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This is a transcript of the audio content of the video “2009 Video Market Meltdown”, which can be accessed at www. chartprophet. com

Is mid-June 2009 and I will discuss the case of extreme Bear.

Well we will quickly review the market. Since peaking in October 2007 to March 2009, the SP500 has dropped nearly 58%.

To date (which is the beginning of June 2009), the SP500 has dropped by nearly one third of this loss.

The SP500 and recently tested in early January high was the highest of the year. Since the public has become more optimistic point measured. In fact, a more general level, a peak seen in the market and certainly the kind of higher level of enthusiasm you’d expect to see at the top of a bear market rally I reckon that’s it.

You’ve probably heard the phrase “bull markets climb a wall of worry” – and does not seem much of a wall on the left is concerned. At least until the individual investor is concerned.

And yes, it is a bear market rally, and I reckon so, then the feeling reached unsustainable levels.

But why am I so pessimistic? Why do I reckon that this is not a new bull market today and we are a normal type of bull market correction? Why stress test?

Excellent question – and I answer that, by showing a graph. You can be the type of chart you are not familiar with that first let me give an explanation here.

This is an example of what I call the table of prices for a time. It shows a bar graph in the normal foreground becomes a 1 minute chart of the SP500 emini term, and left the profile distribution of prices over time shows how much time is spent at each price.

And you can see from this table that more time was spent just over 930 – which is the horizontal red line here. It is very vital because it shows that the price that has attracted most of the time. And as you can see above, time is an vital element in this formula again in a second.

You can use these cards at once using any period of time.

Here is a map that covers the activities of one week with the minutes of the bars in five years and here you can see that most of the time was passed just above the 940 level within the week. For more information on these cards, then you should start with the profile of Google’s market “and start the work of Peter Steidlmayer.

Here’s the point I want to do (here is a chart based on hourly bars covering a long period of time in the SP500 cash index, back to 2003) – one of the things relevant to this type of plot is we can leave the card is where the value is used according to the formula:

Price = Value + Time

That makes sense if you reckon about it.

The value is simply that the card spends most time with this type of map you can see very clearly where the value and the value was at different times.

For example, in 2005, the value chain was lower at 1200. In 2006, it was about 1270 – you can see very clearly.

The fact is that I have been following the letters, looking at these letters many years and it is my opinion, I learned that these lines really relative.

There is a relationship between levels in these lines the value emerging in the letter.

I will not say more about it in this video, but now that the SP500 is to find the value, as far as I’m concerned, at least, is very, very low.

This is not suggesting that the bear market finished in March. In fact, suggesting that the low Mars is not low enough. In fact, once below 500 is what this picture is suggesting that, obviously, a highly pessimistic.

Again, why the scene of the crisis? If the market is the time falls below 500, why not take all the time you want to go? Why not a small below 500, say, three years?

The following table shows what I believe WD Gann Master factor time and again should google “WD Gann” for more information. I reckon Gann control cycle time is 60 years. And that is what we see here.

The blue line shows the Dow Jones from 1947 to 1949 and the brown line shows the Dow Jones from 2007 to today. They are not the same, I grant you, but for me, are very similar and I’ll tell you why. Look in the center here, in the eight “years.

Now, a year ending in ’8 ‘, that every analyst will tell Gann, is generally a excellent year. Gann said himself in the first half of last century. If you look at the graph, 1958, 1968, 78, 88, 98 see that boys are generally strong year – but 1948 was unusually flat and certainly in 2008 and it’s not because I reckon the cycle Sixty years becomes active.

I look at this picture and I suggest a low end is still to come, too quick. Indeed, in 1949, this world has been the low end. The Dow has never been lower than anything.

So this is my second attempt, I have fantastic faith in this cycle and is now making me very nervous market.

I already mentioned that the “wall of worry” had disappeared and I want to talk more and the market sentiment.

A bull market requires that pessimism is a sort of declaration to the contrary – that requires a lot of bears that are always available to turn optimistic and provide more fuel (purchasing power) for a subsequent meeting. And I am of the opinion that at this moment in mid-June, the fuel is exhausted.

So this rally has run out of fuel? I reckon so. There are many optimistic media at the time, a lot of bullish sentiment, many investors back on the market today, worried of missing the next huge go they said is rising.

And in a bear market rally when it can be measured from the extreme investor optimism is probably in search of a superior.

So, we present some evidence of this upward trend “extreme”.

Here’s one of my like letters. This indicator at the bottom here, we compare the total volume of the total Nasdaq NYSE. We call it the Nasdaq / NYSE volume. In fact, it shows an average of 10 days to go this relationship, which is the black line. Thus, 10 is a day moving average of the Nasdaq total divided by the total of New York and showed as a percentage. Speculation is more typical of the Nasdaq Stock Exchange in New York so that this indicator attempts to measure the amount of speculation in the market today.

