Newsletter-10-18-08
Tradingourway
Volume 2, Issue 12 Oct 12, 2008		 Tradingourway Logo

Don't be fooled into thinking the DownTrend is over  
Up-Coming events:

At the moment we are putting plans in place to hold a seminar in the the Tampa,FL area January 2009. We are still working on finding a centrally located Hotel with an open week-end in January.
You can Sign up now   you won't be billed until your attendance is confirmed.

A BIG THANK YOU, To all who have participated in the survey. I will use these results as guide for future topics in the newsletter and for  more detailed articles on the website. I was a little disappointed that so very few took the time (3 minutes) to take the survey.

I plan to keep the survey open for several more weeks in order to give newcomers and those that haven't gotten around to taking the survey a chance to so.  Unfortunately, the survey does not allow you to retake or modify your initial response. Please feel free to send an email to kermitp@tradingourway.com  with your suggestions.
You can view the results of the survey here
  If you haven't taken the survey and would like to, click on - Start Survey...
Taking the survey does not imply that you plan to attend the seminar or purchase any items, it is only your opinion we are asking for now.
This issue:
As much as we would like for the markets to have found their bottoms the fact is they have not yet completed the downtrend. These last few days may deceived you into thinking it is time to jump back in the market. The only way you should do that is if you are a very short term trader watching the markets intraday and you want to play the corrective wave that maybe occurring now.

Below is the Dow 30 one hour chart which shows we are in a descending triangle. The SP500 and Nasdaq composite have the same pattern.
DOW hourly chart
Looking at the above chart, I have labeled the pivot of the triangle. I did this to calculate the retracement of each wave. Wave 2-3 retraced 84% of wave 1-2 while wave 3-4 retraced 68% of wave 2-3. So far wave 4-? has retraced 41%. It is reasonable to think the retracement will be at least 61.8%. That would make our next low around 8600. After that we can look to play the upside very cautiously.
 
According to my Elliott Wave software the Dow shows to be in wave 3 of a 5 wave down pattern on the daily, weekly and monthly charts. Same for the SP500 and the Nasdaq. The exception is the Nasdaq weekly shows an ABC down pattern. Keep in mind, Elliot Wave is just another indicator and in my opinion no better or worse than many other indicators In fact, one is hard pressed to find an indicator that shows any potential for a positive move. All major moving averages are well above the last close price on all 3 indices. Stochastic and MACD are still pointing down.

Now I know there is probably in the 500+ indicators one that thinks we are starting an uptrend. We may very well have hit the low of the wave 3 and started a corrective wave 4. I believe that is where we are now. If that is the case, I expect the retracements for the DJ30 to be in the  9850 - 10,300 range, the SP500 to be in the 1070 - 1130 range,  and the Nasdaq composite to be in the 1920 - 2040 range.  
Previously, I talked about a fire sale for the RAMP program. Well, Andy's at it again for $99 you can get RAMP and install it on all your computers.  

Worden Brothers new StockFinder is now in BETA and available to anyone wanting to "PLAY" with it. Others may want to wait until it comes out of Beta test. 
Summary:

As always I want to hear your thoughts on these and any subjects. Please, feel free to send an email with your suggestions, complaints, and comments to    kermitp@tradingourway.com  
 
Thank You, for taking the time to read our newsletter and good trading to all,
 
           Kermit Prather