SUMMARY OF INDEX DAILY CLOSINGS FOR FRIDAY, DECEMBER 18th, 2015

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1 ROBERT D. MCHUGH, JR., Ph.D. Weekend Market Forecasting and Trading Report An Educational Publication of Main Line Investors, Inc. P.O. Box 1026 Issue No Address: Kimberton, PA Friday, December 18th, 2015 SUMMARY OF INDEX DAILY CLOSINGS FOR FRIDAY, DECEMBER 18th, 2015 Sep NASDAQ 1 NASDAQ 1 Russell 30 Yr Treas Date DJIA Transports S&P COMPQ Bonds Sep Sep Dec ^26 Sep Dec ^01 Sep Dec ^25 Dec ^06 Dec ^21 Key Economic Statistics Date VIX U.S. $ Euro CRB Gold Silver HUI Crude Oil 12/04/ /11/ /18/ Current Short-term Psychological Sentiment of the U.S. Stock Market Negative The Bottom Line from Friday s Market Action: Stocks are in a downtrend this weekend, with every short and intermediate term indicator we track on a Sell signal. In spite of the normally upbeat holidays this month, the Fed s actions have confused markets and now sent them lower. Selling Friday did not reach capitulation levels, meaning more downside is likely over the short-run. Apple Computers (AAPL) is crashing from May highs, leading the market lower. Bond yields have risen almost 2 points since the Fed raised short-term interest rates, flattening the yield curve, which is often a precursor to economic slowdown. We just came out with a new Year End Platinum special and a new Year End Standard Subscription special for those who are interested in upgrading, renewing or extending, details on pages 2 and 3. Note: Holiday Publishing Schedule Markets are closed this coming Friday in celebration of Christmas. Our last publication this week will be Wednesday, December 22nd. We wish all of you a Merry Christmas and a Happy, Healthy, and Prosperous New Year in Education to Help You make Money in Both Rising and Falling Markets Visit Our Website At Page 1

2 Standard Membership: What You Get with a Subscription to Our Services: Access to Daily and Expanded Weekend U.S. Market Forecast Reports Covering Stocks, Gold, Silver and Mining Stocks, Currencies, Oil and Bonds Access to our Featured Proprietary Amazing Stock Market Buy and Sell Purchasing Power Indicator (Short-term Trading) Access to our Demand Power/Supply Pressure Indicator (Short/Medium term Trading) Access to our Incredible Intermediate-term investing horizon Secondary Trend Indicator Access to our Long-term investing horizon Primary Trend Indicator Daily Executive Summary s providing key forecast indicator results, and full analysis of the day s activity Access to our Conservative Portfolio Model and Transactions Charts covering Technical Market Patterns and Elliott Waves Cycle analysis of possible important market turn dates, including our Phi Mate Turn dates, Bradley model turn dates, and Fibonacci price/time targets Occasional Mid-day Market Comment s Access to our Closed Platinum Trades Archives Standard Membership Pricing: 3 Months Term $ 89 6 Months Term $ Months Term $300 (12 Months + 1 Bonus Month Free) 25 Months Term $425 ($350 if Paying By Check) This Month s Featured Special Deals: New Year End Special 7 Months for Just $99 (Good through 12/31/15) 8 Months for Just $ Months for Only $199 To Subscribe, Renew or Extend your present membership: To pay by Credit Card: Simply go to and click on either the Subscribe Today or Renew Today buttons at the upper left of the home page, select Standard, scroll down to the term you want and pay by credit card there. Note: We do not auto renew your membership, you have to renew yourself. To Pay by Check: Simply mail a check payable to Main Line Investors, Inc., P.O. Box 1026, Kimberton, PA Please include your address (which is your User ID) so we can apply payment to your account. Page 2

3 What You Get with a PLATINUM Subscription to Our Services: Platinum Elite Membership: 15 to 30 Trades Per Year, where we communicate to you the details of our trades, within 15 minutes of when we conduct them on a best efforts basis Complete access to all of our Standard Subscription Services Education Services for Members where we answer questions about market conditions and our trades, especially helpful to individuals who are new at trading, or trading stock index options An extra 3 months free added to the term selected for individuals who are new to options trading and want to learn by paper trading our trade alert ideas We play both rising and falling markets and primarily trade options on Exchange Traded Funds (ETFs) for major stock market Indices, Gold, Silver, and Mining Stock indices, such as SPY, DIA, QQQ, RUT, GLD, SLV, and GDX. On occasion, we send out s intraday, commenting on intraday market price action as it relates to trading and the price/time patterns we see occurring in markets at that particular time. us at mainrdmch@aol.com for more information, questions, or a disclosure form to join. You get a credit for the unused portion of your standard subscription when you upgrade to Platinum. Platinum Elite Membership Pricing: 7 Months Term $1,695 ($1,395 if paying by Check) 12 Months Term $2,995 ($2.495 if paying by Check) 60 Months Term $9,995 Less up to $6,000 in Credits, with option to renew at $550 per year This Month s Two Featured Special Deals, for December 2015: 19 Months for Only $1,995! (Only $1,795 if paying by Check) New! Year End Special: 9 Months for $1,295 (Only $1,195 if paying by Check) To Subscribe, Renew or Extend your present Platinum membership: us at mainrdmch@aol.com for a Disclosure form. To pay by Credit Card: Simply go to and click on either the Subscribe Today or Renew Today buttons at the upper left of the home page, select Platinum, scroll down to the term you want and pay by credit card there. Note: We do not auto renew your membership, you have to renew yourself. To Pay by Check: Simply mail a check payable to Main Line Investors, Inc., P.O. Box 1026, Kimberton, PA Please include your address (which is your User ID) so we can apply payment to your account. Page 3

4 Be Prepared for What is Coming, for What is starting now, in Global and U.S. Markets. It may not be what you think; it will not be what the Federal Reserve and Wall Street want you to Believe. Available at Dr. McHugh s new Best Seller, The Coming Economic Ice Age, Five Critical Steps to Survive and Prosper. This is a book you will want to give to those you care about. Buy it Direct from amazon.com at Table of Contents Page 2-3 Subscription Services and Pricing / Special Deals Page 4- Report Organization / Table of Contents Page 5- Purchasing Power Indicator Chart and Comments Page 6- Blue Chip Stock Trends Summary (Signals, Age of Trend, Interpretation) Page 7 Primary Trend Indicator (Long-term Trend Time Horizon) Page 7-11 Today s Market Comments Page 12- Key Trend Indicator Statistical Levels for Today and the Past Week Page Statistics for Today (NYSE) and key indicator charts Page Fibonacci Cluster Turn Window Page Updated Primary Trend Indicator Page 23- Signal Performance Summary (All Markets Signals) Page Technology Trends (NASDAQ 100) Page 26 Small Caps Page Precious Metals and Mining Stocks Trends Page Trader s Corner and Past Trading Performance Statistics Page 36 through 58 Elliot Wave and Other Mapping and Analytical Charts Page Glossary of Terms (Educational Information on how to use this Report) Page Disclaimer, ETF Symbols, Elliott Wave Notation Key Education to Help Prepare for The Coming Economic Ice Age Page 4

5 S&P/DJIA Purchasing Power Indicator PPI is a Short-term Momentum Measure of Purchasing Power, Generating Buy and Sell Signals When Changes Suggest Sustainable Multi-Week Moves are Likely The PPI Issued a "Sell" Signal on December 17th, December 18th, 2015's PPI is S&P PPI Sell Signal Buy Signal The S&P 500 Declined 70 Points After the PPI Triggered a Sell Signal on December 8th. And Fell 36 points the day after its new Sell Signal December 17th copyright 2015 Robert McHugh, Ph.D /18/15 9/18/15 10/18/15 11/18/15 12/18/ Our Purchasing Power Indicator (The Short-term Market Trend, typically from 1 to 4 weeks) The S&P 500 fell 36 Points the day after our Purchasing Power Indicator generated a Sell signal Thursday, December 17th. After the PPI triggered a Sell on December 8th, the S&P 500 fell 70 points. For information on how to use this indicator, go to the Glossary at the end of this report. Page 5

6 Blue Chip Stock Trends Signals (For the Dow Industrials, NYSE, S&P 500) Short-term Horizon (Over the Next 1 Week to 1 Month Hourly and Daily Traders): (Sideways (Sideways Young, More Trend Likely, Maturing, More Trend Possible or Old) or Approaching End) Buy or Sell Date of S&P 500 Age of Signal s Status Indicator Name Signal Signal Signal Interpretation Purchasing Power Indicator: Sell 12/17/15 2, Young More Trend Likely 30 Day Stochastic Indicator: Sell 12/18/15 2, Young More Trend Likely 14 Day Stochastic Indicator: Sell 12/18/15 2, Young More Trend Likely Note: We Like to Consider the above 3 Indicators together to confirm a new trend. If all three are in agreement, that confirms a new trend. If any one has a different signal than the others, that suggests a sideways move is occurring, or a trend turn is in process. Medium-term Horizon (Over the Next 1 to 3 Months Daily Traders): (Young, (More Trend Likely, Maturing, More Trend Possible Neutral, or Old) or Approaching End) Buy or Sell Date of S&P 500 Age of Signal s Status Indicator Name Signal Signal Signal Interpretation Demand Power/ Supply Pressure: Sell 12/07/15 2, Maturing More Trend Possible Intermediate-term Horizon (Over the Next 1 to 12 Months Weekly Traders): (Young, (More Trend Likely, Maturing, More Trend Possible or Old) or Approaching End) Buy or Sell Date of S&P 500 Age of Signal s Status Indicator Name Signal Signal Signal Interpretation Secondary Trend Indicator: Sell 07/22/15 2, Maturing More Trend Possible Page 6

