Chart (1) $TRIN is an oscillator consisting of a 55-day moving average of the ARMS Index (TRIN) minus a 21-day moving average of the same. As this indicator has been in an unusually moderate range for some time, we can expect extremes to be on the horizon one way or the other. The other three have all registered some extreme levels after declining from "lower highs" last month. Could our markets be in the beginning of formation of a solid bottom of some sort? This is the one indicator of these four which says definitely NOT! Capitulation (Give-up) phase is required after a decline of this magnitude. Expect a 500-to-2000 point down day at the bottom of this one!

Chart (2) $$ADCL is a 10-day moving average of the net change in Advances-Declines (NYSE). This one is ahead of the others in that it has traced out a second, and now a third failing rally. The next most likely move will be either to a "higher low" or a "lower low"! Unless the market adds another leg down NOW, it appears a "higher low" is under construction. There is room above for some kind of rally, but it doesn’t HAVE to happen. In either case, a short-term Buy signal may be near, which must then be confirmed by the other market indicators and a "higher low" in a general base formation for the market as a whole

Chart (3) $$SPRY is a measure of "smart money" action in the S&P futures. After a neutral range over the previous two months, this has recently been swinging wildly at the extremes more often than not. The "lower high" pattern is again in evidence here. We must consider this repetition as trying to tell us something important. Remember, the market Can do ANYTHING! The message here, however, continues in the negative vein.

Chart (4) $TICK is Closing TICK (NYSE 10-Day). Quite similar to $ADCL, It has also made a much longer series of lower highs after an extreme overbought. This has been a strange one, rallying to sharp New Highs even as the market began to roll over to the downside! Perhaps it rises at such a time because it’s the easiest statistic to manipulate and "Smart Money" buys minimal shares of small issues to make it look good. More likely, smarter traders anticipate the coming decline with day-shorts, which they cover by the close whether with good gains or small losses. In this respect, it appears a Capitulation phase is in progress already. Maybe it’s just the Daytraders who are nearing a final puke-your-guts stage while Investors are yet unconcerned/unaware about the newly proven DOWNTREND! We are expecting an imminent convulsive capitulation phase during this month of October!

Although the Major Averages are acknowledged to be in a "corrective phase" (both down over 10% from recent highs), general levels of complacency in the face of World Shaking events suggests the necessity for horrifying headlines before the misplaced confidence leads to a widely destructive Liquidation Phase. The Public is still focussed on and buoyed by cover stories such as "GetRich.com" in TIME, and "Dow 36,000" in Atlantic Monthly. Meanwhile, the First Ever Default in "Brady" class Bonds, Quadrupling in the price of DRAM chips at Christmas production peak due to Taiwan Earthquake, Lower dollar amounts flowing into Equity Funds, largest US Bank failure in 7 years, Weakness in the US Dollar as foreigners take home some of their assets, and the Reversal of Central Bankers GOLD policy causing the largest Spike in price in 17 years, do not seem to IMPACT tiny minds!

The biggest thing happening in the sky for this month is the FULL MOON conjunct Jupiter and square Neptune, forming a T-SQUARE with the SUN, all very close to the important Zero Degree of the various signs. There will occur some spectacular world event which will precipitate SPIKE TOPS (Sharp UP, then Sharp DOWN) in OIL, METALS, & the CRB Index. Various Currencies and Bonds will form Tops and/or Bottoms (as they are cross-connected).

The surprise move by mostly European Central Banks to reverse a policy restrictive to price advances by GOLD has led immediately to an explosion in the price of the yellow metal (chart at top). It was UP $45 dollars intra-day last Monday and settled back to up about +$30. There is much talk about Gold Mining companies and Hedge Funds who have been making a nice profit by borrowing GOLD from the Central Banks and Shorting it forward on the open market.

Rumor has it that many of these trading firms have been hurt by the rapid counter-trend movement, and that many are still trapped in highly leveraged and inimical derivative positions. Since most are on quarterly reporting periods, we should hear from those most troubled in short order (so to speak)! We think their necessity to remove these tremendous liabilities (at any cost) will cause a further spurt in the prices of all REAL ASSETS. Another story going around is that the FED has called firms with LONG futures positions and basically asked them not to press for DELIVERY, that they will guarantee delivery at some unspecified future date. This in order to defuse the World CORNER in this Most Precious commodity. (Jay Gould, Jim Fiske & Dan’l Drew would be proud)! This DANGER/OPPORTUNITY is nowhere near over, and you may expect Much, Much Higher Prices!

By the way, this huge move has been telegraphed by steady increases in the GOLD Lease Rates, available, as just about everything else now, Online!

Paul Macrae Montgomery in his UNIVERSAL ECONOMICS (1-800-338-8943 = Institutional Accounts only, please) newsletter makes an interesting point: "The only sort of ‘inflation’ we are concerned with here has already taken place- namely, the unprecedented inflation in the nominal value of the world’s capital markets. For example, Bill Gates probably has enough Microsoft stock to buy all the Gold in Ft. Knox ten times over — and nearly enough to buy all the Gold of the sixteen or so countries who store their bullion at the New York Federal Reserve. This condition is not just of theoretic interest — it rather has the potential to significantly move markets."

Incidentally, another rumor has it that Bill Gates, following the lead of his good friend, Warren Buffett, has just bought 10% of a Silver producing company. It is also said of Buffett that he now owns 25% of the above-ground SILVER in the World. Not only that but, unlike the weakness in the Hunt brothers’ consortium, he has taken delivery of the raw metal. Additionally, he has taken it out of the country, in order that the Silver Bears cannot have laws passed to grab his stash, as was done by FDR with GOLD in 1933!! We have been recommending SILVER to consulting clients, in addition to mentions here, since 510 basis Dec. It closed Friday at 574 after hitting a high at 585.

It appears to us that the seminal event here could be the TRASHING OF THE U. S. DOLLAR! It has clearly one of the WORST chart patterns in the book right now. Similar to the NYSE Composite Index on front page, it has already broken down through the NECKLINE of a Head-and-Shoulders TOP formation and is accelerating its downtrend, as expected from such a pattern. The repercussions for Americans could be quite restrictive, as most prices will rise in $ terms, helping our Balance-of-Payments, but hurting consumers Buying Power out there in the world. We may have to go begging for money to pay the Interest on our Humongous Debt Load! Perhaps some of the money will flow back in after October 25 as foreigners seek safety from Y2K uncertainties.

Speaking of Y2K uncertainties, we have it on good authority that, expecting a shortage of CASH, Banks are ordering up to 50 times their normal complement/inventory of American Express Traveler’s Checks. Best Information re Y2K we have found is at www.yardeni.com/welcome.html#y2k Ed Yardeni is the Chief Economist and Global Strategist of Deutsche Banc Alex Brown in New York and has much Economic info, as well as Y2K emphasis, on his web site.