Monthly Archives: September 2009

BAM Model Blows Holes in the Efficient Market Hypothesis and Random Walk Hypothesis

What a perfect opportunity to prove these egg-heads wrong. These efficient market guys are the ones who built models that blew up the world and saddled taxpayers (us) with debt after we bailed them out!

Please don’t take this wrong–I’m not trying to come across as arrogant–but the idea that markets are random is absurd. A three year old child is capable of drawing a trendline and those trendlines existed long before graphs were available to the public and long before computer trading came into being.

How is it possible that random price movement would create a trend channel and how could it create those trend channels on each and every fractal timeframe?

The BAM Model was created through detailed study of price movement related to human emotion (behavioral analysis) and it required me twenty years to develop this model.

When markets are volatile and emotion is running high, as measured by the $VIX index, the BAM intra-day SPX model has at times predicted every significant intra-day move that the market would make during the trading session. For example, prior to the trading session, we’ll email clients with this:

-strength into 9:15
-weakness into 10:45
-strength into 11:30
-weakness into the close.

If markets are random, how would that be possible?

In fact, we’re so confident in our model that we’ve committed to a Twitter “Full Access Campaign” where we’re allowing the entire world to follow the predictions we send to our large hedge fund clients each day and we’re going to do that each day until October 11th.

Let’s see how it goes and if, after watching our real-time messages, the doubters still believe in this EMH, RWH nonsense, I’ll be shocked.

I’ll even tell them how I developed the model because I think they’re so stuck in their views that they’ll never take the time to figure this stuff out–

100 years of monthly bar data would be considered by some as a decent data set to study but since each month equals one bar of data, 100 years equals only 1200 bars of data. If, on the other hand, you move down the fractal ladder and study just 20 hours of 1 minute bar data that would also equal 1200 bars.

Using this method of studying fractal movement–in essence an unlimited number of miniature bull and bear markets–it was possible for me to determine unequivocally, that what I thought I had discovered in the longer time frame studies of monthly, weekly, and daily charts was indeed showing up in each and every fractal level I studied.

Very similar to fractals in Elliott Wave Theory but I built this from the ground up.

I welcome you all to follow us free on Twitter until October 11th.

Our model is unequivocal in its message here. The stock markets of the world are about to crash and our model has identified both price targets and calendar dates for the events.

By the way, when crude oil was trading at 147, we told our clients that the BAM model was predicting a crash in crude oil over the next 12-18 months taking the price down to 36 dollars per barrel.
It only took 8 months to reach our target and, once again, these RWH guys said it was “totally unpredictable.” What are the odds of that?

Here are a few articles that came out after our September 21 call for a “50% stock market crash.”

50 Percent Crash Coming for Stock Market?

Financial Model Tweets Out Predictions Of The Next Stock Market Crash

A 50% crash in stock market may happen soon?

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MARKET CRASH: What ETF Gambling, $VIX Complacency, and Risk Appetite Tell Us About Investor Resiliency

These juiced ETF’s are excellent trading vehicles but there’s no question they’re very, very dangerous.

We recommended the $FAZ to our Twitter followers on September 23rd when it was trading at about 19.57 but we also tell followers and subscribers that these are positions we’re involved with and that if they should want to invest in our “model portfolio” to use no more than 2-12% of their invest-able dollars.

For us, a more interesting take-away on the ETF debate (we have a model based on behavioral analysis theory) is the way in which the leveraged ETF’s are feeding the publics appetite to gamble.

History teaches us that we humans tend to go through periods where we love to speculate, followed by periods where we hate to speculate.

Unfortunately, markets are very large now and that means that when risk appetite plunges (after a big feast) everyone runs for the restroom at the exact same time. (sort of like 2008).

Back in 2005-2006, we were able to predict in detail what would occur during the crash of 2008-2009, (see weekly report archives on the blog) because the BAM Model predicts when market participants will be resilient to pain (losses) and when they will not be resilient to pain.

Ironically, when people are NOT resilient to pain, they close incorrect positions out very quickly and the markets tend to trade in a more normal, more stable manner.

It is when resiliency is high that investors will allow a position to “get away from them” and it’s that dynamic that causes large price moves–either bulls riding losing positions down or bears riding losing positions up–that sets up the compression that allows the market’s inevitable “capitulation.”

There is never a capitulation set up in markets with low resiliency and there is always capitulation in markets with high resiliency.  (Our model tracks market resiliency–all of the markets we’re tracking –on 7 “fractal” time period ranging from monthly, weekly, daily, hourly, 5 min, 1 min, and 25 tick.)

