On Friday, SPX fell over 23 points, while the Dow declined over 210 points, and Nasdaq fell about 55 points. Oil rose $1.52 to close at $68.35 a barrel. Earnings generally only met expectations, after the market became overbought, and recent economic reports gave mixed signals. Moreover, SPX, the Dow, and Nasdaq have been creating bearish “megaphone” patterns (of higher highs and lower lows), which suggest the market will fall further.

Recent economic data indicate the housing market is slowing and production costs are rising. Moreover, the unemployment rate fell below 5%, which is typically inflationary (NAIRU, the Non-Accelerating Inflation Rate of Unemployment is estimated to be 5%). Also, capacity utilization is rising. Furthermore, a shrinking current account deficit may be inflationary (e.g. when exports rise and imports fall). Inflation has risen somewhat, although it remains benign. Nonetheless, there are indications of economic strain (e.g. through decreasing returns to scale and diminishing marginal productivity), which will lower profit growth and accelerate inflation. Ultimately, profit growth drives the stock market.

The first chart is an SPX daily chart. Major resistance levels are around 1,275, i.e. a previous high, which was recent support, and the 20-day MA, which is also the middle of the Bollinger Band. SPX closed slightly above the 50-day MA. However, it closed slightly below the uptrend line of the recent rally. Major support levels are around 1,246, i.e. a previous high, which was prior support (see circles), the lower line of the Bollinger Band, and the downtrend line of the megaphone pattern. If SPX fails to hold 1,246, or slightly below that level, the 200-day MA, currently at 1,217, and 1,200 are next major support levels. The megaphone pattern indicates 1,246 will not hold.

The second chart is a same period OIH chart. OIH rose about 25 points this year, on top of big gains last year, because of rising oil prices, strong earnings of oil stocks, and perhaps on anticipation of the OPEC meeting, although oil inventories have risen. A large risk premium has been built into OIH, in part, because of potential supply disruptions from Iran and Nigeria, which are major oil producers. Consequently, OIH has the potential to fall over 10 points short-term and over 20 points intermediate-term. Energy stocks represent about 15% of SPX. On Friday, OIH closed above 150 and created a bearish spinning top. Moreover, it closed slightly above the upper Bollinger Band. Major support levels are just above 136, i.e. previous high, and in the mid-120s (see circles).

The Federal Reserve has tightened the money supply over the past 18 months, and raised the Fed Funds Rate 25 basis points at each of the past 13 consecutive FOMC meetings. Monetary policy is now “data dependent,” rather than an automatic removal of accommodation. The market expects another 25 basis points hike January 31st and has priced-in roughly a 50% chance of another hike in March. Consequently, uncertainty about monetary policy may increase over the next month or two, which may be negative for the market. Also, each economic report will have a greater influence on the market and generate greater volatility. Next week is another heavy earnings reporting week, the next OPEC meeting is January 31st, and Bernanke replaces Greenspan after the FOMC meeting January 31st, which should contribute to volatility.

Charts available at PeakTrader.com Forum Index Market Overview section.

Arthur Albert Eckart is the founder and owner of PeakTrader. Arthur has worked for commercial banks, e.g. Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds from 1999-00. Arthur Eckart has a BA & MA in Economics from the University of Colorado. He has worked on options portfolio optimization since 1998.

Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time and over time. This methodology has resulted in excellent returns with low risk over the past four years.

http://www.PeakTrader.com

My First Million took me exactly 27 months to achieve. I remember the day I made the resolution with self respect. It was a brave choice and required some faith. But looking back, faith had little to do with it. You see, I knew some things that I didnt know before after reading a book. The book made so much sense to me and was clear…so clear infact that it passed on Vision to me.

I could literally SEE how it was going to happen. I could estimate what resources I currently had available and what resources I’d require to manufacture the results I needed to achieve my goal. It was due to the concepts in this book that when I applied them to my own circumstances, everything had little choice but to fall into place for me.

I don’t mean to say things fell into my lap, it’s just that with this new “understanding” luck or chance played no part from then on.

Not having the benefit of the knowledge, that I was to actually achieve my goal so quickly, I began very tentatively despite my Vision.

I started (officially) with just $100

Thats it. As much as I believed in what I was about to do, I couldn’t justify risking much more money. Believe me, I am a very conservative person and the very real issues of bills and keeping a safe dry roof over my family was much more important. Vision or not, I had the reality of my current life to contend with, so that initial seed capital account of $100 went a VERY long way.

The scope of this article is too short to give you the outline of the book I read, but one of the many things the Author Hayden Muller talked about that really lit up my mind to the potential of his method was “intrinsic value”

He opened me to the reality that everything (All investment objects) have an actual dollar value, an intrinsic value that can’t be denied at a specific point in time. That being the case, if you become aware of a prospective “investment objects intrinsic value” you can control your profit margins on those transactions.

For example, if you new that this “investment object” was worth without doubt $1000 however it was being sold for $700 you would then aquire vision and see profits where others can not. To put it another way, you will attempt to buy excess “intrinsic value” on a systematic basis. If somebody was selling legal tender $1 bills for 70 cents how many would you buy? It doesnt take a genius to figure out that would be a good deal right?

Well excess intrinsic value is everywhere. Its this particular concept that struck home with me and really was responsible for my inevitable interest in Haydens work and finally executing his method.

Of course thats not all there is to it. Its a small part of a holistic approach that I personally believe all “High Net Worth Individuals” utilize to grow their asset base.

I moved very quickly into real estate and that is what produced most of the results, but stubbornly starting with just $100 it took a good 6 months to get to the point where I had entry and exit capital for real estate deals. Its a shame I didn’t know about the book I review on the site, back then. But I use the method now so all is not lost. (If you want to know how to buy and sell property with no money at all and no credit at all, go to my sitelink below and find the article called “Part 2 what to invest in” on the site)

I can tell you if you really want it, you may just step up and take it. $1 million dollars is not a hec of a lot of money, but its a nice start.

The method has been coined as “Opportunity Investment” and it is possible for any one to use in any part of the world. Its like nothing I have ever seen before or since.

A Group of us have invested in an online resource for people wishing to discover more, I’ve left a link below if you are interested.

Martin Thomas is a professional investor and CEO of Opportunity Investor.com http://www.opportunity-investor.com
(Yes, Haydens book is available there)