Watch out when DJIA hits 7,000 - 7,500 . bottom buy opportunity

This week could be a major turning point for equity and commodity markets. The US DJIA has likely completed the wave “d” of the triangle formation and only needs one more leg up to complete wave “e”. This should then be followed by one more major down leg targeting the DJIA at 7,000-7,500pt, likely a major bottom. The Dollar Index (DXY Index) which has been trading sideways for the past three weeks in a triangle consolidation finally broke out last night, currently trading at 87pt this morning. Dollar Index should surpass the 90 levels soon. This could mean trouble for global equity markets as there has been a strong inverse relationship of the US$ and global equity markets since Mar this year. As such, it is not surprising crude oil below US$60/barrel last night, currently at US$58/barrel. It is likely that crude oil could fall towards the US$50/barrel levels before a major bottom sets in. We will provide more details on global equity and commodity markets in our next Alpha Edge end of this week.

Panic and opportunity

Nearly everywhere you look, another massive corporation is announcing staggering losses and begging Washington for billions to avoid bankruptcy.

CASE STUDY #1 — General Motors: $25 billion wasn’t enough — needs $50 billion more to survive! GM’s sales are down 20% in a year. Its share price is down nearly 90% — from $31.14 a year ago to $3.36 at yesterday’s close.

The last time GM stock was this low, Harry Truman was in the White House, and Elvis Presley was in grammar school. And now, analysts are warning that America’s largest automaker may soon be worth zero.

Investors have every reason to fear for GM’s survival: Last Friday, GM posted a $2.5 billion net loss for July, August and September, bringing its 2008 losses to $21.3 billion.

Worse: Yesterday, the company revealed that despite the $25 billion in Washington aid already on the way, it is now burning through its cash reserves at the staggering rate of $2.3 billion per month.

The company’s top executives now freely admit that without a bailout, GM will likely go broke in the first half of next year.

Alarmed that an estimated 1.4 million GM workers and suppliers could suddenly find themselves out of work, House Speaker Pelosi huddled with car company executives to arrange another, additional bailout of up to $50 billion. And during his visit to the White House yesterday, President-Elect Obama urged President Bush to sign the bill when it passes Congress.

CASE STUDY #2 — American International Group (AIG): $150 billion refinancing announced yesterday!

First, the Fed gave AIG an $85 billion line of credit in a failed attempt to save America’s largest insurer.

When that failed to work, the Fed added $38 billion more through its borrowing facility.

And when the company continued racing towards failure, the Fed agreed to buy more billions of AIG’s toxic commercial paper.

Now — just yesterday — after announcing it still lost a whopping $25 billion in July, August and September, the government revealed that it refinanced AIG’s earlier loans with better terms and gave them still MORE money, for a new, total rescue package of $150 billion!

That’s just ONE single company, and already it has gotten as much money as the entire U.S. population got from the economic stimulus package of 2008.

CASE STUDY #3 — Fannie Mae: Losing money so fast, it could need as much as another $100 billion or shut down completely!

Despite the $100 billion already spent to bail out Fannie, the company has revealed that it lost a staggering $29 billion in the third quarter — an announcement that means America’s largest mortgage lender will probably need untold billions more to avoid a total shut-down.

Ten Billion Here ... A Hundred Billion There ...
Before You Know It, You’re Talking REAL Money!

Anyone who thinks that these three companies are alone — and there won’t be hundreds more lined up behind them to demand their share of the greatest bail-out bonanza in history — is dreaming.

Just yesterday, we heard more calls in Congress for a second huge stimulus package in an attempt to get shell-shocked consumers to begin spending again.

And anyone who believes the government can magically create all of this wealth out of thin air is greatly mistaken. They will have to BORROW the money. Indeed, last week — even BEFORE this latest news hit the wires — the U.S. Treasury announced that it will borrow a total of $550 billion — more than the entire deficit for ALL of fiscal 2008 — just in the last quarter.

