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Mvh Pike!
In the reeds.
pike@piketrader.com
Besök gärna www.PikeTrader.com

Posted 1/2/2005
New Year 2005! The lessons and new direction learned from 2004.


I hope you all had happy holidays and are excited as I am about the New Year 2005. The year 2004 presented many challenges in trading the S&P500 for practically every trader I have spoken too both professional, intermediate and beginner. It was a year where the most visible and obvious change was the radical shrinking of the ranges in the S&P500 along with changes in the way the market started reacting to the High 5 indexes and indicators we have been using for many years.

The great part of 2004 was that it gave those of us who are committed and hard working researchers the opportunity to analyse new Tick Volume on the prices, the nuances in the numbers, and the reaction to the indicators and news. The first 6 months or so of the year was spent by me trying to adjust our methodology to the market changes yet keep the primary principles we had been using succesfully intact. That had reactions that showed periods of success and then there were periods where the adjustments were just falling apart in the face of the new market structure.

Finally coming into the last 3 months of the year I began to evolve my new Market Force Oscillator and its application to the one minute and 5 minute EMini S&P500 charts. Later in the year rolling into the end of November I was able to put on the final changes after extensive research and present the new, completed system on November 23rd Tuesday. The last 13 sessions show the excellent results of our new, entirely revamped approach with about +34 points gain.

In tracking the new approach we can see that on an average we will be looking to make about 2-3 trades a day, keep stops under 2.75 points in most cases, and ideally avoid any kind of drawdown of significance. As we continue in this new direction I am confident that we will have fully harmonized our Headline Call and Recommended trading setups with our exact intraday, live trades.

Certainly this is unique and revolutionary in the industry having a newsletter that tells you before the market opens what direction it will go in, making recommended setups to catch those moves based on the underlying Market Force and opening, along with a Live Service that trades that exact approach and is highly succesful continuously. This is my entire goal and mission which is now coming to light in a way that should ideally make our trading more profitable, peaceful and comfortable.

WHATS UP FOR 2005?

As many of you know I had continuously recommended getting long starting right from the exact beginning week of the Iraq War. I had stated on many, many occasions from that point and on into this year that I was expecting a RALLY into the END OF THE 4RTH QUARTER OF 2004.

Amazingly the market literally rallied right up to the last few hours of 2004's final trading day and then sold off from the highs moving into the close. I find it facinating how acccurate this call turned out to be especially in the face of not only many doom and gloomer financial advisories but also in the face of the actual world situation.

For 2005 the rally is expected to contiune for some months most likely but along the way start to appear to lose steam.

First, the VIX dropped to an 8 year low which shows investors are not very fearful of the current financial picture. This is a cautionary sign.

The Nasdaq composite index is has consistently kept running into resistance at 2200 and most likely will continue to do so. Here we are sitting at Friday's Close at 2175 so we are bumping up against this again.

The polls of Investors Intelligence newsletter shows newsletter writers at one of the highest bullish percentages since early 2001 which is another cautionary sign we must watch.

So although there is still money on the sidelines in the money market funds a good portion of that has shifted into equities and there is a certain point where we often see "everyone" throw in the towel on the sidelines, jump in with toasting champage glasses in hand and ....create a top in the markets.

Rest assured we will be using our daily Market Force indicators to give you as accurate a picture as possible in determining the short term underlying and longer term aspects of the market moves in the coming months.

One interesting factor however I have read about is that looking back to 1885 there has NEVER BEEN A SINGLE LOSING YEAR ENDING WITH A "5" STARTING WITH 1885. Not only that the average gain in the market for those years has been near 27% (courtesty of Schaefer Research). So here is a more unsual factor that inspite of the above mentioned negatives could deliver another decent year in the markets.

IF this does occur it will be a similar phenomena to my call for a bullish 2004 based in part of the fact that we had a presidential election year which are traditionally bullish inspite of the many negative factors. In line with that similar idea usually the first year out for the new (or re-elected) President is a difficult one in the markets.

Regardless of all these different factors we rely strictly on our MARKET FORCE INDICATORS which have served me well for over 7 years now. My committement to you is to continue to deliver daily, Highly Accurate, Historical Market Directional Calls for both the intraday and short term underlying direction. I will also give you my longer term forecast when I have a clear enough picture of what that will be as I did at the start of the Iraq War. I hope to have a clearer picture in the weeks and months ahead but for the majority of us reading these daily briefings on the Morning Call the NEXT FEW HOURS DIRECTION will be quite fine for us.

Look forward to working with you this year and racking up some nice S&P500 points! All the best, Mohan

Mvh Pike!
In the reeds.
pike@piketrader.com
Besök gärna www.PikeTrader.com