2012 Market Review

Speed Retirement SystemJanuary 4, 2012

The fibonacci sequenceis derived by adding1 + 2 and adding the

result to the last number.ie, 1+2=3, 3+2= 5, 5+3 =8, etc

The end result it that you geta numerical relationship between

the numerical sequence thatsome traders feel have significance

in the marketplace.

The main fib numbers are23.6%, 38.2%,

61.8% and 100%There are two other levels

at 76.4 & 78.6%

The expectation is that pricewill hold support (or resistance)

at one of these percentages.

I’m not going to go intoa lot of detail on the fibonacci

sequence because youcan google it and find

an incredible amount ofinformation on the subject.

The other way the fib numbersare used are to predict price

extensions. The commonfib extensions are …

1, 125%, 161.8% & 261.8%

Ok, so how do you use this?

One way to use the fib #’sare to see where you expect

the market to stop afteran impulse move.

(either up or down)

For example, after a stockmoves up and begins to

correct, you wouldexpect the downmove

correction to stop at either23.6%, 38.2%, 61.8% or 100%

of the last upmove.

The depth of the correctionwill give you a clue as to

to the strength ofthe last upmove.

For example, a correctionthat stops at under 50%

is considered strong.

Likewise, a stock that movesup (or down) less than

100% of that last impulse moveis thought to be

weakening.

Remember, this worksfor both upmoves,

as well as downmoves.

I don’t want you to thinkthat this is the holy grail,but it can give you clues

at to what you expectthe price action to do.

Let’s look at somereal world examples.

For those of you whowere members when

Speed Retirementstarted back in April of 2010,

you will rememberthat I was looking for amarket top last April.

This is why …

Let’s look at arecent example …

This is a 5 year monthly chart of the S & P 500 Index …

I like to use the fib levelsin conjunction with

price bars. As you cansee, the 61.8% level

is VERY powerful!

Let’s look at the Top of theMarket on May 2, 2011

Let’s look at the MonthlyPrice formation on the

S & P 500

S & P 500Price & Time

Projection

We know that based onthe Double inside day

formation on the monthlycharts for the S & P 500, we

expect a big move afterthe high or the low is

taken out.

I’ve shown these chartsbefore, but these are

the two possible scenariosthat can happen.

Scenario 1:

Scenario 2:

What conditions wouldconfirm either pattern?Pattern 1: Bear Market-

a) Low at 1010 taken outb) the 21 ema to cross

under the 50 ema (at least)Pattern 2: Bull Market-

a) A few closes above thehigh of the inside day, andb) preferable a close above

the October high

I know, but even duringthe big bear market of

2007 to 2009, the 21 emadid not cross under the50 ema until it cost you

a lot of money!

Ok, so let’s shorten upthe ema’s on themonthly charts …

Let’s project where themarket could go assuming

the “C” point isconfirmed at the

October Low of 1074.

Projection TopRange 1: 553+1074 = 1627 Range Average = 1530Range 2: 360 + 1074 = 1434

100% of October Price BarAdded to the High =1292 + 218 =1510

Price wants to retestold highs and they

become naturalprice targets.Old highs are

1440 and 1576 (historical high)

Projected Time to TopRange 1 took 14 monthsRange 2 took 11 months

Average of the two = 12.5 months

Therefore, the projected top,assuming a bottom in

October 2011, is anywherefrom August 2012 to November 2012

Upside resistance is at 1312.After that, the next major

resistance line is 1375.

1437.50 is a key line onthe upside. I don’t expectwe take that out the first

time up.Support lines are at 1250

and then at 1218.

This is from the October 5, 2010

State of the MarketPresentation.

Let’s look at sentiment& % of Stocks above

their 200 Day moving average.

I don’t know if wewill get a generational

correction, like theone that ended on

March 9, 2009,but we will have

opportunity!

Buying at the generationalbottom in March 2009,

afforded untold opportunity.Look at VCI, PCLN, GMCR, F,

CAT, ARCC, LULU, CMG

Thanks for Watching!

Speed Retirement SystemJanuary 4, 2012