YQ, there is not time value in e-mini futures but rather 'premium'. Just pull up a quote for the next quarter's contract, in this case MARCH, 2009. Right now we're trading the Dec contract for the ES, NQ, and ER2.

The Dec ES for example (S&P) is 863 with the cash index at 864. Funny thing is the March contract is $1 less at 862! What that tells you is that the powers that be are predicting a LOWER price for the SPX than the cash index is suggesting. Wow! That's called the 'premium'. In this case it's negative. So, that's usually a buying opp. But not for daytrading. It's just a signal.

So, if you were a longer term swing trader, and you thought the SPX would be higher than it is now, you'd absolutely pile into the March contract over the Dec. Why? Because of the lower price and future expiration.

Expiration doesn't really mean anything like options. With options it matters because of the time decay. But futures are a little different. Right now everything is wacked. Normally you'll see that March contract being 4+ months out be trading at least 5 points higher than the cash index. Obviously the traders would make you pay up for the fact that 9 times out of 10 the index would be higher then than now. But in this nutty market, who knows. Personally I think it's a gift. But that's just me.


As far as which to trade, it's a matter of your risk profile. If you're a tad conservative (not that you'd be conservative if you're trading these) you'd probably not want to trade in the ER2 (russel 2000) because it's $100 per point. If it moves 5 points away from you, ouch! And fast. The ES (SPX) is $50.

So, if I were you I'd trade to start with the Nasdaq 100, or NQ. For Dec, it's NQZ8 (NQ + 'z' for DEC + '8' for 2008)

The NQ is only $20 per point. You can still get into trouble if you're wrong, but not as fast as $100 or $50 per point. The YM for the DOW trades almost like the ES because it's basically 1/10th the SPX. So, eventhough it's only $5 per point in the DOW, if the SPX moves 10, the DOW will move about 100 in that same time netting you the same gain/loss in the YM as the ES.

Futures pricing is just a dirivative of the cash index. Options are priced completely different as dirivatives of the stocks they represent. Because they are used and designed as 'rights to buy or sell' and priced like an insurance policy in terms of the risk to the seller of that option to pay out, there's going to be a premium you have to pay for that right and since they expire, a formula to allow that premium cost to drop over time. Futures are not the same. They are just trading vehicles of the indexes with no other purpose other than to allow you to take a position in the indexes.


The trick to making good consistent money in these is to know the daily ranges and support and resistance levels of the indexes to a 't'. For example, right now 1200 on the NQ is a magic number. Under it, you buy as low as you can and as close as you can between 1150 and 1180. You'll always get an intraday move into the low 1200s with a massive move up coming any day now. The $NASI chart is screaming 300 point move up coming. So don't be short this.

Who here was watching CNBC today and Art Cashin's mention of the lunar cycle this Sunday?


Okay, you all know my love for cycles and how I've given you them numerous times in the past weeks before they were up and nailed them almost to the day! The last being the March 23rd low being the 20 week cycle then.

Okay, so, this month of Oct, 2008, we have:

4 year cycle low due Oct 22nd
40 week cycle low due Oct 13 to Oct 16
and now the Lunar Cycle


What does this mean -- just remembering the basics of what he said, the lunar cycle of this magnitude has only happened two other times in the last 100 years -- 1929 and 1987.

Well, enough said.


Everyone on the NYSE floor was talking about it. It's marked the bottoms of those major selloffs. It comes Sunday night.


Just food for thought. For those who don't know him, Art Cashin is a floor Specialist on the NYSE.


Nutty market, eh?

You add in all that stuff on top of that weekly $NASI chart and you got the mother of all buying opportunities I think. All this talk about the DOW breaking this triangle projecting to DOW 6000 is hooey.

But then again, who knows in this market. I will tell you that this is the best thing to happen to the market in over 20 years. Why? With over 12000 hedge funds all trading on major leveraged margin, and apparently by the looks of it all in the same long commodiity trade, this washout is the mother of all washouts. Estimates are of 60%+ being 'capitulated'.


You see, what most don't understand is that the biggest headwind for a stock is when too many fast buck types are trading it. All the fast money types want is a fast buck. So they become a large group of sellers at prices not too much higher than where they bought it. So, for example if they bought AAPL at say $90, most will bail at $100 or $110. What if they were never there? You could say that the stock wouldn't run to $110 that fast. Sure. But wouldn't you rather buy a stock knowing it's worth $120 and buy it at $90 and watch the mutual fund guys SLOWLY buy it and watch it grind out a profitable advance slowly day after day?

With that action, you don't wild 20% + corrections. You get small corrections within an overall uptrend. This destruction in hedge fund land which is the root cause of all of this is wiping out these huge group of sellers that have put a major lid on the market.

