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« Triangle Fails | Main | Little Big One »

Thursday, January 10, 2008


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I hope your right .Why expect a 5th as the weakest wave following a 3rd only then to correct from 1974 or 1982.It doesn't fly my friend with lending at a standstill and "change"
in the wind .This market has topped count on it.Elliott is dead put a fork in it the futures markets fixed that in 1987.

Go long if you must but prepared to lose money.


in the 4th year of a presidents term if the president or the vice president does not plan to run for election in november the market does not perform well in the 4th year. there have only been a few times that this pattern of the pres. election cycle has occured. none were good years.

if the president or vice pres. are running for office in the next term there is an effort on his part to help stimulate the economy, jobs etc... to help himself or the v.p. during the 4th year to get future votes.

as with all seasonal and presidental election cycles there are exceptions to the usual pattern. patterns within patterns ....


good call by cstradingman on future rate cuts.
bernanke has annouced he plans on fighting by cutting rates.
there is an article on the in regards to this fact.

Cornelius Cornholio

The serge wont begin until Precter offers a "free week".

Every serge since 1996 has had a free week as the perdictor.


Perhaps we should all keep an eye on the Baltic index to see where we might be going.


I am not buying this surge, do any of you actually live in the real world? Business is slowing and slowing fast, how do I know, I own two businesses and talk to my suppliers. So if you buy this surge theory go ahead and load up. I'm on EWI's side on this one.

Mark Lytle

If the market fails to rise past yesterdays high, I believe I spot a wedge forming in the $SPX that looks similar to the one that formed in the October-November time frame...

Mark Lytle
Houston, Texas


Surprise 50bp rate cut coming next week! Lets see if we can get properly positioned for it.

Cornelius Cornholio

I'm serious, the serge wont start until Precter offers a free week.

Keep an eye on Precters site, as soon as he offers the free week, that will be the bottom.


Intermediate term bottom coming next week on fed panick.


Rate cuts will eventually make the economy worse.


Yelnick with the SOX CRASHING in a 3rd wave your tech rally is

Mike Laird

Technology is not only rising, but its rising so strongly it will lift the rest of the boats? Lets look at the evidence. Over the past 3 months, BioTech stocks are 5% below a similar investment in 3 month T bills. Computers are 16.5% below. Electronics are 24.7% below T bills. Software is 7% below. Telecom is 20% below. Wireless is 20.5% below. Other Tech is 19% below a similar investment in 3 month T bills. T Bills, mind you. Then there's the Presidential cycle. The 4th year stinks. Also, SOXX has finished a multi-year triangle 4 wave, and has broken below the line to start the 5 wave down. Oh and housing is into a multi-year decline and despite people feeling poorer (how's California doing?), they will buy up the latest tech gadgets. Right.

I can get better odds at a roulette table.


Patience, guys. The Surge will not be visible until the end of January at the earliest. Tech stocks have led the debacle of the past two weeks. SOX has sucked for a while and is no longer the leading indicator of tech - semiconductor innovation has migrated overseas. Still not clear if the Little Big One is on, or just more ratcheting of a wave 4. I am watching for a triple bottom off this drop and plateau since late Dec. Dow12.5k +/- is the support/bottom level. If broken significantly, the Little Big One is on.


the dow industrials is below it's 50 day moving average and the 50 day moving average is below the 200 day moving average. this is usually a confirmation by trend followers of a change of trend. like all things it
is not always correct. but, it would take a considerable rally or considerable time or a combination of both to move the 50 day back above the 200 day and the indexes daily closing price above both of those averages.
i would say this is another confirming factor in regard to the dow theory sell signal that occured in november 2007.

here is a link to an article about the u.s.a. is in danger of losing its
AAA credit rating on its government debt.


The R2K is correcting the run-up since 2000. A 50% decline puts it at 590. The 2000 high is 614. So the next support band is at abt. 600 (+-)... that's another hundred points down from here. Beyond the current short-term bounce (which if not over, should be next week), there will likely be a more significant countertrend some weeks away, before hitting that support (don't think we'll hit it in a straight line). I think March/early Spring is a better time frame for a turn.

cstradingman - you do know I'm short... don't go spoiling things w/ your emergency fed cuts! I agree: the fed cuts will eventually make the economy worse; as will the bailouts and stimulus packages being proposed. Recessions are healthy. And, I don't get why the politicians think it's such a good idea to prop up overpriced housing keeping it unaffordable to others.

yelnick - I agree that the mobile internet and the convergence of hdtv/pc's/internet are the next big things. I'm a techie and love this stuff. But, I'm being surprised by how many people are becoming tech weary. And, from anectodal evidence, many really are struggling... I know someone retired who may have to go back to work as their health insurance has skyrocketed to 14K per year.

