Planet Yelnick

Sand in the Line of No Return

Market appears settled into a trading range despite all the prognostication of a big collapse or a renewed bull.  The STU's line in the sand was obliterated 7 minutes into the trading last week.  Neely's line stands firm for the moment (SP1475).  Neither has solid guidance other than to watch.  Prechter's monthly Financial Forecast is heavy on history (of credit bubbles) and investor psychology rather than wave count.  Even Friday's STU was circumspect - after their line in the sand was blown, they thought a major countertrend rally as underway; but when that stalled they now are unsure.  Sounds like the rest of us!

Clear Line of No Return

Today's interim STU draws a line in the sand: yesterday's high cannot be exceeded, or their upward flat count is bogus.  (Dow12.461, SP1341).  The alt counts include: that we are still in wave 4 as a triangle or larger flat, with wave 5 down to follow (to new lows) or we ended the downtick and are in a large rally before the dreaded 3 of 3.  They don't leave open that we are in a larger-degree wave 4 with a wave 5 to new highs ahead of us.

Yves on TV

Watch Yves on Bloomberg TV - Thursday 20th  at 17:00 on Taking Stock (or at  http://www.bloomberg.com/tvradio/tv/)

Bob on TV

Prechter will appear on Bloomberg television for an interview in the 5 p.m. hour (Eastern Time) today, March 19. Visit Bloomberg Television - to see if it's available in your area.

Triple Bottom? or Coiled Spring

Special STU today to hold the faithful in line.  They count us just ending a wave [ii] flat before a wave 3 of 3 etc. down.  The pattern from Mar10 broke as 335.  The c wave came into the range of the prior wave 4.  It fits, but the up volume and breadth was huge (a 90/90 day?).  They are watching for the volume and breadth of a drop tomorrow to the prior wave iv low, and will then opine on whether we have several more weeks of correction first.  On the other hand, we have had a triple bottom of the drop to Jan 22.  If this puppy keeps skyrocketing past Dow13K then the last two days will mark a Zoran Bifurcation Point.   

Mother of All Margin Calls is Beginning

The Mother of All Margin Calls comes when sound institutions must sell good assets due to the write-down of bad assets.  Carlyle had such a call last week.  JP Morgan issues a report calling it a 'systemic margin call' that will spread, especially after the week jobs report Friday.  Soon, many of these calls will come in not because a fund like Carlyle Capital is at risk, but investors in that fund, who used leverage to finance their contribution, are getting margin calls, and must liquidate good assets/loans to pay off the margin debt.    This is what Prechter predicted years ago in Conquer the Crash, to much hooting & derision.  It has started.

Update Mar10: it is spreading.  At least 6 hedge funds with $5.4B have had to shut down due to margin calls.  And not because they are in trouble, but because their creditors are!

On The Brink

Guestblogger Tony Cherniawski returns with an update to his post right after Jan23 called A Probable Path Forward.   He saw Jan22 as the end of a wave 1 down of a much larger and more devastating wave C.  Now he sees us ending the wave 2 with wave 3 of C about to begin.  This chart tells the story.  Read Tony's analysis below the fold, and watch out below!!

Plateau Continues

STU gives several scenarios, but still holds to the nest 1-2s in the Dow.  They see a five wave down today, but it could also be read as a three wave followed by a little plateau. In the Naz we finished (or nearly finished) a wave 4 triangle, and in the S&P they still see the wave 4 triangle as a alt count possibility.  Neely also gives several scenarios, but they are essentially the same except for timing: we are in a B with a C to follow, and the B plateau (which we have been in for a month) could and likely will continue longer than most imagine - beyond the turn window around Mar21. 

we had a thrust down from Dec, and then a plateau since Jan23.  At a smaller scale, we had a thrust up from Jan23 then a plateau since.  The move down has stalled, which makes the coiled spring of nested 1-2s unlikely.  Instead, we seem to be in a wave 4, and likely a triangle.  Perhaps we get the break down late this week, the first turn window; but I am with Neely - more likely the E wave up starts later this week with a 5th wave thrust down sometime around or shortly after Mar21. 

Then the Surge?  IPOs are in a stall; only Visa will come out in March.  The tech IPOs are on the shelf until conditions improve.  Dollar continues to slide.  Oil at records beyond 1980 even when adjusted for inflation.  Gold approaches $1000/oz; it was $20 for most of US history, and $35 just 35 years ago.  Dollar now worth 2c.  Something has to give. 

Election Year Pattern - May Bottom?

Great chart on election years being choppy until May (or perhaps more precisely, until the contours of the coming election are clear).  We might have a clear pair of candidates by early Wed morning (John Wayne McCain and Barack "Yes We Can" Obama), but we may have to wait until the early-election dirt is exposed in the late Spring (Clinton did a number on Dole in 1996; Bush did a similar job on Kerry in 2004).  Patterns come and go and have no predictive power unless based on underlying causality.  Like the Four Year Presidential Cycle, which is driven by interference in the economy to get elected, this pattern is apparently driven by removal of uncertainty.  My thanks to Deacon (see reader comments here) for pointing this chart out.