But even that record-smashing amount is only the tip of the iceberg: Goldman Sachs analysts announced that, to finance an $850 billion federal deficit ... to buy $500 billion in bad assets ... and to roll over $561 billion in maturing Treasury securities, Washington will have to borrow TWO TRILLION DOLLARS!

Worse: That $2 trillion will almost surely STILL not be enough: Just to cover the bailout loans, investments and commitments the government has announced SO FAR, the total bill comes to a whopping $2.7 trillion. (See table at right).

As the U.S. economy continues to crater ... as federal tax revenues continue to plunge ... and as Washington continues to run amuck with new bailouts ... Washington could easily add another $1 trillion or even more to this borrowing spree!

A NEW Orgy of U.S. Government
Borrowing Is Directly Ahead!

This reality — the fact that the greatest tidal wave of Treasury bonds in history is about to slam into the markets — means two things:

1. Plunging bond prices: Like any other investment, when the supply of bonds rises, bond prices fall. Given the mind-boggling size of this borrowing binge, we’re now staring down the barrel of one of the most devastating bond market crashes ever.

2. Huge profit potential for contrarian investors like us: Investments that soar when bond prices plunge are about to give you the opportunity to multiply your money throughout the rest of 2008 ... throughout 2009 ... and beyond!

In fact, this great government borrowing binge gives us not just one, but TWO opportunities to go for windfall crisis profits in the weeks and months ahead ...

WINDFALL PROFIT OPPORTUNITY #1:
These New, Little-known Investments
Can Hand You Triple-Your-Money Gains
When Bond Prices Plunge ...

Years ago, unless you were a registered government bond dealer, it was impossible to profit from a bond market decline. You were not allowed to sell Treasury bonds short to profit from their decline. And later, even with the advent of Treasury-bond futures, the risk was too great.

Not any more! For the first time in history, you now can buy a simple, exchange-traded fund (ETF) that was specifically created to PROFIT from falling bond prices.

The basic principal is very simple: The more the government has to borrow, the more bond prices are likely to decline ... and the more bond prices decline, the more money you stand to make!

PLUS, for the first time in history, there is ALSO an ETF now available that lets you DOUBLE your profits as bonds crater: With each $1 decline in the bond price index, you make $2!

Best of all, you can grab that huge profit potential without buying futures or options, without selling short, and with ...

Simple, easy-to-trade EXCHANGE TRADED FUNDS: No exotic investments, no margin, no foreign accounts — just buy or sell ETFs in your regular broker account. If you can buy 100 shares of AT&T, you can just as easily buy 100 shares in these special ETFs, online or offline.

Low cost of entry: Ideal for investors with as little as $5,000 to invest and also for investors with $100,000 or more ...

ETFs that hand you TWO dollars for every one dollar that stock or bond indexes fall: When they drop 15%, you could make 30% ... when they fall 30%, you could grab 60% ... and when they plunge 50%, you could double your money!

Five layers of protection to shield you from excess risk: Designed to help you minimize risk and maximize your returns, making you steadily richer every time stocks plunge ...

All for just $2.46 per day: Recos designed to multiply your money every month for less than the cost of your morning coffee!

If, for example, bonds fall as much as they did in the bond market crisis of 1980, you could see gains of as much as 200% in my favorite inverse bond ETF.

Given the sheer size of this precedent-shattering borrowing spree, I personally think you’ll do much better. But even if bonds only fall half as much as they did in 1980, you could double your money in a relatively short period of time.

WINDFALL PROFIT OPPORTUNITY #2:
These Inverse ETFs Can Hand You
Many MORE Doubles As Crashing Bonds
Take Stocks to New Lows!

The fact is, if these inverse ETFs on bond prices were the only way to go for huge gains as the government’s borrowing binge unfolds, your profit potential would be enormous.

But the wealth you can amass directly from sinking bond prices is only the beginning.

Your second windfall profit opportunity is with ETFs designed to profit from falling stock prices — both in the U.S. and abroad. With the U.S. government borrowing massive amounts and pushing interest rates higher ...