The extent of this selling is such that I think any future 'retest' will be a far more shallower one because the 'real' sellers are getting wiped out now. Litterally. Many hedge fund managers (most are 20 somethings out of ivy league schools with rich parents with rich connections that gave them money to trade with) are going to be working at McDonald's with the mortgage brokers playing cards on weekends talking about the good old days of the $50k a month salaries and no one believing a word of it.

At least we'll know it was true. But it will still be a memory.

BTW, remember how I once said that just like when you knew looking at home prices that were selling for $800k to people making $50k a year didn't make sense and would one day adjust to reflect reality, stock prices work the same.

Look at the $SOX this morning. It looks like it's going to open up at around 202 to 204 as I look it now before the bell. The Oct 2002 low was 209. So, we're going lower than that. Now again, this market isn't selling off on fundamentals. It's selling off to 'deleveraging' - ie, too many dumbass hedge funds allowed too much leverage (40 to 1) to trade with now being forced out of the market all together through the same tiny door at the same time.

In 2002, many of these companies were losing money. Even BRCM was losing money. MRVL was losing money. 209 back then could have been considered high. It came down from I think it was without looking at the chart around 1300 in 2000.

Today, at a lower level, many of these stocks are incredibly profitable. MRVL today is very profitable as of their last 10q. BRCM is a cash cow averaging over $200 mill a quarter in free cash flow sitting on over $2bill in cash in the bank with no debt. INTC - well, we don't need to go there. It's a big huge dollar sign. You can go on and on. LLTC's problem is they have too much debt as a ratio to their cash. But they still are profitable.

In other words, these stocks have no fundamental basis for being down here. It's a gift of magnitudinal proportions. But cheap can get cheaper just like home prices got pricier before they fell. So, hold your nose and ride it out because you're going to see one of the largest spikes in the stock market of all times any day now. That 1000 point DOW rally a few weeks ago is going to be dwarfed I think. Trading imbalances are always violently corrected.

Yeah, but today could be the day we've been waiting for. These hedge funds have been the cause of this (not the situation but the forced selling). The problem has been Oct is the end of the lockup for them and they have to get the redemption money out before the end of the month. Then they have the problem of the wash sale rule for their own money.

In other words, the trades they put on for their own $$ using the leverege they got from Lehman and Bear Stearns that is now gone is the root cause of the forced selling. It's these huge margin calls that's doing this and it's the reason you can't rely on technicals now. It's ludicrous. I don't know why the SEC ever allowed this leverage issue to be this large. They are I think today just washing their hands clean of their trades. That's why the limit down on the futures. The overseas action they had backs all this up because we've all heard what great trades the 'emerging markets' were. Well, it's sell all and anything wherever you got it to sell.

As Cramer explained yesterday, all those funds that have been letting go their trades as slowly as they can hoping for a huge rally to bail into haven't got it yet because the mutual funds aren't playing. They 'real' money managers around the country know exactly what's going on. And they are not about to bail these clowns out with their money. So, they're simply sitting on their hands until the right time. I think you've seen a little of that this week where the mutual fund guys and institutional managers are starting to nibble.

Just yesterday, Oppenheimer said to go 'all in' long the market. Funny how it was the day after the 4 year cycle low came. I don't know if there is a correlation. But it does seem like today could be the capitualation event we've been waiting for.

Today could be a monster hammer bottom if we close strong. Days like today don't typically end up bad after all this downward move into it. Crashes happen without warning. We've been crashing for two months now.

Get your cash ready. It's time I think.

I'm not a MRVL fan anymore, but there is hope coming and soon. This chart of the Nasdaq summation index is at record lows. I don't normally follow Cramer as his credibility has been destroyed by TradingMarkets and specifically Gary Kaultbaum who's got a score card on him that is pretty pathetic. He's actually proven Cramer to have lied about his own record. I think it's something like having called 14 bottoms now and upwards of 3000 picks over the last few years and then having actually said on TV that he never reccommended the stocks he reccommended.

But that aside, he today made a great case for what's been going on with the market if you didn't see the show. He showed to the hour of the day how hedge funds have been massive sellers and why they do it at specific times of the day. Makes a ton of sense.

But look at this chart of the summation index for Nas:




That is unbelievable. The NYSE's is almost the same. Upward correction of this is going to be monsterous and tech will probably lead the way. I think MRVL probably will see north of $10 easy. I never thought I'd ever say that as a 'good' thing. I think BRCM on pure fundamentals is worth north of $30. The lowest 2009 estimate is for $1.16 in a worst case scenario with $1.30 to $1.50 being the average. BRCM constantly beats so it will probably be somewhere north of $1.20. $1.20 x a PE of 20 gets you to $24. They're buying $1bill in stock back starting this quarter. So that will also add to it. But a stock like BRCM never trades at a PE of 20. Always north of 30. In this crazy nutty market where forced margin selling rules the day due to the stupid 40 to 1 leverage that was allowed to hedge funds, who the hell knows really where the bottom is. But the good news is that most funds will be done this week with any forced selling.

