TimingCrystal

[teabull]

It was a very interesting week on Wall Street and, in fact, on equity markets around the globe. Last Friday's tentative rally soon gave way to tenacious selling on Tuesday and Wednesday of this week and culminated with a thud lower at around mid-day on Thursday past. I believe that there is a very good chance that the mid-term low for this correction was put in place this past Thursday at around the S&P 500 Index 1370 pt level. Moreover, I believe the stage is being set to engender a significant stock market rally over the next few months. While this is conjecture at this point, there is some quite overwhelming historical statistical evidence that supports this viewpoint. For those of you who are unaware, the Board of Governors at the Federal Reserve Board voted unanimously to lower the discount rate charged by the Federal Reserve Bank to the banking system by 0.50% this Friday morning. My research into such happenstances in the past found the following encouraging news. For the period January 24, 1958 to February 22, 1993 there were 16 occasions that the discount rate was dropped by 0.50% or more. Over successive 12 month periods of such an occurrence, the S&P 500 Index gained on average 21.80%. This, against the long-term average yearly gain in the S&P 500 of approximately 10.00%. I also believe, sadly, that small investors displayed extremes in fear and panic this Thursday. This was evidenced by the extremely heavy volume selling of the Nasdaq 100 Index, when on Thursday the Indexes tracking stock, the QQQQ's, were down by close to $4.00 or 10%. So where does the market go from here? Typically, after such savage declines as the markets have experienced over the past couple of weeks, an event occurs in one to two weeks hence that causes another round of profit taking and heavy selling. It is in this process that the prior low is tested to ensure there continues to be sound reason for strong price support at those levels. If completed successfully, stocks are, by and large, firmly in control of strong hands, with the speculative juices and overleveraged investors having been fully wrung out of the system from the prior frothy rally. While there is no guarantee the market will behave in this precise manner going forward, their is at least the possibility that such an occurrence will unfold according to plan.

We wish you all continued good luck with your investments in the future.

Sincerely,

Anthony Waller
President
Teabull Asset Timer Ltd
http://www.timingcrystal.com

Please note: The views of Anthony Waller and Teabull Asset Timer Ltd are not a recommendation or a solicitation that any particular investor should purchase or sell any particular security in any amount, or at all. We always recommend that investors seek investment advice from their licensed investment Advisor or Broker before making any financial decisions.