search elliott


  • Google
Share/Bookmark

Enter your email address:

Delivered by FeedBurner

FlagCounter

  • Where From?
    free counters
Related Posts with Thumbnails

« Crash Free Week! | Main | Read This Excerpt »

Tuesday, August 28, 2007

Comments

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

tulku

Hallo Yelnick,

Prechter is Right NOW! [Even a broken clock is 2 times a day right :-)]
We're beginning to 3rd wave down now. A Crash? Not neccessary, but a small waterfall in the 1st half of September '07 is very very probable. A small pullback up in the end of August (30-31.08) and later - Down.
My "Top a little more than 1550 on SP500" sent here in may '07 was right.
DJIA topped higher than 13987pts, where we had 1,382 x of 2000-2002 falls, which means the Bear Market we've got since 2000 can't be expanded flat one.
My forecast and view - long term expanding triangle on DJIA (the shape like picture in link)like this one:
http://www.traders.com/Documentation/FEEDbk_docs/Archive/1296/Abstracts1296/1296Webster.html

in 2000- beginning of 2020 is still intact [E wave bottom in 26 of June 2023? - this will be very important day in Cristopher Carolan's Spiral Calendar - a golden ratios with 1835, 1929 and 1987 tops...who knows?:-)], which means, the falling from July'07 top to hard bottom will last at least the same time as 2002-2007 rise (circa 46 months from July top) - which means we'll see bottom not earlier than in may 2011, and probably a little lower than 7200. It needs more time than 46 months, I think (wave C in expanding triangle usually is longer in time than wave B - Neely's "Mastering EW").


Second scenario? We have long time irregular flat on DJIA, but remember - irregulars are very rare (Neely's "Mastering...")

Greetings from Poland to everybody.
Tulku.


novboi

A market "correction" in China could send shockwaves throughout the world.

Last March there were "rumors" of tax changes in China.
---US markets went down 5-7%.
---China went down 20-25%.

It took 2 months for the US markets to recover its losses fom a "rumor".
---US markets are now back at levels prior to the "rumor".

China's economy is steaming along but markets must self correct at some time.
---If a "rumor" took the market down,
---just think what about a real "correction" of 20-30% in the Chinese market!

Ronnie

I read and re-read Lamoureux's article many times, but still cannot be sure whether he is long or short the market !

The article is very self contradictory and unclear.

EN

I read before that Yves used half his capital to short the double inverse of the NDX at 1900 last spring so he must have covered on the recent dip under 1900 that lasted a day or two in order to realize any profit.

This rally off yesterday's bottom is just to fast to be countertrend. I expect we are going to take out last Friday's highs by the end of the week, move up to fill the gap at 1503 ES and then collapse after labour day to retest the August lows. I closed out the shorts I suggested at Friday's close and will reshort at better prices after labour day, if given the chance. Long live the bull after this little speed bump is over.

george

yves,
in a past commentary you stated that you thought tangible assets would be performing well. what types of investments do you define as tangible?
what time frame do you think they will do well?
thanks,
george

george

this is a must read article . it is about someone that in 2 trades bought one billion dollars in puts on the market that are deep out of the money that expire on sept.21,2007. the traders refer to them as the bin laden trades...
george
you have to scroll about half way down to read the article.
http://mparent7777-2.blogspot.com/2007/08/45b-bet-on-another-911-within-4-weeks.html

Yves

George, it used to be that to get access to commodities, you would have to open a future account.Not anymore there is a few vehicules now available that are non financial i.e. for consumption
the large categories are energies , grains, metals both precious & industrials , softs and meats.I suggest that you can find good value plays uncorrelated to the stock market.Currencies can be included but they have high relationship to stock movements.My favorite contrarian play now is Natural Gas as most people that follow me know.You can buy UNG on amex.It is holding real futures that are rolled about every two months.The same apply to many other tangibles or "real stuff".No doubt ETF's will grow to accomodate demand.
Yves

EN

George:

The guy who wrote that article does not seem to understand options. He said the supposed trader wrote deep in the money calls. If you were sure of a crash you would buy way out of the money puts. It sounds like a bunch of conspiracy nuts getting all worked up.

Pat

This refers to George's comment on the 29th Aug. with the link to the "Bin Laden" trades. Firstly, the 9/11 link is by now a confirmed urban legend, read about it here:
http://www.snopes.com/rumors/putcall.asp
Re the current rumour on the SPX700, can anyone confirm if this is true using data frm the CME? There is also apparently an almost equal and opposite side taken in Europe...which if true, might indicate a less sinister side to the trade?