The only thing that will drag on the market going forward then will be the mutual fund redemptions in Nov/Dec when everyone gets their Oct statements. No one knows what will happen because mutual fund holders once down 40%+ might just figure they're long term investors and why sell now?

Richy rich types who give money to hedge funds to trade are just that -- traders. They flow in and out. The hedge fund managers then take that money, lever up 40 to 1 and trade multiples of that cash level. That's why they're all blowing up.

Margin works both ways.

I am averaging into BRCM because it's like a mini APPL. Nothing but cash and cash flow. No debt. Even forecasting good profitability next year because they are somewhat insulated.

Any big rallies can be used to sell calls and since BRCM's volitility is high, the calls are very expensive. Nice to sell.

But like I said, the cycles are both over as of yesterday. So expecting any big legs down is gambling. The odds are now moving to a sustained large rally going into early next year. Feb to June is a dangerous area. Around Feb, we'll have to start to watch it close.

This move down in the market was driven strictly by forced margin selling and redemptions. All the guys on TV and radio pumping gold and emerging markets and commodities are going broke. Commoditity runs are typically in 2 year spurts. Then 20 year downcycles. It's pretty consistent over time. Well, it's been 2 years.

I think the Feds are sitting on their hands now after having donw all they've done because they are enjoying seeing the destruction in oil prices. That does so much to help everyone out. Not just lower prices. But the wealth destruction in the 'bad' countries like Russia and all the middle east bad guys. Not to mention Venezuela.

So, there is probably a bigger picture event going on that no one is talking about. A weak economy forces oil to get crushed. And, the harder it falls the more people won't rush back into it.

I think the odds still favor the fact that this cycle now over will lead to a massive rally that then comes back in March -ish to 'retest' it possibly lower. So, DOW under 7800 eventually as everyone that gets in now are going to want to save their profits and pile out of the market on the next leg down.

But I think it's safe to say that the worst is over for now - at least in terms of all the forced selling.

regarding BRCM, now that everyone has been shown that they will for sure do at least $1.15 to $1.50 next year depending on the economy, the forward PE for next year on a GAAP basis (true eps) is under 15 now for a stock that's growing north of that.

In other words, you get a minimum $30 stock for half the price.

But don't take too long because the sale ends soon!

BRCM at a 12 PE ???

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=33049579

You have to understand that right now the 'redemption parade' is screwing up all the technical outcomes.

What do I mean? Huge hedge and mutual funds are getting massive 'cash out' requests. 'GET ME OUT NOW!'.

So, they sell regardless of what the price is to raise the cash to payout the holders who want their money. The more they want their money, the lower the stock prices and thus the more you get the panic perception and thus more selling which then (now) leads to margin selling.

So, all that means that you don't have support anymore until all this 'forced' selling is done. Oct 31st is mutual fund fiscal year end which means they are selling now what they can to raise money to meet redemtions. Plus many are selling now to take the loss this year and still be able to not fall prey to the wash sale rule. Many large hedge funds only allow you to redeem money a few times a year and magically this month is one of them. Well, you see what is happening. That's why the commodity stocks are getting destroyed when really many of them are the most profitable.

So, fundamentals and technicals mean nothing now. Because the selling is 'forced' and therefore by definition artificial with no fundamental backdrop, there most likely will be a 'V' rebound to correct the market's value back to what it 'should' be trading at. By any definition of 'fair value', that's higher than we are now. Could be north of 10k on the DOW.

However, I see something that's being setup that everyone's talking about and I think trading - and possibly very wrong. There is a large triangle in the DOW that looks to be setting up for a massive breakdown. The projection on it could be 2000 points down. And, if this breaks, it could be fast (before the end of the month).

However, there exists the possibility that too many traders are shorting this in anticipation of it happening. But what happens if it doesn't? What if this 4 year cycle low due today (Oct 22nd) turns out to be the actual low? Maybe that's why you got that end of day buying spurt. The short squeeze here could be monsterous. Another 1000 point + day up?>

I'm not predicting this to happen. But I am saying shorting is VERY dangerous here.

I'm telling you to watch that $NASI chart above. That's a record low. Unheard of. If you understand what that chart is telling you in terms of breadth in Nasdaq, you understand how nuts it is. It backs up the idea that this is a major major cycle low.

