Planet Yelnick

Rate a Minute! "Every Change of Rate"

Bernanke threw a bit of cold water on the recent race to break Dow 11400, a key level, and the race for gold to break the Prechter Limit of $661, by stating that a pause in rates does not signal that rate increases are done.  This sent a shudder through forex markets, and may betook indecision as to whether they should worry over rising inflation or a slowing economy. 

Serendipitously, a clever and hilarious (at least for economists) music video parody on Bernanke has surfaced out of Columbia Business School (CBS in the video).  The students were having a little fun with Dean Hubbard, who was a candidate to follow Greenspan as head of the Fed instead of Bernanke.  The student who played Hubbard is said to have an uncanny likeness.  Good singer, too.  And a very good music video parody.  They are hard to do this well,  The students did another one, which is also pretty good.  My thanks to The Big Picture for bringing this video to our attention.

Bernanke threw a bit of cold water on the recent race to break Dow 11400, a key level, and the race for gold to break the Prechter Limit of $661, by stating that a pause in rates does not signal that rate increases are done.  This sent a shudder through forex markets, and may betook indecision as to whether they should worry over rising inflation or a slowing economy. 

Serendipitously, a clever and hilarious (at least for economists) music video parody on Bernanke has surfaced out of Columbia Business School (CBS in the video).  The students were having a little fun with Dean Hubbard, who was a candidate to follow Greenspan as head of the Fed instead of Bernanke.  The student who played Hubbard is said to have an uncanny likeness.  Good singer, too.  And a very good music video parody.  They are hard to do this well,  The students did another one, which is also pretty good.  My thanks to The Big Picture for bringing this video to our attention.

More Breaking News - Now Its Gold That Has Peaked

Prechter put out another special bulletin today: a 26-year wave analysis that shows gold has peaked.  The analysis leaves virtually no wiggle room. If gold moves up more than $30, Prechter would become a gold bull.  Worth reading for that alone. 

Bull Flu Disease

A roundup of analysts beyond Prechter show a convergence of views from different starting points, indicating a serious correction in 2006 but a delay in the Big One Down until after 2008.  This is consistent with the Yelnick view that 2006 will be a down year under the four-year cycle, but the downturn would not begin until late May/June - this is why last year's call of a top by Prechter was called a Wolf! Wolf! call - and that the real downturn will be delayed until after the 2008 Olympics because the Chinese will spend what they have to to keep it going until then, their Y2K moment. Let's take a look.

Prechter Rebuts - Silver Substantiates

Prechter launched the defense of his analysis today in the May EWT, issued weeks early. Last November, he thought the uptrend might last as long as May 6, and reiterates that prediction: the top should occur within two weeks +/- of May 6, or from now to May 19. He bases this on the large triangle which ended on Oct13 at Dow10200. Triangles are the penultimate wave, meaning one more wave up was expected. That wave is now ending, and should not go much higher over the next four weeks. Those of you who are quick to criticize his prior premature top-illations should get a copy and study this issue of EWT. Or, wait until May 19.

His reputation might be a tad less tarnished after calling to the moment the top in silver (if it holds). After a parabolic rise, it dropped 21% in two trading days. A bit of a crash, that. The STU reports that silver bullishness was an astounding 98% Wednesday, the day before the fall, which might be a record extreme for any market. A bundle of a contrary indicator, that. And Prechter notes that he has never seen an immediate recovery after a sharp drop like this from a parabolic rise. So a shorter term check for you Prechter critics is to see if silver recovers over the next few days.

Volatility should precede a change of trend. We saw currencies move sharply over the last few weeks (Icelandic Krona, NZ$). We may now see commodities make sharp moves down after parabolic rises - watch copper, sugar, gold and the biggee, oil. Stocks may follow. The Greenspan Indian Summer has caused all major markets to walk up in lockstep. They may walk off the cliff together, too.

Breaking News - Silver Peaks

Silver hit its upper trendline and faded today - "violently" according to an interim bulletin of EWT. Prechter sees both silver and gold as having peaked, and expects a sharp drop after a bit of reversal. Such metal peaks can also presage a stock peak. Over at the STU, and despite Prechter's extreme bearish tone, Hochberg analyzes what the waves are telling him, and currently they tell him that the markets in an uptrend. The correction a week ago broke as a triangle, indicating only a break in the overall trend, not a reversal.  The trend remains up, and we are now in wave 5 of that trend. When you put the two together, EWI is predicting that this wave 5 will continue for a *short* while, then top, while silver/gold should drop fairly strongly before then.

Is this then it? Not clear, as the bulls see us in 82W5, and this wave 5 may be just the end of wave 3 up from Oct02.  Hence the expected 2006 correction may be relatively mild, with more upside to follow in 2007-8. 

Zoran's Unfinished Symphony

I received a sad email today, that Zoran Gayer had passed away.  The Elliott community has lost a great one.  For those who have been reading this blog for several years, you know how much I respected Zoran and his analysis.  We occasionally discussed issues in both his theory and its application.  I had been encouraging a friend to help Zoran commercialize his thinking.  Based on comments and emails, I know a great number of you were fans of Zoran, and were eagerly awaiting the synthesis of his thinking in what we expected would be a ground-breaking book.  My condolences to his family, friends, clients and admirers. As a fitting summary of how I feel, let me share a post of a good friend and colleague of his, Richard Williams: 

With great sadness I have to inform you that Zoran Gayer passed away Monday night in Australia. He was a great friend and teacher. One who will be missed greatly.

Zoran was unusual in his willingness to share any discovery or knowledge, thinking that it was just part of being human. His work on EWT and behavioral aspects to trading have greatly assisted many, many people who knew him and fell under his tutelage.

His brilliant mind and enormous curiosity made it possible for him to look at the same things that most of us do, but to discover aspects that no one else that I have ever known has done. His latest theories of how mass psychology works to shape market behavior were remarkable.

He joked with me that he had another lifetime of work to pursue. And that wasn't far from the truth. He intended to die with his boots on, having lived a life that was full and rewarding.

Zoran, may you find the answers to all the questions we pondered in the next life; and some great waves too!

Watching the Bond Market

While US markets are closed today for Good Friday, the Wall Street Journal has its eyes opened on the bond market.  Rates went above 5% yesterday. Greenspan's conundrum (why are long term rates so low?) has been answered, although the reasons remain hidden.  One factor has been the diversification away from the Dollar, as major trading parties have balanced their currency reserves across their trade flows.  But what has changed recently?  The Japan Carry trade is withering.  For a over a decade Japan kept long-term rates so low that the carry trade arose: borrow in Yen and buy bonds in other currencies.  Such as US Treasuries.  Now that Japan is emerging from its deflation post the bubble in 1989, it is raising its rates.  The unwinding of the Yen Carry may be why the NZ$, the Icelandic Krona and other currencies have fallen sharply recently.  And why the US long bond is now rising. 

Topping Process

Many of the bearish Elliott Wave sites keep calling the top, when they should be calling the topping process. A consensus ifs forming around an upcoming correction. The curious consensus is that both the bulls (82W5) and bears (50W4) see a top soon.