Today’s market, interestingly–and for the first time in the history of my market data–is registering resiliency at an all-time high for both bulls and bears. This is a dynamic most often associated with expanding patterns whereby price makes higher highs AND lower lows during a trading period where both bears AND bulls have a very high level of conviction that they are “correct” in holding positions (stubborn).

Today’s macro environment is obviously a disaster to anyone wishing to use common sense and for that reason the bears think they’re correct but, because government intervention has provided a perpetual “backstop,” bulls feel correct in anticipating an eventual recovery and they’re also probably playing the odds w/ respect to the old adage–“never fight the FED.”

Unfortunately, that dynamic (complacency created by government interventions) has, along with unprecedented fast-money in hedge funds, placed us in a position where our model says we’re going to witness the largest crash in the history of markets as we trade forward.

We all understand what happened in Japan and it seems odd that we’re repeating many of the exact same mistakes they made. I’ll leave the fundamentals to people specializing in that field and we’ll stick to our behavioral analysis work.

Our model is predicting a massive crash and we have a target of SPX 529 over the coming 2-5 months.

If you are interested in following our work in real-time each day, go to our Twitter page .

Here’s our press release from 9-21 with our forecast of a 50% crash in the stock market as well as our crash call in crude oil.

Press Release: BAM Investor shares predictions on Twitter for Free

CommodityOnline: “A 50% crash in stock markets may happen soon?”

TechNews.AM:  “How accurate are BAM Investor’s stock predictions?  Check Twitter”

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Economist Agrees with BAM on H1N1 Productivity Loss

“Swine Flu Could Wreak More havoc on US Economy says UAB Economist”

“Although business managers have had time to prepare contingency plans, those that already have cut the numbers of employees in an effort to reduce costs during the downturn may be hardest hit,” Sutton says. “In many cases, companies that already are working with the bare minimum staffs face further productivity challenges should large numbers of the remaining employees contract H1N1.”

Sutton says more research is needed to measure the more precise impact of the H1N1 virus once the traditional U.S. flu season has passed. Until then, statements on the economic influence of the virus will reflect educated predictions based on the history of previous pandemics and their reported economic effects.

“The most recent case we have to study is the Asian SARS outbreak in the early 2000s, which negatively impacted a range of industries in Asia. The effects led to a regional loss of between 0.5 and 2 percent of GDP,” Sutton says. “H1N1 impact predictions are based on examples like this one in which virus fears traditionally have had a negative influence on the economies of impacted regions.”

http://www.medicalnewstoday.com/articles/165080.php

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BAM In The News…and India is Following

Our BAM TFAC (Twitter Full Access Campaign) is going very well with 5% single-session gains posted in many of our individual recommendations today.

As you know, this campaign –opening up our “playing hand” for the world to see– is regarded by some as “suicide by forecasting”…, but we believe in the BAM Model and its ability to guide us to profits, and we welcome this very public challenge.  After all, we’ve always broken the rules (you’re NEVER supposed to provide both time and price objectives when forecasting!), and now we’re not only breaking the rules…we’re breaking them in front of a global audience!

To that point, we’re happy to see the press picking up our TFAC story and we hope to see our stock market crash alert reach the eyes and ears of many more individual investors over the coming days.

We’ve included a link to one of the articles written about us by our friends in India – CommodityOnline.  They are the leading provider and largest global vertical of information, news and research on commodities.

http://www.commodityonline.com/news/A-50-crash-in-stock-markets-may-happen-soon-21355-3-1.html

One more thing before you go.

Check back often (or become a “BAM Insider” for instant notification of new posts) because we’re going to be posting a brand new video presentation of JG Savoldi explaining the similarities of today’s market and the 1929 stock market crash.  We’ve already taken a peek at this video and, I’m telling you, it’s a “must see.”

Talk soon,

Rod Wilson

Director – BAM Investor

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The Disco is on Fire! Will you make it to the exit?

No change in the stock market forecast.  The BAM Model sees a massive crash coming that should take the SPX down to the BAM 529 magnet over the coming 2-5 months. 

I’ve had some questions regarding upside price targets and I wanted to clarify something. 
When we forecasted a “V” bottom in stocks back in March, we said the buying stampede should unfold into June and we mentioned price targets as high as the BAM magnet at SPX 1132.  But when the SPX started stalling into the 944 magnet we called a TOP in June and watched the SPX reach a high on June 1 followed by a 9% decline into July 8th. 

The entire move from the July 8th low into today’s high is a FALSE MOVE AND WILL BE UNWOUND 4X FASTER THAN IT UNFOLDED ACCORDING TO THE MODEL.