I watch Kudrow on TV... and while I agree w/ much of his and his guests beliefs, I don't think they grasp that the middle class really is under stress. I won't go off-topic into the free trade/fair and balanced trade stuff again, but I think the republicans are coming across as same-old and clueless. Jack Kemp was on the other day, and I thought to myself, how '90's and out of touch.

Alright, I'll go a little off-topic ;) ... free-trade and outsourcing and mass immigration and all the other '90's republican policies haven't benefitted the middle class -- they just haven't. The dems are tapping into populism, but will compound the problems. The republicans are clueless and old-think. Maybe we'll get a surge of some degree, but I think it'll be short-lived, shallow and last gasp.

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Yelnick, I hold a graduate degree in Electrical eng, and I am currently an IT worker.

In brief, your tech surge will not materialize. Why? Because there has not been any real breakthrough in technology for a while.

What we currently have, is just an ENHANCEMENT to the existing technology. Apple is selling an enhancement lifestyle, Oracle is same old, VM is selling enhancement to Disk management by virtualizing the bigger disk, wireless is enhancement to the ethernet cable, etc. Google? Well, it is an enhancement to search technology. RIMM? Enhancement to existing phone to make it more multi-functional.

80s PC is real, since it is the first machine that achieve the breakthrough in computing and save a lot of work, enhancement science simulation, and progress the society at much faster rate.

90s Internet save a lot of money for many consumers, and making business much more efficient.

The next breakthrough for sure, will be in NanoTech. That essentially create many more "new" material that we have not imagine before. It will be HUGE.

Don't take me wrong. Enhancement tech makes money esp in focusing on lifestyle, but never comprable to the Breathrough stuff like 80s PC and 90s Internet, and the coming NanoTech revolution which I am not sure when it will start. Today, actually many so called new tech in software/hardware are still based on the TCP/IP protocol created decades ago.

Green Tech like solar panel is a breakthrough (much more efficient and easy to make and put on), and is truly refected in the price swing last year. Nothing new for the software/hardware tech company.

Last year I gave tips to buy solar companies. This year, my tips is CREE. LED will change the lighting of the world. Read more here


Sean - thanks for the tip... it makes excellent sense! I typically ignore tips, but you've been on this blog and have credibility. Is LLFINC a publicly traded company? I'll do more research, but, being lazy, why do you favor CREE... is it the leader?

I'm sure yelnick doesn't want this to be a stock pickers blog... but what do you think of the solar stocks now? They've backed off... do you expect another run? And what about nano -- is it too soon or is there an emerging leader(s)?

I bought a bunch of biotechs when they dropped a few years ago, but instead of getting a bargain, they've continued to languish. I know biotech will be revolutionary, but that hasn't translated into making money... yet. So, that experience has made me wary.


Sean, there is a huge amount of innovation going on, but it is happening at a higher level of the stack. "It's the data, stupid." Google and the online ad rush, Facebook and the social networking phenom, Skype and the VoIP volley, and soon the mobile Internet. A similar surge happened in the late '80s, but most of the value was captured by the PC leaders, just as this time most of the value is being captured by the top 7 web companies. Yet the late '80s saw Cisco, AOL and other networking companies emerge.


Yes, Data! I love it. I am actually in Data Warehousing, where the data amount Double almost every year.

If there is any safe Tech industry to be in during recession, it got to be something like Business Intelligence industry. Most of them have been bought up recently, and the last one standing is MSTR. I love its product, but it has run up too much already to take a position now, though I am sure it will win market shares in years to come.

The other value play of Data Warehousing is TDC, which I think has a superior database compared to Oracle. I used both on system with Terabytes, and both DB were run by industry experts, but I got to tell you TDC win hands down. So, there goes my tip of TDC.

Business intelligence offer values, but Yelnick, make no mistake, BI does not offer Technology breakthrough. The things you are talking about data in Facebook etc, they are just data, not Technology breakthrough.

RC, I am not good in biotech, and that FDA approval thing is like Lottery. My other tips for weathering recession ... Bio Contract Research company, like PDGI which I hold from teens. Yes, that is one of the SAFEST and Double digit growing industry. Congress has passed laws to enforce large bio companies to contract out their medical pill studies to ensure no one is internally manipulating the data. Remember last year a few major medicine recalls?

