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« Mighty Prechter Still at Bat! | Main | Mighty Prechter Calls the Count »

Sunday, October 08, 2006


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Prechter saying 1929 crash is imminent


Sigh. Just when I thought we were moving on from listening to Prechter.

Just to recap:
1987 - Prechter saying 1929 crash is imminent.
various other times - Prechter saying 1929 crash is imminent.
1995 - Prechter saying 1929 crash is imminent.
1998 - Prechter saying 1929 crash is imminent.
2000 - Prechter saying 1929 crash is imminent.
2001 - Prechter saying 1929 crash is imminent.
2002 - Prechter saying 1929 crash is imminent.
2003 - Prechter saying 1929 crash is imminent.
2004 - Prechter saying 1929 crash is imminent.
2005 - Prechter saying 1929 crash is imminent.
2006 - Prechter saying 1929 crash is imminent.

If you just assume as a given that this is what Prechter is always saying, then you can basically move on.

But I guess each year brings a new crop of newbies who are unaware of Prechter's track-record.

His early 1980's win was an AWFUL long time ago - and he won it thanks to what Dick Diamond taught him, not because of Elliott.


Does it make a difference whether the Democrats gain the upper hand or whether the Republicans remain in control? The answer may surprise you. It does not make one bit of a difference. This surprising answer becomes immediately obvious, if one digs deeper than the typical retoric thrown at the electorate. Just take the popoular charge on that the Democrats are taxers and spenders. Well, we now know that the Republicans can and do spend just as much or even more. But wait they reduced taxes and did not increase them. This is of course another silly argument for the largely ignorant electorate. If increased spending is not financed through increased taxation, the FED ultimately has to produce funds out of thin air to cover the deficits. This increases the money supply and imposes the hidden tax called inflation on every holder of US dollars - citizens and non-citizens alike. This is akin to applying generous amounts of vaseline, so the rape appears rather painless initially.

tony caldaro

Hi Duncan,

Thanx for the kudos.
Actually I have maintained the same OEW count for the past four years:

Cycle wave low in Oct 2002.
Primary wave One: late 2002.
Primary wave Two: Mar 2003.
Primary wave Three: early 2004.
Primary wave Four: August 2004.
Primary wave Five: ongoing.

A post election minor correction does seem likely. Providing we complete this last small fifth wave up, of this uptrend, during earnings season.

After that, the market still needs to complete Intermediate waves 3 and 4; Major waves 3 and 4; and then to end Major wave 5 to complete Primary wave Five, and the bull market. Mid to late 2007 looks good at this point.



Tony C, thanks, makes sense. You see this 02W5 as begining with the Bush Re-Election Rally. You must also expect it to extend, as 03W3 did not, and usually w3 or w5 extends? Might it then run through 2008?


Tony's count says:

" ... the market still needs to complete Intermediate waves 3 and 4; Major waves 3 and 4; and then to end Major wave 5 to complete Primary wave Five, and the bull market. Mid to late 2007 looks good at this point."

Tony, I am sure you mean well but I assure you when we get to "late 2007" you will have a different count. Mark my words on this. This is the nature of the beast!

This is a bit like religion. You either believe or not. But for most people "believing" makes them feel better.


Nostradamus, do you think perhaps Prechter has for years now been forcing his count to fit his fundamental view? He seems to have adopted a Hamilton Bolton old-school BCA view (based on evidence of economy during the gold standard) that the credit bubble must end in disaster and to have been swayed by the impressive magnitude of such consequences to suggest a higher probability of imminent disaster than could really have been justified by the market alone.

In reading a history of major depressions in the U.S. from 1830 on, I was impressed with the following:

(a) All were set off by a deflation of excess credit. This was the one factor in common.
(b) Sometimes the excess-of-credit situation seemed to last years before the bubble broke.
(c) Some outside event, such as a major failure, brought the thing to a head, but the signs were visible many months, and in some cases years, in advance.
(d) None was ever quite like the last, so that the public was always fooled thereby.
(e) Some panics occurred under great government surpluses of revenue (1837, for instance) and some under great government deficits.
(f) Credit is credit, whether non-self-liquidating or self-liquidating.
(g) Deflation of non-self-liquidating credit usually produces the greater slumps.

