Lights Out?

Both the STU and Neely agree: a little more counter-trend rally then the Little Big One down.  As Neely elegantly puts it: "If [the counter-trend rally] ends this week or next, the S&P will experience its largest and fastest decline in years between now and mid March."  Hochberg says: "This push will correct the preceding impulsive decline and help set the market up for wave iii (circle) of 3 down, which should be a very strong selloff."  The other side (Yves for example) think the bottom is in.  The Naz turned up first; the Dow and S&P followed today.  My view is that the Surge is coming, but the bottoming process may take into March at least before this is clear. 

The most interesting part of today's STU is their Lights Out analysis.  They had shown last summer that high-yield corporate bonds went from available to non-existence over a very short time frame, one month.  Similarly,  last week the STU noted how the Baltic Dry index and the ISM index both dropped precipitously.  The STU then points out other examples.  By analogy they expect the equity markets to similarly wake up and fall off a cliff.   

The rapidity of a market window closing on an asset type squares with my experience: in June 1983 I got a tech IPO out, but in July 1983 the tech IPO window shut hard; in April 2000, I was on a roadshow and got my IPO funded, but right afterwrds the IPO window shut hard on dot-coms; and in late 2000, I saw  Covad and similar telecom stocks raise money in September, and suddenly they could not raise a dime in October (debt or equity).  Slam!  In one month.

We shall see between now and the next turn date, Feb19, whether the rolling LIghts Out in market after market will panic equities, or whether this is a buying opportunity. 

Comments

[Bob Morley]

So what would be the best index to ride down? Any thoughts on that guys?

[Dow Predator]

The market is going UP. Bottom is in.

Dow Predator

[Bob Morley]

Just when I thought all the votes were in, The Predator finds some chads. Bummer

[Dow Predator]

This is simple guys.
As long as Monday low holds. The market is Bullish.
As long as that low holds... we are going to all new time highs and the final top will be in 2009. Jan 22 was the end of a 4th wave correction (or B wave).

Lets go day by day. But as long as the word "recession" is in everybody´s mouth. I am bullish!.. Even kids are now talking about the upcoming "recession".

Dow Predator.

[Mark Lytle]

I believe the markets will go up until options expiration on Friday, although it could top on Thursday instead. I think we are already in a wave 5 of a bigger degree wave "1" or "A" .. I expect this leg to last until we get to March 1st or so...finally resting probably, at the level of the of the '06 bottom ($SPX)..

[MHD]

I'm going to have to side with Neely and Steve this time. A little more upside and then down hard we go.
In this corner weighing in at wave ? DowPredator and Yves. And in this corner weighing in at wave ? Neely and Steve, and probably Tony C. Should be an awesome smackdown!

[ADHD]

Don't they get bored of saying the same thing year after year?

[MHD]

You don't get bored as long as someone is willing to pay you to flip a coin:-)

[tulku]

Oh no.
Prechter & Hochberg begin 1-2 1'-2' nesting once again...
And now Neely is in their choir.
Why?
Did they see Trannies (DJTA) lately?
Anybody, who could find 5 wave structure in Trannies fall since July'07 - I give you 1000 USD if you show me this 5 waves in it without breaking any Elliott rule!
So, could we see 3 in III in nearest time (Hochberg), when Trannies are so strong?
Anybody in Elliott community believes it?

We haven't bottomed yet, but we're not so far from it. This structure shows typical 3-3-5 correction style - nothing more!
A little more patience bulls, please.

[Ham Actor]

I’m with the bears. 1-2, 1-2. There are no double bottoms and there will be no surge. Keep it simple, the market is tracing out 5’s down and 3’s up, therefore the trend is down until proven otherwise.

The USD is all set for a serious rally, with a nice flag on the Dollar Index and pull back from a trendline across down sloping peaks over past month. I am expecting a flight of funds home from offshore to prop up failing investments in the US. EUR trend is down with 3 wave correction ending. Aussie and Kiwi look toppy. USD/JPY is spotty but could accelerate up from consolidation.

Keep your hats on we are in for a wild ride!

Not wanting to teach my grandmother to suck eggs but, hope the Yelnick bulls stay smart. Keep the stops tight on naked longs with overweighting in out of the money puts in case of an emergency - we may get a melt down with no escape. There is money to be made for the nimble regardless of the view.

[wavechart.com]

Dow Predator has got it pretty much right. Market has made low for the year...and we have begun an intermediate term rally to new highs. See my charts at wavechart.com. I have never seen 1-2-1-2 count work in STU forecast...and they have used this 3rd wave setup pattern many many times. Big rallies always followed.

Elliot
wavechart.com

[Tom CZ]

as long the market holds current january low it is simple A - B - C, there is possibility of another down wave starting so creating space for 5s down but why to care about that in 1-2 1-2 ideas when it is better to getting long against current low for much bigger return than to sell just above it and to pray we will get crossed that....?!? I buy above support and sell on the break of it but not sell to falling market above with prays to get through and lower...

[Upstart]

I agree with Predator. The market is going much higher. Check Carl Futia's brief commentary today, "Nattering Nabob of Negativism". The magazine covers are indicating a major bottom. But I think the top comes this year. A big rally like in 2001-2002, post 9/11, but this time it makes a new high because we are not as far off the old highs as in 2001. Then the decline sets in as everything comes to roost, similar to early 2002. I vividly remember the anchors on CNBC near the end of the post 9/11 rally saying, "What is the stock market seeing that we are not seeing in the economic data?" Months later, as the stock market tumbled to new lows, they said, "Now the stock market has come in line with what the economists and economic data show." Same thing about to happen now.

We saw what resulted in January from being Lucas 76 months from the 2001 low. Now we will see the historic market top that is produced 76 YEARS from 1932.

[shatnpeed]

tulku, TULKU, on jan 26, in this blog, I replied to your question "could anybody count a 5 waves in this autumn '07 move?" and presented a clear explanation of the e-wave count. Did you learn nothing about e-wave from my answer? The clean, clear count often does not work, but all counts must follow the rules. For the correct count on TRAN you must first start with long term chart, then consider that in the short term (and all time frames), corrective waves can RUN.

[MHD]

All this wave talk is giving me the runs!!

[Mark Lytle]

On the 15 minute chart, the last 5 days is describing a reasonable well defined bearish wedge...I would expect the breakdown to start in the A.M. tomarrow...I will post the snapshot on my Blog after the market close...