Pat

You can go short by selling calls too, same effect as buying puts. But writing (or "selling") an option will result in the seller having an "unlimited" risk. When you "buy" an option, your risk is limited to what you paid for it. This refers to both calls and puts

yelnick

Tulku, thanks for sharing your analysis. As an irregular flat, this market is stretching the limits. Prechter's initial thinking on a flat was the new high (above 2000 levels) would be a spike before a deep drop. Maybe that is what is about to happen. Previously he had expected this period to break as a large triangle - and it could be an expanding one. If we are 49W4 it likely will be a triangle, as 49W2 was a double zig-zag (1966-1982), and will likely last past your 2011 time, say into 2014. Tony Caldero is a champion of the count that 2000-2002 was 82W4, and we are in 82W5 (he might start his count in 74 like Prechter, but still have the same current count of a W5). This explains the new high, and will also explain what I think may be about to happen: after a serious drop into Sep12-24, we have a final woo woo! rally in equities into 2009. That would be best counted as the final W5 of 82W5. Interesting, this final rally cold also be part of an expanding triangle correction.

EN

Sure. selling deep in the money naked calls is shorting the market but the author of that article assumes the market has to drop 700 points for the trade to work which is bogus. The market would just have to end up being lower than 1450 (700 strike plus the 750 price of the call) to make some money. But if you were so sure a crash would take place it would make more sense to buy puts and sell them at the bottom instead of keeping the premium on the calls. Shorting airline stocks before 911, I think he may have got that from the most recent James Bond flick. These guys probably also think the government is going to kill them to prevent them from uncovering the "truth". If you know the government like I do, you know that they are way too poorly organized and incompetant to organize such sinister plots, let alone prevent them.

There is little doubt that we are in s sideways market such as 1966-1982. It should last until 2014 or so. Whether it is a flat or triangle or whatever does not really matter because once it is over we'll have another great secular bull market.

Werner Merthens

If you were 100% sure that a crash is imminent, you would sell naked calls as much as your broker allows and buy puts with the call premiums to the extent allowed under your broker's margin requirements. But who can be 100% sure other than the Oracle of Gainesville?

MHD

The 118,000 contracts at Sep strike 700 puts, probably cost 10-15 dollars a contract for a total of 1.5 million invested at max. Not billions! The S&P would have to drop 400 points by Sep 21 for those contracts to have any value above the original investment. Even if the S&P dropped to 700 and those contracts were at the money, the value would probably be 200-300 million, not billions as stated in the article.

stu mann

the Q is, why does Asia have so much savings? I've read that 1) it's the culture, 2) they don't have as many options to buy/invest, and 3)it's evidence of their economies being earlier on in "the growth cycle".

but as R. Duncan pointed out two years ago, its unbelievable that the BOJ flooded the world with liquidity back in 2003/2004 and no one took notice - the BOJ single handedly kept globalization from tanking (like is now happening) thru reckless money creation. On paper, the average Japanese citizen might have a high savings rate, but their government has blown that savings many times over.

but now that the BOJ induce credit binge has ended, and without the yen to provide the kernel for US$ liquidity, those who promised to pay must do so. this suggests the only place to be is in the US dollar.

Japan will get spanked most by the credit implosion because they're the only ones with any kinds of savings to cover their pledges. America, on the other hand, can only dismantle Social Security (a Republican wet dream) and close down a few military bases - but no savings will be lost because there were none to begin with!

meaning US markets will probably correct 50% (Prechter now agrees, although he once said DOW 500) but the damage won't be long lasting, as money floods in from across the world looking for a safe place. On the other hand, Japan, the developing world & the commodity countries, will have assets stripped away. these will be forced sales vs. market sales, so look for a steep decline in commodity prices, followed by a big boom.

Options Guru

If you were sure of a crash you might buy out-of-the-money puts but if the crash is deep enough you might never get paid.

If you're less sure you might write in-the-money COVERED calls. You own the stock and you lock in profit. If the strike price is lower than the trading price you'll part with your shares but you will have locked in a profit.

If you're even less sure of a crash you might write COVERED calls that aren't in-the-money. Here, you lock in a profit but might end up holding stock that's depreciating in value.

HIstorically, an overwhelming fraction of all options expire worthless. Since a roughly equal amount of puts and calls are sold, you'd expect that at least half of all options expire worthless. In truth, it is well more than half. It is over 90 percent.