7 Blue Chip Stock Trends Signals (For the Dow Industrials, NYSE, S&P 500) Long-term Horizon (Over the Next 6 Months to 2 Years Monthly Traders): (Young, (More Trend Likely, Maturing, More Trend Possible or Old) or Approaching End) Buy or Sell Date of S&P 500 Age of Signal s Status Indicator Name Signal Signal Signal Interpretation Primary Trend Indicator: Buy 5/12/10 1, Maturing More Trend Possible Note: Markets are volatile and trends can reverse, affecting these signals at any time. The further in time these signals are from when they were first generated, the greater the risk the trend could change. Trading involves risk and that risk should be managed with investment limits, stop losses, or other tools to prevent loss. While these signals have proven to be excellent at identifying trends, over-the-horizon risk analysis (and background indicator analysis) is important, and the longerterm trend needs to be kept in mind when trading the shorter-term trends. Today s Market Comments Stocks got crushed Friday, December 18 th, the Industrials plunging 367 points after losing 253 points the day before. That s a loss of 620 points in two days for those of you keeping score at home. The S&P 500 got torched for 67 points the past two days, the NASDAQ 100 watched 150 points evaporate into thin air. All this damage happened after the Fed announced its first interest rate increase in 9 years. I have a lot of comments on this event later in this report. The Industrials broke down below the bottom boundary of a rising trend-channel from August 2015, raising the possibility that the wave e-up top truncated, the pattern is complete, and the next major down-leg is starting. It is bizarre that stocks rose sharply during the two day Fed FOMC meeting, a mysterious timeout inside a declining trend from our December 8 th Purchasing Power Sell Signal, which resumed on Thursday, December 17 th, and also was confirmed by our December 17 th PPI Sell Signal. The S&P 500 lost 106 points after those two PPI Sell Signals. It s as if the market wanted to start a downtrend from the December high; however the Fed needed to paint the tape during their delivery of the bad news rising interest rate moment, as if the market was stupid enough to believe rising interest rates at this time are a good thing. A cynic might think that the Fed, through its Plunge Protection Team authority, purposely pushed the stock market higher during the two day FOMC meeting, knowing it was going to increase interest rates and noting a declining stock market trend was developing, in order to assure market order and stave off a panic selloff on the announcement. If this is the case, markets returned to their downtrend Thursday, December 17th, recognizing economic trouble is brewing, and stock market prices are going lower. Certainly rising interest rates are not going to improve corporate earnings, or improve household income or net worth, nor add jobs to the economy. A free stock market sees this. The Fed raised interest rates in a slowing economy and in the face of commodities deflation. The decision was absurd. On Thursday and Friday, the stock market made this point. Page 7

8 It is interesting that the day after the Fed raised short-term interest rates for the first time in 9 years, and in the face of a slowing economy, U.S. Bonds rose, long-term interest rates fell. This is yield curve inversion action, which if it persists, is a warning of a coming recession. When I managed a $1.0 billion Bond portfolio, back in the day, one of the key indicators I paid attention to in order to time purchases was an inverted yield curve. It told me interest rates were topping, and the Fed was causing a recession. It was a great time to buy high quality Treasury and agency notes. Anyone who believes that the stock market has risen after the Fed began a rising rate cycle in the past is not considering a few facts: First, the Fed has never before in its 102 year history (it has a birthday coming up on Friday, when a near vacant Congress rammed it into existence without a majority vote Christmas 1913) raised interest rates in the face of commodities deflation. Second, the Fed has only twice before raised interest rates in the face of a slowing economy. Wednesday was the third time it did this. The last two times it did this were a causal factor in the Great Depression of the 1930s and again in 1966 which was also a causal factor for the recession that followed. Since 1948, every Fed rate increase occurred with GDP growing faster than 4.5 percent. GDP is nowhere near that rate of growth now. Try 2.1 percent GDP growth at best, probably a lot worse if we take out GDP growth from illegal immigrant population increase, and consider strictly per capita U.S. citizen GDP growth. On December 8 th, 1965, the Fed started a rising interest rate cycle in a slowing economy, which was promptly followed by a 26.5 percent stock market crash that started on February 9 th, 1966, two months later. The ivory tower dopes continued to arrogantly raise interest rates six more times as the stock market plunged for six more months in The stock market was finishing a Jaws of Death pattern at the time the Fed started a new rate increase cycle, like it is now. It was a bad decision by the Fed then, and is a bad decision again now. The point of raising short-term market interest rates is to slow an overheated economy, to cool inflation. The only place there is inflation right now is in necessities, not luxury products and services. This means the Fed could raise interest rates to 40 percent from 0.25 percent and it will not slow price increases for necessities. What prices are rising at this time? Try food, water, health care, health insurance, tuition. Necessities. Okay, and also the Fed s balance sheet if we want to get technical. Commodity prices are falling, including precious metals (many used in industry), oil, and gasoline, as are real estate prices outside of Manhattan and its surrounding communities (Manhattan and its surrounding territory benefited from the $5.0 trillion the Fed printed out of thin air the past several years and handed to Wall Street, while Main Street got nothing). There is no inflation to cool. Again, the Fed never before raised interest rates in the face of falling commodities. This is new turf, dangerous turf. It s a case of the old adage, the Fed marches into the battle after it s over and shoots the wounded. Talk about kicking the middle class and small business in the choppers. If the Fed is focused on the need to raise interest rates because of all the Mergers and Acquisitions activity this year on Wall Street, that is nonsense because all this means for the economy is that large corporations are struggling to generate organic revenue growth, so are trying to buy it. That is a finance game, not economic growth. M&A also means layoffs, lots of layoffs. The fancy term we read about from the CEOs who discuss their Mergers is synergies, code for layoffs, loss of jobs by middle income employees with families. The latest to hit the presses is the Dow Chemical / DuPont deal. There are a lot of nervous families this Christmas with bread winners who work in those two companies. Page 8

9 When we take a hard look at GDP growth, and at the employment data, Yellen argued the Fed s rate increase December 16 th was necessary due to substantial improvement in the labor market. Nonsense. She claimed in her Q & A that the economy had generated 2.3 million new jobs in Bullbleep. The Labor Department s own statistics from their CES Birth/Death report tell us that 804,000 of those 2.3 million supposed new jobs were a guess, an estimate, a melatonin dream from the bureaucratic bean counters, new jobs they think might have come from new positions they hope were created by the net of new businesses less the loss of jobs from businesses that went out of business. 804,000 jobs are a fictitious estimate. At best, the truth is, the economy created 1.5 million new jobs in Now, consider that the U.S. population grew by 2.2 million during 2015, and we see that new job creation never came close to keeping pace with population growth. Further, her mentioning improved employment as a reason to raise interest rates is bogus, just look at the labor participation rate. It is an abysmal 62.5 percent, down substantially from the turn of the century. The Labor Department counts jobs (supposedly), but we never get to see them report family supporting wage quality jobs, do we? If a minimum wage clerk job is created, it counts in the Labor department s employment stats, and apparently the Fed is okay with that. Let s look at some of the latest economic statistics as reported by the Commerce Department: The financial news networks made a big deal about New Residential Construction rising 10.5 percent in November, but what they did not mention was it fell 12.5 percent in October. Is that a sign of a robust economy? And, where are the sales going to come from? I don t know about you, but it is a miracle to see a sold sign on a lawn in the mid-atlantic to northeastern corridor of the U.S. where I have traveled this past year. Lots of For Sale signs, hardly any Sold signs. Commerce reported that New Residential Sales rose 10.7 percent in October, but they had fallen 12.9 percent in September. Is this cause to raise interest rates? I don t think so. After tax profits for retail corporations were down in the latest reporting quarter for Commerce also reported that U.S. Total Business Sales fell 0.2 percent in October. Getting back to a false sense of GDP growth that needs to be curtailed by rising interest rates at this time, again, since Truman was president, the Fed never raised interest rates when GDP was below 4.5 percent until now. GDP was estimated by the Commerce Department to be 2.1 percent in the third quarter of Now, consider that some estimates have illegal immigrants entering the U.S. at around 500,000 per year, these unaccounted for folks are spending money, earning wages, in essence contributing to GDP growth statistics, which skews the GDP growth figures to be better than the GDP figure really is on a per capita basis for U.S. citizens, which is what really matters after all. In other words, between the rising cost of necessities, stagnant wages, an absence of family supporting wage jobs, and slowing GDP (it was 3.9 percent in the second quarter 2015, 2.1 percent in the third), where are the signs of an overheating economy that needs to be slowed? So, what we have here is the Fed raising interest rates, and starting a rising rate cycle, during a period of time with no elastic product/service inflation, no meaningful job growth, and slowing U.S. Gross Domestic Product. Did IQs suddenly drop? And let s understand, rising short-term interest rates will slow the economy. This is not a macroeconomic growth move by the Fed. It is disinflationary, perhaps deflationary, is a contraction move for the economy. Borrowing costs for households with home equity loans, credit card loans, and student loans just went up, cutting into already strained household budgets. Borrowing costs for small businesses with lines of credit tied to prime just went up, increasing earnings pressure. Margin debt just got more expensive. And make no mistake, bank deposit rates will not go up as much as the Fed just raised interest rates. If lending rates just went up a quarter percent, depositors will be lucky to see an increase of 1/10 th that amount. It ain t gonna happen. The rate increase will not benefit savers, as banks are flush with deposits. They are not about to raise deposit interest rates any time soon. The U.S. monstrous debt service cost will now go up. Interest rates on short-term Treasuries will rise, increasing the Federal Deficit. Is that a good thing? Page 9