Read this about BRCM ---


"--RBC Capital Markets lowered its price target on Broadcom to $22 from $36 to reflect the economic downturn. Barclays Capital lowered its price target on Broadcom to $22 from $25 and dropped its estimates on the company to $1.63 from $1.66 for the current year and to $1.34 from $1.48 for next year"


Okay, now do the math -- 'lowered' estimates for next year of $1.34. Multiply $1.34 x say, 15. So, a PE of 15 on $1.34 gets you a $20.10 price. At 20x that's $26. And those are on 'lowered' numbers.

Okay, here we go. We are setting up for a really quick retest attempt this week that could finally put in a short term bottom. The divergances are clear.

http://www.decisionpoint.com/TAC/ORD.html


Look for a big big rally into Feb, then a major decline again to either retest again this area or even break it. Then 'that' should be 'it'. I mean the final low you'll ever see in your lifetime or anyone elses.

This is a large "ABC" move in the market with this being the 'c' wave.

Rotation should be into tech because that's where the money is. Many like BRCM have no debt, high cash levels and don't need to borrow anything from banks. In other words, safe. Plus you get the benefit of a high potential return unlike bonds, real estate, and emerging markets.

The decline in Commodity stocks proves speculators, ie hedge funds, were mostly responsible for the run there.

Now they are getting wiped out. That will leave the only place for money to chase returns is into tech.

Could be a monster Nov and Dec for theses stocks.

A black candle means the open and close of that day were outside the previous day's candle's open/close.

It does appear many times like that's a bottom/top picking strategy if you look at the charts where they appear. But don't bet on it.

I think this week or next we get a successful retest of the Friday low area. 8000ish +/- on the DOW.

The reason is simple -- the Monday rally was a trader's rally. The selling was forced margin selling. So, the 'real' buyers (mutual funds, etc) want to make sure that low is real. So, they sit on their hands and allow the quick buck guys sell out their trades which typically will allow a higher low than Friday. When it appears the selling in fact stops, then they will come in. And probably right around the cycle dates. Funny how that works.


The best case scenario is we just bounce around here. As for BRCM, it's now clear that the reports from LLTC and ALTR are showing why BRCM is up this morning.

ALTR beat, but by a small margin. LLTC met, but has a big problem with debt. ALTR also has about half their cash in debt. That's why ALTR at best will trade where it is because no one is going to pile into a stock like that with that debt hanging over them. Their guidance along with INTC was actually not that bad. If they both only miss a little going forward and hang onto the majority of their revenues and margins, then these stocks will prove themselves to be MASSIVE buying opportunities.

But then you have BRCM. No debt. A cash cow and second largest (revenues) cell phone chip maker now. Very interesting setup because you can say that BRCM is probably the best positioned stock in the space for the largest potential move higher. INTC has too much stock outstanding to allow it to move up in a big way. TXN the same. TXN's prob is they have too many other biz's that are slowing that affects their overall profitability.

Very interesting. As I said, if BRCM just comes in within 80% of thier projections for next year, the stock is worth $30 on a PE under 20! So, it could be yet again that the analysts are wrong and have been too bearish on the downside. Bearish is one thing but too bearish is another.

Yeah, because if this is the low, then the next leg up will be a wave 1, with a retest making a higher low, or a wave 2. Remember, wave 2s are typically around 72% retraced of the low. So, I think the DOW jams over 10,000, possibly 11,000 and then a retest back into the 8000s again.

That will be one hell of a buying op.

All this money the Fed is pumping is going to find itself right back into the market. Just watch how this firepower works. The one thing Cramer doesn't tell you when he calls for a 'depression' scenario is that the Fed didn't do any of this back then.

WOW! LOOK AT THE $NASI CHART ABOVE! That's the Nasdaq summation index. Trust me without going into detail, at a RECORD -1300, that's just unbelievable.

Now, for what's going on - what you're seeing is simply margin forced selling. Cramer has been saying to expect the 'real' crash to happen Monday or Tuesday as the general public freak out and call their brokers on Monday morning to sell everything as the news over the weekend scare them. That's what happened in 1987. He says crashes don't happen on Fridays.

The only problem with that scenario is that we haven't had a 1 day crash. We've BEEN crashes day after day with the headline news every night this week being the market decline. That creates sell orders by the public which in turn creates support breaks which in turn forces stop losses to get hit and sold which in turn creates margin proplems which in turn make brokers sell positions to meet margin requirements which in turn creates huge volitility (now over 70! on the vix) which in turn creates even more margin forced selling.

That's the worst case scenario tidal wave. You have always heard what 'could' happen in the perfect storm. Well, you got it. You might want to put away a newspaper to look back at 20 years from now and say 'I was there!'.

Now that aside, what's going to happen going forward? I don't think we see any more selling next week. If we do, it will be little. I think the Friday morning move was 'it'. That was your final capitulation.

