The AES Corporation and its subsidiaries engage in the generation and distribution of electric power. It generates power for sale to utilities and other wholesale customers, as well as operates utilities that distribute power to retail, commercial, industrial, and governmental customers through integrated transmission and distribution systems. The company operates through three segments: Contract Generation, Competitive Supply, and Regulated Utilities. The Contract Generation segment owns and operates plants that sell electricity and related products to utilities or other wholesale customers under long-term contracts. This segment has interests in 76 power generating facilities totaling approximately 23.0 gigawatts of capacity. The Competitive Supply segment owns and operates plants that sell electricity to wholesale customers in competitive markets. It sells electricity into local power pools under short-term contracts or into daily spot markets. This segment consists of 27 power generation facilities totaling approximately 13 gigawatts of capacity. The Regulated Utilities segment consists of 14 distribution companies in 7 countries with approximately 11 million customers. This segment is composed of integrated utilities located in the U.S., Venezuela, and Cameroon, as well as electricity transmission and distribution businesses located in Argentina, Brazil, El Salvador, and Ukraine. These utilities sell electricity under regulated tariff agreements and have transmission and distribution capabilities, as well as generation plants. AES Corporation was founded in 1981 and is based in Arlington, Virginia.

<>The blue line, above, shows the stock price of  AES relative to the S&P 500 index (the red line). The two curves don't seem to bear much in common. But, as you may recall from the previous Forecasting Systems Letter, my studies with Profit Data Miner showed that moving average crossovers of this $15 billion utility company served as excellent input variables for the BioComp Profit neural mesh system. This conclusion was based on massive number crunching on data from 12-15-03 to 12-15-05. Now the statistics, below, show that the predictability of this indicator has held up well from 12-15-05 through 09-13-06.
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<>The blue chart at the top shows the price bars for the S&P 500 futures contract . The yellow oscillator in the center represents the trading signal. The trades are reversed when the signal crosses the red "0" line. And, the red graph at the borrom shows the accumulated equity from trading one contract (without any deduction for slippage and commissions).
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The table below comes from the Dynamic Trend Profile system's proprietary evaluation of gold and silver stocks. Without going into great detail, it seems that the preponderance of red "rooms" suggests that this is going to be a tough market. This table was generated on Wednesday evening. I see that today, gold is already down about 1.5%.

Below, in a similar table, we see that the metal mining companies are also showing a similar downward outlook.

The chart below, provided by Dow Theory Letters writer Richard Russell is called a point and figure chart. It is unique in that each vertical line represents either an upward or downward price movement -- regardless of the length of time required. So, it is a chart of pure price movements. Richard Russell expresses much confidence that these charts reveal future price direction. As we can see below, gold has broken below the blue trend line of support -- and that, like the tables above, signifies bearishness in the marketplace.

Look at all of the blue "rooms" below. These stocks are property and casualty insurance companies. And, this table certain suggests a rotation of cash out of commodities and basic materials and into financial service -- particularly insurance. Perhaps, this rotation is the result of forecasts for a mild hurricane season this year.

The table below also suggests that life insurance companies are benefitting from this rotation.

The top row in the table above is the Dynamic Trend Profile outlook for the overall market. The lower row represents the outlook for the Nasdaq market. As a reminder, the "rooms" on the right are of shortest durations, while the long duration "rooms" are on the left.

In my previous letter, I reported on forecasts from a website run by John Ehlers, a noted market analyst, called eMiniZ.com. At that time I commented that, even though the profit curve looked good for the past year, the system had been down since June. In the last two days, however, it has been hot -- as the table below shows. I've actually been trading these signals -- and I'm pleased with the results. As of last night, all the signals are bullish.

One final bullish confirmation comes from Richard Russell's Dow Theory Letters. Here is another point and figure chart (like the one shown above of gold). This time the chart shows the Wilshire 5000 index that includes almost all of the stocks traded in the U.S. Unlike gold (which is breaking out in a bearish direction), the chart below clearly shows the overall market breaking out in a positive way -- getting ready to test the previous high of the year.