Composite Index "is it a BEARWEDGE???"

*no comment, refer back to the TITLE... hahaha, antiie/unker prepare for the worst now... BUY LOW BUY LOW, dont miss the chance.. its one time opportunity to face the worse since 1929.... wakakaka, BUY LOW BUY LOW... BURSA JUMBO MEGA SALES COMING SOOOOOONNNNN??

FKLI & CPO (February 2009)

>> $72,074

1)30.01>FKLI LONG 3@877-SELL 3@868 = -27 (03.02)> -1410= 70,664

2)03.02>FKLI SHOT 6@868-BUY 6@875 = -42 (04.02)> -2220= 68,444

3)04.02>FKLI LONG 4@878-SELL 4@869 = -36 (05.02)> -1880= 66,564
>>> 1st week february loss = -$5,510

4)05.02>FKLI LONG 3@875-SELL 3@894 = +57 (10.02)> +2790= 69,354

5)10.02>CPO April, LONG 1@1944-SELL 1@1930 = -14 (11.02)> -370= 68,984

6)12.02>FKLI SHOT 4@884.5-BUY 4@889 = -18 (13.02)> -980= 68,004

7)12.02>CPO April, SHOT 1@1931-BUY 1@1940 = -9 (13.02)> -245= 67,759

8)13.02>CPO April, LONG 1@1958-SELL 1@1968 = +10 (13.02)> +230= 67,989

9)13.02>CPO April, LONG 1@1988-SELL 1@1995 = +7 (13.02)> +155= 68,144
>>> 2nd week february profit = +$1,580

11)16.02>FKLI LONG 3@914-SELL 3@905 = -27 (16.02)> -1410= 66,734

#)17.02>FKLI SHOT 903-BUY 890 = +13 (18.02)> +630 *Miss Trade

12)18.02>FKLI LONG 3@892-SELL 3@886 = -18 (20.02)> -960= 65,774

10)13.02>FKLI LONG 1@902-SELL 1@881 = -21 (20.02)> -1070= 64,704
>>> 3rd week february loss = -$3,440

11)20.02>FKLI SHOT 2@883-BUY 2@880 = +6 (23.02)> +260= 64,964

12)20.02>FKLI SHOT 1@881-BUY 1@880 = +1 (23.02)> +30= 64,994

13)24.02>FKLI SHOT 1@881-BUY 1@885 = -4 (24.02)> -220= 64,774

14)24.02>FKLI LONG 3@885-SELL 3@893 = +24 (26.02)> +1140= 65,914

15)26.02>FKLI SHOT 3@893-BUY 3@897.5 = -13.5 (26.02)> -735= 65,179
>>> 4th week february profit/loss = +$475

FEBRUARY:- fkli & cpo profit/loss = -$6,955/-9.6% ($65,179:+35.7%)

In the long run ... Commentary: This might be first genuine bear market in three decades

ANNANDALE, Va. (MarketWatch) -- Lots of attention was paid, going into Monday's trading session, to the Standard & Poor's 500 Index.

Would it join the Dow Jones Industrial Average in breaking to new bear-market lows, lower than the Nov. 20 level that up until recently had marked the low point of the bear market that began in October 2007?

As fate would have it, of course, it was not even close. By the close of trading, the S&P 500 was more than nine points below its Nov. 20 closing low.

That's depressing enough news, of course.

But by focusing on whether the Nov. 20 lows would be broken, investors may have overlooked something else that happened Monday that is even more momentous from a longer-term point of view: The Dow broke below its closing low of the 2000-02 bear market; the S&P 500 had achieved that dubious feat last Friday.

Technicians will no doubt endlessly debate the meaning of this in coming days. But one intriguing consequence of the 2002 lows' being broken is that the stock market's decline between 2000 and 2002 begins to appear less and less as a bear market and more as a mere correction within a great bull market that began in the early 1980s.

According to this retelling, that bull market lasted 25 years and did not finally end until October 2007.

What difference does it make how we retell the story of what has passed? In one sense, of course, it makes no difference. After all, regardless of what you call it, the stock market fell some 40% between 2000 and 2002.

