP PLENTY OF CASH ON HAND, IN THE SAFEST REPOSITORIES YOU CAN FIND.

Please see my new article about “Lemons and Lemonade” at http://tycoonreport.tycoonresearch.com/articles - written today during the heat of battle during trading hours in the stock market.

A. The Indexes

The major Indexes appear to have topped and reversed to the downside. After today’s falloff, it is entirely possible that there will be a bounce tomorrow. It may already have begun, as a bounce off the floor today; but it does not seem likely that the bounce will grow to the extent of exceeding the May highs. It might not even exceed the highs of last week. In addition to the earlier double tops in the Dow Industrials and in the S&P 100, the S&P SmallCaps 600 also made a double top, on May 21 and 29.

Here’s what I think is happening: On May 19, the Industrials, the S&P 500 and 100, the NASDAQs, the S&P 600, and the Russell 2000 completed a normal upward correction of the downturn which began last October, which has been followed by a normal retracement from the lows of late May; and that the way ahead is Down.

In the event the highs of May 19 should be broken, then something other than our analysis would be happening, and we would probably want to see you out of Short positions at that time. However, we seem quite a distance from such an event, although it is more possible in the NASDAQs.

The bottom line is that we think the downtrend has reappeared, and that you should be Short. As we analyze the minute-by-minute progress of the bounce off the floor today, it might be well to leave safety buy-stops where they are instead of lowering them. As the bounce proceeds, you might add a Put to your portfolio.

B. Gold

Gold rose about $5.5 today, and there is room for it to move higher still. You should have become Short some days ago. We think you should remain Short, but watch those protective buy-stops. You may elect to exit and wait to see whether this bounce develops further.

C. Silver

Pressure is mounting for Silver to move higher. You should have become Short some days ago, and in a net-positive position. We think you should remain Short, with protective buy-stops. You may elect to exit, book your profits, and wait to see whether the bounce develops further.

D. Crude Oil

Pressure is slowly accumulating which would cause Crude Oil to rise. By now, you should have cashed in your Long profits and you should be sitting with a Call as “insurance” or as “a toe in the water to the upside.” Less and less do I see the rationale for a Put.

William Kurtz

For CandleWave, LLC

Friday evening, May 30, 2008

STAND FAST. RETAIN YOUR DOWNSIDE POSITIONS AND YOUR SAFETY BUY-STOPS. ELEVATE YOUR NASDAQ 100 SAFETY BUY STOP IF YOU HAVE NOT ALREADY DONE SO.

WE ARE WATCHING THIS BOUNCE. BE READY TO JUMP ON IT WHEN IT APPEARS TO BE TOPPING AND BEGINNING TO REVERSE.

TAKE THE BULK OF ANY UNREALIZED PROFITS IN CRUDE OIL, LEAVING A “TOE IN THE WATER” to the UPSIDE.

KEEP PLENTY OF CASH ON HAND IN THE SAFEST REPOSITORIES THAT YOU CAN FIND.

A. The Indexes

The bounce persists. The Dow Industrials Index was down very slightly today; the S&P 500 and 100 were up very slightly. The NASDAQs were up modestly, but now show indecision. The S&P SmallCap 600 and the Russell 2000 were up nicely, which (as we said in a special note yesterday) indicates that the small investor is still addicted to gambling. We had suggested in a special note that you elevate protective buy-stops a bit on the NASDAQ 100. The others still look all right where they are.

We still think this is a corrective bounce in an underlying bear market; and there is great downside potential in the stock market. Mortgage rates are creeping up, and it probably won’t be long before the Fed must follow suit. Popular wisdom maintains that the Fed sets rates and the market follows; but that has it backwards.

In our opinion, apart from special situations which interest you we think the best course right now is to keep hands in pockets and watch for a top and rollover in the major indexes, and then add a position to the downside.

B. Gold

The bounce which we predicted has arrived. There is room for prices to move higher. You should be Short, with protective buy-stops in place. We suggest that you keep your hands in your pockets at this time with respect to new positions.

C. Silver

Silver is in much the same position as Gold. The bounce which we predicted is now in progress. There is ample room for prices to move higher. You should be Short, with relatively close protective buy-stops to prevent your gains from disappearing while we wait for the bounce to play out. We would not suggest jumping in with a new position right now; let’s see whether the market throws off any clear clues before making an additional move.

D. Crude Oil

It appears that Crude Oil may have hit a plateau, as we thought it would and as we have written about in EzineArticles.com/ For those of you who were stopped out for safety, either in whole or in part, we suggest not entering into new positions now. You might keep a “toe in the water” to the upside; aggressive investors might purchase a Put option.