Near the end of a major expansion, few creditors expect default, which is why they lend freely to weak borrowers. Few borrowers expect their fortunes to change, which is why they borrow freely. Deflation involves a substantial amount of involuntary debt liquidation because almost no one expects deflation before it starts.

tony caldaro

Hi Duncan,

This 5th wave is extending, and could extend even further. All is possible in the market, as you are aware.
With EW, we are dealing with a collective human psychology cycle. Which can get more/or less, optimistic as time goes on.
The count I posted is the most probable outcome of the ongoing bull market. As time goes on, the Waves and the MMI will approach completion. And, the bull market will end.
Thus far, we have many months to go yet.


this is what happens to the bears:


Dow Predator, see that you may have your new EW mapped out during the weekend? Care to share with us?



Heraclitus, I couldn't have said it better. Look at RP's gold forecasts: in the EWP book, he says that commodities have isolated price campaigns i.e. isolated cycles or supercycles that DON'T stitch together in the way that is portrayed for stocks. But then in his letters he presents multi-century wave-counts for oil and gold and his institutional service gives wave-counts for the soft commodities, which is almost schizophrenic in its duplicity. Which is right - isolated campaigns, or a continuous fractal?? He's never come clean and he seems to change his story to suit, or perhaps (more cycnically) where there's a subscriber base to be lured.
When queried on this he morphs out of pure EW and says that his forecasts for commodities are "based on deflation" i.e. making it totally apparent that he is fitting his wavecounts (and even use of EWP itself) to his fundamenetal view! He even describes himself as "a deflationist". So yes, I do agree. Come what may he is not a pure Elliottician - even without the deflationary thesis, he uses cycles and various other forms of T.A. And since he has conceded that "the 1998-2006 period has not been tradeable with my tools," we should expect this to continue until he comes clean about what's not working for him and why he's failed to adapt.
Mind you, in his Socionomics book, he even tries to present a wave-count for the absorption spectrum of concrete (from memory) towards the end. This is ludicrous : an absorption spectrum is not show a dynamic process. The absorption spectrum of say Calcium atoms has nothing to do with the absorption spectrum of Hydrogen atoms, but to a lay audience that doesn't understand the theory of absorption spectra, the chart looks quite mesmerising when labelled 1, 2, 3, 4, 5. So what I mean to say is that Prechter seems desperate to attach his "theories" even to things he doesn't understand and that he should never attempt to model with them. Meaning, his judgement is "unreliable" (or, less kindly, that he's deluded).
It's sad that people seem so easily blinded by science and that this causes them to play "follow the leader". It makes me speculate that (maybe unconsciously) he plays the crowd. For example: interesting timing for publishing a book on gold and silver, right at the recent high.
And by the way, thanks for the fascinating summary of previous major depressions. That's some reading you've done! Best wishes...


The message with the video link posted on Monday, October 09, 2006 at 06:40 PM is not from me.


Wait--- sorry. It is from me. I was confused by another video link:

Please do not impersonate regulars to this site. It's immature "blog-cunting." To quote google: "Don't be evil."


The pull back in bonds should bottom in the next couple of days. The bond bull market should start to resume shortly. The fed should stop having these clowns come out and threaten to raise interest rates. The futures market already stopped buying the balony. It's just giving me a good chance to buy bonds.


Prechter is a bull?!?! The Millennium Bear is suddenly bullish!?!? Anybody remember Prechter's bullish conversion just prior to the '87 crash? BUY PUTS NOW!


a little shout-out to all you bears who think a DOW plunge of 40 pts lasting 2 hours is vindication. and can we finally put to rest "contrary indicators" pretty please because Oct. 10., 2006 the only difference between a bull and a bear is the size of his bullish predic(k)tion.


I need help. I have a bipolar personality. I lost my mind reading the EWP waves a few years ago. I love Prechter. I hate Prechter.
I am homeless because I lost all my money listening to Prechter. I log on once in a while from an internet computer. I clean the floors there and I am paid 1.618 dollars per hour.
I need help!! I love the bashing... I am a basher! I am insane.



Wasting time. . . Waves? Maybe, but what is really different than congratulating Bruno on his coin flip in the end???? What kind of a method points two seperate intellegencie in diff directions for years on end? Just following Elliot's RULES one could see that the 2000 to 2003 decline was a correction which meant higher numbers. What is the point in this useless game? Get a bed to sleep off the addiction . . . Forget EW, it will only lead you to fight the trend which is your freind. Why beat up your friend from Grade 3?