But, in another sense, this retelling of history carries great significance, since it reveals a lot about the bear market we're suffering through right now. According to some technical analysts, prominently including Richard Russell, editor of Dow Theory Letters, a major bear market can be expected to obliterate between one-half and two-thirds of the previous advance.

I'll do the math for you: We've already erased around half of the bull market that began in 1982. A two-thirds retrenchment would take the Dow down to around the 5,200 mark.

By the way, this sobering retelling of the stock market's history over the last three decades isn't something that technicians are cooking up only now, after the stock market has already declined by 50%.

Russell outlined just such a possibility nearly a year ago, in April 2008, when the Dow was trading at relatively lofty levels around 12,600. In entertaining the notion that the 2000-02 bear market was actually a mere correction within an ongoing bull market, Russell wrote: "Somewhere ahead we're finally going to enter a true primary bear market, maybe one of the greatest and most tragic in history. That future bear market will end with something we haven't seen since the 1980 to 1982 period, and I'm talking about great values in stocks. And when I say great values I'm talking about blue-chip stocks selling in single-digit price/earning ratios while at the same time providing dividend yields of 6-7-8%, the kind of yields we last saw at the lows of the early 1980s."

The bottom line? On this retelling, we should have expected the bear market that follows an unprecedented bull market would be just as momentous.

In other words, we should not have been surprised.

Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.
*Courtesy of MarketWatch

An historical walk down Wall Street, Commentary: Analogy with the 1930s doesn't have to spell doom

ANNANDALE, Va. (MarketWatch) -- It's become fashionable in recent months to look to the 1930s for an analogy to what we're suffering through today.

But how many of the commentators who so blithely throw the comparison around have actually analyzed what it would really mean to play out that decade's script?

I think you know the answer.

So, for this column, I decided to take that analogy seriously. And, not surprisingly, I found that it presents a very depressing portrait of what might lie ahead. If we think we've had it bad so far -- and we have -- we haven't seen anything yet.

Believe it or not, however, I also found some good news.

That, at least, is the conclusion to emerge from a recent interview with Jeremy Siegel, the Wharton finance professor and author of the classic investment book, "Stocks for the Long Run."

To locate the date during the 1930s that is most analogous to today, Siegel looked for the point at which the stock market after 1929 had -- as is the case today -- declined by half. He relied on a stock-market benchmark that he has calculated which takes dividends into account and also adjusts for inflation.

This point of 50% decline came very early in the Great Depression, according to Siegel -- at the end of 1930, in fact. As in the current bear market, that initial point of 50% decline came just 16 months after the August 1929 stock-market top.

But the bear market had only barely begun at that point. Over just the next five months, according to Siegel, on an inflation-adjusted total return basis, the stock market fell an additional 60%.

You read that right: That's a 60% drop on top of a 50% drop -- or should I say "on bottom of ..."?

If the stock market today were to suffer a further decline of similar magnitude, the Dow Jones Industrial Average would be trading below the 3,000 level by the end of July.

To this extent, therefore, we had better hope that the analogy with the 1930s doesn't hold.

The news isn't all bad, however. That's because, according to Siegel, the stock market quickly recovered from its 60% plunge in early 1931 -- within two years, in fact. By June 1933, the market was actually ahead of where it had stood at the end of 1930.

Furthermore, over the five years beginning at the end of 1930, the stock market, on an inflation-adjusted total-return basis, produced a 7% annualized return -- notwithstanding the 60% drop in the first five months of that five-year period.

In other words, even if you had been so unlucky as to buy stocks right before a six-month decline of 60%, you would have been whole again within just two years and would have earned a 7% real return over the next five years.

Few investors would object to that outcome today, of course. A 7% real return over the next five years sounds awfully attractive, in fact. And, yet, assuming the analogy with the 1930s holds up, that is what will happen between now and February 2014.

Of course, there's no way of knowing whether we're really playing out a 1930s script. And even if we are so unlucky as to endure a 60% drop over the next five months, there are no guarantees that the market will recover as quickly as it did following the first half of 1931.

Nevertheless, insofar as we choose to compare the current bear market and the Great Depression, we owe it to ourselves to carefully analyze what that analogy holds. And, as awful as that analogy is, it also contains some welcome and surprising silver linings.

Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.
*Courtesy of MarketWatch

DowJones 60m.chart (24.02.2009)

*DJ rebound - its about time because of the BULLDIV from RSI & Chart and Bernanke mention all this will end by year end (he can see the future, good good) hahaha, but Bursa move ahead of the rest of the world yesterday. Now trick question, DJ follow Bursa ka?? hehe

AIG - Chart & Put

*congrats to all my friends that making good USD... very good PUT decision to all you guys make last October/November. Regret i tada follow you guys....

PUT OPTIONS

Expire at close Fri, May 15, 2009

Strike		Last	Chg	Bid	Ask	Vol	Open Int
3.00		2.50	0.00	2.54	2.68	223	2,980
4.00		3.50	0.00	3.50	3.70	10	1,234
5.00		4.50	0.00	4.50	4.70	10	1,380
6.00		4.40	0.00	5.50	5.70	5	174
7.00		5.40	0.00	6.50	6.70	10	1
8.00		6.56	0.00	7.50	7.70	12	70
10.00		8.60	0.00	9.50	9.70	36	47
15.00		13.55	0.00	14.50	14.70	5	12

Stocks jump after Bernanke says recession may end

Stocks jump after Bernanke tells Congress recession might end this year

NEW YORK (AP) -- Federal Reserve Chairman Ben Bernanke has given Wall Street a double dose of reassurance. Bernanke has told Congress the recession might end this year, and that regulators aren't planning to nationalize banks. The news alleviated some of investors' worries about the economy and the banking system, and lifted the Dow Jones industrial average and Standard & Poor's 500 index off their lowest levels since 1997.

AP - Federal Reserve Board Chairman Ben Bernanke testifies on Capitol Hill in Washington, Tuesday, Feb. 24, 2009, before the ...">

AP - Federal Reserve Board Chairman Ben Bernanke testifies on Capitol Hill in Washington, Tuesday, Feb. 24, 2009, before the ...

Analysts said the market was also hoping that President Barack Obama, who speaks to the nation Tuesday night, will offer details about his plans to help stabilize the financial system.

The Dow is up 236 points at 7,350, while the S&P 500 index is up 29 at 773. The Nasdaq composite index is up 54 at 1,441.

Advancing issues are ahead of losers by 5 to 1 on the New York Stock Exchange. Volume came to 1.84 billion shares.

*Courtesy of Yahoo! Finance

>> Now we wait and see whether Bernanke prediction going to happen by year end or not. Hehehehe, now looks like prediction between Greenspan vs Bernanke ???

US Stocks Close Lower On Broad Losses; DJIA Down 251

NEW YORK (MarketWatch) -- U.S. stocks plunged to their lowest levels in nearly 12 years as risk aversion and the weight of a global recession sparked a broad-based decline led by industrial heavyweights such as General Electric and Alcoa.

After a bank-led 485-point slide last week sent the Dow to new bear market lows, a more broad selloff Monday pushed the index even lower Monday. Setting off the declines was a drop of 48 cents, or 7.6%, to 5.81, for Alcoa, and 53 cents, or 5.7%, to 8.85, for General Electric.

For GE, traders continue to view the industrial conglomerate as basically a financial firm, with a Deutsche Bank analyst saying there's a growing risk that GE will have to cut its dividend to support its GE Capital unit. For banks, and all of the companies that rely on the credit markets to sustain growth, a continued fear about what still remains on corporate balance sheets reigns.

"Where there has been smoke so far, there has eventually been fire every time," said David Klaskin, chief investment officer for Oak Ridge Investments in Chicago.

Overall, the Dow closed down 250.89 points, or 3.41%, to 7114.78, marking its lowest closing point since May 7, 1997. In 10 sessions, the Dow has lost more than 14% and is down 19% for the year.

Former Dow-component American International Group also weighed on the broad indexes, with CNBC reporting that AIG is in talks with the U.S. government about securing more funds to be able to continue operating after March 2. Traders say any move to help the giant insurer could delay government officials from more pressing issues within the economy and banking system.

AIG, now a small-cap, closed down a penny, or 1.9%, at 53 cents.

The Standard & Poor's 500 slid 26.72, or 3.47%, to 743.33, marking an 11-year closing low and passing through its closing low of 752.44 made in November. Though the tech-heavy Nasdaq Composite declined more than the other broad indices, off 53.51, or 3.71%, to 1387.72, it remains up more than 5% from its November closing lows.

