Jump to content
drbubb

The Elliott Wave thread / Comments, links, charts

Recommended Posts

I think they are seeing this as a B wave down, with a C wave up still ahead.

Neowave seems to have a different opinion. They think the rally may be done, and a drop to fresh lows will come in 2H.2009

 

thanks , it might take a while to resolve this one, if we say got a bounce later in the summer out of say a low 800's S&P it might take Sep/Oct to resolve it one way or the other?

 

Share this post


Link to post
Share on other sites

My forecast from yesterday:

And here's a short term qqqq, suggesting a possible low and bounce today ... update

urzv.gif

 

 

...that's more or less what has happened. But the rally was even weaker than expected (that may be ominous)

 

zzz4.gif

 

If my Wave count is right, we could be set for a drop today (Wednesday).

It will be interesting to see if that possible support at around 34.25 holds.

 

A powerful wave 3 of 3 could break that support.

If it is a weak drop, I should buy it.

Share this post


Link to post
Share on other sites

(here's another analyst expecting a big drop):

 

AllAllan Neowaver... :: http://allallan.blogspot.com/

EXCERPT:

 

The seemingly endless Wave 4 up from March seems to be over and absent a last minute reprieve from the Governor, the writing is on the wall.

Picture%204.png

Share this post


Link to post
Share on other sites

Bob Prechter gave the speech for the Market Technicians Assoc. at Bloomberg headquarters

To view: http://www.elliottwave.com/wave/mta

 

Robert Prechter at the Market Technicians Association's 2009 Symposium

Instructor: Robert R. Prechter Duration: 1 hr. 6 mins.

Watch Robert Prechter at the Market Technicians Association's 2009 Symposium at Bloomberg Headquarters in New York on May 14, 2009.

 

(I will comment after I view it)

 

I cannot help but quote this short, but very interesting excerpt from the May EWT newletter (it is an example of the sort of quality writing you get in the EWI publications):

 

Deflation now, Hyperinflation later? - that's what we may see, says Prechter

 

"Economic bears today are inflationists because they fear a bigger version of the 1970s. Paul Krugman (with whom I disagree on virtually everything) on May 29 quoted an economic historian on the sentiment of the 1930s, when the inflationary 'teens were likewise burned into people's memories:

'... during the early years of the Great Depression... many influential people were warning about inflation even as prices plunged. As the British economist Ralph Hawtrey wrote: "Fantastic fears of inflation were expressed. That was to cry, Fire, Fire in Noah's flood." And he went on, "It is after depression and unemployment have subsided that inflation becomes dangerous."

 

That later statement above is exactly what Conquer the Crash said:

' While I can discern no obvious forces that would conteract deflation, after deflation is another matter. At the bottom, when there is little credit left to destroy, currency inflation, perhaps even hyperinflation, could well come into play.'

 

(Note: Hmm, does that mean Iceland may soon drift into hyperinflation?)

 

Consider also that more inflation is the easiest call on the planet. The presumed forces of external causality are as clear as can be... But simple logic does not work in predicting financial markets.

Share this post


Link to post
Share on other sites
Consider also that more inflation is the easiest call on the planet. The presumed forces of external causality are as clear as can be... But simple logic does not work in predicting financial markets.

 

I remember CNBC a few days back showed a 100bn Zimbabwe dollar note to the screen. If you enjoy fading news headlines then inflation is the "dumb money" view

As an aside I was trying to find the Bull on the cover of money magazine (Tom O'Brien mentioned it) but cant find it.

 

Share this post


Link to post
Share on other sites
Consider also that more inflation is the easiest call on the planet. The presumed forces of external causality are as clear as can be... But simple logic does not work in predicting financial markets.

Those that are sucked into rallies are the ones that were first sucked into Friedmanite ideology which is very limited to explaining or representing the novel circumstances we see today. Investors as a group are stuck in the past and this is potentially a massive advantage for the more flexible minded who can stay a step ahead.

Share this post


Link to post
Share on other sites
I am no chartist at all but looking at the chart can we surmise:

1) that when the SPX is below the MA then we are in to bull market

2) that when MA is above the SPX then we are in to a bear market?

This follows apart from 03-04.

Or is this too simplistic?

 

Sure, but which moving average?

And that approach will not get you into trades at Turns.

 

Having said that, picking a Turn can be a treacherous business, which the frustrating experience of recent days hows.