The top is in for now - but it's NOT a Grand Supercycle degree one. Just being clear...



Both the DOW and S&P500 when viewed on a daily bar chart have that "parabolic" blast-off look to them. A "crash" to the upside is every trader's wet dream as the action is a "taking-candy-from-a-baby" acceleration into a blow-off peak with trend lines becoming steeper and steeper and pullbacks shorter and shorter.

A parabolic rise to DOW 13,000 is the perfect scenario designed to frustrate the bulls (desperate to buy, fearful they will miss the runaway train, hoping to retire early) and bears (desperate to sell, hopeful for a crash, fearing financial ruin).


The LRP (Lunatic Ratio Pinciple) is at extreme levels. The LPR measures the ratio of rational to lunatic posts on this blog. Its current, extreme reading reading has definite implications for the future directions of the markets. For only $23.80 I clue you in on how to correctly interpret the LRP.


Anybody watching the QQQQ realtime? A classic "gunning of the stops"!! Such bold trading grows hair on the ole trading coconuts, real good stuff!!

Global Boom - Dow 100,000

In the latest EWT, you can tell Prechter is starting to bend.

Hes looking at the bullish case and understands that the next huge bull market may be global. Global bull markets could send the Dow soaring 50,000+. He then somewhat apologizes for missing the global and internet booms.

Prechter, the new Global and Tech Bull!!!! Go figure.


There are 4 things could slay this Bull and I fear them all:

1) an asteroid
2) a pissy FED
3) a bullish Bob Prechter
4) an extreme reading of the LRP


Once 82W5 is complete, won't that also mark the end of 49W3? If 82W5 tops out at 12k, the min target for 49W4 would be around 7.5K. Isnt this extremely bearish?


BKinDaHouse, this 82W5 count makes the 82W4 correction from 200-02/03 understandable: a normal correction goes down to the level of the prior 4th of the 3rd wave, which was also around Dow7.5K. If 82W5 ends at as little as Dow12K, expect the 49W4 to follow to be long (16 years) and deep - at least back to Dow7.5K.

Although Prechter sees this 82W5 as ending fairly soon and fairly close up, this likely reflects his continued uber pessimism, not the logic of the wave count. 82W5 would normally have a relation to 82W1, which although it was only 2000 points - looks small against Dow12K, and is already beyond that - was a ratio of around 4x.

Some of the more mathematical Elliottician's on this site should comment. One might see a fib ratio between 82W1 and 82W5, but we are already beyond 1x and 1.6x (except in the constant-dollar Dow, where 1.6x is still ahead of us). If this runs through 2008 as I expect, 82W5w5 will extend in time and duration, much as 83W3 did. You can recall that Prechter called the top at Dow3600, Dow4400, Dow5400, until he gave up. Hard to predict the end of an extension with fib ratios to prior waves; it acts as a new impulse wave.

Similarly, this puppy may run to the point that the S&P also gets to new highs before ending. Given that the tech stocks dragged the S&P down farther than the Dow in 2002, such a new high would likely also entail a tech rally. Maybe the GoogTube deal will spark another mini-mania in Web 2.0 ventures and drive us to a Bubble Echo top in 2008. We'll see. If so, hard to use numerology to predict any end point.


The top is in for now - but it's NOT a Grand Supercycle degree one. Just being clear...
Posted by: Confuseius | Wednesday, October 11, 2006 at 06:52 AM

You are a loser Confuseius...TOP IS IN FOR NOW? coin says we go higher into November.

This EW people are really nuts!!.....

Anyone here wants to short this market?...Losers!


The previous post - rdneu56 | Thursday, October 12, 2006 at 08:26 AM.

Was this really posted by rdneu56? Or was it somebody else? The frequent use of the term loser is a dead giveaway of who really posted it. If the term basher were used, it would be even clearer.


Dear spammer
Sounds like you have an axe to grind. Me, I'm happy because I live off my trading.
If you call that losing, then please feel free.



Thank you for your nice post. I still think you are nuts and a loser because you use EW.
I am the real rdneu56, ignore all the other posts.


