search elliott


  • Google
Share/Bookmark

Enter your email address:

Delivered by FeedBurner

FlagCounter

  • Where From?
    free counters
Related Posts with Thumbnails

« Howling at the Count | Main | Bet Your Bottoming Dollar - Sharp Reversal Ahead »

Wednesday, April 18, 2007

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Barry Ritholtz

In the post, I note that many of the conditions are different between then and now, and I do not believe that 1987 is the best historical analogy . . .

LoneStarHog

While I find the chart interesting, there is one HUGE difference between 1987 and 2007. It was because of the 1987 crash that President Reagan signed the Executive Order establishing the President's Working Group (a.k.a. PPT) - among other manipulating organizations: The Counter Risk Party Management Group, Exchange Stabilization Fund.

That SHAM called the Federal Reserve is pumping BILLIONS of liquidity (~12% annual rate) daily. The PPT is making good use of the liquidity. One can actually watch them at work.

It amazes me that people still claim that all of this is conspiracy, when it has been openly admitted by Greenspan, Bernanke and even Volker.

The real question is the proverbial one: Can even the PPT permanently alter the DESIRED trend of the markets?

I think NOT!

rdneu56

Notwithstanding the constant drumbeat about the nefarious PPT, the US dollar is getting pounded into the ground slowly and steadily. The PPT must have decided not to protect the currency. This looks like, smells like and acts like a real secular bearmarket. May be it is one?
If this is in fact a secular bear, then we can expect trouble to spread from the currency markets to other asset classes, which clearly hasn't happened yet. All the 'concerns' about subprime loans, inverted yield curves and other equally meaningless events will then seem ridiculously naive.

cstradingman

The bond bears are baffled. Most felt the ten year would at least break 5% on yield. I think this treasury rally is for real. If the ten year yield goes back below 4.38. It could spook the markets and lead to a crash.

remy

Dow Jones made all-time record high yesterday

1987 comparison isnt valid.

rdneu56

remy,

It did so in 1987 as well. Other than that, the other 'similarity' is the last digit of the year - 7. Oh yes, the subject came up in 1997 as well and it will come up in 2017 without a doubt.
I shall let the Fibonacci mystics ponder the deeper significance of 7 being only one digit away from 8 and 2 from 5. For now, I note that if I divide the first difference - 1 - by the second difference - 2, I get 0.5 which is a Fibonacci ratio.

Eventhorizon

LoneStarHog,

Can you expand a little on where you see the Fed pumping billions in liquidity daily?

Today, for instance, the Fed drained $11bn, the largest amount since Jan. Outstanding RP balance has steadily declined this entire year, and the Fed has implemented only $4bn in permanent open market operations (monetizing debt) as compared to about $20bn+ in 2006. Over the longer term, the RP balance has declined from the $25bn-$50bn range of 2002-2005 down to $15bn - $30bn range. This amounts to a significant drain (a suck, if you will, not a pump).

So, by "pumping" do you mean the banking system as a whole rather than the Fed in particular, or do you mean there is some secret activity taking place that is not reported?

EN

1987 is not possible based on the fact that the DOW made a NEW RECOVERY HIGH above the February top. In Sept of 1987, the market made a lower high and then collapsed.

I have a hard time believing that markets act exactly the same way twice. For an interesting para. look at B. McLearan's CNBC report on Safehaven for the 1946 parallel. If there is a para., then this one looks a lot more likely.

When the down move does start, nobody will be predicting it.

francis schutte

1990, only 3 years later the Japanese Stock and Real Estate markets collapsed. Even the Yen fell by about 40 % against the Euro and the Dollar.

The Real Estate market fell by an average of 80 %. So did the stock market.

It ALL happened under a continous growth of the Japanese Money Supply and with falling interest rates. For you information, the Japanse interest rates were even pushed under ZERO...in other words, to keep Yen's was costing money.

Nor the exponential money supply, nor the negative interest rates could stop the collapse of the Japanse financial markets.

Try to remember this when looking at the actual casino stock markets.

Maybe the overlay between 1987 and now will become Cassandra's latest edition.

more bullishthanever in this bear and crash talk

Hi LoneStarHog

The real question is the proverbial one: Can even the PPT permanently alter the DESIRED trend of the markets?

I think NOT!

My DESIRED trend is up. - and smilying

If so many expect a crash as today - it never comes.

CRASH will continue up. I rather own a small piece of business than the paper crap they call money.