It was notable the financial sector didn't take part in the broad market declines as talk of an expanded U.S. government stake in Citigroup prompted some gains for banks. Citigroup shares rose 19 cents, or 9.7%, to 2.14. Bank of America, which has also been subject to speculation about a possible government takeover, gained 12 cents, or 3.2%, to 3.91.

But traders note a heavy reliance on Washington isn't healthy for banking stocks long-term. And the broad stock declines have fed into the same level of concern from investors in late 2008, when money managers said many of their clients were increasingly asking for the safest route possible.

"People are totally risk averse to anything right now. They're backing off any asset allocation and just getting out as it's going to take a while before any stimulus money moves in," said Thomas Nyheim, a portfolio manager with Christiana Bank & Trust.

Elsewhere among banking stocks, Royal Bank of Scotland gained 29 cents, or 5.2%, to 5.83, after reports that it would follow in Citigroup's footsteps with a breakup in which it would hive off assets it plans to sell.

However, UBS and other Swiss banks dropped on continued worries about their investment-banking operations. UBS closed down 1.32, or 14%, at 8.39.

Shares of managed-care providers dropped sharply Monday after the Centers for Medicare and Medicaid Services said Friday private Medicare plans would see a modest 0.5% increase in the 2010 fiscal year under tentative projections, a growth rate that would come in well below some analysts' expectations. Shares of UnitedHealth Group declined 4.16, or 15%, to 23.82 and Humana fell 9.71, or 24%, to 30.83.

Ford Motor gained 15 cents, or 9.5%, to 1.73 as the car maker reached a tentative deal over unionized retiree health benefits Monday, increasing the chances that General Motors and Chrysler can secure their own concessions. GM closed unchanged at 1.77.

On the earnings front, Campbell Soup reported a 15% decline in fiscal second-quarter net income on falling volume and the stronger dollar. The soup maker closed down 82 cents, or 2.8%, at 28.63.

Garmin gained 1.11, or 7.3%, to 16.28 on Nasdaq. The maker of global positioning systems' fiscal fourth-quarter net income dropped 49% on falling sales and margins.

Fitch Ratings further downgraded the credit ratings of Mexican cement maker Cemex SAB, off 36 cents, or 6%, to 5.64, citing concerns about the company's level of debt.

*Courtesy of MarketWatch

DowJones 60m.chart (23.02.2009)

*as I mention last saturday, DJ going SOUTH because of the last 2 Friday inverted hammer & last night DJ drops nearer to 7,000 level. This level should be a short term support level for DJ.

Major stock market indexes fall to 1997 levels

Dow, S&P 500 fall to 1997 levels as sagging confidence pulls stocks lower; Dow falls 251

NEW YORK (AP) -- Wall Street has turned the clock back to 1997. Investors unable to extinguish their worries about a recession that has no end in sight dumped stocks again Monday. The Dow Jones industrial average tumbled 251 points to its lowest close since Oct. 28, 1997, while the Standard & Poor's 500 index logged its lowest finish since April 11, 1997.

All the major indexes slid more than 3 percent. The Dow is just over 100 points from 7,000.

"People left and right are throwing in the towel," said Keith Springer, president of Capital Financial Advisory Services.

Investors pounded most financial stocks even as government agencies led by the Treasury Department said they would launch a revamped bank rescue program this week. The plan includes the option of increasing government ownership in financial institutions without having to pour more taxpayer money into them.

Although the government has said it doesn't want to nationalize banks, many investors are clearly still concerned that this could be a possibility as banks continue to suffer severe losses because of the recession. They're also worried that banks' losses will keep escalating as the recession sends more borrowers into default.

"The biggest thing I see here is the incredible pessimism," Springer said. "The government is doing a lousy job of alleviating fears."

The Treasury and other agencies issued a statement after The Wall Street Journal reported that Citigroup is in talks for the government to boost its stake in the bank to as much as 40 percent. Analysts said the market, which initially rose on the statement, wanted more details of the government's plans.

"It's only a very partial picture of what we may get," said Quincy Krosby, chief investment strategist at The Hartford. "This proverbial lack of clarity is damaging market psychology."