Remember we have the OCT cycle low next week. But what's more interesting? ELLIOT WAVE!

Check this out -- I'm not going to do a chart because I don't have the time right now. But understand that every 5 wave move up or down sets up a 3 wave corrective 'ABC' move. It's the language of the market.

So, if you look at the larger grand cycle chart, you can show a 5 wave 20 year bull market that started in 1982. It ended in 2000. Corrective waves are quick. So the "A" wave (1st wave down) from that 20 year 5 wave move was the 2002 low. Then, the 'B' wave move was the 2002 low to the 2007 high. The 2003 'retest' was wave 2 of the 5 waves up to 2007. Wave 'B' is an impulse 5 wave move'.

Then you can say based on "AWE" theory (Alternate wave equality = wave 'c' will equal to a degree wave 'a') that this move down on a possible wave 'c' from the 2007 high to now is 'it' because it's nearly exactly the length of the move from 2000 to 2002. DOW 10,750 to DOW 7200 and DOW 14,250 to DOW 7800.

Nearly identical.

So, the case can be made that this is 'it'. We might not get a monster 'v' move up. But the move up is from this area. So you don't have really any risk on the downside.

That's why now is the time to pile into the 'right' stocks. I say BRCM because $200 mill in free cash flow, top 5 in cellphone chips, possible hundreds of millions in royalties coming from QCOM, $2.3 bill in cash in the bank, no debt gets you a recipe for $30+ within the year.

Hedge funds are going to jam into the risk stocks such as Russell 2000 and Nasdaq to get back their money.

The 'Plan' --

Look for either the 'low' to have been made already with some continued weakness the next 2 weeks before a massive 15% to 20% rally through Feb-March. Then another 'fast' vicious fall to 'retest' this low in the SPX of 1070 to 1125 to 'end' it and a new secular bull market to begin slowly.

However, fair value for the SPX right now based on consensus EPS for the SPX is the 2002 low of let's call it 800. That's basically DOW 7500.

That also means Nas 1100 ish again.

Ouch.

AAPL to $20?
RIMM to $20?
GOOG to $150?
BRCM to $6?
MRVL to $2?


That's what would happen. But not just yet. Let's see.

Notice every year going back 10 years, BRCM has traded $25+.

Keep this in mind - per the 'Stock Trader's Almanac' ----


Oct is known as the 'Bear Killer' month. Why? 11 post World War 2 bear markets have ended with a huge exclamation point in Oct.

Based on all the fear and news out there and dire predictions for the end of the world as we know it and predictions of everyone in food lines next week, the DOW and SPX are down from their highs about 25%. Most stocks are down way below that. The question is, how much is already priced in? If GE for example is at $35, then yes, you got some downside. But it's not. It's at $22. It was at $40 less than a year ago. At what point do you just come to the conclusion that yes, the economy is weak and getting a bit weaker. Yes, we're in a reccession regardless of what the 'official' numbers show. But, these companies still make money. Just not as much as the a-hole analysts predicted. No wonder, they're always wrong.

Take BRCM for example. Predictions for Oct's report are for revs of $1.29 to $1.31 bill making a GAAP EPS of about $.32 to $.35. Lowered predictions are now for something like $1.26 to $1.27 bill in rev with $.25 to $.27.

But this same Piper analyst dumbass lowers the price target from $29 to $19. Huh? Your 'lowered' rev and profit estimate drops by a tad and you lower your price target by $10???? Are you friggn' stupid? Or, worse, are you trying to time the market or be on the market's side? In that case, you're not a fundamental analyst basing a stock price on its true EPS projections, just pulling price levels out of the air based on what the market is doing. That's not your job idiot.

Here's an interesting article to read:

http://www.marketwatch.com/news/story/dead-cat-bounce-fresh-new-bull/story.aspx?guid=%7BA4120E42%2DCEE5%2D4C9B%2DAF4E%2DC330A40883F0%7D


We're on the verge.


BRCM today made a very good daily candlestick and is looking to make a nice weekly one. Follow through, follow through, follow through though.

On the weekly chart, BRCM is still as of today under last week's closing low and under the weekly bollinger band. That means just to get back into the band's range, we need to get back around $21. $25ish is the mean-average and area of most puts and calls. So, that should easily be achieved if the market can find some mojo.

As for the overall market, I think we have found 'the' low area that based on Hulbert's article above will be retested either the end of Oct or sometime next year around March to June.

But we're on the verge of a major rally that could take the SPX to 1300 to 1350 by year end because too many large funds are way underwater and need to get back to near even to prevent redemptions and the loss of their funds. I was reading IBD yesterday and their mutual fund index and just about every one of them is negative for the year.

Shorts are gonna get crushed.