The company product is really impressive, and I learned from msg board that the CEOs are previously from CREE and their new product are all using CREE.


Just some correction.

Data Warehousing = Data Mining = Business Intelligence

Bio Contract Research -> drug development services , like PDGI or CVD. They are contractors for Bio Drug development companies to test the new drugs

I like CREE because it's the only pure play LED company listed in USA. LED industry really started to achive the tremandous light output efficiency 2 years ago, and is truly a contender to replace all incandescent and compact fluorescent bulbs. More importantly, it is soooo long lasting (see advertisement -- never replace the bulb for 20 years in residentials, and imagine commercial embrace it like mad), and much more color vibrants.

Please do your own diligence.


Yelnick sorry to highjack your blog for hopefully my last comment on stocks.

CREE may have a bad last 4th quarter 2007. But I suspect management will give glowing future. If there is any hint, here is a builder Robert posted on yahoo. Again, please do your own diligence.


Mark Lytle> Surprise 50bp rate cut coming next week! Lets see if we can get properly positioned for it.

The implied chances for the Fed to cut benchmark lending rates by 50bps hit 90%.
SURPRISED? This market needs at least 75(upside) and 25(downside) to be surprised

President D Szvaselinovic

USA Market is ready allmost avoid a Vaseline Move.
Nearby, glorious revolution! Up, capitalist pig!


Sean, hijack away. I view my post as a setup for comment and wave counts by readers. Some really good chartists in my readers. And occasionally a great stock picker.

Zoran used to see a thrust & plateau ending with a triple touch of the support level. This Jan thrust down and plateau has only touched twice, and the second one hasn't finished. So I wouldn't be surprised with a down start on Monday to Dow12.5k again, then the Fed rushes in with a rate cut or prmise of one, market rallies, then fades one more time to touch 12.5K. Then we will see if it breaks through or bounces. If it bounces, the trend has likely changed, and the new thrust will go above 13K.

stu mann


I see tech going from the frying pan into the fire.

- within the next few years, mobile phone towers will be recognized as the hazards to human health they are. but it won't be like cigarettes. the industry will collapse.

- it is just as easy to say Microsoft, Yahoo & Google are laundering fronts for US Black Govt. money. High growth is an indication of war profitering now. Profits will probably drop as the US withdraws from Iraq now that all the low lying "tax payer" fruit has been stripped.

- having survived a Seattle tech startup back in 99', I know firsthand how little "tech" there really is in "tech". It was mostly smoke and mirrors then, it's will be mostly smoke and mirrors this time round. The 2000 Dotcom Bust was only made possible by a DOW up 1000%. The DOW has gone nowhere since, plus the Boomers are 10 years older and not as stupid this time round. The $ just isn't there for a 2nd crackup boom.


Awaiting rally monday thru early wednesday collapsing below 12,000 by friday.The market bulls are cows now.Easy to see 1150
S&P by April 2008.

President D Szvaselinovic

Many bears! More than Russia!
Come glorious revolution!

Mark Lytle

The futures indications suggest that the wedge I described is real and functioning... I have a preliminary target for the bottom of this move of 1354 on the $SPX..


Sorry for some fundamental commenté


Shock, Annualized

Now, the really shocking stuff is doesn't show up until you look at the "Seasonally adjust annual rate for the 3-months ended December 2007." This is where you find why Gold is going through the roof and the dollar collapsing to within a few pennies of its all time lows. Remember, these are 3-month annualize rates:

Finished Goods: +13.3%

Finished consumer foods +9.4%

Finished energy goods: +51.9%


Intermediate materials supplies & components: +15.0%

Intermediate food & feeds: +19.2%

Intermediate energy goods: +55.3%

Materials for non-durables: +20.3%


Think those are scary? Look at the head of the supply chain!

Crude materials for further processing: +59.6%

Foodstuffs and feedstuffs +19.2%

Crude energy materials +129.5%

THE US is fu... D O O M E D and western Europe also

Mark Lytle

I couldn't agree more...The U.S. citizens will be hit with a Hyperinflationary depression, where their money buys less and less, even as they lose higher paying jobs for lower paying jobs, and/or unemployment..

We will be amost third world in 10 years or less..


We finally got $900 gold, time for a big Homer Simpson Whooo Hoooo! Precious metals are looking dangerously extended here, but 5th wave tops are notoriously difficult to call (if this is indeed a 5th wave for gold). The Euro may be finishing an ending diagonal, with a slight chance of a through-over to about $1.53. Inflation fear is getting pretty extreme here, IMHO. Oil is acting heavy, and may be finishing an initial impulsive decline off its record high.