Meanwhile, technology stocks fell after The Journal reported that Yahoo Inc.'s new chief executive plans to reorganize the company. But the selling came across the market as pessimism about the recession and its toll on companies deepened.

"There's no where to hide anymore," said Jim Herrick, director of equity trading at Baird & Co.

The market's decline extends massive losses from last week when the major stock indexes tumbled more than 6 percent. The major indexes plunged through the lows they reached in late November, at the height of the credit crisis.

"There's no main driver of the down day," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "There's just so much skepticism in the overall market and (the question is) is the government doing proper things to get us out of this problem. Obviously the stock market is voting no."

According to preliminary calculations, the Dow dropped 250.89, or 3.41 percent, to 7,114.78. It last closed this low on Oct. 28, 1997 when it finished at 6,971.32. The Dow hasn't traded below the 7,000 mark since October 1997.

The Standard & Poor's 500 index fell 26.72, or 3.47 percent, to 743.33. It was the lowest close since April 11, 1997, when it ended at 737.65.

The technology-laden Nasdaq composite index dropped 53.51, or 3.71 percent, to 1,387.72.

The Russell 2000 index of smaller companies fell 16.38 or 3.99 percent, to 394.58.

Declining issues outnumbered advancers by more than 6 to 1 on the New York Stock Exchange, where volume came to 1.61 billion shares compared with heavy volume of 2.12 billion shares on Friday.

Among tech stocks, Hewlett-Packard Co. fell $1.96, or 6.3 percent, to $29.28, and Intel Corp. dove 70 cents, or 5.5 percent, to $12.08.

Other big decliners included General Electric Co., which dropped to a 14-year low of $8.80, but ended down 53 cents, or 5.7 percent, at $8.85. Aluminum producer Alcoa Inc. tumbled 48 cents, or 7.6 percent, to $5.81.

Some financial stocks managed to gain, including Citigroup, which rose 19 cents, or 9.7 percent, to $2.14, and Bank of America Corp., which gained 12 cents, or 3.2 percent, to $3.91.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.77 percent from 2.79 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.28 percent from 0.26 percent Friday.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude fell $1.59 to settle at $38.44 per barrel on the New York Mercantile Exchange.

Overseas, Britain's FTSE 100 fell 0.99 percent, Germany's DAX index fell 1.95 percent, and France's CAC-40 slipped 0.82 percent. Earlier, Japan's Nikkei stock average fell 0.54 percent.

*Courtesy of Yahoo! Finance

DowJones 60m.chart (20.02.2009)

*DJ 60m... RSI flat, chart wise last 2 bar invert hammer & under mid BB... next expected move SOUTH

KLSE vs DJ

*2 years KLSE vs DJ... KLSE pointing to break down severely, DJ no need to story sure GONE, the only thing how LOW is LOW ????



*5 years KLSE vs DJ... hmmmm, DJ major whacking IF break and close under major last line chart LOW.... KLSE as usual "TIPU" support using our EPF money (ValueCap lor).

**The conclusion BURSA BOLEH - tipu everybody.... what to do but futures traders waiting like a hawk to join the major FLOW soon....

DowJones 60m.chart (18.02.2009)

*Dow 60m... RSI looks well supported (double bottom, bull div, whatever) next movement tonight, hmmmmm....no idea...

DowJones 60m.chart (13.02.2009)

**Hmmmm... 60m Dow clearly sideway & trapped between the high n low BB... from my signal very high chance for Dow to go reverse IF break the last 2nd low... the upsite limited from current chart pattern on hourly chart... the stimulus package to me should be nothing because the real effect from the stimulus only can be seen towards year end or next year... the whole world in denial mode now, where got such thing overnite recovery... hahhaha to me Stimulus Package can becomes Stimulate "Package" only...muahahahahha

DowJones 60m.chart (12.02.2009)

DowJones 60m.chart (11.02.2009)

Crude Oil Daily & Hourly chart..

Daily Chart




Hourly Chart

*Crude breaking lower, should it drop to $30, $25 ?????

