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« 82W5? | Main | Dollar Bottom? Elliott Soup! »

Tuesday, May 09, 2006

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EN

I don't know much about dollar fundamentals but I have noticed that over the past few days most Elliotticians (who have been bearish) have turned short-term bullish expecting new highs in the DOW or at least a retest of the old high. Perhaps this is a bad omen for stock market bulls when there is little variant perception? When most people expect "one more high" perhaps it will not come.

Something extremely strange is going on in the NDX. It has been stuck in a 130 point trading range for almost half a year. Back in the bear market, it used to have a DAILY average of 100 points! What has happened to the volatility of this market? If someone can explain this historic low volatlity and what it might mean I would love to here it.

MHD

The new Vegas is the RUT not the NDX!
Gold just blew away Neely's Elliott prediction so its time to rag on him. I'm sure there will be many more Elliott predictions other than Prechters that turn out the opposite from their predictions.
Also, to keep the debt bubble growing, 50 year mortgages on the way. A truly mad society we live in.

bmz

MDD-

Yeah, it appear's that Neely is resorting to the ol' "let's just move back the goalposts" strategy himself, both in gold and in stocks. His projected S&P top of 1300 has now morphed into 1350ish with an admission that the current pattern is very hard to count.

I'm intrigued by SPWaver who has been looking for awhile at a top to the 3+ year stock bull market to occur March 10-12 at precisely this price area. We should know in a few days or so if another E-Waver bites the dust.

BMZ

Correct that- May 10-12

and meant MHD (scratch MDD)

stocksbysammy

First, I have to admit that I am a EWI subscriber. I do not no how to count waves and have no time to learn them. I enjoy the theory behind Elliot and try to apply it with real life experiences to trade. I own a few restaurant/bars and back in the “bubble” years of 1998 – 2000, bad help was hard to find. We had to offer wages and benefits to keep people that I never would have imagined. Now when we do hire, there is 20 – 30 applicants for every position, we pay them less then we did in the late 90’s and do not have to offer benefits. Also, back in the late 90’s if you tried to get a contractor, “builder, plumber, electrician, etc.” they would never return your call, now they call back within the hour. How all this applies to the stock market I’m not sure, but I do believe that the underling economy is slowing more then people believe.

Yelnick you shoulc check out Don Wolanchuk

Don Wolanchuk has been nailing market turns lately and is the best Elliott Waver out there.

Wolanchuk uses Elliottwave with Put/Call ratios.

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Wolanchuk is the man

If Elliottwave had a Superbowl or Championship, Wolanchuk would win every year and be a Dynasty. Wolanchuk is the Lance Armstrong/Joe Monatana of Elliottwave. He has won 'Timer of the Year' 17 times.

Prechter is the Arizona Cardinals.

tony caldaro

Hi Yelnick,

Bob and I agree for the first time on a market in a long time. I feel the Dollar will be bottoming in a wave II correction low in the next few weeks. I've been watching a few EW pivots to help identify it, but so far, it's still drifting lower. It will find support soon and resume its bull market.
tony

rc

I have a sell on the RUT (medium and st) again as of today. This is the 3rd such critical point since March. The other 2 sells were false postives. I have like little emotional confidence in the sell as this has been the energizer bunny market repeatedly jumping up and out of critical points. Momentum is fading with each and negative divergences increase -- so each sell has given a stronger signal. And yet it just keeps on going. Anyway, it's not about emotion but intellect and not losing too much on the false signals.

The RUT has been in a channel since December -- over 5 months. It's about midway up now... if it doesn't sell off, then a push to abt. 800 over the next few days would put it at the top.

From a market psychology perspective, everyone is obviously rooting for record highs in the dow -- which seem all but certain being this close. That'll be played up in the news (though in real cpi adjusted dollars it's still a good ways from the 2000 top). The ndx is floundering. And I suspect many traders are looking for a key reversal from record highs.

Anyway, we're certainly ripe for a significant correction.

EN

About the DOW, when a market meets an old high on such a large scale, monthly chart, you generally get at least a 2 bar reaction so selling the old high is wise, if only for a nice swing trade into the start of June. Better yet, use the 11721 DOW high as a proxy to sell the crummy NDX which should suffer nicely in the correction. Everyone thinks a new DOW high is a virtual certainty, everyone can never be right.

MHD

A new high in the Dow would create a buy signal according to Dow Theory. This does not bode well for the bearish scenario of most Elliott Wavers who believe we are in wave 2 up soon to begin wave 3 down, or in the final 5th wave up ready to begin wave 1 down.
Dow Theory has a much better record of major trend identification than the ever changing waves and their alternate counts. How we could be in a new secular bull market is beyond me, but then again, a tulip was worth 80,000 in today's dollars at one time, so when dealing with humans anything is possible!

Gold hits Quarter Century highs

Hey guys!!!! Gold just hit $725!!!!!