 

Here's a chart I put together before going to bed last night

zzzzv.gif

 

I wanted to put some figures to it, was just too tired.

I will do so now.

 

========= --SPX-- : -SPY--

Top (11.June) 956.23 : $96.11

5/a (22.June) 893.04 : $89.25

5/b (23.June) 888.86 : $88.85

Top (24.June) 921.42 : $92.17

off 5a:

change ==== 63.19 : $ 6.86

50.0% ........ 31.60 : $ 3.43

Level ....... 924.64 : $92.68

off 5b:

change ==== 67.37 : $ 7.26

50.0% ........ 33.69 : $ 3.63

Level ....... 922.55 : $92.48

 

Lesson:

I should not have ignored that gap under wave 4,

and the market needed a bigger bounce than the one I first calculated

Share this post


Link to post
Share on other sites

The Possibility of Credit Collapse Deflation

 

http://www.marketoracle.co.uk/Article11646.html

David Calderwood writes: Recently there's been a spate of articles about the inflation/deflation debate.

 

According to the dominant view, the inflation the U.S. has experienced these past 75-plus years will inevitably continue and very likely accelerate as the managers running the Fed and U.S. Treasury attempt to deal with a monstrous overhanging debt bubble by cheapening the dollars with which repayment is made.

===

This logic appeals because the only history anyone can recall is one of continuous inflation. When I graduated college in the depth of the 1982 recession I earned a starvation wage of about $16,000/year as a laboratory technologist. I shudder to realize that in 2008 dollars that's a whopping $35,680.83, a figure many people today would not consider the pittance that it was and remains. Such is the evil of relatively low, creeping inflation; it hides a painful reality of declining living standards.

 

That gradual inflation was bad enough. Today, however, there's near unanimity that the smoldering inflation of the recent past will burst into the flaming inflation of the 1970s when mortgage rates and bond yields were well into double digits, or even whip up into the firestorm of a Zimbabwe-style hyperinflation as the U.S. dollar burns down to a charred crisp.

 

Given such consensus of opinion regarding inflation expectations, it may be useful to examine why the potential for a crushing 1930's style of deflation is worthy of consideration.

 

One of the better exponents of the minority (deflation) view has been, so far, left out. As an occasional guest on financial TV and print Robert Prechter does not have the media cache of Peter Schiff or Jimmy Rogers but he has an approach to markets that is consistent and accessible to anyone willing to do their homework. Possibly his lesser notoriety stems from the fact that his analysis rarely appears for free in the public domain and when it does so it is in conjunction with an overt invitation to subscribe to paid services. One hopes that proponents of the free market are not somehow offended by the presence of such profit-seeking behavior.

 

Prechter's methods also represent a direct challenge to the way most people understand the world, so despite an interesting track record of forecasting (with stunning accuracy and some acknowledged mistakes), his is not among the names mentioned when the prophets of the recent economic debacle are listed. Those who wish to examine this challenge are encouraged to do so and make up their own minds.

 

Prechter's position on deflation shows up in the subtitle to his 2002 book Conquer the Crash. In a nutshell, his position is that there's a critical difference between currency inflation and credit inflation, and that as long as the monetary authorities, banks, and public are collectively optimistic and trusting, both currency and credit appear to have the same effects on prices, but that if credit builds up to a fantastic level as now, when pessimism and distrust take over then a crucial difference between currency and credit is revealed.

 

This is why historical comparisons are so challenging. The same action can have very different effects if underlying conditions change. In the past whenever the Fed plowed lots more fuel into the credit creation machine called the fractional reserve banking system, that system enjoyed conditions that turned that fuel into multiples of credit and it was promptly borrowed and spent. After 1995 a manic level of optimism led to a vast extension of credit outside of that tidy little cartel called the banking system, so people became even more convinced that credit is the same as currency.

 

All that debt rests on trust. Creditors count those loans as assets, trusting that they'll be repaid. The debtor looks at his Jet Ski or Harley Hog and includes it in his asset ledger, too, and trusts he'll be able to make the payments until the loan is retired.

 

The trouble is that trust is getting tougher to come by as rising unemployment and declining asset values work together with declining confidence.

 

One pillar of the inflation-expectation view is that the managers of the Fed can and will exercise the "Helicopter Option" if they decide it's inflate or die. We should never forget that politicians (and Fed governors are clearly politicians) are inveterate liars. Just because they talk about helicopters and bags of cash, it may be instructive to note that as central planners they are continually subject to the Law of Unintended Consequences.