WTF, whoa! Careful, anger leads to the Dark Side. Read this prior post:

The K-Winter is ahead. 2014 bottom not 2004.

PS - not my yacht. Friend's yacht. Picture is tongue in cheek. I work for a living.


Keep eye on Precter free week.

When he offers free week, thats when vazeline move begins


We have entered " The Zone".We show a graph on my show that goes up an average of 18 years then goes sideways 18 years plus or minus 2 years.I believe we have entered this sideways trading band .P/E will contract rapidly and come as a surprise.The majority of people will not make money.In fact minus inflation and taxes they will have negative returns for a long time.There are many good traders on this board and both camps will win some battles both from the long and short side of it.I will write soon an article.Sorry about getting caught between TV,radio & internet show.
Yves Lamoureux

President D Szvaselinovic

You mean, you WORK?
Anger lead to dark side.
Vazeline lead to DOWN side.


Fed easing tommorrow morning if futures gap down. Time for the Fed to seriously panick. After the first banking failure. Fed will loosen its collateral standards at the discount window at first. After a few banks go under the fed will tighten its collateral standards. Expect a fed ease of 50 bp before the Jan meeting and at least 25 more at the Jan meeting. Good chance for a trade or to sell if your an investor. Fed funds should be at 0% my March next year.


donald trump on t.v. said fed needs to cut rates at least 1 point.
he said anything less won't help.
he said we are already in a recession.


100's of money funds currently have all of the banks and brokerage firms that have been in trouble as assests in their funds. if anyone of these companies does go under a 1930's style run could occur on dozens and dozens of those money funds. 100's of billions of dollars would be lost in a heartbeat.
the money funds are not fdic insured.
many mutual fund companies, banks and brokers have quietly pumped in billions of dollars since june 2007 to keep the share price at a dollar a share because of bad investments. they have done this to prevent such a run on the funds. at some point the losses will be too great to replace as they have been doing.

I. Sosceles


Yours is the minority position. Let us fine tune it: 12,100.
Then there is the small issue of Gold. It ain't reachin' $1000 on this mission. more time: a-b-c-x-a-b-c.


Hi cstradingman

Maybe fedfunds will be at Zero % in a year or so, definitly they are already below inflation in my opinion.
But it will not help the average Joe - if he will want to get a loan for house it will be 50 down and 10 % interest.

America is fu... D O O M E D


2000 highs: DJIA = 11,908; R2K = 614

From the lows in 2002 to the highs in 2007 -

38% retrace: DJIA = 11,962; R2K = 654
50% retrace: DJIA = 11,230; R2K = 591

These are the simplest TA support targets. This down-move does appear to be at least correcting the bull from 2002 (if not beginning a larger degree bear). So, 38% is a minimal target. I think we'll break 12K on the Dow. And, since the R2K has been weaker than the internationals in the Dow, the R2K will hit the low 600's.

For a time-frame, I'm guessing this down-wave will end around March or so. This is the map of the market I'm following now... subject to change of course. If the Dow breaks 12K and other technicals are turning up, I'd be tempted to go long for a fierce upswing (and perhaps yelnick's surge).

For now though, sell rallies. I'm no EW'er (I just look for 3's and 2's)... so you can shake your heads... but I think we're right now in the middle of this move (yes, the 3 of 3 thing ;)). This isn't the parabolic end-stage, but the steadily grinding lower stage.


cs - 10 year yields still going lower on all time-frames... getting oversold (yields) but no turn-around or ta divergences yet. I again agree w/ your comment that the fed easing isn't helping the economy. Year over year wholesale inflation is way high. I think SSA receipients got a little over a 2% COLA... I googled to a senior site and they're p*ssed. The Fed is between the rock and the hard-place.


cs - just read your remark about the fed easing tomorrow. It would be a ripe moment and I'm considering exiting and re-entering my short position (I'll put in a windfall limit). One thing... what happens if the fed eases 1/2 and it has no substantial effect. Like in the wizard of oz, the fed's power could be shown to be illusory and their emergency action create more fear than calm.

da bear

the stock market is getting interesting. i thought that gold would have held up with stocks down big but it did not. I wonder how the primary season will effect stocks over the next few months.

check out my new website at i have some free articles on it and my latest report in my Da Bear Report section. and be to vote in my poll!

da bear

Fahrenheit 1929: The Temperature at which liquidity burns.


The McClellan Oscillator shows a significant bullish divergence.


No free weak = No up serge!

Investors must wait to buy once free week calls the bottom! It works everytime

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