The four year cycle revisited For members and families only, please do not forward as this tutorial will not be posted to the public.

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Lorena Kimberly Cannon
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The four year cycle revisited 07-0421 For members and families only, please do not forward as this tutorial will not be posted to the public.

1 The four year cycle revisited For members and families only, please do not forward as this tutorial will not be posted to the public. A lot of my energy has been devoted to the gold sector these past few weeks as we were near another breakout point. A trading plan has been in place and tutorials have been prepared to lead us into the next impulsive phase of the gold bull market. This week, I want to focus on a very pivotal development which I first introduced to the members in August The four year cycle. Those who are not familiar with this ongoing phenomenon can read about it and should do so first before reading the rest of this tutorial, at: Lets walk thru this four year cycles beginning with the Dow - the breakout from the cup with handle implies an upside target of A four year cycle low has been confirmed for The next four year cycle low is not due until 2010, and because we are now in a bullish cycle, the next four year cycle top will also occur in 2010, only a few weeks before the cycle low, some time between June and Oct.

2 The SP500 is now approaching the all time high and resistance. If it follows the footsteps of the Dow, we should see another cup with handle, and a subsequent breakout with an upside target of Notice the 4 yr CLs are the same as the Dow.

3 Semi conductors have also made the same 4 yr CLs.

4 QQQQ (ETF was introduced in 1999, so I use the $NDX here) also have corresponding 4 yr CLs. Pause Lets back track a little first. If you read the Four year cycle report dated Aug 2006, you will recall that we weren t quite sure if a lower low would arrive in the traditional time frame of Sep to Oct, and therefore, we weren t too aggressive in trading the QQQQ in the summer of 2006.

5 The Q bottomed in July, and the Sep/Oct lower low never arrived. In fact, we had a bull cross in Oct and prices went up and up. We did not chase it, but patiently waited for either an IP signal, or a BSBS which will eventually occur if the 4 yr CL has indeed bottomed. The 2/27 mini crash had some analysts calling for a delayed 4 yr CL to be occurring, meaning a lower low than the July06 bottom still to come. But with our trading model, a TLBBS at the 200ema is a text book perfect BSBS, and that occurred in mid March thanks to the help from the mini crash. A few days later, we had our first set up which we bought 10%, and then another set up a few days later which we allocated another 10%. I was planning on stopping at 20% in anticipation of more allocations to the gold sector. However, two things which happened this week opened the door for more allocations for the tech sector. #1 breakout model was rejected at resistance again, no breakout in the gold sector yet. #2 we have a breakout on the SMH.

After moving up sharply from the July bottom of the 4 yr CL, SMH went sideways for seven months, casting doubts that perhaps the 2006 4 yr CL would indeed be delayed as suggested by a few experts on

6 After moving up sharply from the July bottom of the 4 yr CL, SMH went sideways for seven months, casting doubts that perhaps the yr CL would indeed be delayed as suggested by a few experts on the four year cycles, into the spring or summer of This week s breakout in SMH, a new high on both the Nasdaq100 and the Nasdaq Composite should provide the last piece of the puzzle that the four year cycle low is in. Summary Having a four year cycle low confirmed has very bullish implications for the next three years and beyond for the broad market particularly the tech sector as it will outperform others with semi conductors assuming the leading role again. As to how this will affect the resource sectors of energy and gold, nobody knows at this point. Inter-market relationship is complex and dynamic, and subject to constant change. Perhaps both the growth sectors and the commodity sectors will rally side by side, or perhaps the inversed relationship between them will return once again. As always, we cannot predict, but we can prepare by planning. Plan of action Like what we have done with the gold sector by mapping out a plan of action, we are doing the same with the tech sector. Traders continue to trade the set ups, and become more aggressive with allocation. Investors you can begin accumulating positions on set ups, and buy aggressively upon an IP signal. The monthly chart should be back on a long term buy signal by the time we have our first IP signal in the tech sector, and therefore, it will be time to hold a core position again. If the inversed relationship between growth stocks and commodity

7 stocks has returned, I will not hesitate to allocate 100% to the tech sector upon an IP signal. If the gold sector also breaks out, I will still overweigh the gold sector due to its out performance during an IP. I have never traded an IP in the energy sector, therefore, I will deal with it when and if it happens. One step at a time. End of tutorial

NEM BSBS today but no entry. For newcomers, this is an excellent example on the difference between a signal and a set up. We have a buy signal today.

NEM BSBS today but no entry. For newcomers, this is an excellent example on the difference between a signal and a set up. We have a buy signal today. Gold update March 25/2006 A note to new subscribers and a reminder to existing subscribers: we trade the signals and not the analysis. Traders simply buy when we have a buy signal, and exit on a TLB (trendline