In this issue:

    **** Signs of a possible Dow Jones Industrial Average Hindenberg Omen

    **** The market is nervous!

    **** Double your money in just three days...

 
Dear FSP Invest Reader,

Ominous Omens and Troubling Technical patterns

By Gary Booysen, editor of Stock Market Sleuth

I feel it’s my duty to let you know that Maureen Williams,an analyst at VunaniSecurites, has notified me of a possible Dow Jones Industrial Average Hindenberg Omen.

A Hindenberg Omen is when the number of fifty two week highs (271) and fifty two week lows (87) hit a specific ratio and warns of a serious imbalance in the market.

You see on the 13 December 2010 Maureen let me know that this ominous pattern was forming on the New York Stock Exchange.

 
We waited with bated breath of the confirmation and on the 13 January 2011 we got it. This time the terrifying technical pattern came in the form of 246 fifty two week highs and 108 fifty two week lows again on the New York Stock Exchange.

So what does this mean for investors?

Statistically speaking after a confirmed signal there is a:
* 77% probability of a 5% sell off…

* 41% chance of a panic sell off…

* 24% likelihood of a stock market crash of more than 15% within 120 days…

In the last 24 years there have only been 26 confirmed signals with only two yieldingless than a 5% decline.

And we’ve already seen a 2.9% sell off in the last few days!

That’s scary stuff when you think of the amount retirement annuities and regular investment funds have tied up in the equity market.

Of course there are other options for investors. You could use alternative financial instruments to short a falling market and make piles of cash instead.

Vunani Private Clients specialises in derivatives instruments that allow you to short the market and make geared returns. To open an account, or for more information, simply call our trading desk on 011 384 2923 or email gary.booysen@vunaniprivateclients.co.za.

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The market is nervous
Weekly Tip with Nic Best, Futures Analyst

With the Chinese growth story and European debt crisis currently making headlines, the market is nervous! The louder the “rumours “ get, the more nervous investors become and the fewer buyers we’re seeing on the market.  

China is trying to engineer a slow down to tame inflation and this has had a negative effect on commodities and commodity countries’ equities . The biggest threat to the continued equity rally is a possible debt restructuring in Europe. If investors have to take a debt haircut in Greece and Ireland, expect a major downturn.

 
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Remember, if you have any questions or suggestions please email us at  tradingtips@fsp.co.za

Until next week

Happy trading,

Trading Tips Team
TradingTips Bulletin

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