10 Make no mistake, the Fed is now tightening the money supply, removing liquidity from the markets and economy. What this means is money will flow from the economy to the Fed. The Fed does not count; it contributes nothing to our economy. If money is at the Fed, it is gone from the economy. Money and Banking 101. The way the Fed raises interest rates is to sell securities it holds in its balance sheet to Wall Street in exchange for U.S. Dollars. That means less money to be lent or spent in the economy. Less money for a growing population. But there is more here than meets the eye. A lot more, for we see that the Fed is actually tightening the money supply in two significant ways, first by the above increase in the overnight funds rate, but second, and this is a biggie, the Fed is unwinding its humongous balance sheet. How? What? Over the past decade, the Fed printed $5.0 trillion of cash out of thin air, and gave it to Wall Street in exchange for securities that were held by Wall Street and the economy. In other words, the Fed traded new money going to the Manhattan economy for IOUs coming back to the Fed, some mortgage securities, some government securities, who knows exactly what, probably a lot of junk. Well, these securities became the bulk of the Fed s balance sheet, which ballooned to a whopping 19 percent of U.S. GDP. But you see, those securities required corporations and government entities to eventually repay cash to the Fed in the form of stated interest rates on those securities, and principal redemptions. In essence, money flowing out of the economy into the Fed, a tightening of the money supply. Further, those securities are maturing, meaning the Fed gets paid money for redemption upon maturity of the securities in its balance sheet. Again, money flowing out of the economy into the Fed. The point is, the Fed is tightening with the raising of interest rates at the same time it has an outlier outrageous balance sheet full of maturing interest and principal in securities it holds. This tightening could hit our economy like a tsunami, a massive withdrawal of liquidity from the economy in the face of commodities deflation (never happened before) and a slowing economy (only happened twice before with disastrous economic and stock market repercussions). The Fed screwed up, royally. Just watch what happens over the next year. It ain t gonna be pretty. Let s call it what it is, we have a bunch of unelected professors running the economy, most of whom never ran a business, never held a real job in their lives. They occasionally pop out from their ivory towers with an arrogance that would freeze a lava flow. They decide our fate with their interest rate policies, and their over-regulation, and their behind the scenes market manipulation for political gain and derrière enshrinement. What is funny to me is, this is precisely what the two Jaws of Death patterns we are tracking are telling us, that events will come that kick the snot out of the economy and the stock market. Well, count the Yellen Fed as one of the contributing causal factors in the Great Recession / Depression of 2016 through Back to the technical condition of the market: There is a Bradley model turn date on January 6 th, a Phi mate turn date on January 7 th, and we have found a 7 observation Fibonacci Cluster turn window around those two dates which we present in this weekend's newsletter on pages 18 and 19. On pages 20 through 22 we present an update from our long-term Primary Trend Indicator. On Friday, December 18th, our key Blue Chip trend-finder indicators moved back to a Sell signal. The Purchasing Power Indicator component generated a Sell on December 17th, the 14 day Stochastic Indicator generated a Sell on December 18th, and the 30 Day Stochastic Indicator generated a Sell on December 18 th. When these three indicators are in agreement, it is a short-term (1 week to 3 months time horizon) key trend-finder directional signal. When these three indicators are in conflict with one another, it is a Neutral key trend-finder indicator signal. Our intermediate term Secondary Trend Indicator remains on a Sell signal Friday, worsening by 6 points (out of a possible 9 points), to negative -29, needing to rise above positive + 5 for a new Buy. Demand Power fell 4 to 380 Friday while Supply Pressure rose 13 to 429, telling us Friday's decline was powerful with massive buying from deep pockets intervention to prevent a plunge. This DP/SP Indicator moved to an Enter Short Signal Thursday, December 3 rd and remains there Friday, December 18th. Our 10 Day average Advance/Decline Line Indicator trig- Page 10

11 triggered a Sell signal Monday, December 7 th, and remains there Friday December 18th. It is important to keep in mind that there are two Megaphone Top patterns that are finishing now, one huge one from 1988, another from 2014, telling us once this final rally is finished a massive and lengthy decline will take control over markets and the PPT will not be able to prevent it. Megaphone patterns are some of the most reliable stock market patterns of any in technical analysis. They are warning patterns, warning of powerful approaching declines greater than their component waves such as the August mini-crash. Caution: I would not bet the farm on a Crash. Crashes are rare and maybe the pattern will morph into something we presently do not see that is less ominous. Risk must be managed. Maybe the Fed buys the entire stock market, who knows given their track record. Maybe a black swan event is postponed several months. Our HUI key trend-finder indicators triggered a Sell signal Thursday, December 17th, as the HUI Purchasing Power Indicator generated a Sell signal December 17 th and the HUI 30 day Stochastic moved to a Sell signal Monday, December 14 th. When these two indicators are in agreement, it is a directional signal, and when at odds with one another, it is a combination neutral signal. On Friday, December 18 th, the HUI Demand Power / Supply Pressure Indicator moved to a Neutral signal. On Friday, December 18th, Demand Power rose 9 to 415 while Supply Pressure fell 6 to 413, telling us Friday's rally was strong, aided by short covering. The wave mapping for Gold tells us that wave e-down is underway of a five wave Declining Bullish Wedge that started in mid Within wave e-down, subwave a-down has finished. This final wave e-down needs to be a three subwave move, not five. We can count five completed subwaves down from the October 2015 wave d-up top, which means the decline since then is likely to be subwave a-down of an a-down, b-up, c-down for e-down. Given the new Sell signal in the HUI key indicators, it is likely that Gold and GLD have finished their subwave b-up rally, and are now dropping into their wave c-down subwave toward a significant bottom. Gold could proceed lower toward 1,000ish with GLD headed toward 96ish when the final wave c- down of e-down bottom of significance arrives. Page 11

12 SUMMARY OF TODAY S & PAST WEEK S TRADING INDICATOR STATISTICS Blue Chips S&P 500 / DJIA / NYSE Purchasing Date Power Indicator Interpretation Dec 11 Down 11 to Dec 14 Up 1 to Dec 15 Up 5 to Dec 16 Up 8 to Dec 17 Down 6 to Dec 18 Down 9 to The PPI must rise more than 6 points above its recent low to trigger a new buy signal, and must fall more than 6 points below it recent high to trigger a new sell signal. The PPI Must rise above negative 3.10 for a new Buy Signal. 30 Day Stochastic 14 Day Stochastic Date Fast Slow Fast Slow Interpretation Dec Dec Dec Dec Dec Dec The Fast has to fall more than 10 points below the Slow for a new sell, or the Fast has to rise more than 10 points above the Slow for a new buy. Demand Supply Date Power Pressure Interpretation Dec 11 Down 8 to 371 Up 14 to 425 Dec 14 Down 2 to 369 Up 1 to 426 Dec 15 Up 9 to 378 Down 8 to 418 Dec 16 Up 12 to 390 Down 9 to 409 Dec 17 Down 6 to 384 Up 7 to 416 Dec 18 Down 4 to 380 Up 13 to 429 The Demand Power Indicator Needs to Rise more than 10 points above the Supply Pressure Indicator for a new buy signal, or the Supply Pressure Indicator must rise more than 10 points above the Demand Power Indicator for a new Sell Signal. Crossovers less than 10 points are Neutral Signals. Secondary Date Trend Indicator Interpretation Dec 11 Down 8 to - 33 Dec 14 Up 2 to - 31 Dec 15 Up 6 to - 25 Dec 16 Up 8 to - 17 Dec 17 Down 6 to - 23 Dec 18 Down 6 to - 29 Above positive + 5 is Bullish, a Buy signal. Below negative 5 is Bearish, a Sell signal. While a move above zero is a good indication of a coming rising trend, and below zero is a good indication of a coming declining trend, for best trading results, it is better to wait for this indicator to move above positive + 5 or below negative 5. The closer it moves toward zero, the greater the risk of a coming trend turn. Readings near positive + 30 show overbought market conditions And near negative 30 indicate an oversold market condition. Page 12