 

People of libertarian persuasion used to know this. We used to know in our bone marrow that human beings are not machines programmed to yield predictable results from known inputs.

 

If the managers of the Fed actually started to punch the "zero key" one space to the left of the decimal in their own account balances and use that to purchase an endless number of electronic T-bonds from the U.S. Treasury, what would those holding T-bonds do? Better yet, to whom could those holding T-bonds sell their T-bonds in the open market?

 

If the Fed becomes the buyer of last resort for the assets that form its own reserves, what exactly are those reserves worth?

 

Nothing.

 

The Fed is not an island in the economic ocean. Neither it nor its managers are omnipotent. Does anyone honestly believe that today's central bank managers have discovered what the Alchemists could not? On the contrary, their fraud is on the verge of general recognition.

 

Depending on one's figures, there is somewhere between 50 and 100 trillion dollars worth of debt in existence today, even now growing exponentially as the Obama Administration takes over as the consumer falters. In this regard credit growth looks like a graph of home prices did two years ago.

 

This analogy is critical. Inflation has until today, like home prices rises prior to 2005, not significantly reversed since nearly a lifetime ago. As with the reversal of fortune in real estate, an event's rarity should not be confused with impossibility. A prudent person might keep the possibility of a credit collapse deflation on the radar screen. Should the conventional wisdom be in error, the consequences of an historic deflation do not invite casual disregard.

Share this post


Link to post
Share on other sites

New Prechter interview - by Eric King for KingWorldNews

26 June 2009:

http://www.kingworldnews.com/kingworldnews...t_Prechter.html

 

Elliott Wave International Founder and CEO Robert Prechter appears regularly on Bloomberg television and has been featured on CNBC and media from around the world. In this interview Bob covers the stock market, real estate, precious metals, oil prices, bear markets, debt, inflation, deflation, social trends, technical analysis, market regulation, interest rates, the Federal Reserve and politics. Robert Prechter has written 13 books on finance, beginning with Elliott Wave Principle in 1978, which predicted a 1920s-style stock market boom. His 2002 title, Conquer the Crash, predicted the current crisis. Prechter’s latest interest is a new approach to social science, which he outlined in Socionomics—the Science of History and Social Prediction published in 2003

 

== ==

 

Notes:

Share this post


Link to post
Share on other sites

Measuring the Dow

20090112_nico.gif

 

True or False: The “Real” Dow Jones Industrial Average has rallied more than 30% from its March 2009 low, standing near its highest level in nearly six months.

That depends on who you ask. According to the mainstream experts, the answer is clearly YES. For many in this camp, the Dow’s upsurge is the “slow and steady” start of a new, “healthier” bull market.

There’s just one major problem with this assumption, namely: Wall Street gauges the value of the Dow in terms of the U.S. dollar. This is a “nominal” figure based on intangible ebbs and flows of liquidity.

In truth, there is only one genuine measure of the Dow’s actual purchasing power: Gold. And that picture isn’t so pretty: Right now, the “Real” Dow/gold is circling the drain of the 170-level, half of its Depression-era peak.

Now, you might ask yourself: Who gives a hoot about the DJIA in terms of gold? Wall Street doesn’t pay it any mind. And gold itself hasn’t been the standard since FDR gave nightly “fireside” chats and the average cost of gasoline was 10 cents/gallon. (Circa 1933.) So, what does it matter where the Dow is denominated on this outdated scale?

Here’s why it matters: In the last three decades, an authentic bull market has occurred ONLY when the “Real” Dow is rising alongside the Nominal Dow.

 

/more: http://www.elliottwave.com/freeupdates/arc...if-but-Now.aspx

Share this post


Link to post
Share on other sites

 

 

I cannot help but quote this short, but very interesting excerpt from the May EWT newletter (it is an example of the sort of quality writing you get in the EWI publications):

 

Deflation now, Hyperinflation later? - that's what we may see, says Prechter

 

"Economic bears today are inflationists because they fear a bigger version of the 1970s. Paul Krugman (with whom I disagree on virtually everything) on May 29 quoted an economic historian on the sentiment of the 1930s, when the inflationary 'teens were likewise burned into people's memories:

'... during the early years of the Great Depression... many influential people were warning about inflation even as prices plunged. As the British economist Ralph Hawtrey wrote: "Fantastic fears of inflation were expressed. That was to cry, Fire, Fire in Noah's flood." And he went on, "It is after depression and unemployment have subsided that inflation becomes dangerous."

