According to TPC expansion contraction model, no recession 2012, but risks increase in 2013 greatly.

• Deficit according to CBO estimate will decline from $1.08T to $585B = domestic private surplus will shrink 2% assuming current account remains at $400B (currently at 5%)
• Private sector household debt accumulation is at 2.9% yoy.  This is good, but consumer credit, and total loans at commercial banks need to improve
• Policy makers have extended bush taxcuts until to 1/2013, and enactment of mandatory spending cuts on 1/2013.  These could be changed which will increase deficit
• If everything stays the same 12Q3 will start showing economic contraction, leveling off at -1.5% in 2013.

Japanese Candle Stick Charting

Main point is:  Know where you are in the trend.   This provides context to the pattern
Reversal Patterns - Only means trend is at risk of not continuing
Ch 4. - Reversal Patterns

Hammer and Hanging Man
1. Real body is at the upper end of the trading range, the color is not important
2. Long lower shadow is greater than 2x height of body
3. No, or very short upper shadow
Must wait for confirmation with the hanging man (the market top).  The larger the gap between close of hanging man and open of the next day the better.

Engulfing Pattern
1. Real body must engulf prior real body
2. Opposite color, unless almost a doji

Dark Cloud Cover
1. After uptrend
2. Strong white day, which opens on its low, closes on it high.  The next day has a long black body, opens on its high, closes on its low
3. Closes well within (about 50%) in the white body
4. Black body (2nd day) opens above a major resistance level and then fails.  Old support can be used as a resistance level

Piercing Pattern - same as above except opposite (also less reliable)

Ch 5. - Stars - Small real body that gaps away from the large real body preceding it.  As long as the star body does not overlap the previous body it is considered a star.  Color not important

Morning Star and Evening Star (opposite)
1. Tall black real body, followed by small real body which gaps lower, followed by white real body that moves well within first period black real body.
2. Gap on 3rd day is not always necessary
3. Volume on 3rd day > volume on 1st day

Shooting Star and Inverted Hammer (opposite of hammer / hanging man)
1. Small real body at the lower end of its daily range and a long upper shadow, color not important
2. Real body that gaps away from previous real body
3. Wait for verification that a reversal is taking place by looking for a gap in the reversal direction outside the real body
4. 
   

Ray Dalio portfolio construction and economic cycles
http://pragcap.com/more-from-ray-dalio

A Template for Understanding

Risk Parity is About Balance

Engineering Targeted Returns and Risks

Take whatever today's $VIX is. Divide it by 3.46. That's the market's view of the 1 stand dev range +/- for the next 30 days in %

What are the most important global economic indicators?  Well, according to Goldman’s Jim O’Neill they’re not exactly what you might have expected (via Business Insider):

“There are some indicators which are simply more powerful in their reliability than others, as well as having predictability in shores beyond their own. In my view, the Korean trade data, US job claims, the US ISM report and its new orders and inventory component, the Euro area business and consumer confidence surveys, especially the German IFO, are the key numbers I look for each month. I do find myself often wondering whether one misses something from the Growth Market world, but if you throw in a couple of key Chinese monthly statistics, their monetary data, PMI, trade and monthly retail sales numbers in particular, then you kind of have most of what you need.”

I would certainly throw in a few more indicators here.   Global industrial production figures are always important.  Japan’s Tankan Survey is helpful.  Out of all of these I’d argue that the Chinese monthly PMI is the strongest indicator of global economic growth.