William Kurtz

For CandleWave, LLC

We have under construction a companion Website which will offer buy, sell, and hold advices with respect to individual stocks. Of course, the service will be based on the candelaabra technical analysis system. Candelaabra will soon be directly offered for sale on a companion website, too.

- - - - - - - - - - - - - - - - - - -

Wednesday evening, May 28, 2008

STAND FAST. RETAIN YOUR DOWNSIDE POSITIONS AND YOUR SAFETY BUY-STOPS.

WE ARE WATCHING TO SEE TO WHAT EXTENT A BOUNCE DEVELOPS. BE READY TO POUNCE ON IT SO AS TO ACQUIRE AN ADDITIONAL DOWNSIDE POSITION AT A GOOD PRICE.

MAKE SURE THAT YOUR UNREALIZED PROFITS IN CRUDE OIL ARE LOCKED IN.

KEEP PLENTY OF CASH IN SAFE REPOSITORIES.

- - - - - - - - - - - - - - - - - - -

As a sidelight, in our previous issue we spoke about the accuracy of our earlier prediction that shares of Goldman Sachs and Merrill Lynch would decline. That run appears to be over, or nearly so. If you took the trade, our suggestion now is to exit and, if you choose, to go Long or to acquire Call options.

- - - - - - - - - - - - - - - - - - -

A. The Indexes

On Friday, we spoke of an impending bounce, and the possibility that the Russell 2000 and the S&P SmallCaps 600 might already have begun bouncing. Those forecasts proved accurate today: the Dow Industrials, the S&P 500, and the S&P 100 all moved higher, but weakly; the NASDAQs and the S&P SmallCaps 600 moved up to a little better than their respective 50% retracement levels; and the Russell 2000 sailed up to a 61.8% retracement. So, the Blue Chips are the laggards. Interestingly, the NASDAQs, the Russell 2000, and the SmallCaps 600 all left behind “Hanging Man” patterns, which warn of bearishness, and are subject to confirmation by lower closes tomorrow. We shall see.

We think it would be prudent if you were to hold off making additional downside commitments at this time. Let’s see how these individual bounces play out first. The lower-capitalized stocks received a good play yesterday and today, but the Blue Chips never really got their engines going. It would seem to make sense to keep hands in pockets for a while longer.

B. Gold

As we expected, Gold topped and reversed (hard), and continued its selloff today, losing another $7.40; but it’s right at the point at which we can reasonably expect a bounce to develop. You should be Short, in accordance with our special e-mail notice of late yesterday. You should also have a safety buy-stop in place. We can expect a corrective bounce. For the moment, our suggestion is to leave your existing positions alone and keep your hands in your pockets.

C. Silver

Silver is in much the same position as Gold. Traders tried hard to move Silver higher today, but failed in the attempt. We can reasonably expect a bounce to develop from this point. You should be Short, in accordance with our special e-mail notice of yesterday. You should also have a safety buy-stop in place. We think that you should leave your existing positions “as is” and refrain from taking on a new position for the moment.

D. Crude Oil

Crude turned around and headed a little higher today. It could move higher still. As we’ve said before, we think you should convert the bulk of your accumulated but unrealized profits to cash, while retaining exposure to the upside. Watch your safety sell-stop levels, because (on a very short-term basis) prices should decline somewhat.

William Kurtz

For CandleWave, LLC

We have under construction a companion Website which will offer buy, sell, and hold advices with respect to individual stocks. Of course, the service will be based on the candelaabra technical analysis system. Candelaabra will soon be directly offered for sale on a companion website, too.

To give you an idea of the predictive accuracy of candelaabra, we spotted a shorting opportunity in Goldman Sachs shares on May 5, 2008, and alerted an outside investment advisory firm on that day to seriously consider shorting Goldman. The following two charts tell the story in pictures “better than a thousand words” ever could.

This is a decline of more than 12% in less than three weeks. Op.por.tunities like this are exactly what we intend to find for you at the new service. Imagine the profit that you could have made, just by having the information at hand very early in the move! (Sorry; we have to break up certain words in print sometimes, for otherwise the electronic powers that be think it’s “spam” and the transmission fails).

Friday evening, May 23, 2008

STAND FAST. RETAIN YOUR DOWNSIDE POSITIONS AND YOUR SAFETY BUY-STOPS.

WATCH TO SEE WHETHER A BOUNCE DEVELOPS NOW, AND BE READY TO POUNCE ON IT SO AS TO ACQUIRE AN ADDITIONAL DOWNSIDE POSITION AT A FAVORABLE PRICE.

KEEP YOUR EYE ON CRUDE OIL. DON’T ALLOW YOUR UNREALIZED PROFITS TO GET AWAY FROM YOU FOR LACK OF ATTENTION.