If you want to buy a stock below it's current trading price, or at least make some money, you can sell naked puts. If the stock trades below the strike price you have to buy it at the strike price. But this is a fine deal when you consider that you avoided buying it at an even higher price.

BTW, Prechter has been, I believe, lying and hypocritical about many things. But nowhere has Prechter been more hypocritical than in his adamant stance on gold and his subsequent backing off of that stance. Gold was supposed to be his litmus test for inflation/deflation. It has risen well above levels at which he said he would abandon the deflation prediction.

Someone made an excellent point: If he is so unreliable at smaller waves, why in God's name would you put stock in his predictions of larger waves, which might be utterly catastrophic to your financial well being if he is wrong!?

Yelnick, do you need to sell ads to Prechter? It seems like small potatoes money-wise and it compromises the impartiality of this forum. Are you affiliated with Prechter in other ways than those ads? You aren't a plant, are you? I enjoy reading opintions on this forum but the Prechter stuff cheapens things.

MHD

Well, it looks like the shorts will be burned again by the feds. Not only do you have to worry about Ben, but now the other stooge(Bush) is joining the party with a massive bailout plan. Should be interesting to see what interest rates do after this announcement.

Nomatter owfardownstocksgo Preachter will not break even

Prechter: Why the Fed Will Not Stop Deflation

Link to Excerpt: http://bullnotbull.com/bull/node/44

My comment: Not the FED will do the bailout but the politicians:

Headline Bloomberg and reason fpr marketrally:

Bush to Expand Government Role to Deal With Subprime etc.


cstradingman

This relentless rally in treasuries is continues to fuel the equity markets. After the next consolidation in the long bond, I really think tresuries are going to take off. Anyone have an opinion on how they think equity markets will react to a 50 basis point drop in yields on the long bond and the fed funds rate from these levels? Seems like stocks should continue to rally to new highs. The only alterantive is a crash which seems unlikley. I don't see equites going into a controlled selloff or bear market.

MHD

One thing you can be sure of, as long as Ben and Bush continue to open their mouths the markets will think they're going to get a blowjob! The markets testicles are already so blue one wonders whether it can contain itself till Sep. 18th.
Once again, Japan and China will have to bail out the stupid Americans who bit off more than they could chew.
Eventually the debt to pay for all the foreclosures will have to be paid by the taxpayers. But, then again, what's another trillion in debt. If you're going to dig yourself in a hole, forget the shovel. Bring in the heavy equipment and do the job right.
Maybe our money should read "In debt we trust", instead of "In god we trust"!!!!!

Mario

There will be for sure a retest of the august lows. This upmove from august is a corrective ABC pattern.
SPX will reach 1485/1515 and the leading Techs with NDX is almost reaching 2004. This up coming week will be a stalling one. After that we will see a small correction to retest the lows of august. The big ONE is stil in front of us. So I give Yelnick also the credit for this one.

Mario

MHD you are right. This problem wil pop up in 2008/2009 when Bush has left the building.

EN

Mario:

I am on your side when it comes to a retest of the lows this Sept. There is an open chart gap up at 1503 ES that I think might get filled on Tues. before a reversal or maybe that is as high as it could go as of Friday. Regardless, there is some profit to be made on the next move down.

BTW: Have any of you guys ever heard of a trading service that has been consistently profitable? I am not talking about a charting site that gives 5 different scenarios and then takes credit for "making money" when one of those 5 plays out. I am talking about a service like Neely's that gives buy, stop and exit points in futures. Neely's service has been pathetic this year. Has anybody made consistent money with any other service? Or are they all losers?

I continue to do my own thing and ask mainly to see how good my competition would be if I did start a trading service.

Mario

Hi EN, did you notice the possible Ascending triangle for the EURO starting from B wave with a-134,05 b-128,76 c-136,79 d-132,69 and e-138,45. If the EURO is going down, Yelnick could be right about the rising us dollar.EURO wil go down all the way to at least 125,00 This also could mean that there will be no rate cut at all in september. This is short term fuel for stockmarket bears.

EN

Yes, the Euro does look like it is running out of steam over the past few months and the USD is hated by all. It makes me cautious to be wildly bullish on gold.

It is also true that I am noticing Gold, Oil and Stocks dancing perfectly together over the past little while, even on an intraday basis. If there is another leg down to this stock market "correction" and I am pretty certain there will be, then I would expect the gold stocks and oil stocks to get hammered just as bad, if not worse.

