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         Daily Blog - Tiger Software

                                   July 29, 2007

              1. Using Major Peerless Sell Signals.

              2. ETFs That Short The Market

              3. Can The Rest of The World's Markets
             Keep Rising  if the US Markets Decline?   

              4. An Eerie Parallel to 1973-1974                             

William Schmidt,     - Tiger Software's Creator
      (C) 2007 William Schmidt, Ph. D.  - All Rights Reserved. 

      No reproductions of this blog or quoting from it
      without explicit written consent by its author is permitted.

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      to william_schmidt@hotmail.com

   1. Major Peerless Sell Signals 

           Peerless is a software program I wrote back in 1981.  I used to travel around the
           Southwest with an Apple II-plus, putting on seminars in brokers' office and selling
           a book and software for $250.   Twenty six years later, the very same major signals
           that I had discovered then still work.  On July 17th this year, just eight trading days
           ago, Peerless gave an automatic major Sell "S9" and Sell "S12".  Compare the
           recent major Sell signals with what occurred in January 1973.  Exactly the same
           algorithms called the top in January 1973, not long before oil prices shot through
           the roof because of the oil embargo, a year before Nixon was impeached and a year
           before Congress refused to keep funding the US war in Viet Nam, and 18 months
           the DJI fell from its high of 1050 to 580, a decline of more than 40%.  There are some
           technical defferences, but the similarities are clear-cut and the historical parallels

           This is our "bread and butter", so I can't tell you what it is based on, until you buy
           our program, but compare the top in January 1973, shown first, with the apparent
           top eight trading days ago, shown second.  Buy our software and we'll show you
           how to call these tops better than you ever imagined possible.
                                                                      January 1973 Top
wpe2.jpg (44766 bytes)
wpe3.jpg (11914 bytes)


                                                                                                                                July 2007 Top?
wpe4.jpg (44604 bytes)
wpe5.jpg (11559 bytes)

                      What Should You Do When You Get A Major Sell?

                      The first thing to do is to use the Peerless Help Routine and see how accurate
           and powerful the particular signal is.  Doing this, we see that there have been 194 days
           when an "S9" signal occurred beteeen 1965 and 2007.  The average DJI drop at the time of
           the next major Peerless Buy is 5.3%.  That might not seem like a lot, but it is impressive
           when you realize these are Sell signals and the DJI rose from 800 to 13200 in this period. 
           71.8% of the them brought declines at the time of the next major Peerless Buy signal.
           There was a simultaneous "S12" major Sell at the 14000 top recently.  Looking up the
           S12's track record, we see there have been 58 of them up to mid 2006.  These averaged
           a drop of 6.1% at the time of the next major Peerless Buy.  79.7% of them were profitable. 

           You could also study these results and see how "S9" and "S12" signals do in Julys and we
           can also take the first occurrence if there is a cluster of days with "S9" signals.  When we do that
           we see only 2 earlier July cases where there was a simultaneous "S9" and S12" as we just saw.
           In both cases, these S9-S12 Sell signals took place as the DJI made a new all-time high
           and fell 15%

S12       7/16/1970 - This was at the end of the 1969-1970 bear market.  It does not really
                       match the current situation, where we have had an on-going bull market. The
                       DJI fell in this case 1.9%, at which time Peerless gave a major Buy.

          S12        7/17/1978 - The DJI disregarded this Sell signal and rose 5.7% before Peerless
                       gave a reversing Buy Signalfell in this case 1.9%, at which time Peerless gave a major Buy.

          S9        7/12/1982 - This was at the end of the 1981-1982 bear market.  So it does
                       not really apply.  The DJI fell 5% from 825 to 780,  But on 8/17/2007 Peerless
                       gave a major Buy and the 1982-1983 bull market started.

         S9/S12  7/13/1990 - This was at an all-time high.  There also was a "Sell S12" here. 
                       The DJI fell immediately and sharply, reaching a mini-bear market bottom in
                       October with a major Peerless Buy signal. 
At that point the DJI had falled
.  This was at the time Iraq invaded Kuwait.                 .  
        S9/S12   7/8/1998 - This was at an all-time high.  There also was a "Sell S12" here. 
                       The DJI fell immediately and sharply, reaching a mini-bear market bottom in
                       October with a major Peerless Buy signal. 
The DJI had by thrn falled 15.2%.   

