Planet Yelnick

Trick or Cheat

Dollar is in the dumpster.  Over 90% bearish sentiment.  Rest of market had over 90% bullish sentiment today.  Gold over $800.  Oil approaching $100.  The few and the brave contrarians call for a reversal.  Neely put out a bulletin that the next fall in the S&P would NOT be retraced; he is about to turn BEAR after being a Bull since 2002 (and a Bear since 2000, after being a buill after 1987).  The STU remains convinced a reversal is imminent. 

But sometimes the trend keeps going.  The Dollar may have a small snap-back rally but then essentially fall off a cliff.  The potential is for such a massive and relentless drop over the next year that the Euro goes well above $1.50, maybe approach $2.  The Dow could soar albeit it would be relatively flat in stable-currency terms (eg. against the Euro).  GOOG at $1000?  The disruption from such a fall would dwarf the current domestic worries of avoiding a recession or bailing out banks.  This is now the HIGHER potential outcome of the Greenspan Put and years of flim flammery in management of the economy; the previous outcome was a strengthening Dollar and somewhat muddling through this crisis. 

You wonder about Helicopter Ben right now, and the Treasury Secretary, let alone the President.  Why let the Dollar fall?   You think raising Chinese prices from $3 to $4 on imports will save American manufacturing of the same item at $20? You think the oil trade going direct to Yen or Euros and dropping the Dollar will help our economy?    

The Surge is Coming, But Not Yet

Nice rally today.  Note the continued rotation into tech stocks.  Smart money now anticipates the Surge.  But not yet.  This is a typical counter-trend rally. Maybe has more legs.

Bigger news today is the Dollar.  Rallied, and according to the STU, showed five waves up.  The bottom!  It may fade a bit before continuing up. 

No surprise then that oil dropped. 

BTW a reader asked what is Neely's view.  I used to receive a complementary subscription, but no more.   Maybe if Glenn is reading this, he can reinstate. Too bad, I was watching Neely make better calls than Prechter over the past year. 

Monday Should Be Fun

History does not repeat, but it often rhymes - Mark Twain

Lots of 1987 parallels floating around.  The market had faded from 2700 to 2200 the Friday before the big drop to 1700.  I remember the 100 pt drop on that Friday, and the sickening feeling on Monday when the 500 pt drop proved relentless.   At 6x higher in the Dow, the 367 drop on Friday would have had to have been 600 pts to match 100 pts 20 years ago, and the several week slide into that Friday would have been a 3000 pt drop rather than our recent 500.  Do we expect a 3000 pt drop on Monday?  More likely a bounce at the open (dumb money) with the critical juncture the last 30 minutes (smart money).   

Emboldened by their call last week, both the STU and Friday's EWT are strong and clear in their predictions for the next stage of this market. 

An Unambiguous STU

Tonight's STU has laid down a clear and immutable position:  the wave structure is complete, yesterday's highs cannot be violated, the top is in.  The S&P in particular thrust to the absolute maximum it could go if the pattern is what it appears to be - an ending diagonal.  I suppose if this gets violated in the next few days, one should bet the farm, as the STU leaves no room for hedging.  (For you bashers, which way you bet is up to you!)  The type of decline expected could be minor - a wave iv with v to follow, or medium - a wave C in a triangle, or shockingly large - a wave C in a flat that should go lower than the August bottom.  In any of these scenarios, the Dollar should *finally* attempt a rally.  I watch with shock and awe how the Canadian Looney is above parity and the Aussie Dollar is above 90c. 

Yves Urges Caution! Speed Bumps Ahead (aka Buying Opportunities)

The moment of truth has arrived.  The STU still sees this as an irregular flat (or triangle) which should peak shortly, then drop down towards Dow13K, at which point the deeper drop of the flat or the narrowing of the triangle will be revealed.  The general punditry is much more bullish, seeing the anticipation of further rate drops as a signal to keep investing.  The Surge may be upon us, as we are seeing rotation into certain speculative sectors (tech, online ads, cleantech).  More on this in a subsequent post. 

Yves adds another in his fine series of guestblogs.  He includes a chart which shows a bit of his methodology.  The chart shows an investment sector overlayed with signals from his Liquidity Index.  Before each major low his Liquidity Index has given an advanced warning of the drop.  He thinks this time the drop will come faster than the prior two signals.  (His guestblog timing has been related to his index, and if you check back you will see it was prior to the two major drops.)  This *last* drop then sets up a tremendous buying opportunity, as it may be the final jink and jive before The Surge.  Enjoy!