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The Locomotive "The General" - Are You Listening?

"In early April, 1862, a band of Union soldiers lead by civilian James Andrews infiltrated south from the Union lines near Shelbyville, Tennessee and met at Big Shanty, Georgia (near Marietta). On the morning of April 12, 1862, 20 of them (2 raiders never arrived and 2 others overslept and missed the adventure) stole the passenger train "The General" during its morning breakfast stop. With the farms and factories of Georgia supplying the Confederate Army fighting further west, the Raiders' mission was to burn the railroad bridges between Atlanta and Chattanooga, thus isolating the Confederate Armies from their supply sources and enabling the Union Army to seize Chattanooga. Due primarily to the persistency of William Fuller, conductor of the stolen train, and, secondarily to the rainy weather and unlucky mis-coordination with the Union Army to the west, the Raiders failed. All 22 at Big Shanty that morning were captured. Eight, including James Andrews, were tried and hanged by the Confederate Army in Atlanta." From Andrews Raiders Memorial -www.findagrave.com

William J. Knight was an engineer, captor and defender of the stolen locomotive and was from my hometown, Stryker, Ohio. I couldn't help but recall the story of this stolen locomotive which was running north in a big hurry as I watched the markets rally since midday on Tuesday. The markets were hi-jacked and bridges of resistance were burned as the buying not only continued, but accelerated through the week. Trying to catch this train may not be difficult, but hanging on and ending the journey north may be as difficult as the Civil War story. It may also end very badly if this is only a blow-off top. Or could it be something more substantial?

It appears that the market's main focus has been the FOMC getting to the end of its rate-raising cycle as evidenced by the ignition point which came on the publication of the minutes of the last FOMC meeting. The next meetings are scheduled for January 31 and March 28. The expected January 31 outcome is another 25 basis point increase and most Fed watchers expect no more than one additional increase at the March 28 meeting. The wording of the January 31 meeting will again be critical, but is likely to be interpreted as bullish for the markets no matter what it says. The key then will be the March 28 meeting. If the FOMC announces no increase at that meeting or raises and issues a statement that there will be a "pause" in increases, then that may be the news that falls into the "buy the rumor and sell the news" category. Based on the evidence we've seen this week, the market has motivation to rally into March 28.

Joining the "raiders" can be a dangerous activity, but we will have stops to tell us when our signals are wrong. In the long run, trend following always wins.

Our Market Model

{Subscribers receive signals and weekly commentary on our model, trend compliance and sentiment. This public report is only a partial analysis and commentary. To subscribe, go to our website at; www.MarketListener.com}

Trend Compliance

Now you can see that last week's down trend leg has disappeared from the chart in the upward price action as the leg extends from October's lows.

One Year NDX Trend ZigZag

Next we take another look at the Nasdaq Summation Index chart. Last week we pointed out the fact that "the 18 EMA crosses ($NASI) have been very valid signals and in many cases it leads the broader market." We are very near a re-cross of the NASI to the buy side. The stochastic on the NASI shows to be very oversold and looks to be turning to the upside.

6 Month Nasdaq Summation Index

Moving On to Sentiment

The VIX is turning down but will not be giving us a sell alert until it gets much closer to the 10 level. There is room for more bullish sentiment development.

6 Month - Daily VIX Volatility Index

In general, the options players are still conducting their business in a low volatility market (options prices are cheap). If this environment continues, the market is likely to move sideways to higher.

Our Stop Level

{Our trading system includes stop signals which are calculated and applied on a daily basis as required. Our trailing stop strategy helps to lock in gains and get confirmation of trend changes.}

Market Listener Trader Signals & Results

-4.2% 12.0% 25.1%
YTD 6 Month 12 Month

2005 Final Results +40.9%
2004 Results +69.9%

Historical results are not indicative of future results. Trading leveraged mutual funds carries risks including the risk of loss of principal.


Trigger Inputs
or Other
ML Signal ³
--- --- Recent Signals Not Shown N/A
Dec 05, 2005 Buy Buy Buy Buy Overbought
Extreme - DSSI
Nov 07, 2005 Buy Buy Buy Buy   Buy
Oct 31, 2005 Buy Buy Buy Sell Cash Stop Cash
Oct 28, 2005 Sell Sell - Sell   Sell
Oct 19, 2005 Sell Buy - Sell Cash Stop Cash
Oct 05, 2005 Sell Sell Sell Sell   Sell (100%)
Sep 30, 2005 Sell Buy - Sell   Sell (50%)
Sep 15, 2005 Sell Sell - Buy   Sell
Sep 14, 2005 Sell Sell - Buy Cash Stop Cash
Sep 07, 2005 Buy Buy Sell Buy (mod.)   Buy
Sep 06, 2005 Buy Buy Sell Neutral Cash Stop Cash
Aug 08, 2005 Buy- Buy Buy Buy   Sell
Aug 04, 2005 Buy Buy Buy Buy Cash Stop Cash
July 08, 2005 Sell Buy Buy Buy   Buy
June 24, 2005 Sell Sell Sell Buy- Cash Stop Cash
May 13, 2005 Buy Buy Buy Sell++   Buy
May 06, 2005 Buy Buy Buy Sell+ Cash Stop Cash
Feb 11, 2005 Sell Sell Sell Sell   Sell
Feb 04, 2005 Sell Cash Sell Sell Cash Stop Cash
Jan 14, 2005 Sell Sell Sell Buy   Sell
Dec 31, 2004 Buy Buy Buy Sell Proprietary Cash
Oct 15, 2004 Buy Buy Sell Buy   Buy
Oct 08, 2004 Buy Buy Buy Buy Cash Stop Cash
Oct 01, 2004 Buy Buy Buy Buy   Buy
Sep 24, 2004 Buy Buy Buy Buy Cash Stop Cash
Aug 20, 2004 Sell Buy Buy Sell+   Buy
Jul 16, 2004 Sell Sell Sell Sell   Sell
³ This Market Listener signal is our base signal. The MACD is our primary weekly input, but can be "out-voted" by the other faster or proprietary indicators on a daily basis when we need to go to cash to implement our Fault Tolerant Cash Safety Stop (FTCSS). You should not base your trading on this or any other single indicator. Our trend following system can dynamically adjust parameters based on current market conditions including volume and sentiment factors. We also employ proprietary indicators which can override the current model.

Listen To What He Says

NAB Zechariah 3:1-7 Then he showed me Joshua the high priest standing before the angel of the LORD, and Satan standing at his right hand to accuse him. The LORD said to Satan, "The LORD rebuke you, Satan! Indeed, the LORD who has chosen Jerusalem rebuke you! Is this not a brand plucked from the fire?" Now Joshua was clothed with filthy garments and standing before the angel.

He spoke and said to those who were standing before him, saying, "Remove the filthy garments from him." Again he said to him, "See, I have taken your iniquity away from you and will clothe you with festal robes."

Then I said, "Let them put a clean turban on his head." So they put a clean turban on his head and clothed him with garments, while the angel of the LORD was standing by. And the angel of the LORD admonished Joshua, saying, "Thus says the LORD of hosts, 'If you will walk in My ways and if you will perform My service, then you will also govern My house and also have charge of My courts, and I will grant you free access among these who are standing here.

I am working on the art of listening and hope that you are also.

Best Profits,

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