13 Key NYSE Internal Strength Statistics for Friday, December 18th: Volume as % 10 Day Average Points % Up Points % Down New 52 Week Highs New 52 Week Lows Advancing Issues Declining Issues Advancing Issues % Declining Issues % Volume % Up Volume % Down Closing Ticks Closing Trin Today 119% 5% 95% % 65% 24% 76% Yesterday 102% 4% 96% % 65% 14% 86% Blue Chip Stock Background Stock Trend Indicators For the Dow Industrials, NYSE, S&P 500 (Used to Evaluate the Age of Current Trends) McClellan Oscillator (+300 Extreme Overbought/-300 Extreme Oversold) Today Yesterday Day Average Advance/Decline Line Indicator (+800 Extreme Overbought/-800 Extreme Oversold) Plunge Protection Team Indicator * A rise above positive or a drop below negative 16.0 triggers a new buy signal. On the other hand, declines can (don t have to) occur when this reading falls within the range of negative to positive Next Phi Mate Turn Date January 7th, /- a few days Next Bradley Model Turn Date January 6th, /- a few days Page 13

14 S&P/DJIA Purchasing Power Indicator PPI is a Short-term Momentum Measure of Purchasing Power, Generating Buy and Sell Signals When Changes Suggest Sustainable Multi-Week Moves are Likely The PPI Issued a "Sell" Signal on December 17th, December 18th, 2015's PPI is S&P PPI Sell Signal Buy Signal The S&P 500 Declined 70 Points After the PPI Triggered a Sell Signal on December 8th. And Fell 36 points the day after its new Sell Signal December 17th copyright 2015 Robert McHugh, Ph.D /18/15 9/18/15 10/18/15 11/18/15 12/18/ Secondary Trend Indicator TM Very simply, when the STI turns above positive +5, it means odds favor a multi-week rising trend. When the STI turns below negative -5, the odds favor a multi-week declining trend. S&P 500 December 18th, 2015's STI is -29, on a Sell Signal from STI Buy Signal Sell Signal A Huge Bearish Divergence from June 2014, warned of a Huge Coming Stock Decline. The S&P 500 is Overbought around positive + 30 and oversold around -30. A Bearish Divergence Warned a Decline is Coming 1200 copyright 2015 Robert McHugh, Ph.D /18/15 6/18/15 8/18/15 10/18/15 12/18/ Page 14

15 S&P NDX Reenter Short S&P 500 vs: Demand Power & Supply Pressure Sept 2015 to December 2015 When Demand Power Crosses 10 Pts above the Supply Pressure Line, we get a Buy Signal. When Supply Pressure rises 10 Points above Demand Power, we get a Sell Signal. Exit signals occur when DP or SP lines return to intersection after an entry signal. We received an "Enter Short Positions" Signal December 3rd, 2015 S&P 500 Enter Long Demand Power Supply Pressure copyright 2015 Robert McHugh, Ph.D. A Bearish Divergence Warns a Decline is Coming A Huge Bearish Divbergence is in Place, Warning a Huge Decline is Coming. Enter Short Enter Long Enter Short /18/15 10/18/15 11/18/15 12/18/15 NASDAQ 100 vs: Demand Power & Supply Pressure Sept 2015 to December 2015 When Demand Power Crosses above the Supply Pressure Line by 10 points, we get a Buy Signal. When Supply Pressure rises above Demand Power by 10 points, we get a Sell Signal. Exit Signals occur when DP or SP lines return to intersecttion after an entry signal. NASDAQ 100 Enter Long copyright 2015 Robert McHugh, Ph.D. Supply Pressure Bearish Divergence We got an "Enter Short Positions" Signal 12/17/15 Demand Power Enter Short Enter Short Reenter Short Demand Power/ Supply Pressure Demand Power/ Supply Pressure 9/18/15 10/18/15 11/18/15 12/18/ Page 15

16 S&P NYSE 10 Day Moving Average Advance/Decline Line vs. the S&P 500 S&P 500 A/D Oftentimes Trend Reversals are Forewarned By Bullish and Bearish Divergences Between the NYSE 10 Day MA Adv/Dec Line and the Prices of of Equities. Bullish Divergence Bearish Divergence A Bearish Divergence Warned of a Coming Decline /18/15 8/18/15 9/18/15 10/18/15 11/18/15 12/18/15 NYSE A/D Stocks are declining from Bearish Divergences between our key indicators and prices. Page 16

17 Russell RUT 10 Day Moving Average Advance/Decline Line vs. the Russell 2000 Oftentimes Trend Reversals are Forewarned By Bullish and Bearish Divergences Between the NYSE 10 Day MA Adv/Dec Line and the Prices of of Equities. A/D Russell 2000 Bearish Divergence Bearish Divergence Warned of a Coming Decline. RUT A/D Bullish Divergence Bearish Divergence copyright 2015 Robert McHugh, Ph.D /18/15 8/18/15 9/18/15 10/18/15 11/18/15 12/18/15 NASDAQ NASDAQ Day Moving Average Advance/Decline Line vs. the NASDAQ 100 NASDAQ 100 Oftentimes Trend Reversals are Forewarned By Bullish and Bearish Divergences Between the $NDX 10 Day MA Adv/Dec Line and the Prices of $NDX Equities. Bullish Divergence Bearish Divergence A/D Line A Bearish Divergence Warns of a Coming Decline 8/18/15 9/18/15 10/18/15 11/18/15 12/18/15 $NDX A/D Page 17

18 There is a Significant Fibonacci Cluster Event From Dec 29th to January 7th /- 1 Day Significant Turns Often Occurr When Fibonacci Numbers and Ratios Converge Into a Short-term Period. Tops and Bottoms and the Fibonacci # of Trading Days Clustering From 12/29/15 to 1/7/16 +/- This Turn Date Cluster Has 7 Prior Tops and Bottoms a Fibonacci # of Trading Days From This 7 Trading Day Period December 29th to January 7th, /-. 8/27/09 Low 1,597 T Days 8/2/13 Top 610 T Days 1/30/15 Low 233 T Days 12/4/15 Top 21 T Days 8/25/15 Low 89 T Days 11/13/15 Low 34 T Days Dec 29th to Jan 7th +/- a Few Days 12/11/15 Low 13 T Days 1/7/10 1/7/11 1/7/12 1/7/13 1/7/14 1/7/15 1/7/16 Closing Prices and Trading Days -- Chart Updated as of December 18th, 2015 There is a turn coming to stock markets sometime around year end 2015, and the above analysis suggests sometime between December 29th and January 6th, a 7 trading day period. This Fibonacci cycle turn has 7 past tops or bottoms a Fibonacci number of trading days from this future turn period. We also have a Phi Mate turn date on January 7th and there is a Bradley model turn date on January 6th, so it is possible that these three independent cycle turn analyses are pointing toward the same turn, perhaps the turn occurs around the 6th/7th. Cycle analysis gets us in the ballpark, but our Purchasing Power Indicator will get us into the seat. At this point we cannot tell if the turn will be from a top to a declining trend, or from a low to a rising trend because it really depends upon what trend stocks are in as these dates show up. If stocks decline for the next two weeks, it will be a low. If stocks rally into this turn, perhaps a Santa rally, it will be a top. We have found that when there is a cluster of trading days within a short period of time that are a Fibonacci number of trading days from a key top or bottom turn from the past, there is a higher than normal probability that a significant trend turn is coming around that cluster time period. Page 18

19 What are Fibonacci numbers? They are an incredible set of numbers that seem to rule markets, both in terms of distance of price moves and timing, and rule physics and art throughout the universe. The Fibonacci number sequence starts with the number one, and then when it adds it to itself, it produces the next Fib number, which would be 2 (1+1), then if we take that resultant number and add it to the previous Fib number in the sequence, it produces the next Fib number, which would be 3 (2+1), then the next number is 3 + the previous number in this sequence which was 2 resulting in 5 (3 + 2), then 8 (5 + 3), then 13 (8 + 5), then 21 ( ), etc, which gets us the sequence 34, 55, 89, 144, 233, 377, 610, 987, 1597, 2584, etc. What is incredibly unique about this sequence is that the two component numbers, when divided by their combined result, will equal either.382 or.618. The ratio.618 is known as phi. For example, for the Fibonacci number 21, its two components are 13 and 8. If we divide 13 into 21, 13/21 =.618 and 8/21 =.382. The larger the numbers, the more precise they come to.382 and /377 =.618 and 144/377 =.382. So, getting back to our Fibonacci Cluster for December 29th through January 6th: December 30th, 2015 is a Fibonacci 1,597 Trading Days from the August 27th, 2009 Top. December 29th, 2015 is a Fibonacci 610 Trading Days from the August 2nd, 2013 Top. January 4th, 2016, is a Fibonacci 233 Trading Days from the January 30th, 2015 Low. December 31st, 2015 is a Fibonacci 89 Trading Days from the August 25th, 2015 Low. January 5th, 2016 is a Fibonacci 34 Trading Days from the November 13th, 2015 Low. January 6th, 2016 is a Fibonacci 21 Trading Days from the December 4th, 2015 Top. December 31st, 2015 is a Fibonacci 13 Trading Days from the December 11th, 2015 Low. Our conclusion: The stock market is likely to start a significant trend in the beginning of the new year The price action between now and then will determine which direction the new trend takes. Our Purchasing Power Indicator will confirm when it has started and tell us the direction. Page 19

