Dear #FULLNAME#,

Come meet us at the 2010 NYC Traders Expo next month! This is a great opportunity to get a tutorial on our seasonal trading tactics, ask us anything you wish and get a full rundown of the new, redesigned Almanac Investor. I will be speaking at the upcoming Traders Expo in New York, February 14-17, 2010, and have been given the opportunity to invite Almanac Investor Newsletter subscribers to receive a complimentary pass to attend the full conference as my guest!

On Monday, February 15 from 6-7 pm I will present: Seasonal Sector Trading Tactics—Using Technical Timing Tools to Maximize Profits in Historical Seasonal Patterns.

REGISTER FREE
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About The Show
http://www.moneyshow.com/nyot/main.asp?scode=016548

Second Warning Shot

The market has fired its second warning shot in a week at the 11-month old bull. Even with our Market Probability numbers positive for the last trading day of January the odds were slim that the market could rally enough today to put the January Barometer positive for 2010. After a feeble attempt early in the day stocks faded in the afternoon, pushing the S&P down 3.7% for the month, registering a negative January Barometer for 2010.

With all due respect to detractors who insist on back-testing the January Barometer to 1896 when the Dow Jones Industrials were born, the January Barometer only came to be after the twentieth “lame duck” Amendment to the Constitution was passed in 1933. In 1972 when we discovered the January Barometer and first published it in the Stock Trader’s Almanac we declared that the lame duck Amendment “changed the political calendar and the January Barometer was born.”

In the 2010 Almanac on page 42 we write: “Down Januarys are harbingers of trouble ahead…. Though some years ended higher, every down January since 1950 was followed by a new or continuing bear market, a 10% correction or a flat year. Excluding 1956, down Januarys were followed by substantial declines averaging minus 14.3%, providing excellent buying opportunities later in most years,” including -45.4% in 2008 and -18.1% in 2009.

This negative JB reading comes on the heels of last Friday’s trigger of the Dow’s December Closing Low Indicator. Of the 31 times since 1950 when the Dow closed below its December Closing low in the subsequent Q1 it declined further 29 times or 93.5% of the time. Both years (1996 and 2006) that the Dow did not fall further the January Barometer was positive. The 29 subsequent drops averaged -11.8%, including -42.1% in 2008 and -17.6% in 2009.

There have been positive reports such as today’s Q409 GDP at 5.7%, the sharp rise in ISM-Chicago and U of Michigan Consumer Sentiment, but the market was not impressed by these backwards looking statistics that were heavily influenced by a rebuilding of inventories. Optimistic earnings expectations have been squashed by actual earnings releases that have too frequently been accompanied by disappointing outlooks.

When tech’s white knight (and one of the few sources of exciting innovation), Apple, fails to delight Wall Street a more cautious approach is prudent. The new iPad looks eerily similar to the super-sized iPhone in the Apple Store window showing off the latest apps. We were looking for something more, but at least the pricing wasn’t absurd. It should be better considering they have been building and selling the iPhone for nearly three years.

With a down January it is difficult to be bullish as 50-day moving-average support levels that have held since July 2009 have been broken. Absent a sharp reversal, 200-day averages are the next line in the sand, but they are well below current levels. All eyes are on Washington now and if they don’t get something done soon on the jobs front, the odds increase of the lower end of our 2010 Forecast materializing before the upper end.

FREE LUNCH MENU

Our Free Lunch stocks have pulled back with the market, yet maintain a slight advantage. As of 1/28/10 the entire Free Lunch basket is up 1.2% on average versus 1.9 for AMEX, –1.5% for NASDAQ and –1.8% for the NYSE. Bulletin Board concerns are the biggest drag on the basket, down 27.8% on average. Sell winners when you have them and cut loose the dregs. We will be looking to unload and close out the whole list into strength in mid-February.