Up $100!!!!! from Prechters crash call!!!! Prechter is still bearish!!!

rdneu56

A major crash started today with initially modest declines in the major market indexes. A never before seen confluence of Fibonacci, magic and nasty numbers indicate that this is the big one. The one that destroys all major stock averages as well as the universe as we know it. Sell everything now, while you still can. Invest the proceeds into food, drink and survival gear and head for the woods.
Prechter was right after all.

roddy g

are you serious? or was that a fib (onacci)?

EN

If this is the start of a serious decline to SPX 1060 then we will definately know by July. The decline should be relentless selling for 2-3 months. I will believe it when I see it.

Bob Jr.

This is the BIG ONE!!! Dow 600 in 3 years!

Sell everything!!!

-BOB

agee

yawn :) dollar is going up!

MHD

So much for the new high. I guess the bullish Dow Theory signal just got a claw up its a%#.

rc

The critical point daily & weekly sell signal I had on the RUT on May 10th is now also a lt multi-month sell. The up-channel from October has been decisively broken. The RUT is at support on an upper tl since 2004, so a bounce may be near (not exactly a profound observation). I can't predict markets, but there is a strong _potential_ for this selloff to be severe and continue for months. On a lt basis, I'd get out (already am since March) while the going is good and _not_ look for a bounce. On a trading basis, I'd take profits on such strong multi-day moves, and look to get short again on a bounce.

It's always a good reminder (to me at least) how emotions counter analysis -- it certainly didn't _feel_ like the market was about to go down hard as of Wed. evening... it's been the energizer bunny market foiling two other critical points since March... and there we were, the dow just a hop and skip from record highs. It _felt_ like it'd be throwing money away and posting a sell would about guarantee another false positive. Patience and discipline.

Is this the end of the bull since October -- yes. Is it the end of the bull since 2003? Who knows, but it's a high probability candidate. It sure will be interesting, slap yourself for not seeing the obvious, in hindsight if the dow ends up failing at a double-top. But we're here and it isn't so obvious. This downturn may end sooner rather than later with the energy for the rut and dow to spring up to new highs. Or not.

EN: good analysis. Post more.

MHD

I've seen the market bounce back so many times from a severe drop that I do not trust"the top is in". What is different this time is the follow through. I was also looking at the possibility of a double top as mentioned by rc above. So it looks like the line in the sand has been drawn. Either make a new high and give a Dow Theory primary buy signal or a double top has formed with very bearish implications.
One must remember that the record earnings for the S&P is nothing more than record debt being accumulated by the buyers of their products, and financed by the Asians. At some point this will end and the doom and gloom of all this debt will reveal itself. Prechter did not predict all of this, history has, and we seem to never learn from it. You never can, and never will be able to borrow and spend your way to prosperity. And that's the bottom line folks!

Paul

Every time we had correction since March 2003, I've thought it was the beginning of the bear market and of course I and Prechter have been wrong ever since. I still think the last couple of days were just a correction. However, what we're seeing right now may be a prelude to what is to come. We've not seen a 10% dip in stocks since `03. I see the dollar oversold. Metals and stocks overbought. Maybe the big bad bear will return this year. Because a low is due this year, I believe we could potentially see a real collapse this October. I've been out of stocks for the last several years.

One thing I'll look out for is if I see all asset prices declining at the same time - stocks, bonds, metals, real estate, etc. Then I'll be on high alert.

rdneu56

Associated Press

Gainesville, GA
Thurday, May 11, 2006, 7:32 PM local time...

Associates of Elliot Wave International, a well known investment advisory service, have been spotted around Gainesville, Georgia buying up large quantities of Kool-Aid. When questioned about the reason for the purchases they declined to comment. They did however point out that today’s decline in the US stock market that was mirrored by the Nikkei after it opened in Tokyo is the beginning of a major crash in the world stock markets. They added that the world will soon recognize that Bob Prechter was right all along, forecasting this event and a major deflationary depression, even though the markets moved opposite to his forecast for nearly 20 years.

rdneu56

Reuters

Gainesville, Georgia
Saturday, May 13, 2006, 7:53 PM

A large number of Elliot Wave International loyalists have been gathering outside EWI headquarters in Gainesville, GA since late Friday afternoon. They are awaiting the reemergence of Robert R. Prechter Jr., who secluded himself accompanied his closest confidants, Steve Hochberg and Peter Kendall, on Friday this week shortly after the markets closed. Before his disappearance Prechter, the founder of Elliot Wave International, expressed absolute confidence that the precipitous stock market decline and subsequent deflationary depression he has been forecasting for the last 20 years has finally arrived after 2 back-to-back setbacks in the global stock markets on Thursday and Friday this week.
Rumor has it that the exalted trio took with them the original writings of Ralph Elliot Nelson for in depth study. The crowd, gathered outside EWI headquarters, expects Prechter to surface early next week with a new prediction for the ultimate low of the Dow Jones Industrial during the coming depression. The faithful believe that anything above “Dow 200” would be a disappointment. As far as the date of the ultimate market low, expectation vary widely between early 2008 and sometime in 2024.