 

That later statement above is exactly what Conquer the Crash said:

' While I can discern no obvious forces that would conteract deflation, after deflation is another matter. At the bottom, when there is little credit left to destroy, currency inflation, perhaps even hyperinflation, could well come into play.'

 

(Note: Hmm, does that mean Iceland may soon drift into hyperinflation?)

 

 

 

 

Dr Bubb. Any more thought on this? Deflation now. Hyperinflation later? I am thinking 'timescale'. The King interview has Prechter say we may well be mired in deflation for 'decades'. How does this go with Defla now Hyper later? Or is he thinking hyper will be speeded along by the curency collapse catalyst sooner than we think. Another point. In his Gold and silver musings (A collection of RP's recent and historic writings on gold and silver) ch 15 Monetary policy:The Future has been Fully Mortgaged, he extrapolates his theory of a Dow at 1000, caused by a credit implosion, 'I expect the final implosion in credit value will be so swift that the authorities will not act in time to counter it...they will try..and fail spectacularly...it will be too late.'-APRIL 18 2009. Is this the point of hyperinflation entrance?

 

If yes then what good are Treasury Notes/Bonds. 'So if you want to make money reliably and safelt during recessions and depressions, you should own bonds WHOSE ISSUERS WILL REMAIN FULLY RELIABLE DEBTORS THROUGHOUT THE CONTRACTION (my caps). He goes on, 'Of course as Conquer the Crash makes abundantly clear, finding such bonds in THIS depression...the deepest in 300 years, will not be easy. CTC forecast that in this depression most bonds will go down and many will go to zero. This process has already begun. This time around, you have to follow the suggestions in that book to make your debt investment work.'

 

Finally Prechter says on p 38 (after having compared todays gold price with the price in 1980, though not an INFLATION based comparison-thus not really a comparison at all in my eyes) and I quote ' Nevertheless, as CTC said, a moderate position in gold is desireable because it is money and it is always good to have money. At some point, we will want ONLY money. But I stillthink that day lies in the future, nearer the end of the deflationary crash'.

 

Of course what we need here is some estimate, guestimate of when that day will be. As nobody knows then in my mind it is better to pick up gold (and silver) while it is available and affordable, even though the price could well be taken down in another bout of deleveraging. Traders may be able to jump in and out of other things thus scoring more profits along the way. But those of us who are not, it would, I think, be wise to turn whatever fiat currency we have into what everyone will rush to when we want 'only money'. To hell with fiat currency, its relative price seems irrelevant. Besides which in the last deleveraging it was damned hard to get your hands on pm's and if you could the premiums were ridiculous. The super rich had bought all the bars and wont the same thing happen again in Autumn/next time?

 

I don't doubt this would seem like chucking money away to you and to RP who see 'better money making opportunities for wave c in stocks'. I wonder if those of us who do have children to protect are more inclined to get the 'insurance' before anything else. This could be an interesting slant for the Socionomists to pick up on. And by the way I respect your decision to not have kids, I have no axe to grind, just what a waste of your obvious talent and how much you could teach a son/daughter (and pass on your knowledge and wealth).

 

I am presuming a hyperinflation would be resultant of a currency collapse which will ricochet around the globe. Iceland, Ireland, Italy, GB, Japan, USA, EU- in no particular order. With the Grace of God we will avoid a major war. Being a parent in war will not be fun.

 

I am coming around to Richard Russell's 'keep it simple' comments recently. A house owned outright, a bit of gold, cash. I would add a biggish garden, a wood burning stove and a library of good books, bicycles and some stockpiled essentials. Neighbors/ family/community would be a plus. How's that for social mood? And I wonder where RR lives? US? Anyone know?

 

Thanks if you have time to answer all this. Jake.

 

Share this post


Link to post
Share on other sites

EWI thinks a Right Shoulder may be in place

 

A break of support (SPX-878-880 and INDU, near 8220-30), might bring much lower levels, they believe.

They believe that a "measured move" could take the SPX to near 800

Share this post


Link to post
Share on other sites
Dr Bubb.