Simply amazing that the XAU just can't get through that historic resistance at 160 going all the way back to the mid-1980s. When it finally does get through and start using it as support, the gold bull market should begin in earnest. Until the, I await patiently.

Nomatter owfardownstocksgo Preachter will not break even

on Robert Prechter's prediction of a Depression:

"Congratulations on the continually improving service being provided to Fullermoney subscribers. I've been a subscriber for 4 or so years and avail myself of the audio, commentary and charts on a daily basis.

"A friend forwarded me the latest (September 2007) issue of Robert Prechter's "The Elliott Wave Theorist". Many Fullermoney subscribers will be au fait with Prechter who can only be described as a "permabear" (or at least he has been for the last 20 years that I've been aware of his work).

"Not surprisingly he's forecasting a major market crash, along with a depression of 1930's proportions, with the crash most likely starting between 27 August and 26 October this year.

"The bit I found of interest was his prediction of deflation resulting from the expansion of the current credit crunch. His view is that the Fed will not and cannot bail out all the bad credits, so is powerless to prevent a spiralling deflation. He says like in the 1930's the Fed will only lend to good credit risks and needs to protect the value of their own Treasury Bond holdings that provide backing for the value of the Fed's Notes.

"Prechter wrote about his crash predictions a few years back in a book called "Conquer the Crash".

"Prechter says US house prices have fallen for 10 months in a row, the longest time since the 1930's, commodities are down from their highs, and stocks are beginning to turn down. He says all assets moved up from 2002 on the back of increased liquidity flows but now that credit is contracting, deflation will accelerate.

"In his view lowering interest rates will not work as illustrated by the experience of Japan where despite near zero rates, real estate imploded and the Nikkei collapsed.

"He thinks a sea change in sentiment will occur and cites the example of sub prime mortgages being viewed as fine one day and toxic waste not long after.

"We are seeing some credit squeeze here in New Zealand - 7 finance companies have gone into receivership in the last 16 months with 3 in the last week.

"Many mum and dad investors are extremely nervous. Like many western countries Kiwis have borrowed plenty against appreciating property values to buy more property and / or to fund lifestyles that they could not afford from their basic income.

"Time magazine seems to be full of empty houses in the US and desperate mortgage holders and lenders.

"I am interested in the Fullermoney view of whether Prechter's prediction of a deflationary spiral has any merit. If he was correct the prospects (at least in the short term) for commodities, stocks, property and most fixed income securities are poor. Presumably most Fullermoney subscribers are positioned for inflation with metals and other inelastic commodities, along with Asian and emerging market equities.

"Prechter's "scorched earth" portfolio recommends T Bills, Swiss money market funds, outright cash and deposits in a few selected (safer) banks. He says T Bills have outperformed the S&P 500 over the last 7 years and will do far better than stocks in the coming years by "simply not producing losses"!

"There's an old saying that "even a broken clock is right twice each day", and while Prechter has pretty much got it wrong for most of the last 20 years, he just may get it right eventually and I don't want to fall into the complacency trap and write off the deflationary risk just because the person espousing that is a permabear."

My comment - Thank you for this interesting email which raises some topical questions. I am very happy to hear that you are enjoying the service and we look forward to making a large number of new enhancements available in the not too distant future.

Japan made the mistake of squeezing for long after the stock and property bubbles had burst. This resulted in the deflationary spiral of the coming decades and the ultra low interest rates they have today. Central bankers have learned hard lessons from this experience and see it as a priority to avoid the same mistake today. I believe that it would take a whole series of major policy mistake for a 1930s' style depression to take hold and I just don't believe that the monetary authorities are that stupid.

Bob Prechter has been predicting financial Armageddon for as long as I have been aware of his work and it has yet to occur. That is not to say that recessionary risks are not evident because they are, but even if this crisis were to result in a recession I do not believe that we are going to see anything like what was experienced in the 1930s. I do not see the evidence from the charts to support such a bearish view, although I am sure it helps to sell books. So far, policy from the world's central banks has been measured and accommodative and the reaction of the markets has been positive.

At Fullermoney we do not deal in chart theories but in chart facts and the facts are that the 4-years and counting uptrend remains in motion, the progression of higher major reaction lows is intact and not one global equity index is making new lows. If these facts were to change it would be cause for reassessment but until they do I put very little credence in the bearish view.


The comments to this entry are closed.