The majority seems to think the market has put in place a large head and shoulders low on the daily charts but any technician will tell you that, if that’s true, we should NOT move back down into that pattern especially if we’re in a bull market.

The model says we WILL move back down into that pattern and once that occurs you should see the technicians come out and talk about the extremely bearish implications.  (Failing patterns create violent fast-market moves in the opposite direction.)

Has anyone mentioned the fact that the weekly SPX RSI is as overbought as it was when we were trading at 1500? 

THIS IS EPIC AND I BLAME IT ON THE MULTIPLE INTERVENTIONS. 

No fear in this tape but I guess that’s what happens when Uncle Sam has your back.  Most seem to understand that the disco is on fire so, although you may be enjoying the music, we suggest positioning yourselves very close to the exit.

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Is Volume Confirming the Model’s Crash Call? YES!

If a market crashes on high volume and then bounces over 50% on low volume, what happens if it rolls over and volume increases again?  The answer is “another crash leg.”

Is it typical for late September and early October to bring an increase in volume?  Is it typical for late September and early October to bring selling pressure? Does one plus one equal two?

It is a fact that in the history of the US stock market, a new bull market has NEVER begun with a large rally like this.  The only other time we saw a large rally like this off a PRESUMED bottom was in 1930.  The best bull markets start slowly and the first leg up is unimpressive.  The second leg up is the monster up leg NOT the first leg up.

I know, I know, the EXPECTED fundamentals are beautiful just like the EXPECTED fundamentals for crude oil were beautiful at the 147 TOP in 2008.

Granted I’m getting run over here but, mark my words–this is going to be a disaster.

-JGS

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Elliott Wave Expanding Triangle?

I’m not seeing anything in the intraday stock model that would require a new high on the year BUT…if the SPX is trading in a large expanding pattern with BAM magnets as the turning points, 1049.30 would be the next Fibonacci target level.

MONSTER SELL SIGNALS ARE TRIGGERING BUT BUYERS CAN CONTINUE THEIR STUBBORN WAYS RIGHT UP UNTIL THE (text withheld/subscribers only) (so we won’t allow ourselves to become discouraged with the model’s call)

WE CONTINUE TO BELIEVE THE STOCK MARKET IS IN A HUGE EXPANDING PATTERN (ELLIOTT WAVE)

That structure would be following an A,B,C,D,E pattern (originating at the Novembver 21, 2008 low) with the BAM 944 SPX cash magnet as the “A” high (actual high was 943.85) the BAM 680 SPX cash magnet as the “B” low (actual was 666.79) ,the BAM 9497 INDU FUTS magnet as the “C” high (and possibly SPX 1049.30) and “D” and “E” yet to unfold.

Assuming the above is true, and it sure looks like it might be, the next leg down (wave “D”) projects down to the (information withheld/subscribers only) Very interesting considering our long-standing BAM SPX magnet target is sitting down at the (information withheld/subscribers onloy) level!

Anyway, it sure looks like this stubborn advance (the heads are calling it “resilient”) is a huge expanding pattern that will end in tears. 

No change.  This is an EPIC short-selling set-up according to our work and stocks should be (subscribers only) toward that BAM (subscribers only) magnet over the coming months. 

(sentence withheld/subscribers only) in either December 2009 or February 2010.

near-term–severe weakness into 9-14 and 9-21ish

SELL, SELL, SELL!!

We think this has everything to do with China and the (information withheld/subscribers only).  The fact that the H1N1 spread as quickly as it did on the Washington State campus–infecting 2500 students (18,000 enrollment) within a two week period–confirms the experts’ view on the highly contagious nature of H1N1.  Again, we’re not calling for mass deaths, we’re simply saying that we think the forecasters and analysts are underestimating the disruptions to the economy/productivity we’ll be seeing over the coming months.

-JGS

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BAM – 30 YR BOND Model Update

It’s interesting to me that I haven’t heard a single word about the fact that the 30 YR bond is breaking out of it’s basing pattern

As you know, we’re raging bulls with respect to the 30 YR BOND and think it will trade up to our target at 130.30 during September and that it will trade to a new all-time high THIS YEAR.

BAM Bond Model - Screaming BUY Signal

BAM Bond Model - Screaming BUY Signal

I also think, based on the incredibly strong BUY signals being triggered here as well as the expanding megaphone pattern they’re re-entering, that this advance will unfold as a “MELT-UP”

Remain LONG BONDS, this should be incredible.

-JGS

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