Get Ready Bulls: Here Comes The MagicT

August 7th, 2007

A cuppa MagicT anyone? No, it's nothing to do with tea (or mushrooms!) It's short for "Magic Trough".

There are seventeen market models within my unique TrendSensor Trading System, and MagicT is one of the elite group of seven models I place highest weighting on. It has an uncanny knack of serving up buy signals very early in the strong bounce that usually follows powerful sell-offs that are fueled by fear and panic. In fact, it was designed to identify this exact type of opportunity.

Interested in technical analysis of markets? (skip this paragraph if you're not!) OK, here's the nerdy stuff: MagicT uses time series analysis of price volatility, a statistical analysis of trend duration to identify excessively long trends, and a simple chart pattern to nail the start of a strong rally following panic selling.

The URL below will take you to a chart of the DAX Index (Germany) going back to 1993, and covering two bull markets and a bear market. The chart shows MagicT in action - those 16 buy signals, 15 of which are near the bottom of some nice troughs.

www.trendsensor.com/Charts/DAX-LT-MagicT.png

Aside from that errant first buy signal in 2002, you can see that MagicT really nails the lows of some sharp declines in the DAX.

Unlike the Germany market, many market indexes throw a MagicT buy signal only once every two or three years. Yet right now I can identify 14 market indexes (all within USA and Europe) that are primed to trigger a MagicT buy signal. That's phenomenal! And very bullish. A few of these may not fulfill all the signal requirements within the time frame allowed, but there are ten markets that appear very likely to throw MagicT buy signals within the next week or three. These ten markets are evenly split between Europe and USA:

* Europe: ATX (Austria), BFX (Belgium), CAC40 (France), DAX (Germany) and FTSE100 (UK).

* USA: BIX (S&P Banking Sector Index), HGX (Philadelphia Housing Sector Index), NYA (NY Composite), SPX (S&P 500) and SXX (Philadelphia Semiconductor Sector).

When MagicT rides into town within the next few days, it probably signals the start of the last excellent buying opportunity within the US and European markets for a long time to come.

But right now, I know I'm going to get a few buy signals in the not-too-distant future, so this is a heads-up for my trading signal clients - and an invitation to catch those signals via my free 5 week trial offer for others reading this.

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