Alert

This update is exactly the text we sent to subscribers today. It includes the two previous updates from Friday, September 7, 2007.

Today is Sunday, September 9, 2007

Good afternoon,

1715 EDT

We are 25% long in the Swing positions for all covered indexes.

We are 100% short in all indexes in the Investor Core positions, producing a
market neutral portfolio position.

It is rare to receive a message from us on a Sunday afternoon as long time
readers know. This message is the result of nearly 2 days of data analysis and
application of several filters to the results of our models. That is not how we
spend our weekends.

I don't like this trade.

I don't believe I have ever said that before in this newsletter.

I did not like this current 25% long Swing trade but entered it as the signal
occurred on a Time Locus and sentiment is in neutral allowing for an upward
move. As I discussed it with Group members, we began looking at the data
points in all the indexes, verifying intraday and daily structural phasing and
technical indications.

What I don't like is much more simple than the mathematics of all that is
contained in our models. I don't like being long when the observable precedent
patterns indicate to be short. The precedent pattern also indicates to not be in
cash. But all that was not clear with minutes to go before the closing on Friday.

The easiest precedent pattern to see is the NDX gap downward on Friday that
remains open. The NDX daily bar for Friday, the size of the gap and the break
below the upward trendline are all simple basics that at best warn of more
downward action to come.

We used two favored linear filters on the signal data produced by the data
preprocessing programme, and each confirmed our belief that any upward
movement was suspect and small at best. If you know what the term
'underdetermined' means (not enough valid support for the outcome), then you
know why I don't like this trade.

At its worst, the scenario replays the continuous downward move toward new
lows for this correction. This is a direct contradiction of my stated view that the
market indexes would rise toward the FOMC meeting on September 18th.

Is the timing correct for the September 7th and September 11th Time Loci?
Yes, they have been re-checked as were the last 11 minor and major Time
Loci. Do we have a Time Locus for the September 18th FOMC Day? Yes,
indeed we do - as always is the case.

Is the pulsive upward corrective structure complete? That is where the sand
leaked into the gearbox. I just don't know on the NDX but I am leaning toward
a completion of the upward phase after examining the re-mashed data. I am
suggesting a 75% to 85% probability that it is complete and that any upward
movement will be sold immediately by the markets.

Since we have not seen the markets open on the Globex platform, we will not
have an indication even then for several hours, whether we should take our view
to a trade status.

We have two trading questions: (1.) should we be in cash?
or, (2.) should we be short? If cash is where we should be, then it will be a
100% Swing cash position. If short is where we should be positioned, then it
will also be a 100% short position.

We don't expect an extreme downward opening at this point which will allow
for a breakeven position change on Monday's opening. We will decide what position to take as we see the overnight action on the Globex and in the currencies.

Look for an early morning update tomorrow and a potential change of position
before the morning's data releases. Then we will follow that with an update if
the markets react to the Consumer data release.

This is what trading can be like in times of uncertainty and when traditional
theories and techniques are not producing expected results. We will adjust our
trading as called for by these conditions.

WBB

_______

Previously on Friday:

1545 EDT
We will enter 25% Swing long in the NDX, Dow, RUT and the SPX.

The NDX data supports the terminus view also.

WBB

NEW READERS - A 25% or 50% Swing position represents that percentage
of your "trading risk capital". We define "trading risk capital' as 2% of total risk
capital, which is the combined amounts of daily capital net of profits and losses
taken by closing each day. Open trades should be treated as marked to
market at closing.

_______

Previously today:

1455 EDT (Friday)

If the indexes proceed downward into the closing, we may indeed have an excellent Swing buy signal to enter at today's closing. We didn't expect it but we will take as large as a 25% long position in the SPX.

Yes, it will be very high risk, but we did not take this morning's gap down because we expected an upward move into the closing back to the 60% level of however much today's decline set in. We then expected the completion of lower prices with a momentum divergence buy signal in the Monday morning session. This may still be the outcome, but we want to advantage the trade entry at a price low.

The trade can carry upward in its choppy slog until September 24th. We project a move of 35-45 points for the SPX, and a similar relative amount for the Dow.

The volume pattern setup is available and the intraday structure is near completion. Intraday sentiment has touched an extreme similar to the intraday of August 16th and the 28th.

It is a minor Time Locus date, and the models are indicating a low, not a high or an acceleration point. In terms of the model, it is forming a "terminus locus", an ending.

We have not completed quick-processing the NDX data yet but expect to find the similarities consistent.

Update by 1545 EDT with any trade entries.

Please don't get in front here. You may want to wait for Monday and use the signal as an analysis aide.

WBB