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DOW Jones - November 27, 1999
October 31, 2002 4:23 PM , PST

How DiNapoli Techniques Predict The Top of The Market - January 2000!

The markets were very bullish. Yahoo was trading at $115 on the way up to $250. SCO was over $50. The tech stocks were screaming upward.. But the charts were warning of a potential disaster.

Here is what Joe said, "We have Double-RePos brewing on a monthly basis. Is this important? Boy I'll say! It's been years, many years since we've had this happen. Last time it occurred we had one hell of a correction."

Take a look at the trend indicators on both charts. If we get any weakness in price, where will they go (rhetorical question)? They look sick now!

Now, lets add to that a surge in speculative OTC issues and tech stocks.
Interest rates rising! I don't follow the financial press, so you tell me-anyone bearish??
If not, we might just have the profit opportunity of the decade around the corner.

Below is how the DOW and S&P chart looked at that time:

Click chart below for enlargement.

Click chart below for enlargement.

This is what Joe wrote about this chart:
Since 1990 we've had two Double RePos. One resulted in about a 20% correction while the other
Turned into the one of the most incredible Failure plays on record.
This kind of a play if executed properly could be the only trade you'd really need for the first quarter of 2000.

Click chart below for enlargement.

For those of you who have large equity portfolios and don't want a tax consequence.........
You might consider writing some covered calls… now!
For my part, considering if the signal comes in, I may consider selling some naked index calls if the premium looks good. I won't wait for the close on the monthly - I'll anticipate the signal if it looks sick enough.
Acting on the shorter time frame with proper stops and confluence entries should also be quite profitable, since you will have the strength of a Directional signal backing you up.

THIS was before the world could imagine our current bear-market.

A month later, Joe followed up with the following:
This does not look good! Potential Double RePo looking more real every day, bonds breaking down, rampant speculation, talk of an inverted yield curve, MACD giving a clear sell, divergence… What more do you need. Watch those retirement funds and be careful with shorter term buy signals. This could get UGLY!

Then on 2/17/00, Joe posted the following summary:
An unconfirmed monthly Double RePo is certainly in place. I hope you have heeded these warnings expressed as early as last November. If so and you have anticipated the signal your doing well. If you have gotten out of equity retirement funds your on your way to preserving your capital while others will likely see serious deterioration. The central point is however that it is prudent to eliminate excessive risk since risk control is what this game is essentially about.

For those of you that do not already have a position there usually is a nice throw back on which to get short even after the confirmation.

Here are some ways to take advantage of this signal.

Get out of equities, retirement funds etc
Take only sell signals or take the shortest of buy signals both in terms of profits and time frames.
Hit retracements on rallies back to the old highs on volatile stocks and indexes.
Buy puts on rallies back to the old highs on volatile stocks and indexes.
Sell naked calls on rallies back to the old highs on volatile stocks and indexes
Look for directional signals and trends on weekly dailies & hourlys to get short.
Use minesweeper bonsai etc as entry techniques as described in the trading course.
Watch for a DR Failure but demand this failure to be across different indexes like the
NASDAQ, Dow and S&P before counting this major sell signal dead!

HOW's THAT for an excellent call!!!


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