snippets from my weekly report, page-7

Hi By50,

I'm surprised by your comments. I wonder if you actually read what I said.

I might add this to what I've said. This is only the second time since this bear market began that I've suggested strongly that a rally might be on the cards. The first time was back in March 08 when we had a rally into June.

I've stated clearly why I think we might (not will) rally. Here are the main points again:

1. The Weekly MACD is positive.
2. The Daily MACD is positive.
3. A break above horizontal and vertical resistance is imminent.
4. There has been a movement out of defensive stocks into more high risk stocks.
5. The Shanghai Stock Exchange Composite Index is rallying in bullish mode and has done so since late October 08.
6. The ratio charts for XMJ/XAO and XLF/XAO have turned positve.
7. There has been a negative movement in the ratio charts of defensive sectors compared to the XAO; i.e., there is movement of funds out of defensive sectors into more risky areas.
8. A sustainable rally is only possible if investors are willing to take on risk.

This set of concurrent events has not happened before in this bear market.

So long as all these factors continue to pertain and if:

1. The Daily Slow Stochastic drops below the oversold level and then turns up, and,
2. A decisive break above horizontal and vertical resistance occurs

I believe a sustainable, tradable rally will be in place which may last until May/June 09.

There are other factors I could add. But I think that what I have stated above is sufficient to make the case for a bullish move.

Of course, I could be wrong. But I think the probabilities are strong. And in this game, that gives you an edge in the long run.

You may not, of course, see it my way. That is your prerogative; but, please, don't ask "what it is that makes this low any different to any other", when it has been clearly spelt out how it is different this time.

Cheers
Red