Any more thought on this? Deflation now. Hyperinflation later?

I am thinking 'timescale'. The King interview has Prechter say we may well be mired in deflation for 'decades'. How does this go with Defla now Hyper later? Or is he thinking hyper will be speeded along by the curency collapse catalyst sooner than we think. Another point. In his Gold and silver musings (A collection of RP's recent and historic writings on gold and silver) ch 15 Monetary policy:The Future has been Fully Mortgaged, he extrapolates his theory of a Dow at 1000, caused by a credit implosion, 'I expect the final implosion in credit value will be so swift that the authorities will not act in time to counter it...they will try..and fail spectacularly...it will be too late.'-

 

APRIL 18 2009. Is this the point of hyperinflation entrance?

 

If yes then what good are Treasury Notes/Bonds. 'So if you want to make money reliably and safelt during recessions and depressions, you should own bonds WHOSE ISSUERS WILL REMAIN FULLY RELIABLE DEBTORS THROUGHOUT THE CONTRACTION (my caps). He goes on, 'Of course as Conquer the Crash makes abundantly clear, finding such bonds in THIS depression...the deepest in 300 years, will not be easy. CTC forecast that in this depression most bonds will go down and many will go to zero. This process has already begun. This time around, you have to follow the suggestions in that book to make your debt investment work.'

 

Finally Prechter says on p 38 (after having compared todays gold price with the price in 1980, though not an INFLATION based comparison-thus not really a comparison at all in my eyes) and I quote ' Nevertheless, as CTC said, a moderate position in gold is desireable because it is money and it is always good to have money. At some point, we will want ONLY money. But I still think that day lies in the future, nearer the end of the deflationary crash'.

 

Of course what we need here is some estimate, guestimate of when that day will be.

. . .

I am presuming a hyperinflation would be resultant of a currency collapse which will ricochet around the globe. Iceland, Ireland, Italy, GB, Japan, USA, EU- in no particular order. With the Grace of God we will avoid a major war. Being a parent in war will not be fun.

 

I am coming around to Richard Russell's 'keep it simple' comments recently. A house owned outright, a bit of gold, cash. I would add a biggish garden, a wood burning stove and a library of good books, bicycles and some stockpiled essentials. Neighbors/ family/community would be a plus. How's that for social mood? And I wonder where RR lives? US? Anyone know?

 

This is a good post, with an interesting series of questions.

I prefer to answer them on The Libran Strategy thread, if you dont mind.

Share this post


Link to post
Share on other sites

1246960964061985300.jpg

 

Link: "Deflation is Winning" Report:

 

Watch the 20-minute Video – FREE

Deflation is Winning. Are You?

Inflation vs. deflation? You're probably familiar with the widely publicized case for inflation; just tune in to the financial media to get the consensus view. We invite you to challenge the mainstream: Watch this special 20-minute video, and you'll learn why the consensus is so often wrong.

 

The mainstream media couldn't predict the biggest bear market in 100 years; how do you expect them to anticipate what will unfold next? Watch a revealing video from financial analyst and sought-after speaker Steven Hochberg, chief market analyst for world-renowned research and analysis firm Elliott Wave International.

 

Hochberg and his colleagues, including famed financial forecaster Robert Prechter, were among the first to predict the financial tsunami responsible for washing out millions of investors. Prechter and Hochberg identified the 2005 real estate top in real time. They anticipated the huge declines we've seen since in stocks, crude oil, metals and agricultural commodities. They even warned their subscribers about the "sharp and scary rebound that began in March 2009. But what many people don't know is, they also helped their subscribers survive and prosper during this volatile time.

 

http://www.elliottwave.com/a.asp?url=/club...mp;cn=goldstock

 

 

Share this post


Link to post
Share on other sites

A Crisis Timeline

http://www.youtube.com/watch?v=9qtGbXKaTbE

 

From Warren Pollock, who is using Elliott Waves

Share this post


Link to post
Share on other sites

Prechter on the monetary phenomenon of credit ...and a credit-based economy.

 

Jaguar Inflation - A Layman's Explanation of Government Intervention

 

http://financialsense.com/Experts/ewave/2009/0710.html

I am tired of hearing people insist that the Fed can expand credit all it wants. Sometimes an analogy clarifies a subject, so let’s try one.