Millions more consumers will find it increasingly impossible to make payments on mortgages, credit cards, auto loans and revolving charges, pushing more lenders to the brink of collapse ...

Companies that manufacture, transport and sell high-ticket items like automobiles and trucks ... flat panel TVs, computers and other electronics ... stoves, refrigerators and other home improvement products ... will suffer greater losses than ever — and many will go belly up ...

The stocks of those companies will crater as earnings turn into massive losses, driving the Dow, S&P and Nasdaq into the most severe tailspin we’ve seen so far ...

And the inverse ETFs on those indexes and sectors will skyrocket, spinning off gains of 46.1% ... 89.9% ... 106.7% — in some cases in as little as a few days — or even in a single trading session!

The simple truth is, with just one trade this summer, these double inverse ETFs could have helped you turn $5,000 into as much as $10,335 ...

Or $50,000 into $103,350 ...

Or $100,000 into a whopping $206,700 ...

All in just a few weeks!

On big down days in the market, you could make those kinds of gains in just a few HOURS! But I don’t stop with just helping you go for huge gains on single days: My Crisis Opportunity ETF Trader is designed to help you COMPOUND your gains — month after month — as long as this crisis lasts!

And in this super-volatile environment, only inverse ETFs can make those kinds of gains possible — all in a regular brokerage account, even an IRA!

Even last summer — between May 15 and July 15 — when stocks were far less volatile than they are now, inverse ETFs could have handed you gains of 30.9% ... 46.1% ... up to 106.7%.

Thanks to these inverse ETFs, you could have banked ...

• A healthy 30.9% gain between June 5 and July 15 as the technology sector declined ...
• An impressive 37.2% gain between June 5 and July 11 as the semiconductor sector fell ...
• A tidy 37.7% gain between May 15 and July 15 as the consumer services sector dropped ...
• A tasty 46.1% gain between June 5 and July 15 as the real estate sector plunged, and ...
• A whopping 106.7% gain — more than a DOUBLE — between May 15 and July 15 as the financial sector cratered.

And more recently — as the markets became more volatile in September and October, these inverse ETFs could have handed you ...

• A 49.6% gain in just 14 days as the semiconductor sector declined between October 1 and October 15 ...
• A 61.0% gain in just 15 days as the technology sector fell between September 25 and October 10 ...
• An 89.13% gain in just 19 days as the real estate sector dropped between September 26 and October 15 ...
• An 89.6% gain in just 19 days as the consumer services sector plunged between September 26 and October 15, and ...
• An 89.9% gain in just eight days as the financial sector cratered between October 1 and October 9!

Unfortunately, you can’t go back in time to grab those gains and neither can I. But it’s crucial to understand two things: First, in each case, your money would only have been at risk for a brief time, and second, over time, these kinds of short-term gains could easily multiply your money three times ... four times ... even five times over!

And now, with soaring interest rates, global stock markets are setting themselves up to get crushed again, and my favorite inverse ETFs on foreign stock markets could give you even greater profits in a shorter period of time!

Inverse ETFs:
The Best of All Possible Worlds

I love using exchange traded funds at a time like this. Of course, losses are always possible with any investment vehicle. But like mutual funds, ETFs spread your risk over a basket of securities. And as with mutual funds, you can trade them in your regular brokerage account. You can even put them in your IRA if you wish.

But that’s where the similarities end. UNlike mutual funds ...

• ETFs cost less to own. They never nick you for loads or 12-b1 (marketing) fees.
• You always know what your ETF owns. You can check online, anytime, 24/7.
• ETFs are priced continuously through the trading day — so you always know precisely what your shares are worth ... and you can buy or sell your ETFs instantly ... at any time of the day.
• Plus, INVERSE ETFs let you profit when a particular index or stock sector goes down. And best of all, double-inverse ETFs let you earn two dollars for every one dollar the index falls!