THE TRADER GUY

TWO THINGS ALWAYS BRING STRONG RALLIES

PRECHTER FREE WEEKS AND 1987 COMPARISONS

TWO MORE MONTHS OF STRONG BULL MARKET SINCE PUT/CALL RATIO IS AT 10 YEAR HIGHS

EN

IF this is an expanded flat correction starting at the February high, it would seem to me that the DOW should stop just under 13000 to finish B up and then make a move down in C to retest the old year 2000 high from above at 11750. When it passed that old high it never came back for a retest from above - ceiling becomes floor. That is a warning that it is going to test it at some future point.

Is the media all bulled up by these new recovery highs? I don't know since I no longer get CNBC.

francis schutte

All thse comments..and only one that sounds "negative" !?

All goes well, the economy is booming, people have no debt, gas, food and housing is costing less each day. There is plenty of oil, automobiles sell like candies. There is full employment and earning figures are up...

There is no war, no terrorism, international travel and flying are nothing but fun.

The air is so pure that the trees are growing all the way up to heaven!

Where is your common sence left? Don't you guys all smell that there is something really wrong?

I bet nobody really knows who Cassandra was!?

Confuseius

As Jim Cramer puts it...
"IT IS ALWAYS MORE INTELLECTUALLY SATISFYING TO BE BEARISH, BUT STUPID WORKS BECAUSE MARKETS ARE STUPID."

francis schutte

The markets are stupid, and they are also Greedy.

What goes along, comes along ...and trees NEVER grow all the way into Heaven(old sayings.)

To be intelligent is to make sure you're out of a market that can crash any time, for nobody will have the time to get out when it "comes along".

I remember October 1987...

tim trikke

There are always many compelling reasons to be afraid of a crash. Many of these have been trumpeted since 1987 and the markets have generally been pretty strong, especially if you consider dividends, which you should as they are money, too.

If you think there's a high probability maybe you want to put, say, 20% in stocks (a mixture of businesses) and the rest in a mixture of debt/cash.

Talking about debt levels or the meaning of cassandra or trees not growing to heaven is probably not going to help you outperform.

The markets are hard to predict as people who post to this website and the experts who are supposed to predict them for a living demonstrate.

Try to focus on being productive and being a good friend and family person. That will keep you happy whether the markets are strong or weak.

Confuseius

'A "Cassandra" tends to describe someone who makes true predictions which are disbelieved.' (from Wikipedia)

yelnick

EN, I think you have it about right, with the caveat that the recent momentum may pop the Dow above 13K. Most likely would be for a 2d top in May (first is Feb), but I expect a third top in late summer before we get the cleansing C wave of this fourth wave. Hence this little wave B inside the fourth wave may break into a complex corrective form. This sets up the final and dramatic run from Nov07 to sometime late 2008 or early 2009. Dow16K?

Better index to watch right now is not the Dow but the Dollar Index. A major collapse of the Dollar might paradoxically fuel the final thrust in the Dow (foreign money pouring in, we look cheap in terms of their currency) but if the Dollar busts 80 on the index then we may be in for a very serious day of reckoning.

EN

Hmmm, yes a third summer top would seem to fit the Neely Expanding Triangle count, which could be the top of a D wave and then an E wave slaughter into October/November. The data on the years ending in 7 supports a 22-24 percent correction in the latter half of those years. Let's see if we can break above 13000 this week coming. If we take wave A low as the yearly low, then wave B becomes 1.618 times wave A in TIME on Monday. 13000 would make it 1.236 times wave A down which is common for B waves in an expanded flat.

One thing seems for sure to me and that is that all those guys calling for crashes have been more like "the boy who cried wolf" than Cassandra. Cassandra made predictions that came true and nobody would listen to her whereas the Boy who Cried Wolf kept fooling everybody until they would listen no more. That is how bull markets end; nobody listens to crash calls and almost nobody makes them at the top of a market.

francis schutte

If the Dollar index falls through the .80 level, the stock markets can probably have a last upwards bust...

If the Dow reaches a level of 30,000 , the US dollar will probably be much, much lower...

Either the US dollar will cash, either the Stock markets will crash...However it is obvious that at a certain level - as panic sets in- , both will crash.

In "all cases" it is advisable to liquidate any Dollar denominated investment tools.

tulku

Hello everybody, especially Yelnick!
The last time I was here, I thought market is going flat after march low.It looks I was wrong. Look at the sentiment here:
http://www.market-harmonics.com/free-charts/sentiment/investors_intelligence.htm
Is this typical sentiment for correction? I don't think so.
And what about such scenario:
After a short correction, used by market to cool down daily RSI(14)signalled overbuying, we will once again jump higher, with the last bear's total capitulation, touch 1550 zone on SP500 and...we 'll make the Top? 1546 was 2000's Top...