 

It may sound crazy, but suppose the government were to decide that the health of the nation depends upon producing Jaguar automobiles and providing them to as many people as possible. To facilitate that goal, it begins operating Jaguar plants all over the country, subsidizing production with tax money. To everyone’s delight, it offers these luxury cars for sale at 50 percent off the old price. People flock to the showrooms and buy. Later, sales slow down, so the government cuts the price in half again. More people rush in and buy.

 

Sales again slow, so it lowers the price to $900 each. People return to the stores to buy two or three, or half a dozen. Why not? Look how cheap they are! Buyers give Jaguars to their kids and park an extra one on the lawn.

 

Finally, the country is awash in Jaguars. Alas, sales slow again, and the government panics. It must move more Jaguars, or, according to its theory — ironically now made fact — the economy will recede. People are working three days a week just to pay their taxes so the government can keep producing more Jaguars. If Jaguars stop moving, the economy will stop. So the government begins giving Jaguars away. A few more cars move out of the showrooms, but then it ends. Nobody wants any more Jaguars. They don’t care if they’re free. They can’t find a use for them. Production of Jaguars ceases. It takes years to work through the overhanging supply of Jaguars. Tax collections collapse, the factories close, and unemployment soars. The economy is wrecked. People can’t afford to buy gasoline, so many of the Jaguars rust away to worthlessness. The number of Jaguars — at best — returns to the level it was before the program began.

 

The same thing can happen with credit.

 

......

Share this post


Link to post
Share on other sites

This is interesting from Prechter.

 

 

 

Good investments for deflation: Gold and Silver?

As discussed in the section about the deflation gold relationship, gold cannot be considered a sure-fire safe haven during deflation; in fact, the reality is quite the opposite.

 

However, many people are surprised to find that Robert Prechter advocates buying gold and silver during a deflation anyway. Prechter says:

 

"First, it could be different this time, for some reason I cannot foresee. In a world of fiat currencies, prudence demands hedging against a rush to tangible money.

 

"Second, these metals should perform well on a relative basis compared to most other investments. Unlike so many commodities, they will not fall 90 percent from today's prices, much less to zero, like so many stocks and bonds. These metals are downright inexpensive compared to their top values in 1980. Even if the precious metals continue to decline, they will fall much less in percentage terms than most other assets because they have already fallen so far.

 

"Third, the question of whether there will be further bear market in the metals is important primarily to speculators and quibblers. Gold and silver have declined in dollar value for over two decades, which is between 90 percent and 100 percent of the total time I had expected them to fall. It may not be prudent to try to finesse the final months.

 

"Fourth, the metals should soar once the period of deflation is over. Silver rebounded ferociously after it bottomed in 1932, tripling in just two years, rewarding those who continued to hold it. If deflation again keeps precious metals prices down, the rebound after the bottom should be no less robust. Given the likely political inflationary forces, it could well be much stronger. So by all means, you want to own precious metals prior to the onset of the post-depression recovery.

 

"Fifth and foremost, if you buy gold and silver now, you'll have it. If investors worldwide begin to panic into hard assets, locking up supplies, if governments ban gold sales, if gold and silver prices go through the roof, you won't be stuck entirely in paper currency. You will already own something that everyone else wants."

 

 

Pretty much took the words out of my mouth! If you read in between the lines this is what he has been trying to spit out now for some time. I m glad he has brought it to consciousness and put it in print.

Jake

 

 

 

Share this post


Link to post
Share on other sites

Elliott Wave Lives on ...

Has some nice charts: http://stockcharts.com/def/servlet/Favorit...t?obj=ID1606987

 

Tony Caldero's Blog : http://caldaroew.spaces.live.com/

Share this post


Link to post
Share on other sites
I think it would be unwise to rule out EW and Neowave.

I presume they think that the markets are defying the logic of their methodologies-for whatever reason; manipulation, over confidence, earnings reports, hubris, the media, markets can stay irrational for longer..et cetera- but beware... I imagine that they will be thinking that the markets are going to be WORSE than they imagined ie LONGER mired in deflation a la Japon, despite all the cash thrown at the problem. In fact Prechter recently intuited that he was becoming MORE bearish (yikes).

 

Neowave's inventor Neely may feel some sort of "defying of the logic" has happened. Or at least his forecast was wrong.

This may require him to make a new forecast, which he hints may be far more Bearish.