What do you mean? The first week of Sep up? If you're referring to my previous chart of the weekly cycle which showed that to be an up week, yeah, that was wrong but it wasn't my prediction. It was how the weekly cycle was supposed to play out per the Stock Trader's Almanac and McClellen cycle predictions.

I'm just parroting them.

Trust me, they are wrong from time to time, but they are way more often correct and many times to the day.

However, as posted before, there exists the very real possibility that you will never see these lows in your lifetime again. The SPX has an ultimate downside target of the 62% retracement level which is about 1070. 1172 was the 50%. The 9 month or 40 week major cycle comes in between Oct 13th and Oct 22nd. To put it into perspective, the 20 week cycle low was predicted March 23rd. It was almost to the day. That was a Sat I think that date came in which meant it was a weekly prediction.

But major cycle lows and highs just have to be within a month or two to be considered accurate and confirmed. So, we're well within the time range. The volume and rate of decline especially in Nas yesterday could be considered a capitulation. So, many might have been washed out in a forced margin selloff.

Remember that the market will always move months before the actual economy turns. Many times the market will be well on its way into a new bull market right as recessions begin. That's exactly what happened in 1992.

Just look at the homebuilders. Talk about a positive divergance. Look at that $NASI chart above. We're down for this week only -650 compared to -1100 on the previous two declines. Yet we're making a far lower low on Nas. That's screaming to you that something is going on internally with Nas positively that's not showing in the price - yet. Divergance! Pull up a $BPNDX chart. Look at where it stands compared to the two previous legs down. There are now 23 of the 100 $NDX stocks trading on PnF buy signals compared to under 15 before. Divergance! You're being warned of a monster rally around the corner. Was today the beginning of a bigger move? Who knows. But I do think Nov and Dec will be very rewarding.

So, don't be so negative and buy into the 'DOW 2000' BS.



And what do you mean way off as usual? I was wrong on MRVL overall, but always said sell calls and own puts. Had you, the decline was irrelevant and as in my case, actually very profitable.

I say buy BRCM now because there is little downside here. Hell, even HAL is worth backing up the truck. You could buy RIMM today at $68 and just retire of selling calls for the next 10 years month after month with a basis down here.

AAPL could be, but I actually think AAPL has a problem - Steve Jobs. If he's sick, then I just don't know what AAPL is without him. The guy is a legend and an absolute genius and impossible to replicate. We wouldn't have PIXR today without him. Hell, we wouldn't have AAPL today I bet.

If he goes, AAPL will be a $25 stock. RIMM though just is way to intrenched in the sector of the hottest tech market going forward. That's also why I like BRCM so much at these levels because unlike MRVL, they are extremely well diversified, consistently extremely profitable and will be the first to run back into the high $20s, low $30s on any new tech strength. That's why you buy it here and ride it up to the mid $20s to then start selling calls.

He's trying to scare the congress into acting. Who knows. But whatever happens in the next week or two, it will be over will quickly. His opinion is based on the idea that many banks will go under making many to pull their money from stocks to pay margins or just raise cash.

But large mutual funds will fly into these stocks in droves becuase it will be one hell of a buying opportunity.

Watch today how the $SOX holds 300.

Hey, thought I'd make a small mention here to other chip lovers who don't buy into the BS doom and gloom talk about the end of the chip world as we know it that if you're interested, I have a board at:

http://investorshub.advfn.com/boards/board.aspx?board_id=13193


The board I use more for S&P cycle analysis which I think you'll find interesting. But I also use it for my loved chip stock BRCM.

Hey, thought I'd make a small mention here to other chip lovers who don't buy into the BS doom and gloom talk about the end of the chip world as we know it that if you're interested, I have a board at:

http://investorshub.advfn.com/boards/board.aspx?board_id=13193


The board I use more for S&P cycle analysis which I think you'll find interesting. But I also use it for my loved chip stock BRCM.

$SOX holding north of 300 very strong the last month. The longer it holds and doesn't break, the more both longs and short will have to realize this is the bottom.

Considering that the 2002 low in the $SOX was 209, just a measily 100 points lower when most of these $SOX companies were not even 1/2 as profitable as they are now suggests it's just a matter of time before the $SOX sees 500+ again.

No. I don't hear very good things from my 'source' on what's been going on over there. The future doesn't seem to be that bright with MRVL. Think about this-- why did they lose the new RIMM phone contract to Freescale? Why when they have supposedly such a great relationship with all the other phones they've been supplying?

I hear they have been losing their best talent(engineers). I don't know if it's because of the stock price drop with no end in sight or whatever. But maybe RIMM sees this uncertainty too and is trying to diversify? Even if it's just that then that alone justifies MRVL where it is today.