20 Primary Degree Trend Indicator for the DJIA: The 14 Month Moving Average vs. Its 5 Month MA Our Primary Degree Trend Indicator, Whenever the 14 Month MA (Fast) Crosses Below the 5 Month MA of Itself (Slow), a Primary Degree Bear Trend is Underway. A Rise Above Signals a Bull Market. As of 11/30/2015, the Fast declined to approx. equal to the Slow, still on a "Buy." Bear Primary Trend Signal Copyright 2015 by Robert McHugh, Ph.D. Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 Above we show that the Primary Trend Indicator remains on a Buy Signal as of November 30th, 2015, but the Fast measure has dropped to almost equal the Slow measure, and with these lines converging, it could be an early indication that a top is in or close at hand. The Primary Trend Indicator is a measure of the long-term trend. It generated a new long-term trend sell seven years ago, September 30th, 2008, just as the autumn stock market crash started, when the DJIA closed at 10,850.66, the first change from the buy signal October 31st, 2003, five years earlier, and the first sell signal since We saw a 4,400 point drop after this sell signal was triggered. On May 31st, 2010 the PTI generated a new buy signal, and it remains on a buy signal as of November 30th, Since that Buy signal 5 years ago, the Industrials have risen 8,152 points ( 80 %). However, it must be noted that this indicator does not change until several months after a new primary trend turn has started, so a trend turn could be starting now and this indicator may not move to a new sell for several more months. However the price drop below both the Fast and Slow indicators in September 2015 is potentially an early warning of a change in the long-term primary trend. Here is how the Primary Trend Indicator works: One of the tools we have in our arsenal to identify the status of a Primary Degree trend is a simple analysis of the 14 month moving average versus a Slower moving average calculation, the 5 month MA of the 14 month. It has been terrific at identifying multi-year trends, both up and down. While it is a little late in generating the buy and sell signals, it triggered a sell near the start of Primary degree wave (4) down, in mid What followed was a two and a half year, 39 percent drop into the wave (4) bottom on October 10th, It took a while for this indicator to confirm that the rally that started on October 11th, 2002 would in fact be a multi-year primary degree wave up, wave (5) up. But in October 2003, this analytical tool did in fact trigger a Primary Degree buy signal, which led to a four year further rally to new all-time nominal highs on October 11th, 2007 at 14, DJIA Bull Primary Trend Signal May 2010 Page Month MA (Fast) 5 Month MA of the 14 Mo MA (Slow)

21 As of November 30th, 2015, our PTI remains on a Buy. The spread between the Fast and the Slow went positive in January 2010 for the first time in 20 months. It improved to positive in April, 2010, and came in at 417 in May, 2010, when a Buy was triggered. The spread fell and sits at + 51 on November 30th, This compares to a 351 points spread in December 2014, which tells us convergence is occurring, and it would not take much of a decline to trigger a new sell signal. It would take a few months of decline. We require a 5 month moving average of the Spread between the Fast and Slow to reverse in a new direction for 3 consecutive months in order to declare that a new primary trend, a new multi-year trend, is underway. March 2010 generated the first of the three required consecutive positive readings in the 5 month moving average for a buy, April 2010 generated the second, and May 2010 generated the third, when a new buy signal was triggered five and a half years ago. There had been only three signals since 1997 before the Buy signal in May 2010, so this tool is useful for long-term investors, as it filters out the noise of up and down corrections of significance in favor of the primary trend. September 2008 was the third signal, and May 2010 s was the fourth. The next Sell signal will confirm that the Economic Ice Age has started. This chart is useful for our Conservative Balanced Investment Portfolio since once we get a new signal, in the past we have been able to rely upon that signal for years. Further, it tells us which direction surprises are likely to occur, so when playing speculative options or futures, we will know the direction where a surprise trend turn is most likely. Knowledge of the primary trend is also useful for trading. In this case, we can be more aggressive when entering a position in the same direction as the primary trend, and less aggressive when entering a short-term trend play against the primary trend. Next, we look at the chart at the top of the next page as a confirming indicator of the Primary Trend Indicator shown on the previous page. It is a comparison of the position of the 20 Month Moving average versus the 40 month. Some recent history: As of February 28th, 2009, the 20 Month/40 Month Spread went negative, which was the first time that happened since August In February 2009 the 20 Month fell 145 points below the 40 month, down from May 2008 s peak positive 1,026 spread. It worsened to negative -345 March 31st, 2009, to negative 751 in May 2009, and worsened to negative -1,723 in March It moved to a positive reading February 2011, at + 26, confirming the May 2010 Bull Market Signal and remains positive, comes in at + 1,277 in November 2015, but is declining. What is helpful about this indicator, is that once we get this indicator s confirming buy or sell, we can look forward with high confidence to a large chunk of the primary trend s move still being ahead of us. For example, the 20 month MA crossed below the 40 month MA in February 2002, with the Dow Industrials at 10,106. From that sell signal point, the DJIA dropped 2,909 points, or 28.8 percent. That suggested a great spot to purchase Leaps Put options. Then, going the other way, the 20 month MA rose above the 40 month MA in August 2004, at DJIA 10,174. The Dow Industrials then rose 4,106 points, or percent. Here, your strategy could have been to either play long-term leaps call options, or to simply go long in the cash market and stay there, in other words, increase your long investment position. Page 21

22 DJIA Nov- 05 The 20 Month Moving Average versus the 40 Month Moving Average in the DJIA A Decisive Cross-over By the 20 Month Below the 40 Month MA in 2015 Will Confirm a Secular Bear Market is Underway DJIA Nov- 06 As of 11/30/15, the 20 Month was 1,277 Points Above the 40 Month, Confirming the Primary Trend Indicator's Bull Market Signal. 40 Month MA Bull Confirmation 20 Mo. MA at 17, Mo. MA at 16,038 Nov- 07 Nov- 08 Nov- 09 Bear Confirmation Bull Confirmation Nov- 10 Nov- 11 Nov- 12 Nov Month MA copyright 2015 Robert D. McHugh, Jr., Ph.D. Nov- 14 Nov- 15 Since the February 2011 Bull Market confirmation, the Industrials have risen 5,812 points, or 57 percent. As of November 30th, 2015, the 20 Month is 1,277 points above the 40 Months, solidly on a Buy confirmation signal. However this is a lagging indicator, there is convergence evident from the 1,637 level in December 2014, but its signal will turn several months after the Coming Economic Ice Age begins. There were no false crossovers or cross-unders with this confirming 20 Month/40 Month MA measure. Once it turned negative, the trend was down. Once it went positive, the trend was up. Short-term countertrend moves can occur within the primary trend. Page 22

23 Summary of McHugh s Proprietary Index Key Trend-finder Buy/Sell Signals And Their Performance Fullest Extent of Index Term Signal Date Current Signal Index Move Since Signal Purchasing Power Indicator DJIA/S&P Short Sell Dec 17th, 2015 Sell Signal DJIA 14 Day Stochastic DJIA Short Sell Dec 18th, 2015 Sell Signal DJIA 30 Day Stochastic DJIA Short Sell Dec 18th, 2015 Sell Signal Demand Power /Supply Pressure S&P Short Sell Dec 3rd, 2015 Sell Signal NYSE 10 Day Adv/Decline Indic S&P Short Sell Dec 7th, 2015 Sell Signal Secondary Trend Indicator DJIA Intermediate Sell July 22nd, 2015 Sell Signal NDX Purchase Power Indic NASDAQ 100 Short Sell Dec 17th, 2015 Sell Signal NDX 14 Day Stochastic NASDAQ 100 Short Sell Dec 18th, 2015 Sell Signal NDX 30 Day Stochastic NASDAQ 100 Short Sell Dec 18th, 2015 Sell Signal NDX 10 Day Adv/Decline Indic NDX Short Sell Dec 3rd, 2015 Sell Signal Demand Power /Supply Pressure NDX Short Sell Dec 17th, 2015 Sell Signal RUT Purchase Power Indic RUT Short Sell Dec 18th, 2015 Sell Signal RUT 10 Day Adv/Decline Indic RUT Short Sell Dec 9th, 2015 Sell Signal HUI Purchasing Power Indic HUI Short Sell Dec 17th, 2015 Sell Signal HUI 30 Day Stochastic HUI Short Sell Dec 14th, 2015 Sell Signal HUI Purchasing Power Indic GOLD Short Sell Dec 17th, 2015 Sell Signal HUI 30 Day Stochastic GOLD Short Sell Dec 14th, 2015 Sell Signal Plunge Protection Team Indic DJIA Short Sell Oct 5th, 2015 Sell Signal Primary Trend Indicator DJIA Long Buy May 31st, 2010 Rose 8,152 Points ( 80 %) Jesus said to them, I am the bread of life; he who comes to Me shall not hunger, and he who believes in Me shall never thirst. For I have come down from heaven, For this is the will of My Father, that everyone who beholds the Son and believes in Him, may have eternal life; and I Myself will raise him up on the last day. John 6: 35, 38, 40 For I know the plans I have for you," declares the LORD, "plans to prosper you and not to harm you, plans to give you hope and a future. Jeremiah 29:11 Page 23