Crisis Opportunity ETF Trader’s mission:
To protect your capital and profits
like a junkyard dog.

If history proves anything, it’s that the ONLY way to build wealth consistently over the long haul is to avoid excessive risk like the plague. Doing everything I can to limit any losses is the only way to compound your profits over time and to turn a molehill of money into a Mount Everest of money.

That’s why Crisis Opportunity ETF Trader aims to protect your money and your profits in five, crucial ways:

1. No Margin: I never, NEVER, recommend using margin accounts or borrowed money. So you’re never exposed to the high risk of shorting or speculating in any leveraged futures or options.

2. You’ll Never Have All Your Eggs in One Basket: Because I use exchange traded funds, your investment is always spread out over a basket of stocks or bonds in each fund. Plus, my strategy is to own more than one ETF at all times to further diversify your portfolio.

3. You’ll Never Get Locked in to a Buy-and-Hold Strategy: Crisis Opportunity ETF Trader is always flexible and nimble — ready to get you into a position or to take your money off the table quickly. That’s a critical risk-protection feature in today’s volatile market.

4. I Use Every Possible Tool to Keep You Where The Most Profitable Action Is: I use every cutting-edge fundamental and technical tool available to focus your investment on the sectors that I believe are most likely to suffer the greatest declines — and to get you to the sidelines when the time is right.

5. I Designed Crisis Opportunity ETF Trader to Cut Any Losses Short while Letting Your Profits RUN: Because your money is only exposed for short bursts of time, there’s little risk that you’ll be in a losing investment for more than a few days.

Plus, I Designed Crisis Opportunity ETF Trader
To Give You SIX MORE Huge Advantages ...

I named this service “Crisis Opportunity ETF Trader” because I believe that inside every crisis, there’s an opportunity. And I also believe that, since this is the greatest economic crisis since the 1930s, we now have the opportunity to go for the greatest profits we’ve seen in nearly eight decades.

And even beyond the remarkable profit potential it gives you — the very real potential to multiply your money many times over — I’ve designed Crisis Opportunity ETF Trader to give you six more strategic advantages:

1. You can start with limited capital: Because most of these ETFs go for as little as $10 or $20 per share, you don’t need to already be rich to go for gains that could make you rich.

That means it’s ideal for investors with as little as $5,000 to invest and also for investors with $100,000 or more!

2. There’s nothing to learn: Just follow the plain-English trading signals two to three times a month.

3. No new accounts to open: You just follow my trading instructions in your regular brokerage account!

4. It’s the soul of convenience: Just check your e-mail each weekday for instructions. When you get a signal, just make the trade.

5. It’s easy to follow: In each trading alert, I tell you what to buy ... when to buy it ... what you should pay ... and I even give you my profit target for each trade.

And I do the same when it’s time to sell. You can execute each trade online or simply by reading the trading instructions to your broker.

6. You'll be delighted with the profits you earn, or it's FREE: No one can guarantee profits, but you must be delighted with the money Crisis Opportunity ETF Trader makes you, or cancel for a full refund within the first 60 days. In addition, you can cancel at any time for a pro-rated refund on the balance of your membershi

Panic in US

NEW PANIC IN WASHINGTON!
Hundreds of Billions in NEW Bailouts and Handouts Set to Slam Bonds and Stocks!

GM needs $50 billion more ... Fannie and Freddie could need $100 billion more ... AIG gets $150 billion refinancing ... PLUS Congress has a NEW $100-billion-plus stimulus package on the way!

Q: Where will it all end?
A: In the greatest orgy of government borrowing in recorded history!

