Trade Alert: Buy UGAZ now …

Issue #92

Dear Member,

Natural gas, as I mentioned in last week’s special strategy webinar, is on a tear higher. Today it’s pulling back in what should prove to be nothing but a minor correction before gas prices headed higher.

Hence, we have a nice chance to get in natural gas via the above ETN.

Hold all other positions with your stops in place, including your shares

in the ProShares UltraPro Short S&P 500 ETF (SPXU), which surged dramatically last week as the stock market turned lower.

For your benefit, please see an edited version of a Real Wealth Report flash alert that went out to subscribers this morning, explaining what I am seeing in the stock market:

Important Stock Market Correction Now Here.

The long awaited stock market correction is here. Last week’s rout sealed it in.

This is important. First, the stock market is headed lower, sharply lower.

Second, once it bottoms, the decline will set up the next great buying opportunity, the one I have been waiting for, the one that will set the stage for the Dow Industrials to more than double in the next few years.

But right now, we need to address the downside. Let me explain how confident I am that an important top is in place and that a sharp pullback has now started.

First, the S&P 500 Index plunged though a system sell signal last week at the 1816.75 level. This is the second time the S&P 500 has closed below that level, making it a very important sell signal.

Second, my timing models showed a sell signal for the Dow and for this past Friday, and it came right on cue.

You can see the timing signal on this chart of the S&P 500 cash index. Notice the sell signal labeled January 24. Also note the following:

— The decline should continue into February, and bottom the 21st, give or take a few days, followed …

— By a bounce into the early part of March. Importantly, I do not expect new highs in the broad indices, as this timing chart might imply. There are many reasons for that, too varied and complex to cover in this flash alert.

Also per the above chart, you can see that they now call for a March high, followed by a decline all the way into the August/September time frame.

This does not rule out my long-term projections for substantial new highs in the Dow. It simply means that we are likely to see a bear market develop that could last several months.

Third, Elliot Wave analysis confirms the top. At important turning points, I often use Elliot Wave analysis to help confirm trend changes. Those changes are most often noted by a five wave decline against the prevailing trend.

In the Dow Industrials and the S&P 500, as well as other broad market measures, we now have in place a clear five wave decline, confirming the trend changes as well as my system sell signal at the 1816.75 level in the S&P 500.

You can see the clear five wave decline here, by way of example, for the S&P 500.

Fourth, bullish sentiment is off the charts. Important trend changes almost always occur when the majority of investors and analysts least expect them.

The current situation is no different.

Margin debt, indicating bullishness, is near record highs and above the highs recorded just before the peak in 2000, and just before the real state crisis in 2007.

In addition, a recent Investor’s Intelligence Advisors Survey showed the most extreme bullish readings since just before the crash of 1987 … while a recent poll from American Investors Intelligence showed the most extreme retail investor bullishness since the peak in stocks in 2007.

Anecdotal evidence of extreme bullishness and complacency is almost everywhere in the media. This is not the stuff of a continued rally. Rather, it’s the sign of an important top.

Fifth, the next system sell signals are substantially below current levels, indicating there is no major system support until the broad indices fall much further. In the S&P 500, the next system sell signals, important support areas, lie all the way down at the 1729 and 1683 level, while in the Dow Industrials, they come into play at the 15,229 and 14,520 levels.

In both cases, the large gap between the sell signals that were just hit and the next signals indicates these markets have much further to fall.

Given the timing cycles are now showing that the markets could decline into August/September, that means we also have to look at the key monthly support levels for how low they could go by that time.

Those levels are 1612.00 and 1414.75 in the S&P 500, and 13,937.00 and 13860.00 in the Dow.

Stay tuned and best wishes,

Larry