DowJones 60m.chart (10.02.2009)

DowJones Daily chart

DowJones 60m.chart (09.02.2009)

DowJones 60m.chart (06.02.2009)

The biggest secret to successful trading

The biggest secret to successful trading is …

Trading Discipline

Emotions are probably the biggest obstacle any trader has to overcome. Many traders become losers because they can’t follow a plan. They see a couple of losses, get excited, abandoned the plan and start to take wild shots at the market.

Traders who develop a sound set of trading rules that match their financial situation with their objectives, and then stick with those rules, increase their chances of becoming big winners. Trading discipline can be more important than your trading system.

Discipline means you must become mechanical in making trades when certain price actions occur. You must shut off your emotions, and not accept one trading signal over another. Disciplined traders let profits run and keep losses short by following rigid guidelines.

Again, discipline does not mean you will have perfect results. If you’ve select a diversified portfolio, you know that you can expect losses in some markets. Yet, discipline forces you to trade the whole portfolio and keep you from second guessing your system. If you have a training system that’s proven successful, discipline may be the only thing you need to get profitable returns.

Note these concepts all work together - you can’t have the right trading system and no discipline, you can’t select the right trade without the right system, you can’t diversify without having adequate capital, etc. If you adhere strictly to all of these rules of money management, trading may not be as glamorous as you probably thought it would be.

However, by using sound money management techniques, you spread out your risk and take a conservative approach aimed at getting 25-50% returns on your investments, year in and year out. That’s a good return on investment in anybody’s book, and that’s the approach any new trader should take towards markets.

Adam Hewison

President, INO.com

Co-creator, MarketClub

*Courtesy of Trader's Blog

Positioning portfolios for a possible rally

Commentary: ETFs to help prepare for a short-term, cyclical bull market

HOUSTON (MarketWatch) -- Given the somber assessment of the global economy so prevalent in the news today, it is reasonable to assume equity markets will struggle for some time.

But while stocks remain in a bear market that began March 2000, investors shouldn't ignore the potential for a substantial rally in a short-term, cyclical bull market.

Ned Davis Research looked at 18 previous bear markets and found that the average cyclical bull market within the bear has seen the Dow Jones Industrial Average rise 64% over 508 days. The conclusion is that massive rallies have occurred during severe bear markets, including some of the worst contractions in history in the 1930s and 1970s.

In recent weeks, we've noted several positive developments that make us more optimistic on equity performance during the first half of 2009. First, investors put $23 billion into equity mutual funds in December after taking out a record $320 billion from all funds in 2008. That suggests forced selling is beginning to abate.

Some of the record cash that's now on the sidelines, earning less than 1%, eventually gets allocated to equities. Second, the CBOE Volatility Index

has dropped 50% from its November high. That indicates investor psychology, while still fearful, has greatly improved.

Third, early signs have emerged that the tremendous stimulus provided by the Federal Reserve and U.S. government are helping to stabilize credit markets. Finally, many of the classic signs of market bottoms occurred last fall, suggesting that the lows of October and November could hold for near term.

Assuming November equity market lows hold, stocks could be set for a rally over the next several months as investors begin to feel confident that the massive economic stimulus package to be enacted by Congress will result in a second-half recovery.

How should investors position portfolios to take advantage of an equity market rally? We think there are three exchange-traded funds that, when included within a diversified portfolio of asset classes, should allow investors to participate in a market recovery.

Exchange-traded funds offer an efficient, low-cost method of easily investing in specific investment opportunities. SPDR Trust Series 1 seeks to replicate the performance of the large capitalization sector of the U.S. equity market represented by the S&P 500 Index.

This ETF has a very low expense ratio of 0.095 percent. Studies have shown that the majority of actively managed mutual funds in the large capitalization sector fail to outperform the S&P 500 after fees and expenses.

The reason is that this sector of the market is highly efficient, which makes it very difficult for stock pickers to consistently have an edge. As a result, we recommend that investors index much of the large capitalization allocation in their stock portfolio via an investment in SPY.

Small capitalization stocks also should be part of a portfolio positioned for a market recovery. The iShares Russell 2000 Index Fund seeks investment results that correspond to the performance of the Russell 2000 index of U.S. small capitalization stocks.

Small-cap stocks no longer sell at a valuation premium to large cap stocks and a transition to small cap leadership could develop in the coming months. In addition, increasing investor confidence in an economic recovery would likely favor the shares of small cap companies.