24 Technology Stock Trends Signals (For the NASDAQ 100) Short-term Horizon (Over the Next 1 Week to 1 Month Hourly and Daily Traders): (Sideways (Sideways Young, More Trend Likely, Maturing, More Trend Possible or Old) or Approaching End) Buy or Sell Date of NDX Age of Signal s Status Indicator Name Signal Signal Signal Interpretation NDX Purchasing Power Indicator: Sell 12/17/15 4, Young More Trend Likely 30 Day Stochastic Indicator: Sell 12/18/15 4, Young More Trend Likely 14 Day Stochastic Indicator: Sell 12/18/15 4, Young More Trend Likely The NDX PPI Needs to rise above positive for a New Buy Signal. Note: We Like to Consider the above 3 Indicators together to confirm a new trend. If all three are in agreement, that confirms a new trend. If any one has a different signal than the others, that suggests a sideways move is occurring, or a trend turn is in process. Medium-term Horizon (Over the Next 1 to 3 Months Daily Traders): (Sideways) (Sideways) Young, More Trend Likely, Maturing, More Trend Possible Neutral, or Old) or Approaching End) Buy or Sell Date of NDX Age of Signal s Status Indicator Name Signal Signal Signal Interpretation Demand Power/ Supply Pressure: Sell 12/17/15 4, Young More Trend Likely Key NASDAQ 100 Internal Strength Statistics for Friday, December 18th: Volume as % 10 Day Avg. Points % Up Points % Down Advancing Issues % Declining Issues % Volume % Up Volume % Down Today 150% 1% 99% 10% 90% 13% 87% Yesterday 95% 2% 98% 4% 96% 7% 93% Page 24

25 NASDAQ 100 Key Trendfinder Indicator Statistics Demand Supply Purchasing 30 Day Stochastic 14 Day Stochastic Date Power Pressure Power Indicator Fast Slow Fast Slow Dec 11 Down 5 to 405 Up 9 to 431 Down 14 to Dec 14 Up 2 to 407 Down 2 to 429 Up 2 to Dec 15 Up 5 to 412 Down 5 to 424 Up 3 to Dec 16 Up 7 to 419 Down 6 to 418 Up 7 to Dec 17 Down 6 to 413 Up 6 to 424 Down 8 to Dec 18 Down 5 to 408 Up 9 to 433 Down 14 to The NDX PPI Needs to rise above positive for a New Buy Signal. Today Yesterday NDX 10 Day Average Advance/Decline Line Indicator (+30 Extreme Overbought/-30 Extreme Oversold) Today s Technology NDX Market Comments The NDX Short-term key Trend-finder Indicators moved to a Sell signal Friday, December 18th, The NDX Purchasing Power Indicator generated a Sell on December 17th, the NDX 14 Day Stochastic triggered a Sell signal on December 18th, and the 30 Day Stochastic which triggered a Sell signal on December 18th. When all three component indicators are in agreement on signals, it is a consensus directional signal. When they differ, it is a sideways signal. The NDX Demand Power / Supply Pressure Indicator triggered an Enter Short positions signal Thursday, December 17th, and remains there Friday, December 18th. On Friday, Demand Power fell 5 to 408, while Supply Pressure rose 9 to 433, telling us Friday s decline was strong with deep pockets intervention supporting prices. The NDX 10 Day Average Advance/Decline Line Indicator triggered a Sell signal December 3rd, needing to rise above positive + 5 for a new Buy. It fell to negative 20.8 Friday, December 18th. Page 25

26 Small Cap Stock Trends Signals (For the RUSSELL 2000) Short-term Horizon (Over the Next 2 Weeks Hourly and Daily Traders): (Young, (More Trend Likely, Maturing, More Trend Possible or Old) or Approaching End) Buy or Sell Date of RUT Age of Signal s Status Indicator Name Signal Signal Signal Interpretation RUT Purchasing Power Indicator: Sell 12/18/15 1, Young More Trend Likely Date Purchasing Power Indicator Dec 14 Down 2 to Dec 15 Up 4 to Dec 16 Up 5 to Dec 17 Down 3 to Dec 18 Down 5 to The RUT PPI Must rise above positive for a New Buy. Key Russell 2000 Internal Strength Statistics for Friday, December 18th: Volume as % 10 Day Avg. Advancing Issues Declining Issues Advancing Issues % Declining Issues % Volume % Up Volume % Down 10 Day Average Advance/Decline Line Indicator (+500 Extreme Overbought/-500 Extreme Oversold) Today 161% % 69% 39% 61% Yesterday 103% % 73% 29% 71% Page 26

27 Mining Stocks Signals (For the HUI and Has Excellent Correlation with Gold) Short-term Horizon (Over the Next 2 Weeks Hourly and Daily Traders): (Young, (More Trend Likely, Maturing, More Trend Possible or Old) or Approaching End) Buy or Sell Date of HUI Age of Signal s Status Indicator Name Signal Signal Signal Interpretation HUI Purchasing Power Indicator: Sell 12/17/ Young More Trend Likely Medium-term Horizon (Over the Next 2 to 4 Weeks Daily Traders): (Young, (More Trend Likely, Maturing, More Trend Possible or Old) or Approaching End) Buy or Sell Date of HUI Age of Signal s Status Indicator Name Signal Signal Signal Interpretation 30 Day Stochastic Indicator: Sell 12/14/ Young More Trend Likely Key HUI Internal Strength Statistics for Friday December 18th: Volume as % 10 Day Avg. Points % Up Points % Down Advancing Issues % Declining Issues % Volume % Up Volume % Down HUI Purchasing Power Indicator 30 Day Stochastic Fast 30 Day Stochastic Slow Demand Power Level Supply Pressure Level Today 156% 99% 1% 95% 5% 99% 1% to to 413 Yesterday 103% 0% 100% 0% 100% 0% 100% to to 419 Page 27

28 HUI 200 HUI 30 Day Stochastic HUI GOLD BUGS A Short-term Measure of Momentum Changes Comparing the Percent of HUI Stocks AboveTheir 30 Day MA With a Slower 9 Day MA of Same For December 18th, 2015: Fast Slow A Sell Signal Was Generated December 14th, 2015 Buy Signal Sell Signal % STKS > 30 DMA Overbought > 80% Oversold < 15% A Signal Cross Over/Under Requires a 20 point Fast/Slow Spread Move -20 6/18/15 7/18/15 8/18/15 9/18/15 10/18/15 11/18/15 12/18/15 Today s Mining Stocks and Precious Metals Market Comments Our HUI key trend-finder indicators, the combination of the HUI Purchasing Power Indicator and the HUI 30 day Stochastic, are on a Sell signal this weekend. There is a huge Bullish divergence between the HUI 10 day average Advance/Decline Line Indicator and Mining stocks, shown at the bottom of the next page, suggesting before long a large rally will take place in Mining stocks and Gold. Page 28

29 HUI Gold Bugs Purchasing Power Indicator PPI is a Short-term Momentum Measure of Purchasing Power, Generating Buy and Sell HUI Signals When Changes Suggest Sustainable Multi-week Moves are Likely. PPI December 18th, 2015's HUI PPI is A Sell Signal Was Registered on 12/17/2015 Buy Signal Sell Signal PPI HUI copyright 2015 Robert D. McHugh, Jr. Ph.D /18/15 9/18/15 10/18/15 11/18/15 12/18/15 HUI 250 HUI 10 Day Moving Average Advance/Decline Line vs. the HUI Oftentimes Trend Reversals are Forewarned By Bullish and Bearish Divergences Between the HUI 10 Day MA Adv/Dec Line and the Prices of of HUI Mining Stocks. Bullish Divergence Bearish Divergence HUI A/D HUI A Bullish Divergence Warned a Rally was Coming Overbought A Bullish Divergence Warns a Rally is Coming A/D copyright 2015 Robert McHugh Oversold 7/18/15 8/18/15 9/18/15 10/18/15 11/18/15 12/18/ Page 29

30 HUI 225 Supply Pressure HUI vs: Demand Power & Supply Pressure June 2015 to December 2015 When Demand Power Crosses above the Supply Pressure Line by 10 points, we get a Buy Signal. When Supply Pressure rises above Demand Power by 10 points, we get a Sell Signal. Exit Signals occur when DP or SP lines return to intersection after an entry signal. ReEnter Short Enter Long Enter Short Enter Short Exit Short Demand Power/ Supply Pressure Demand Power HUI We got an "Exit Short Positions" Signal 12/18/ Bullish Divergence Bearish Divergence copyright 2015 Robert McHugh, Ph.D. 6/18/15 8/18/15 10/18/15 12/18/ The HUI Demand Power / Supply Pressure Indicator moved to a Neutral signal Friday, December 18th. Page 30