 

But EWI does feel that way - just listen to Hochberg on FS this week. He talks about EWI expecting the rally to go higher,

and that it may need to make investor sentiment "even more bullish" by the time it is done.

 

Link: http://www.netcastdaily.com/broadcast/fsn2009-0725-1.asx

 

Here's Tony Caldero, who calls the current Wave C, a "double zigzag" with "more upside to come":

 

LONG TERM: bear market

A few days after the March 6th low at SPX 667 we concluded that a 17 month Primary wave A had ended, taking the form of a detailed zigzag. We then projected that Primary wave B was underway, it should last about 5 months, and the SPX could retrace 50% of the Primary wave A decline from 1576 to 667. We later modified that target to between a 50% rally (SPX 1001) and a 50% retracement (SPX 1122). When the SPX completed a zigzag at 956 on June 11th, we urged caution but kept an alternate count on the DOW charts just in case Primary wave B extended. SPX 956 was quite a bit short of our target in both time and price. The warning proved correct as the market then sold off from 956 to 869 and confirmed a downtrend. When the SPX started to rally off that low we anticipated that it should halt at the 912 pivot. It didn't. On July 15th the SPX gapped up and ran right through the 912 pivot. This indicated that the alternate DOW was gaining in probability. Soon after, the Tech sector confirmed an uptrend and the rest of the market followed. Clearly SPX 956 only ended Major wave A, and SPX 869 Major wave B. Major wave C of Primary wave B was now underway. This week Primary wave B made a new high at SPX 980. This is the highest the market has been since Nov 08, and the SPX has now risen 47% from the March 09 low. Since we are expecting Major wave C to unfold in a zigzag, which would make Primary wave B a double zigzag, (Major wave A was also a zigzag). Major wave C should have some fibonacci relationship to Major wave A. At SPX 979 Major wave C = 0.382A, this was already met this week. Continuing, at SPX 1014 C = 0.50A, at SPX 1047 C = 0.618A, and finally at SPX 1158 C = A. These levels also coincide with OEW pivots: 990, 1018, 1041 and 1136. We currently favor the SPX 1047 level and the 1041 pivot, which was our original lower projection.

 

/more: http://caldaroew.spaces.live.com/

 

NEXT WEEK

Monday kicks off the week with New home sales at 10:00. On tuesday we have Case-Shiller home prices and Consumer confidence. Wednesday Durable goods orders. Thursday the usual weekly Jobless claims. Then friday Q2 GDP, the employment Cost index, and Chicago PMI. Interesting week. As for the FED, the only thing scheduled so far is the Beige book on wednesday. Best to your week!

CHARTS: http://stockcharts.com/def/servlet/Favorit...t?obj=ID1606987

Share this post


Link to post
Share on other sites
But EWI does feel that way - just listen to Hochberg on FS this week. He talks about EWI expecting the rally to go higher,

and that it may need to make investor sentiment "even more bullish" by the time it is done.

 

Link: http://www.netcastdaily.com/broadcast/fsn2009-0725-1.asx

 

I listened to it, it was Thursday so he didnt have sentiment updates for the week. One can only guess that sentiment is way up. Side point, the gold:silver ratio didnt confirm the new high from June. Also there is a Megaphone pattern forming on the Dow

 

Share this post


Link to post
Share on other sites

The “Beat the Market” Fallacy

by Robert Prechter, President, Elliott Wave International | July 17, 2009

 

During long bull markets, a myth develops that a money manager’s goal is to match or beat some benchmark for a market that is rising. This judgment bias explains why investors in recent years came to believe that a proper benchmark against which to judge money managers was the gain or loss recorded by the S&P index. Although “beating the S&P” became a popular basis upon which to judge performance, it is bogus.

 

The fallacy of this belief is nakedly exposed in a big bear market. Even money managers who succeed at their stated goal of beating the S&P can ruin your retirement. In the real world, customers are (surprise!) devastated if they lose half their invested capital, even if the S&P falls even more than that amount, say, 58 percent. How can this be, if the sensible, proper goal is to beat the S&P? Well, that is not a sensible, proper goal.

 

The goals of investing should be :

(1) to keep money and

(2) to make money.

Money managers who successfully protect your capital and make money for you in changing environments are truly serving you. Those whose goal is to beat the S&P will eventually serve you up.