KEEP PLENTY OF CASH IN SAFE PLACES.

A. The Indexes

This is beginning to look serious. If that tiny upmove yesterday is the full extent of the bounce which we were expecting, it certainly didn’t amount to much, and probably wasn’t the genuine article. Our Indicators are telling us that a bounce is due. It may have started today in the NASDAQs, which formed “Hammer” patterns, carrying bullish implications. Likewise, the Russell 2000 and the S&P SmallCaps 600 may have hit bottom and started to bounce upward today. I think that the better course for you would be to hold off jumping into the market with a new position first thing on Tuesday; rather, let’s see whether the bounce develops and how far it travels before it runs out of fuel. Keep an eye on it if you can, and be ready to enter another “short” or equivalent; because this may be a very good selling opening in the making.

B. Gold

A “Doji Cross” formed today in the June contract, and a “Hanging Man” in the August contract. Both of these patterns are warnings of a possible change of trend to the downside. Both of them require confirmation on the next trading day, so we’ll keep an eye on it. Gold is getting close to a top and reversal. Prices today did not exceed those of Wednesday. I think this would be a good time to buy a Put option. If you are Long in Gold, your safety sell-stops should be tight.

C. Silver

Silver has risen higher than I thought it would. Even so, I think this is not a return to a bull market; rather, it is a strong correction in an underlying bear market. Prices are very close to topping and rolling over. The price bar in the July contract today formed an Island Top and also a Hanging Man, both of which are bearish. We especially want to keep an eye on the pattern on Tuesday, for a lower close would confirm the Hanging Man and would be predictive of a decline. Prices seem very close to topping and rolling over. This may be a very good opening in which to buy a Put option. If you are Long in Silver, your safety buy-stops should be tight.

D. Crude Oil

Prices formed a nearly-perfect “Doji Cross Harami” on the Daily chart today. This pattern depicts indecision, and warns of a possible reversal of trend. I think you should move to protect your unrealized profits, if not by exiting your positions outright then certainly by elevating your safety sell-stops. If you wish to retain a partial upside position, fine; but don’t be so greedy that you let these exceptional profits get away from you. There is room for Crude prices to move even higher. Just don’t let greed get the better of you. Exit most of your Long positions in Crude, and never look back. If prices reverse and suffer a dramatic fall, they might race right through your safety sell-stop and you might not get out at your stop price. So keep your wits about you now with respect to your Long positions in Crude Oil.

William Kurtz

For CandleWave, LLC

Wednesday evening, May 21, 2008

A. The Indexes

Our analysis on Monday evening was spot-on. A 425-point drop in the Dow Industrials over a two-day period is significant. All of the major Indexes were down today, except the Utilities but including the S&P 600 and the Russell 2000. I think we have seen a meaningful top. The Industrials seem to have tested that long-standing trend line, but the trend line won. All those Shooting Stars and Hanging Men and Evening Stars did their work. You may chuckle at the names if you wish, but the proof is in the pudding. The SmallCaps took a very brave stance early in the session and drove prices higher; but traders in those issues who went to lunch while leaving money on the table may have wished they had stayed closer to the action.

A few days ago, some observers were marveling that “even” the Transports had made a new high, in spite of high fuel prices. That high was followed by a spike high on Monday which was also a beautiful Shooting Star, which did its bearish work in the Transports today and the commentators are silent about it.

After two strong down days, it is reasonable to expect that we will see a bounce. The Indicators are saying that it is due. I doubt very much that it will take prices to the levels of a few days ago, because I think it is probable that the bear market has resumed. Since you should already be Short anyway, you have enjoyed a gain over the last two days. It might be the better course of action to wait it out a bit even if the market heads lower, look for the bounce, and then pounce on it with an additional Short position.

B. Gold

This rebound has gone higher than I thought it would. It is now very close to the limit of expected travel before reversal. The Indicators are saying that Gold is very close to a top and rollover. I think everyone should have a downside position. It appears to be a good time to buy a Put.

C. Silver

Silver is in much the same position as Gold, except that it appears that Silver may have a little more room to the upside before topping and reversing. Now, or very soon, would seem to be a good time to purchase a Put.

D. Crude Oil

Crude “keeps on rolling along,” like Ol’ Man River. This has been a spectacular trade. Elevate your safety sell-stops. Bear in mind that if the crude market drops violently, prices may fly right past your sell-stop so fast that you will not receive your stop price. That’s why, from the conservative point of view, you might take some profits now and never look back, all the while elevating safety sell-stops on the rest of your Long positions and keeping Calls active.

William Kurtz

For CandleWave, LLC

ALWAYS USE PROTECTIVE STOPS. ALWAYS. NO EXCEPTIONS.

Paid Subscribers may Press Here in order to link