31 TRADERS CORNER For Standard and Platinum Subscribers How Educational Trading is Offered We offer three Investing/Trading Services. Standard subscribers have access to two of the three. Platinum subscribers have access to all three. The first Service is our Conservative Portfolio model. This is available to all subscribers. We have six categories of investments in this model; Cash, U.S. Government Securities, Gold, Buy and Hold, Market Timing, and Speculative. The details and philosophy can be read at the Conservative Portfolio model button at the left of the home page. Our goal with this portfolio is to beat the S&P 500 while generating positive returns over the long run with low risk investments and trading strategies. In other words, we do not want to lose money in any one year, yet over a five year period, want to have returns far in excess of the S&P 500. Since its inception in 2008, we have achieved these goals. The Second Service is our Market Timing Transactions: Available to all Standard and Platinum subscribers, we conduct approximately 5 to 10 ETF or Leveraged ETF trades per year, using our Secondary Trend Indicator, and other key Indicators to generate returns of 5 to 10 percent per trade, have 70 percent or more of our trades be successful, with less than 10 percent of our portfolio at risk at any one time, and with each transaction limited to a maximum risk of 2 percent or our portfolio. These transactions are reported at the Transactions button under the Conservative Portfolio header at the left of the home page. The purpose of this segment is to be a bit more aggressive to enhance overall performance of the Conservative Portfolio with overall minimal risk. The Third Service is our Platinum Trading Service: Available only to Platinum subscribers, we conduct approximately 15 to 30 Long Options trades (Long means we play markets to rise or fall, but the maximum we can lose is the amount invested) or Leveraged ETF trades per year, using all trading indicators at our disposal. This is the speculative segment of our Conservative Portfolio, with total risk at any one time limited to 5 percent of our portfolio. We usually only have 1 to 10 trades outstanding at any time. These trades are reported at the Platinum Current Trade button at the upper left of the home page. Details and philosophy, and past performance, can be accessed at the FAQ and Archives buttons under the Platinum Header at the upper left of the home page. On a good faith basis, Trades are ed to subscribers within 15 minutes of the time we conducted the transactions. We also post details of the trades at the Conservative Transactions button or the Platinum Current Trade button within 15 minutes of when we conduct them. This is not trading advice, is educational only. Platinum Trading Service: Today s Trades There were 0 trades today, December 18th, There are 12 open positions as of today, December 18th, Conservative Market Timing Service: There were 0 trades today, December 18th, There are 6 open positions as of today, December 18th, Conservative Portfolio Treasuries, Gold, Buy and Hold: There were 0 transactions today, December 18th, Page 31

32 TRADERS CORNER For Platinum Subscribers Past Performance Summary For Closed Trades By Year From 2011 through November 30th, 2015 Avg. $ # Closed # Winning % Winning # Losing Net Total Invested Year Trades Trades Trades Trades $ Profits Per Trade % 3 $ 27,802 $ 4, % 2 $ 74,418 $ 12, % 5 $ 92,470 $ 3, % 11 $ 16,240 $1, % 11 $ 11,380 $1,788 All of the above trades and details can be reviewed at the Archived Trades button at the upper left of the home page at IT SHOULD NOT BE ASSUMED THAT RECOMMENDATIONS MADE IN THE FU- TURE WILL BE PROFITABLE OR WILL EQUAL THE PERFORMANCE OF THE SECURITIES IN THIS LIST Here is a Performance Summary for the first 4.92 Years of the Program, From January 1st, 2011 through November 30th, 2015: # Total Trades 166 # Winning Trades 133 # Losing Trades 32 % Winning Trades 80.1% Avg. $ Invested Per Trade $4,431 Net $ Profits (Loss) Realized $221,680 Profits (earned 55 times the $3,999 list cost of a 3 Year Term Platinum in 4.92 years). If My People who are called by My name, Humble themselves and pray, and seek My face And turn from their wicked ways, Then I will hear from heaven, will forgive their sin, And will heal their land. 2 Chronicles 7: 13,14 Page 32

33 TRADERS CORNER For Platinum Subscribers Past Performance Year to Date 2015 The Performance results for our Platinum Trading Program for the Year 2014, January 1st, 2015 through November 30th, 2015: There were 25 closed trades during the first 11 Months of Twenty-two (88 percent) were winners, three losers, none were breakeven. The net profits accumulated on closed trades were $27,802 in 11 months, which is 2.8 times greater than the list cost of a 5 Year term Platinum membership in just 11 months! The average dollars at risk per trade came to $4,254. The return on investment for the average dollars at risk on these closed trades was 553%. Details for all closed trades in 2015 are available for review at the Platinum Archives button at the upper left of the home page at IT SHOULD NOT BE ASSUMED THAT RECOMMENDATIONS MADE IN THE FUTURE WILL BE PROFITABLE OR WILL EQUAL THE PERFORMANCE OF THE SE- CURITIES IN THIS LIST Here is a Performance Summary for the first 4.92 Years of the Program, From January 1st, 2011 through November 30th, 2015: # Total Trades 166 # Winning Trades 133 # Losing Trades 32 % Winning Trades 80.1% Avg. $ Invested Per Trade $4,431 Net $ Profits (Loss) Realized $221,680 Profits (earned 55 times the $3,999 list cost of a 3 Year Term Platinum in 4.92 years). Jesus said, "Do not let your heart be troubled; believe in God, believe also in Me. In My Father's house are many dwelling places; if it were not so, I would have told you; for I go to prepare a place for you. If I go and prepare a place for you, I will come again and receive you to Myself, that where I am, there you may be also. John 14: 1-3 Page 33

34 TRADERS CORNER For Platinum Subscribers Past Performance Year to Date 2014 The Performance results for our Platinum Trading Program for the Year 2014, January 1st, 2014 through December 31st, 2014: There were 30 closed trades during the 12 Months of Twenty-eight (93 percent) were winners, two were losers, none were breakeven. The net profits accumulated on closed trades were $74,418, which is 37 times greater than the $1,999 list cost of a 19 Month membership. The average dollars at risk per trade came to $12,052. The return on investment for the average dollars at risk on these closed trades 517 %. Details for all closed trades in 2014 are available for review at the Platinum Archives button at the upper left of the home page at IT SHOULD NOT BE ASSUMED THAT REC- OMMENDATIONS MADE IN THE FUTURE WILL BE PROFITABLE OR WILL EQUAL THE PERFORMANCE OF THE SECURITIES IN THIS LIST Here is a Performance Breakdown for Trades Closed During the12 Months Ending December 31st, 2014: # Total Closed Trades 30 # Winning Trades 28 # Losing Trades 2 % Winning Trades 93% Net $ Profits (Loss) Realized $74,418 If you confess with your mouth, Jesus is Lord, and believe in your heart that God raised him from the dead, you will be saved. For it is with your heart that you believe and are justified, and it is with your mouth that you confess and are saved. Romans 10:9,10 Page 34

35 TRADERS CORNER For Platinum Subscribers Past Performance The Performance results for our Platinum Trading Program for the Year 2013, January 1st, 2013 through December 31st, 2013: There were 45 closed trades during the 12 Months of Thirty-nine (86 percent) were winners, five were losers, one was breakeven. The net gains accumulated on closed trades are $92,470. This was 25.2 times greater than the average dollars at risk per closed trade. The average dollars at risk per trade came to $3,481. The annualized return on investment for these closed trades was 2,656 %. Details for all closed trades in 2013 are available for review at the Platinum Archives button at the upper left of the home page at IT SHOULD NOT BE ASSUMED THAT REC- OMMENDATIONS MADE IN THE FUTURE WILL BE PROFITABLE OR WILL EQUAL THE PERFORMANCE OF THE SECURITIES IN THIS LIST Here is a Performance Breakdown for Trades Closed During the12 Months Ending December 31st, 2013: # Total Closed Trades 45 # Winning Trades 39 # Losing Trades 5 % Winning Trades 86% Net $ Profits (Loss) Realized $92,470 Page 35

36 The Jaws of Death Multi-decade topping pattern warns that An Economic Depression is Developing. (E) of V of (V) of {III} (A) (B) (C) (D) Our Top Big Picture Scenario Giant Megaphone for Supercycle Degree wave (V) up of Grand Supercycle Degree Wave {III} Up Has Ended. This pattern didn t go anywhere, it is still staring us in the face. The rally this autumn has done nothing to change the above ominous Bear Pattern. This multi-decade Jaws of Death pattern has not been erased, compromised, or changed. A massive economic decline and stock market plunge is in its infancy. We are now on HIGH ALERT!!!!! Grand Supercycle degree wave {IV} s decline is close at hand. The Industrials are about to plunge from the upper boundary of the Jaws of Death pattern, the top for Grand Supercycle degree wave {III} up. Grand Supercycle degree wave {IV} down, which could last 5 to 7 years, is now underway. This plunge should begin once the Megaphone Jaws of Death smaller pattern from 2014 completes, which should finish sometime over the next 4 to 6 weeks. It may have already finished with a truncated final wave e-up. Page 36

37 e 5, C, (E) of V of (V) of {III} A 1 2 i ii v, 3 iii 4 iv a b c d Here is the Elliott Wave labeling for the rally from March 2009, wave (E) up. This completes the multi-decade Jaws of Death pattern. B (D) Weekly Full Stochastics are Topping, On a Sell. Stocks are finishing Intermediate degree wave C-up with a Megaphone top Jaws of Death pattern for the final wave 5-up move for C-up. Page 37