AUD is weak

By Candice Zachariahs
Nov. 7 (Bloomberg) -- Investors should sell Australia's
currency against the U.S. dollar because it may lose 29 percent
as it slumps toward a record amid a global recession, Morgan
Stanley said.
The Australian dollar, which dropped 27 percent in the past
three months, may decline toward its April 2001 low of 47.75 U.S.
cents as investors dump the nation's higher-yielding assets and
retreat to the safety of the greenback, according to Ned
Rumpeltin, a London-based currency strategist at Morgan Stanley.
``The most immediate concerns about the financial system may
have eased, but worries about global growth prospects are now
coming to the fore,'' Rumpeltin wrote in a research note
yesterday. ``There is considerable scope for further declines.''
Australia's currency dropped the most in a week, falling 2.5
percent to 66.20 U.S. cents as of 12:07 p.m. in Sydney from 67.86
cents late in Asia yesterday. It reached an all-time high of
98.49 cents on July 16.
Morgan Stanley lowered its forecast for the Australian
dollar last month, predicting it would fall to 57 cents by year's
end and then touch 47 cents by June 2009, the lowest since the
currency was first freely traded in December 1983.
The Aussie, as the currency is called, has tumbled since the
collapse of Lehman Brothers Holdings Inc. in September paralyzed
credit markets and caused equities to tumble as concern over a
global recession spread.
The International Monetary Fund yesterday predicted that
global growth will slow to 2.2 percent next year amid the first
simultaneous recession in the U.S., Japan and euro region in the
post-World War II era. A growth rate of 3 percent or less is
``equivalent to a global recession,'' the IMF said as recently as
April.
The Australian economy will grow 1.8 percent in fiscal 2009,
according to the IMF, as a A$10.4 billion ($6.85 billion)
stimulus package from the government and aggressive interest rate
cuts by the central bank boost the domestic economy.

Has STI bottomed out?

STI on 28 October dropped to the lowest point at 1,473. On that day, STI was at 95%

pessimistic line of the linear regression chart, suggesting that the pessimistic sentiment had

reached its lowest level.

For the past 10 years, whenever STI fell to 95% pessimistic line of the linear regression

chart, market began to turn around, as happened in 1998 and 2000. Similarly, when the

trend line was at 95% optimistic line, market also turned around, as in 1997, 2000, and 2003.

Up to now however, I find out that they are coincidental occurrences which I do not have

any theoretical explanation to prove the certainty of the accuracy of the chart. Nevertheless, I

believe the chart is definitely worthwhile for reference purposes.

STI in a short span of 3 days rebounded approximately 25%. The rebound velocity was

too traumatic. We could expect volatile fluctuations in the near term.

The financial tsunami is terrifying. I have never seen it before in my life. Cautious

navigation gives you safe voyages for many years to come. I would not suggest you put your

stake with what you have, but keep at least 50% cash with you until mid year next and to

observe how the market trend develops. The post financial tsunami effects will be traumatic.

Rebuilding devastated properties after tsunami takes a long time.

Many people puzzle over how the United States, the country that causes the financial

tsunami, the government that prints currency notes to save the market could lead to US$

appreciates so much. This has upset the financial system worldwide. Beside US$, Japanese

yen also appreciates.

The appreciation of US$ and Japanese yen induce many people to dispose of stocks

and convert other currencies to US$, and deposit monies into American banks. The

American banks however, dare not lend out monies, and US remains short of funds.

3 months ago everybody thought US would wantonly print paper money, and US$

would devalue; everybody sold US$. When US$ strengthens, the scenario turns around;

people rush to buy up US$, upsetting the worldwide market to such an extent that no

traditional analytical explanation is feasible. The only explanation is: the market has become

a big gambling den.

Governments worldwide have come out to rescue the market. I am thus basically

optimistic. The only worry is the collapse of market confidence which would take a long time

to recover. On top of it, there are many gamblers playing the market everyday, making it so

much irrationale.

For now you must try to curb your greed and fear sentiment. Fear on account of stock

holdings that see the market’s dip; greed on account of chasing stocks on market’s rise.

Share prices have dropped to relatively cheap level. The appropriate stock holding and

cash ratio should be 70% to 50% cash, or 30% to 50% stock holding. It all depends on your

own risk tolerance. Never borrow money to buy shares.