That's why I say move to BRCM because it's not 25% owned by one family. It's so diversified and extremely profitable that just the hint of a turn in Semi spending (book to bill) will jamm the stock back into the $30s. MRVL has no such potential short of them coming up with something unexpected.

They were strong today because of the WD upgrade.

Remember if you watch Fast Money about two weeks ago Najarian said someone bought 44k Jan 2009 SMH $26 calls for $1.60. That's what? $70 mill? That's a big bet on a big move in Semis between now and Jan.

If the cycle stuff is even close to being accurate then watch out!

RIMM tonight is killing the Nas futures. But the news from RIMM seems to me to be RIMM specific in terms of their expenses due to the 5 new phone rollouts. Why is it getting sold off $20 on that? Or should I say, why is AAPL and BRCM and QCOM all down 3% or so on this? They have nothing to do with RIMM spending on marketing more than everyone thought.

Seems to me this selling was just already setup and this was the excuse.

Remember, about BRCM - $200 mill free cash flow, $2bill in the bank and no debt. Hardly a stock that runs the risk of falling apart.

NO, Oct 22nd is the 40 week (not 20 as the chart shows) cycle low due date:

Hey Sun, I'm now heavy into BRCM having given up on MRVL. You might want to come over to my other board talking about the SPX an BRCM. (http://investorshub.advfn.com/boards/board.aspx?board_id=13193) The entire two or so years where we were all here talking about MRVL hoping for it to make the expected magical move, I kept watching BRCM rally big while MRVL would not do much. Why? Because BRCM is a very diversified and VERY profitable company. That's why it gets the 1st tier money when the SOX runs every couple of quarters.

Look at this chart of BRCM and you see the retracement falls right at about $25 which is the magic level where most of the volume during the last year has been. So, you'll see that for sure I think before year end and with the $SOX chart and BRCM chart on a WEEKLY looking like near perfect reversals with both showing monster hammers, I think the odds are great for a nice run beginning now. I do expect a small pullback probably to $20 on BRCM being that it just ran from $18.50 to $22.50 in 2 days. But just look at the Jan 2010 $10 calls at about $13.40. That's a basis of $23.40! That means you get a stock that could very well run to $25 at least and most likely higher within the next 2 months for only $1340 controlling $2200 worth of stock. A $10k investment could turn into at least $12,600 I presume, or a 25+% profit in less than 2 months.






But what's really nice is this MONTHLY chart of the $SPX -- WOW! Look at that hammer on the MONTHLY! You rarely get that!







So, it all looks very good for a nice reversal overall right here. There is a 40 week cycle low coming on Oct 22nd. But cycles don't always come in on time and with the unique things that have happened I would assume that that cycle might have been shifted early. Sep 19th, yesterday, was a short term cycle low. To put it into perspective, March 23rd was the 20 week cycle low and look what happened that week.

So, BRCM is a $30 stock. Why? Because, well, look at this chart---





You see, the problem with MRVL is that they still are a one trick pony. Storage is their core biz. It's strong and now finally they are free cash flow positive. But it's like SIGM in that any large customer walks and it's toast for their profit. BRCM is the place to be because it's so diversified and not owned by one large holder like the Sutardja's and MRVL. That means the big money investors don't worry about it like they do with MRVL. The Sutardja's get a whim up their rear and they have the power to do major damage to large investor's investment if they make a big mistake. BRCM is a bigger company that's run like a normal public company, not to mention they are going to probably do over a $1 bill in free cash flow next year putting the stock price today at $21.50 only 20X free cash flow which is unheard of for a 40% growth stock with nearly $2b in cash and no debt.

Look at the $SOX chart above. That's a weekly chart showing a massive weekly hammer. Nice!

Now BRCM needs to get to $22.50 as you can see in that middle chart. We're still in a downtrend until $22 is broken by evidence of that daily chart above. Notice the falling lower channel we broke. We get above that blue line and watch out. $25 right around the corner.

Now after a 100 point move in the Nasdaq today, you'd think we'd see a pullback. Look at the futures! WOW! Up 33 points in the SPX!

www.cme.com

NO, this is not the great depression 2008. There is so much misinformation from idiots on TV who have no idea what they are talking about. This is simply a combination of cycle analysis exaserbated by a drop in net valuation of earnings. Thus you get a drop in the value of the S&P to accurately reflect that new earnings valuation.

That said, understand that recessions are just that, a pullback in the overall growth of the country. Also understand that wealth is created when you buy, not when you sell and that means buying low and selling high. How do you buy low in bull markets? You don't. You buy in bear markets and this is when the rich get richer.