38 c, e 5, C, (E) of V of (V) of {III} c a Alt. e v, 3 a c a b b b x 4 d 1 Above we see stocks are finishing the fifth wave e-up of 5-up. Most of the time when a Megaphone Jaws of Death pattern, such as the above one from February 2014, is occurring, the final wave e-up will reach and end at the top rising boundary line. In this case, we could see the Industrials rise toward the 18,750 to 19,000 range. The new Sell in our Purchasing Power Indicator December 17th, along with the strong subsequent decline, challenges this wave labeling. On the next page we show the subwaves for e-up of 5-up. It is a complex three subwave move, a Flat, X wave, Zigzag. Wave e is a X pattern. Megaphone top patterns consist of five large subwaves, each consisting of 3 subwaves, a pattern. The above pattern complies with these requirements. The pattern is valid. Page 38

39 c e 5 {5} a Alt. c, e c {c} a {b} {a} {c} b {a} {b} {3} {4} {b {1} {2} {a} {c} X b This breakdown below the bottom boundary of the rising trendchannel could be a disastrous development for the short-term Bullish case. d Above we show the short-term detail labeling for wave e-up for the Industrials. This would be a combination Flat followed by a separating X wave, followed by a Zigzag pattern, essentially three large waves. This mapping maintains the integrity of the fact that the initial move from the August lows was a three wave rise, not a five wave. That meant either the rally coming out of the August low was corrective, meaning a deep decline was about to follow, or something else was going on, which we now know was a Megaphone pattern, requiring one more rally leg, but a rally leg that has to be three waves, not five. The Megaphone pattern from early 2014 answers the bell on this conundrum. The breakdown below the bottom boundary of this rising trend-channel raises the possibility that the wave e-up top truncated, the pattern is complete, and the next major downleg is starting. Page 39

40 {5} c e 5 {5} a Alt. c e 5 {b} {3} {4} {1} {c} a {a} {b} c {b} {3} {4} {a} {c} b {2} {c} b {1} {a} {a} {2} d {b} {c} X The S&P 500 remains above its bottom boundary of the rising trendchannel from August 2015, keeping the wave mapping intact for higher prices. Page 40

41 NDX a c, E, C up of (B) up a c b b X D Above we show a possible wave mapping for the NASDAQ 100 since the August 24th bottom. A decisive decline below the rising parallel trendchannel s bottom boundary line, below 4,450ish, would suggest wave c-up topped early, and a massive Bear market decline in the NDX has started. Page 41

42 NDX Big Picture Highest Probability Labeling C E, C up of (B) i iii v, A iv a v, C, A iii B b i iv ii A c, B A B D The NASDAQ 100 Is finishing a Flat pattern for wave (B) up. (A ii C, B (C) The NDX Weekly Full Stochastics are Overbought. The above large picture mapping for the NASDAQ 100 shows a Flat pattern for wave (B) up finished, with wave (C ) down starting now, which will be a massive decline in technology stocks. Page 42

43 Grand Supercycle Wave {III} has finished and Catastrophic {IV} down has started. (C) E, (5) {III} (C) (X) (A) (B) (A) (B) (C), C (B) (A) (C), D (A) (B) Weekly Full Stochastic are On a Sell Signal. (C) E, (5) {III} {i} {ii} {iv} {a} {b} {c} {2} {ii} The wave mapping is much clearer in the small cap Russell 2000 than the Blue Chip or tech indices, a clear bearish count. Five waves down, 3-up, next is five down. Blue Chips and techs should follow the small caps pathway lower. {iii} {v} {1} {i} {iii} {3} Page 43

44 Trannies have finished a Jaws of Death Megapattern. See Green Boundary Lines C (E) V, (V) {III} {V} (C) A (A) B (B ) (B) (D) (A ) (C) {IV} c e, C, (E) V, (V) {III} A a b d Trannies sit at a critical juncture this weekend, at the bottom boundary of a large rising trendchannel. A breakdown below this boundary line would be very Bearish for Trannies. B Page 44

45 e, C, (E) V, (V) {III} [2] There is a nice clean wave count for Trannies, which points toward sharply lower prices ahead. [1] [4] [a] [c] (2) Five waves down from the November high, and a three wave corrective rally, followed by another impulsive decline. Bearish. [3] [5] (1) [b] [1] of (3) Trannies are starting wave (3) down. Page 45

46 (E) of V of (V) of {III} (A) (B) (C) The Wilshire 5000 has finished a Jaws of Death Pattern. (D) Our Top Big Picture Scenario Giant Megaphone for Supercycle Degree wave (V) up of Grand Supercycle Degree Wave {III} Up Has finished. Wave {IV} down has started. {IV} The above chart for the Wilshire 5000 shows a Jaws of Death pattern from 1990 that has completed. Investors must be on high alert that Grand Supercycle degree wave {IV} down has started. Page 46

47 Monthly Left Shoulder We had a decisive break below giving us a minimum downside target for the U.S. Dollar of 40.00, another 50 % devaluation of the Dollar. Head A Massive Devaluation of the Dollar Occurred Due to the Recent Financial Crisis. Another Devaluation is Coming! Right Shoulder Neckline at Monthly Full Stochastics are on a Buy, Topping (5), V 2 c, (2) 1 The Weekly Full Stochastics are on a Sell Signal. 3 a b c, 4 a , 5, (1) a b c d e, b (3) Page 47

48 b d a c e Daily Full Stochastics on a Buy Signal. The Euro has completed the pennant portion of a huge Bullish Flag pattern, meaning it should start rising for several years. This likely means the U.S. Dollar is starting a significant decline. Page 48

49 5, (1) c, C b A Weekly b a a c, D a c, B b Oil Weekly Full Stochastics On a Sell. Oil broke down below what could have been the bottom boundary of a sideways triangle for wave D, which means it is now finishing the final wave c-down of a zigzag pattern for wave D-down. Page 49

50 (3) v, 5, 5, (1) b v, 5, 3 1 b 2 a c, iii i iv ii a c, A B C, (2) Gold s wave (2) correction has formed a complex pattern that could be very close to completion. Weekly Full STO On a Buy. Given the new Buy signal in our HUI Mining stocks key indicators, the HUI Purchasing Power Indicator and the 30 Day Stochastic, Gold and Mining stocks are about to rally sharply. Page 50

51 v, 5, 5, (1) b a a c e, B b c, A b d a c d e, C, (2) Price Target 1,000ish Gold s decline from September 2011 is very close to completion as Gold drops into its bottom target range for the final wave e-down of C-down or (2) down. Page 51

52 a c e, B Gold is finishing its Declining Bullish Wedge from b c, A b d a d c Alt. e e, C, (2) Price Target 1,000ish Gold is finishing wave e-down to complete the Declining Bullish Wedge. It is possible Gold is inside the middle wave of a three subwave move for e-down. Once Gold bottoms, it should begin a multi-year rally, stairstep, but up move for many years. Page 52

53 5, a c, d 2 b d 1 3 e, b c a c 3 4 5, a b c, e, C, (2) Wave e-down is underway. Within wave e-down, subwave a-down is finishing. This final wave e-down needs to be a three subwave move, not five. We can count five completed subwaves down from the October 2015 wave d-up top, which means the decline since then was subwave a-down of an a-down, b-up, c- down for e-down. Gold and GLD may have also finished their subwave b-up rally, which would mean they are now dropping into wave c-down. Gold could proceed lower toward 1,000ish with GLD headed toward 96ish when the final wave c-down of e-down bottom of significance arrives. Page 53

54 (3 ) III 3 5, (1) b a 3 5, c, (2) II Weekly Full Stochastics On a Buy The above mapping suggests Mining stocks are completing a Flat pattern for corrective primary degree wave (2) down. Wave c-down of (2) down looks close to completing five subwaves down. Wave (3) up should follow, and may have started, given our new Buy signals in our HUI key trend-finder indicators. Page 54

55 (3 ) III b HUI Mining Stocks have reached the Bottom Boundary of the Declining Wedge a b c d Mining Stocks are completing the final wave e-down leg of a Bullish Declining Wedge for wave 5 down of c-down to finish (2) down. e, 5, c, (2) Daily Full Stochastics On a Buy. {a} {c} d c {b} {b} Mining Stocks, as represented by the ETF GDX, is approaching its final low for the correction from September {a} {c } e, 5, c, (2) Page 55

56 v, 5, 5, (1) b a a c e, B c, A b d b d a c e, C, (2) Price Target 1,000ish Silver may have finished wave e-down of C-down of (2) down, with a rally leg now beginning. Page 56

57 Bonds Rallied 30 points During the stock market crash of 2000 thru Bonds Rallied 25 points During the stock market crash of Bonds Rallied 13 points During the stock market crash of Bonds Remain inside a long-term Rising Trend-channel. They will rise much further during the stock market plunges of Bonds remain inside a well-defined Rising Trend-channel. U.S. Bonds typically rise substantially and quickly during stock market crashes. They will again when the next stock market crash occurs. Page 57

58 Top Dow Jones Corporate Bonds e, c, 2 i ii a e, a iv a iii b v, 1 b a e, a c b d 1 2 Daily Full Stochastics On a Buy. Declining Corporate Bond prices mean investors are shedding risk, which is a bad sign for the stock market. Page 58