Let's make some Elliottician magic now:

Let's assume, Oct '02 to now on SP500 is a zig-zag. 2005 Fall we had the end of wave b in it. If it is correct, then we're in 5th wave of zig-zag's C, so we should be quite near the top, but not now yet.

Let's make some simple maths now in our C in z-z wave analysis:
1st wave in C, from 1168 to 1327 = 13,61% move up.
3rd wave ended in february, and fourth in march'07.
If 3rd is the longest one, often 1st and 5th wave are equall, isn't it?
So: 13,61% x 1364(4th wave's bottom) = 186 pts
1364 pts + 186 pts =????....1550 (sic!!!)

Interstingly, isn't it?? :-))

Let's look at the DJIA now:
2000-2002 fall was 11750 - 7197 = 4553 pts

1.382 x 4553 pts = 6292 pts (often wave b in expanding triangle is 1,382 x wave a. As I told it here before, I believe DJIA is in big, expanding triangle since 2000, and this triangle will end somwhere near 2010/2020 years)

Let's add to Oct'02 low:
7197 pts + 6292 = 13 489 pts!!!!
Is this area corresponding to SP500 1550 pts?
I think yes.

Sometimes Magic becomes Reality...Is this the case?
My old Polish heart says: It could be...:-))

About USD.
Have you seen any Dollar Bull? I've seen Dollar Bears everywhere, but what about USD Bulls? Are they all dead now?
Haven't seen any? So why do you think USD should sink rapidly now? Or will it make "surprise" to all the bears once again? :-))

Best Regards to everybody!


yelnick

Tulku, interesting analysis. Let me throw another wrinkle in, would welcome your thoughts. Your count is what I called Alt 2 - that the Feb-Mar downturn was a short wave 4 and we are now in wave 5 of 03WC. What if we are instead in what I called Alt 3? In both counts we started this wave C in Fall05. It had its first correction in May06, and its second began in Feb07. In Alt 3 we would still be in the wave 4 correction. It appears to be breaking as a flat with a higher B wave than the start of the correction, or as a triangle (Neely and EN's view). Note that wave 2 had a zigzag, so it is expected that wave 4 would be a flat or a triangle; one of the problems with Alt 2 besides the short time of wave 4 is that the short wave 4 was a zigzag, and fails the rule of alternation. Your numerology of hitting Dow13489 and a new high in the S&P could still hold, but they would be the irregular B wave of wave 4, not the end of the bigger wave C. A wave 5 is still to follow, and could go to Prechter's outside level of Dow16k.

tulku

Yelnick:
Note that wave 2 had a zigzag, so it is expected that wave 4 would be a flat or a triangle; one of the problems with Alt 2 besides the short time of wave 4 is that the short wave 4 was a zigzag, and fails the rule of alternation
Tulku:
You are right, Yelnick. It is the weakest point of my scenario...and it's why I wrote "It could be..."
About numerology. Don't treat it too seriously, please.
What will be, will be. It's only the vision, but maybe the right one...who knows??
Have nice day, and Good Night [It is the night here in Poland :-)]

gary

I expect to be taking a downside position in the dow tomorrow (Tuesday) if the expected signal arrives on schedule.
gary

cstradingman

Looks like we are going to get a nice bull move this week in treasury bonds.

rdneu56

In the meantime the US dollar continues in a tailspin. Will it be able to break out of the tailspin before ground impact? Is it too late to bail out? The stock market is quite happy with the current dollar weakness. Why is that?

Bulls Rule!

Dow 13000 reached! Bulls rule!

Dow 16000 in 2008!

THE TRADER GUY

STOCKS ARE AT 20 YEAR LOWS AND THE CHEAPEST LEVELS SINCE 1986 ACCORDING TO BLOOMBERG NEWS

------

Bloomberg News
4/15/2007

The U.S. economy is slowing. Mortgage defaults are rising. And stocks are the cheapest in 20 years, a "buy" signal for some of the world's biggest money managers.

BlackRock Inc., Fisher Investments Inc. and Schroders PLC, which manage about $1.4 trillion, say stocks are inexpensive relative to bonds. Profit of companies in the Standard & Poor's 500 Index, the benchmark for American equity, is growing faster than shares, and represents a yield of 6.53 percent compared with 4.65 percent for 10-year U.S. Treasury notes.

The gap — the widest since 1986, according to data compiled by Bloomberg — is encouraging investors because earnings forecasts indicate the U.S. will keep growing, while bond yields show confidence that inflation will stay in check.