The downside objective in the S&P has always been the 50% retracement of the OCt 2002 low to the Oct 2007 high which magically is right where we traded yesterday - 1170ish. So, we might bounce around here for a day or two, but expect this to be a long term low if not 'the' low area you'll see possibly forever. Even if it falls a bit more, this should be it within 50 points.

The DOW doubles on average every 7 to 10 years and when it doesn't, it will eventually make up all the lost ground in very fast spurts like it did in the 1990s. So, you have that in front of you being that we didn't go anywhere in the last 10 years. The reason is simple, the county's population grows constantly which means more consumers which means more buyers which means higher earnings eventually. For that one reason the stock market always doubles earnings and thus prices.

Even if AIG went under, what would have happened is the market would have sold off in a quick move and then other companies would come in and save the day and themselves would benefit and it would all be over in a year.

As for BRCM, today, Sep 16th, want you want to see is a close today no higher than $21 but higher than $20.50. That would be the near perfect setup for an island bottom with a hammer. Just beautiful.

That could be the setup for a long term bottom.

Sep 20th is a major cycle low date with 1170 being the target. 1170 is roughly the 50% retracement level between the 2002 low and last Oct's high. So, expect a big bounce to start today. I see the futures hitting 1172 this morning and I expect the cash market to hit that area today. That should be a very good thing to clean this mess up because what we are seeing has been expected for some time.

The smart money has always expected both a retest of the July lows and this 50% retracement level to be hit eventually. So all the doom talk is just bogus. Now that we're there, expect the big money long term guys to start stepping up.

This should mark a major low in the market somewhere around here.

When you combine the Stock Traders Almanac daily projections along with normal high/low swings and fibonacci targets, you get a projection of what each day and week 'should' do.

Obviously news and clear technical breaks will change those somewhat from time to time like last week.

But this week calls for a general up week with today looking prety good along with Friday. The problem with this forcast is that Monday was a large up day that potentially could have thrown everything off.

The goal this week is for the SPX to hold 1260. If it closes on a weekly candle above that level, then the uptrend is intact and we should continue to rally out of this 5th wave. Otherwise, it's most likely we'll trade into 1170 to 1200 again for a intermediate low going into next month.

However, don't get too bearish because there is a monster setup taking place for a bigtime rally and I think it will be led by Semis

Well, last week's cycles were to say it simply, OFF. But I think it's simply because of the clear 4th wave rising wedge breakdown and subsequent hedge fund liquidation to raise capital.

However, with the gov taking over FME and FRE this weekend, next week's cycle to rise overall into Friday looks to be a slam dunk looking at the futures. WOW. Nas up 33 points along with the S&P up also 33 points as I write this Sunday night.

That means you're looking at a potential 300 point up day in the DOW tomorrow.

It makes sense because 5th waves are typically ugly and hard to make up perfectly. I think we hit the 'retest' area in the S&P which was anywhere between 1172 and 1220. We hit 1216 on Friday and that's just fine for an official retest of the July low.

The banks never fell hard last week into that decline as evidence by the SKF (ultra short XLF) never really getting over 120 in the midst of the S&P and DOW hitting near July lows when that fund was trading near 145. That was your signal that someone knew what was going on.

So, the banks now are probably not going to see any new lows and the means this last week fall could have been the lowest price in the market you see for some time.

Cycle wise, we are supposed to hit a high in the market the 1st week or two in Sep (now) and then fall into Oct.

Then you have the Pres cycle coming in for a new low in 2009 and then a big run into 2011.

The next major secular bull market that takes us over DOW 20,000 starts in 2014.

Assuming we don't get hit with a nuke.

But for next week, look for Friday to be a big up day.

Hey rob, sorry for the delay, been busy. But yes, the DOW typically represesnts 1/10th of the S&P. So, if the S&P runs 10 points, then you can expect the DOW to run about 100.

Oil is getting crushed due to the hurricane not being as bad as possibly expected. That bodes well for next week which has the cycle seeing a low on Tuesday for the S&P which is what you'd expect as a continuation of the program selling from Friday. But that should quickly be reversed throughout the week as a trade over 1300 in the S&P should be seen by week end.

It's up now.

If it breaks $14, then it could shoot to $12 which is where you want to back up the truck. I wouldn't touch it here as it looks like it wants to break down under $14. In the $12s could be a nice place for some new covered call positions and BRCM is even setting up for a nice entry in the $22s hopefully.

Actually, another way to play it is to buy the SDS now at about $64 and then sell the Sep $67 call options for $1.20+ for each 100 shares

If that chart above sets up correctly, then you could see the SDS run to $70+ going into the Oct cycle low.

Look for the swing high going into next week to hit us right around 10 AM PST. We might have already seen it. I'm shorting the QQQQs via the QID right here around $40.

Also, shorting the DOW via the DXD around $60.20 to $60.50.