"rdneu56" (yea, right), thanks for the sophisticated insight. When you're ready to graduate from kindergarten, let us know.



I am ready to graduate. Can I use my ruler to forecast the market?
Please teach me how to short the market on a bull market!





I hope nobody is missing this chance to get long on this bond pullback. Looks the the fed rate cuts won't be till Jan of next year unless we take out 4.50% on the ten year soon. But the bond next rally will be be coming before that forcing the fed to cut. The ten year note yield should not take out 4.91%


I think the market is within a day or two of topping here for a nice swing trade for the bears. I expect to be buying puts tomorrow. Anyone else see this?


I need professional help!. As you guys can see I have many many friends in this blog..... they all love me.
I am a multipolar individual....

My coin toss says we go up tomorrow...
Any EW garbage that says we go down?

Garbage Man

I'm on my regular shift. Sacks full of the usual garbage everywhere.


I agree with your assessment on 82W5 and I share your conundrum on the scale, but I disagree on your prediction of time
Here's my "non-mathematical" take on 82W5:

The supply side tax cuts starting in 1980 essentially reduced government regulation of the business cycle. This allowed for the 9-11 year Juglar cycle to rear its head again (it had been dormant during the Keynesian 1949-1980 years). The 80s, 90s, and now the 00s have shown the recovery in mid decade, prosperity towards the end leading to a speculative bubble (and failure) at the end leading to a recession in the beginning of the next decade.

If the pattern continues, 82W5 should extend at least to the end of the decade. Whether it would go significantly above 12000 is an open question.

Look at the short term rates:

82-84: trough in rates
84-85: measured increase in rates
85-89: Short Plateau in rates followed by a rate hike campaign that bursts the bubble

90-94: trough in rates
94-95: measured increase in rates
96-01: Plateau in rates followed by a rate hike campaign that bursts the bubble

01-04: trough in rates
04-06: measured increase in rates
06-??: Plateau in rates followed by a rate hike campaign that bursts the bubble





stu mann

as a "died in the wool" K-waver, I agree with Mr. Prechter in the big pic, although I understand how the hubris of his CTC early 2000 "Sell-your- house-&-only-suckers-buy-gold" call could upset some people. even so, I'm certain has the big picture right, although the old saw of "the market can stay irrational longer than you can stay solvent" still applies.

so what'll happen? Dow 15,000?

markets will, between before the K-wave bottom of 07'-10', do as Mr. Prechter warns - they're gonna freeze up - and all the "investors" who keep kicking the Mr. P around and think they're super duper smart will suddenly lose the plot. Monday a paper millionaire genuis. Tuesday baffled & broke.

why do I agree with a guy like Mr. Prechter? a guy who gets it continually wrong? funny...I read his newsletter and I seem to make money. maybe I filter out much of his bad calls thru my K-wave lens, but I've always found EW helpful.

Mr. Pretcher is right. (like the Roper song goes)deflation is everywhere. Here in my native New Zealand, supermarkets keep pushing prices higher while their markdowns go lower. only a "sucker-born-every-minute" would see inflation in such a knee jerk reaction.

down here in Godzone, the traditional strong housing markets are now into negative territory while the crap/dangerous places have hit 20% price increases in the last year. even the silliest of them Pretcher bashers might recognize this as a rush 2 Sh%t...a classic top.

meahwhile, the car market here continues to soften, wine & beer prices continue to fall, rents are dropping (newspapers & mags say otherwise, but the classifieds DON'T lie for their sponsers) and more and more people I know are working in real estate (more classic top stuff!!!)

I'm sticking with Mr. P & Mr. Hoye - unrelenting strength in the US$ - major declines globabally. a housing THUD, and that STUPID PREZ of yours still sporting his funny ol' perplexed look as parrots off the words coming in thru his earpiece.


Godspeed stu mann. Deflation is next. If we could only help Bobby with the timing.


Stu Mann and MC,

You make valid arguments. However, here is why I believe Prechter got it wrong as far as direction is concerned - at least for now. I look at inflation as deflation of the value of money. As the money supply goes up while the supply of goods goes down - you have inflation. That is precisely what is going on in North America. There are many factors contributing to this, government deficit spending, the war of terror... Wars in particular destroy goods and boost the money supply. The longer it goes on the more deficit spending is necessary. Further, "defense" spending in the US is likely going up going forward, as a large portion of US ground forces is neutralized in Iraq by a handful of insurgents armed with AK-47's and a few camel mounted RPGs. All the while rogue dictators of the ilk of Kim Jong Il are thumbing their noses at the US. Clearly more military options are needed to head that off. And yes, eventually there will be a contraction, but I do not see for quite some time.