"I'm on the wildly optimistic side of things," said Kenneth Fisher, who oversees about $38 billion as chairman of Fisher Investments in Woodside, Calif. "The economy is stronger than people think it is."

David

That would be Kenneth Fisher, great grandson of Professor Irving Fisher of "Stock prices have reached what looks like a permanently high plateau" fame?

EN

The SPX today reached as high as it can go as a B wave and still be completely retraced by a C wave; that is, 1.382 times A wave down. A C wave that is 1.618 times A wave down would take us to 1340 SPX cash, which also happens to be the exact 50 percent retracement of the rally from the summer lows to the Feb. highs. We'll see tomorrow if we can get a sell-off to start a new pattern, we'll see. . .

I would like to see a sell-off and then all forecasters get bullish and have the P/C ratio stay under 1. Again, we'll see . . . The market always presents potentials only to eradicate them in short order . . .

EN

The SPX today reached as high as it can go as a B wave and still be completely retraced by a C wave; that is, 1.382 times A wave down. A C wave that is 1.618 times A wave down would take us to 1340 SPX cash, which also happens to be the exact 50 percent retracement of the rally from the summer lows to the Feb. highs. We'll see tomorrow if we can get a sell-off to start a new pattern, we'll see. . .

I would like to see a sell-off and then all forecasters get bullish and have the P/C ratio stay under 1. Again, we'll see . . . The market always presents potentials only to eradicate them in short order . . .

rdneu56

Actually, Mr. Ken Fisher has a very valid point. The valuation of stocks on the basis of their cash flow to the cash flow from alternatives is far superior to how current PE ratios compare to historic PE ratios.
Of course, there is no perfect method and things can change in the future. But in all likelihood earnings will have to go down or bond yields have to go up or both for a crash scenario to score a non-negligible probability.

vms

In defence of Ken Fisher - he has the best track record of any forecaster I know since I started reading his columns in Forbes magazine since 1999.He called the 2000 meltdown with impeccable timing - not too early and painfully as many others did.He has been correctly bullish about the US economy and market since 2003 when most of us were chiefly worried about a deflationary bust. He has been most bullish about European equities during the same period -they have not only outperformed US equities but would have protected against the fall in the purchasing power of the dollar. I may not agree with his bullish prognostication here but its worth considering his batting average before dismissing his view.

Confuseius

The market went up because it didn't go down. And it didn't go down, because it didn't go down.

The market will go up if it doesn't go down. But if it goes down, then it hasn't gone up.

And anyway, ignore the rally. The bull market is an illusion. It's not actually happening. Wave 3 down is about to begin. But only those in my secret wicked cool clique can see it.

Forecasting genius!

Ken

Monthly and Quarterly traders will see a MINUMUM upside projection of S&P 1700 by 2010 according to Neely

http://tinyurl.com/yuzlt9

Ken

Biggest part of the rally still lies ahead.

2006 to 2010 rally will be larger in price than the 2002 to 2006 rally.

Jimmy James

I've followed Neely's SPX service for several months and it has been completely dismal. It lost money during the Feb-March sell-off by being long and then lost money during the March to present rally by shorting the market all the way up. I am serious: NOT ONE winning trade, every trade lost money. If you had done the exact opposite of it, then you would have made money on EVERY SINGLE TRADE. Further, the wave forecasting was wrong at every turn. So, if a guy can't even get a wave count to work out 1 time out of 10, how can you rely on a larger time frame wave count?

I feel like a real fool for falling for wave theory again and again when it is obvious that it does not exist, or if it does, it is useless.

MKB

> I feel like a real fool for falling for wave theory
> again and again when it is obvious that it does not
> exist, or if it does, it is useless.


Weeeeelllll, it all depends on the expertise of the analyst (or technician). Tony Caldaro has been using wave theory quite profitably and has been sharing (for free) his wisdom and insights via his blog:


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


He also posts wave counts at StockCharts:

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987


Tony makes Elliott Wave Theory very useful.

IMOHO,

MKB

Sam

Timer Digest recently ranked Neely's S&P trading service to be in the top 5 most accurate for the last 12 months.

Omega

If this scenary finally happen,i am believe that the floor can are the 1 june with a Big PROBABLY.¿Will HAPPEN?I DO NOT KNOW.Friday was 4 may siderograph bradley turning point,¿top to 1 june for floor?

Bye.

Omega

The comentary in name of Sam is the comentary of Omega.ERROR IN THE BLOG WEB WITH THE NAME.

Regards.

The comments to this entry are closed.