 

The beat-the-market fallacy is even more obvious when one takes into account the fact that markets are bi-directional. If a money manager is supposed to beat the market on the upside, shouldn’t he also have to beat it inversely (with short sales) on the downside? If the S&P falls 58 percent, shouldn’t that performance be the benchmark, so that anyone who makes less than 58 percent is a piker, while the only good managers are those whose short sales made more than that?

 

Tell me: Why does this proposal sound absurd simply because market direction changed? In a currency ratio, direction is quite obviously irrelevant.

 

Euro/yen goes in the opposite direction of yen/euro, yet both ratios express precisely the same relationship. According to the beat-the-market benchmark, as the market fluctuates, the manager in Europe is supposed to beat the ratio in one direction, while a manager in Japan is supposed to beat the ratio in the other direction! Likewise, the S&P expresses the S&P/dollar ratio, of which the dollar/S&P ratio is simply the inverse and of no theoretically different consequence.

 

It does no good to say that the reason for such a benchmark is that the stock market usually goes up, because this statement describes only the past, not the future. Had you made this judgment in England in 1720, it would have done you no good for 64 years. Had you made it in Rome in 300 A.D., it would have done you no good ever.

 

The ridiculousness of the beat-the-market fallacy is further revealed by observing that the market is a fractal. It fluctuates at all degrees of trend. So which degree of trend is one supposed to beat? If the market rallies for three weeks and falls for two, is the only good manager someone who beats the return on the rally and then beats it on the decline? What about a 3-day rally and decline? What about 3 hours?

 

/more: http://www.financialsense.com/Experts/ewave/2009/0717.html

Share this post


Link to post
Share on other sites

Here's ALL ALLAN, now ready to short:

Elliott update

Sometimes, it just looks right; complete and topping:

 

On this daily chart, it will take a move below 966 on the SPX to confirm a completed five wave move up and suggest a decline to the area of the previous wave four, around 850. If that were to occur, we can assess the viability of further decline, or another rally, at that time. For now, the count looks right, resistance clear (horizontal blue line, generated from the previous wave 3 high) and a possible top at hand.

 

A more aggressive short can be gleaned from the 60-minute chart:

 

My trade of the week will be to go short if the SPX falls below 995 as per the above Blue Wave sell level. If the market rallies further, I'll probably stand aside, unless momentum dramatically improves. Absent such a scenario, the risk:reward at this point is on shorting weakness.

 

/see charts: http://allallan.blogspot.com/

== ==

 

Caldero remains Bullish, after a brief pullback:

This rally from the July SPX 869 low continues to look like the first rally from the March SPX 667 low. In March the SPX rallied 136 points before there was any significant pullback. Today this rally hit 135 points from the July low. Both rallies, btw, were Intermediate wave A of an ABC Major wave. Thus far this rally has had several pullbacks between 13 and 15 points, nothing larger. Upside momentum continues to weaken, but not price. Right now, we'll need to see a decent drop below SPX 888 to create price weakness. Best to your trading!

 

/see: http://caldaroew.spaces.live.com/

Share this post


Link to post
Share on other sites

Prechter was SHORT again // (I wonder if he has covered now)

 

This observation along with the most bullish reading in sentiment among S&P traders (88%) since the beginning of the steep decline in October of 2007 convinced Robert Prechter to send out his monthly Elliott Wave Theorist a week and a half early today. After standing aside since covering his Short position on February 27th, 10 days before the absolute bottom of the decline, he is going back in Short.

 

Does this mean we are there, at the end of the summer rally and at the beginning of a merciless decline in the market?

 

Maybe.

 

As Prechter points out, prices are only at the minimum levels for a normal retracement and could go higher. But he figures it will be easier to get Short early, then get Short late. He also cautions that "getting paid" may be problematic in a Wave 3 down. That is to say that,

 

/see: http://allallan.blogspot.com/

Share this post


Link to post
Share on other sites

I wonder who said this in June 1993 :P

 

The market will most likely hit 3,600 to 3,700 on the Dow sometime this summer, the 44-year-old ******** says. But soon after that, a bear market of monumental proportions will begin, he says, coincident with a devastating depression.

 

How monumental a bear market? Assuming the Dow peak is about 3,600, ********'s target is for an ultimate low on the Dow of between 100 and 400. (Yes, you read that right.)

 

This sounds familiar.....

 

FAIL :lol:

 

 

Armageddon for Stocks Nigh

 

 

Just to keep some balance on this thread you understand <_<

 

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×