After three years of reading the Prechter nonsense - and actually trying to find any sense in it-I'm tuning out....
good luck to those who continue shoring a bull market..hope you wont end up broke!


Timing deflation is next to impossible. But deflation WILL come first. It could be years away. Look at the bond market. When rates rose we had that stock correction and now housing slumping. And they bearly rose! Then everyone started buying bonds!!!! Yields have fallen. Now every is buying stocks again (correction). Yields have started to rise again. This stinks for stock speculators. But great for bond speculators its great!!! The 10 year yield WILL remain low until deflation!!! Stocks will be unpredictable! Think about when the fed tried raising short term rates to raise long term rates, DID NOT WORK. The governmenrt is running huge budget deficits, STILL long rates remain low! Everyone on CNBC for the last 4 years have been prediciting a rise in long rates! SORRY WRONG. Any substancial rise in long bond yields WILL cause the debt bubble to collapse. You saw how nasty that last correction in stocks got when the ten year hit 5.25%!!! I think that high will definitely will hold. Cause that would be the hardest way for the stock bears to make money, making it hard to pick the top in equities. I can only hope the ten year yeild breaks out because it would be the easiest equity short sale of a lifetime. Thats why I know it won't happen!


I can only hope the ten year yeild breaks out because it would be the easiest equity short sale of a lifetime. Thats why I know it won't happen!

Posted by: MC | Monday, October 16, 2006 at 08:27 AM

I now know the kind of trader you are....When you HOPE in the markets you are on your way to be broken.

From now on, I have no respect whatsoever in what you have to say about the markets... HOPE!! What a jerk.!!



I have a question. If the FED wanted to raise long bond rates, could they not do that through open market operations? Could they not simply start selling treasury bond in the open market? If they did that the money supply should contract and long rates should rise. If I see that happen, that would be the point for me to join the deflation camp.
This business about raising short term rates to influence long rates sounds like a smoke screen to me.

Fed is a Myth

Fed power is a myth. Tiny undercapitalized Fed cant possibly control a massive trillion dollar debt market Interest Rates are really controlled by psychology, demographics, climate, and global economics, NOT the tiny Fed.

Fed is so small (compared to markets) its like a flea on an elephants ass


rdneu56: The Fed trying to influence the long end of the yield curve could cause market panic. Thay probably would not resort to using non traditional methods until they are exhausted. Also, trying to raise long term rates when they don't want to rise is harder then getting them lower. They can buy and unlimited amount of bonds but only sell a limited amount. As we have noticed the treasury issuing a large amount of debt has not affected rates much. This has mystified many.

Flea on the Elephant's Ass

if the FED is a group of human beings and not GOD then the FED is influenced by politics, emotion, psychology, hope and fear, greed and vanity... the same factors that effect all market players. Nobody can see the entire picture not even the mighty FED because we are all fleas on the elephant's ass.

If a flea wants to survive on the elephant's ass, he will need to find some elephant crap to eat. Traders!!- forget about the FED and go find some crap!! If prices are going up, buy some crap. If prices are going down, sell some crap.

For all you hungry EWT fleas, if the Impulses are bullish, buy; if the Impulses are bearish, sell.


A treasury bond - an IOU - government debt is accepted and deposited by the institution. The institution records a government deposit of equal value of the bonds received. The government spends the money thus created on whatever Congress decides it should be spent on. The institution now treats the bonds received from the government as an asset and loans out 90% of the "value" to commercial banks, keeping 10% of it back as reserve. The commercial banks use the same procedure to make loans to businesses and consumers. The money thus created and loaned and then spent by the government and private entities returns back as bank deposits and the same process starts over - 10% of the deposits in reserve 90% out in the form of additional loans. The institution at the heart of this amazing money manufacturing machine is none other than the Federal Reserve.
Whoever believes that the people at the controls of this marvelous machine are beholden to some mass psychology effect and cannot really affect the course of events is sadly mistaken in my opinion.

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