bull will be back soon

A couple of down days and the bears are back in force. Familiar, certainly, and possibly a sign that the bull is getting ready to ride again. Gold at 725? I'd say inflation is starting up again. Gold is probably an early riser.

rc

Bears back in force? I'm neither bull nor bear. Charts & indicators I follow gave a clear st and mt sell on Wed, and a lt -- multi-month -- sell has now been triggered. Being strictly objective, there's strong _potential_ for this selloff to be long-lasting and severe. If that happens, it happens.

The last time I saw such a confluence of patterns was in late summer '98. And these patterns are even more compelling. But like Paul said above, the market has sprung up repeatedly since 2003 and may do so again and make another run thru the Fall. However, I would take this sell seriously.

As MHD said, it'll be interesting to see whether we've double-topped in the dow -- that would be something. My sense is that we'll get record highs after a correction, but I wouldn't count on it -- objectively there's a sell now so I'll go with it until it bottoms w/ some bullish patterns. "borrow and spend your way to prosperity": that's the problem w/our economy -- there are unsustainable fundamentals. I don't want to be a gloomer for the sake of being a gloomer, but I don't see how any rational person can overlook so many out-of-whack aspects.

Re: gold. I had a sell the other week, a false positive. And again a correction sell with it topping in the 700 to 750 range. But not sure I want to short it... too manic and risky... but I wouldn't hold longs either.

rdneu56

United Press International

Gainesville, Georgia
Sunday, May 14, 2006, 8:45 PM

The crowd gathered outside Elliot Wave International since Friday afternoon greeted news that the Asian market have opened to the downside with exuberant cheers. This crowd is made up of the most faithful followers of Robert R. Prechter Jr., the founder of Elliot Wave International and author of several books about the Elliot Wave Principle. The Elliot Wave Principle is a belief that civilization as we know it will come to a sudden end. The end will begin with a precipitous decline or crash in the world stock markets. Prominent Ellioticians such as Prechter refer to this crash as a 3rd of a 3rd within a 3rd wave decline. Prechter has been forecasting this event on and off for the last 20 years. Prechter, encouraged by the recent declines in the world markets, firmly believes that doomsday is now just around the corner and secluded himself together with his inner circle, in order to meditate on the final low point and duration of the coming deflationary depression. The crowd of faithful believers in the Elliot Wave Principle is patiently awaiting the reappearance of their idol, in order to learn first hand about the expected extent of forthcoming crash.

MHD

What... no comments this weekend, Yelnick? No soup for you!

Matt Dickerson

Prechter is bullish on the dollar.

Stay short the dollar.

ron hortz

I had an econ teacher 20 years ago tell us how scary the low US savings rate was and it's been much lower since and things have been pretty good. The debt bubble could go on for centuries. We might even grow out of it! No one knows.

MHD

That's right Ron, it's different this time fur sure there, good buddy. Debt is all good, especially non -self liquidating, it's the best! Obviously, the rest of the world thinks we should have plenty of good ole debt since they give us 80% of their savings. I'm at a loss as to why they save. Why don't they go in debt too? In fact, the best thing for all nations is to spend and borrow far more than they can ever pay back. It's the road to financial utopia.
Bob Prechter and his financial history, and statistics....what does he know!
Maybe the 88 trillion of debt we have is just the beginning and we have much more to pile on.
I'm with you Ron, and your economics teacher is a moron.

ron hortz

I sense sarcasm. I wasn't saying he was right or wrong. I was just saying it's exremely hard to make money betting on when or how a debt bubble will burst. Truth is, it sure has been "different this time." Debt levels have been unprecedented by many measures for a long time without a crash or a depression. It might happen tomorrow, it might not. I don't think you or I could predict. And I know Precther has done a very, very poor job of predicting. He became the boy who cried wolf many years ago. He will eventually be right but he has cost a lot of hard working people a lot of money in subscriptions and bad trading advice.

tony caldaro

Fifty odd years ago the U.S. was the world's creditor nation. Everyone owed us. And, we forgave most of the debts. Now we're the world's debtor nation. We owe everyone.

Until a central bank goes on a gold standard, or some other fixed asset. The paper chase could continue indefinitely. It was designed for just that purpose.

MHD

Bob's problem is he never learned the old saying " you never know how big a bubble will get, or how long it will last". His followers never heard the saying, " markets can stay irrational longer than you can stay solvent".
The "paper chase" has gone on for this long for one reason. Everybody's doing it, rather than just one nation. Most nations are also going in debt. If you looked at Japan as a company rather than a nation, they are bankrupt, just like the U.S..

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