One last recommendation is that investors maintain a modest investment in emerging markets. The iShares MSCI Emerging Markets Index seeks to replicate the performance of a diversified index of emerging market equities. Emerging markets were hit particularly hard in 2008 as commodity prices plunged, exports to developed markets slowed and the U.S. dollar strengthened.

However, the long-term trend of emerging market-led growth likely remains intact. Looking at past emerging market corrections, much of the losses were retraced quickly during a recovery.

In addition, the massive stimulus in the U.S. and other countries, particularly in China, is likely to spark inflation in the years ahead, benefiting emerging markets. Finally, an international equity allocation still makes sense as a currency hedge against the potential devaluation of the U.S. dollar.

James Shelton is chief investment officer at Kanaly Trust in Houston.

*Courtesy of MarketWatch

When the next bull market is coming

Commentary: Charts show it could show up again in late 2010

NEW YORK (MarketWatch) -- They say that bottoms in the market are events while tops are processes. That means it takes time for the many parts of the stock market to roll over following a bull market, but they all travel together as bears bottom.

While I agree that cyclical bull and bear markets follow that rule, I have a hard time believing that a secular bear market -- in other words the real deal bear market -- is going to turn on a dime. This is something to which technical and fundamental analysts can agree.

So, while I do think the bear is over and a transition period is underway, I have pushed my expectations for the next bull market out to next year. Based on simple chart reading, it was not a difficult conclusion to reach.

Many analysts make comparisons to bear markets past. And while we can glean insights as to the psychology of the market at those times, we can be assured that no two bear markets end the same way. They all begin differently and for different fundamental reasons, too. But both tops and bottoms all have technical elements that do repeat.

Therefore, while we cannot match them up point for point, we can use previous bear market bottoms as rough guides to how the current one will form.

I have approached this analysis from two angles. The first is simply matching up the trends of the past two bear markets, and remarkably they are parallel. The massive twin 2000 and 2007 peaks in the Standard & Poor's 500 and sizes of the subsequent declines are certainly similar.

Using just this basic analysis of comparing the two trends, and then adding in support and resistance seen on both the 2002-2003 and 2008-present trading ranges, the time frame for declaring a healthy bull market is sometime in late 2010 (see Chart 1).

That is the point in time where the current trading range top runs into the trendline drawn from the 2007 peak. It is obviously a very simple analysis and does not really differentiate the speed of the two bear markets. But it does give us a framework for just how much work the market needs to do to heal itself.

Chart 1

There is more to be found in the 2002-2003 bottoming process and it relates back to the concept of gradual change in trend rather than a simple reversal.

Theoretically, the final big push down to bear market low territory occurs with panic. Prices move very quickly and internal measures such as market breadth and momentum swell to very high bearish levels.

Such a move is unsustainable for long and the market corrects higher before attempting its next push down to lower lows. What we observe is that the decline has a shallower trend and internals that are not quite as bad as the previous decline. This process can repeat a few more times before all is said and done.

The next chart shows the Dow Jones Industrial Average six years ago with each of the final declines highlighted in red (see Chart 2). This makes it very clear that a transition was occurring as the balance of power in the market shifted.

Chart 2

While not exactly the same in terms of elapsed time, the current bottoming process exhibits the same gradual change in trend slope (see Chart 3). It started with the crash-like drop last October to a January decline that was much more normal in speed (whatever normal really means in the market).

Chart 3

Because the current bear market was so much worse in terms of overall speed, decline the healing process should take longer. I would expect more than one more tradable rally and decline cycle within the basing pattern before the target breakout date of September 2010.

This is far from a forecast but rather it is a framework. It keeps us in trading range mode for the foreseeable future and that means if you are going to play you need trading range strategies. Buy low, sell high.

It should be many months before we can switch to trending market strategies of buying breakouts. It also tells us when we can switch from being traders to being investors again.

Michael Kahn writes the Getting Technical column for Barron's Online, which analyzes sectors and markets twice a week. www.barrons.com. Read his blog at www.QuickTakesPro.com/blog

*Courtesy of MarketWatch

DowJones 60m.chart (05.02.2009)

DowJones 60m.Chart (03.02.2009)