S12        7/6/2006 - This signal was over-ridden by a previous NASDAQ buy that is so
                       powerful that it cancels Peerless Sells for 3 months. The DJI in this case did
                       fall to the lower band. This signal also occurred on a rebound after a sell-off,
                       and so does not really apply.

                        What does it take to reverse a Peerless Major Sell.  If the DJI bounced off
           the support at 13200 tomorrow, will it be a good place to buy?

                       Our studies show that the lower band is reached about 80% of the time after
           either an S9 or S12.   When they both occur simultaneously, the DJI has always reached
           the lower band.  But the odds heavily favor a break-down.

                       So will there be a significant bounce from the lower band?  Usually that is
           where professional buyers do come in.  But how tightly will they hold if prices
           start to weaken again.   The key question the markets will face next week is
           whether the well-tested support seen at 13,200 on the DJI will hold.   You might
           want to compare the support at 13,200 with the support that held in March at
           12,000.   We pay attention to key moving averages.  A 200-day moving average
           is shown in the chart below.   We monitor percentage retracements, too.   A 10%
           correction would bring the DJI back to 12,600.  That level is important because it
           also coincides with the 200-day moving average.

           wpe1.jpg (35195 bytes)

                     Until Peerless gives a major Buy signal, we have to advise great caution.  Traders
           can watch the market intra-day and play a support level like we see at 13,200.  But investors
           should wait for Peerless to give a Buy signal.

                       Our nightly Hotline - $298/year - discusses these and many other nuances,
           such as foreign markets, the way the US markets behave in the second half of years
           that end in "7",   what is portended by the history of combined "S9+S12"  signals
          at all-time highs portend and what to watch for from Crude Oil, foreign currencies
          and metals, as well as US housing, REIT, real estate and bank stocks.  

              2. Using ETFs To Short The Market       

                       You don't have to go short the market to make money ina declining market.  And
          you can use the vehicles decribed below to hedge and protect profitable long positions
          you wish to hold, perhaps for tax reasons.   Four of the newer ProShares ETFs allow investors
          to get short exposure to a stock index without having to set up margin accounts or
          worry about  margin calls:    Some of these vehicles are:

                                   Short QQQ ProShares (PSQ)
      Ultra-Short QQQ  (QID)
                                   Short S&P500 ProShares (SH)      Ultra-Short S&P500 (SDS)
                                   Short Dow30 ProShares (DOG )    Ultra-Short Dow (DXD)

                                       DXD, DIA, SDS, SPY, QID, QQQQ 1-yr chart:

                  wpe2.jpg (41271 bytes)
http://etf.seekingalpha.com/article/39285   )

                                                        Watch those Interest Rate Charts:

                           wpe3.jpg (27900 bytes)


          3. Will Foreign Markets Escape The Down-Draft of the Peerless S9/S12?
                         They did not after the May 5th, 2006 S9.

                                               England's FTSE crashed 550 points, or 9 percent:     
         wpe4.jpg (21713 bytes)

                                          Japan's Nikkei, down 1,900 points, or 10.8 percent:
                            wpe5.jpg (22277 bytes)

                                              Emerging markets experienced the most dramatic slide.
                       India's Sensex Index, suffered a crash, dropping 2,500 points, or 20 percent after
                      the Peerless S9 of May 5, 2006..
                                 wpe6.jpg (19966 bytes)                            
                                         Brazil's Bovespa, down 6,000 points, or 14 percent: 
                                   wpe7.jpg (20756 bytes)
                                        The Korean Seoul Composite, fell 140 points, or 9.5 percent:

                                   wpe8.jpg (23239 bytes)

                                          The Hong Kong Hang Seng Index, down 1,550 points, or 8.9 percent:

                                    wpe9.jpg (20537 bytes)

                                       Singapore's Straits Times Index, down 250 points, or 9.4 percent:
wpeA.jpg (20208 bytes)

                                                  Taiwan's Weighted Index, fell  700 points, or 9.3 percent:

                                          wpeB.jpg (22115 bytes)


               4. An Eerie Paralel:               
                                                         Something to think about.
               Barry Ritholz, of The Big Picture Blog, created a post comparing the present with 1973-74 cycle,
               using a chart to show that today's Dow is following the 1970's Dow's pattern with an eerie correlation.
               If the comparison holds true, 2007 is similar to 1973, a year that marked the start of an 18-23 month
               bear market that finally ended with a 40 percent loss. Here is his chart:
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