And you can see the red on the index chart shows that the east (below) exceeds 150. You can see that when the indicator is above 150, the bars on the S & P hits red.

And you can see clearly that usually precedes a sell-off, and in my opinion, especially in a bear market. So if this is still a bear market a higher degree, and is a bear market rally, this indicator is above 170 is an vital caveat.

Here is another indicator of sentiment. This is the sentiment index of the ISE Stock Exchange International. This is a list of options and use their own stock option relationship. It is a measure of call volume compared to the size and Place of excluding ISE market makers and trading company, and the site says that “allows a more accurate measure of confidence Investor right that traditional factors of appeal. ”

And I run an average of 10 days to go in the data, which is a line in black, to soften and as you can see from the minimum of Mars in the index, this indicator has been a shift supervisor. Basically, it is quick the confidence of investors optimistic that the market has increased meeting. And, as you can see, this measure by the public are more optimistic than they were in January before the market and sold more optimistic than they were in May 2008, again before the market sold.

You’ve probably heard of the VIX index is here. Often called the dread gauge, the volatility index SP500 is back in the mid-twenties again after being in the eighties high last October. It is therefore not very frightened at the time in relation with the readings back in the last nine months.

A point to note here is that these indicators are generally regarded as contrary indicators. We seek the extremes of optimism or pessimism of the public, the matter is that at the end of this reading is usually a excellent time to disappear, or go against that feeling.

The last indicator that I will show the public that is my version of the Equity Fund Rydex Ratio of assets. This compares to assets of investors in mutual funds Rydex. I can take the total assets of a number of bullish Rydex funds and assets divided by total assets of a number of bearish funds. This relationship is showed up there. This is a very excellent climate indicator because it shows that investors are more than what they say. And what they do now is change bullish and bearish funds of funds. You can see that due to recent relationship went very quickly to a level not seen since the market top in 2007.

There has recently been a surge of public enthusiasm for the stock market.

But what about the smart money: traders, market drivers, how are optimistic? Can we measure this feeling?

This is my number one indicator of Smart Money. This is based on commitments of traders data. The commitments of traders data for SP500 future.

Just a quick explanation if you’re not familiar with these data. Each Friday the CFTC reports future position (on different markets) held by different groups. Here is an earlier example of the report presents information on the SP500. Believe it or not there is a breakdown of each week provided that the number of long contracts and the number of small contracts in each of these groups: commercial, non-commercial and non-reporting (which is petty trade).

One such group is called sales. The commercials are huge companies who use futures markets to offset the risk. For analysis of commercial net position (which is their long contracts minus its small-term contracts) can track their level of cover and get an thought of your current view of the underlying market.

The trade group is often called the “smart-money.” It is generally wise to follow this particular group when they become abnormally long or small.

So back to the card, the blue line represents the net position of trade (SMART-money) as a percentage of total open interest.

What can we say? He tells us that the smart money is down. And you can see that the market gathered at the March low is really an increase in net small position of the smart money. They are at least as pessimistic as they were in the low in March and have not expressed interest in participating in this rally. Far from it. This tells us that, contrary to public opinion, the Smart-Money is bearish.

Smart Money Numbr-2 is another indicator of choice, but this relationship is based on an S & P 100 index options. There is a strong feeling that these options are mainly traded by smart money. Thus, unlike the relationship of ISE options mentioned above, this relationship is not a contrarian indicator, but a confirming indicator. Once again I am showing a demand for 10 days moving average, this time as a percentage of total options.

So what happens? Well, unlike the ISE sentiment index, the market has been the rise of this indicator is the lowest position. Again, this is a bearish indication Smart-Money.

If I show you the two rate option, which represents public opinion and sentiment of others that is smart money, you can clearly see the difference between their behavior.

Well, I will conclude with a summary in the case of the bear ends like this:

My analysis of the distribution of prices suggests that the decrease of Mars is not the ultimate bottom of this bear market.

2 cycle times more reliable than I know suggests another leg down soon.

3 Smart Money is not optimistic.

4 The Not-So-Smart “Money is very optimistic.

For me, in total, which paints a very terrible image.

And there are a couple of other things.

Firstly, a level. 870 is a very vital role in the SP500 index. I reckon if this rally can be maintained above this level in the coming weeks, so I’m incorrect, probably in this analysis, but do not reckon it will happen. But, and I reckon it is more likely if the SP500 falls below this level very quickly to a movement should continue.

And finally, this. If the index does find below that level, below 870 and the lower position, I’ll listen to most market analysts, has called for “reduction of a correction,” or “test “should” or “a fantastic buying opportunity,” one might even say “it is the right shoulder of a reverse head and shoulders pattern.” In other words, when the market declines, I expect the bullish sentiment remains high. These comments will fuel further decline.

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