The Surge Will Not Be Denied

Some comments to my prior post have compelled me to lay out the prediction regarding The Surge.  The title of the prior post comes from the first Rap song, "The Revolution Will Not Be Televised". The Surge will not come as expected, and will not be on CNBC.   The Surge will, however, be recognized when it comes by the Elliott Wave world, and is one of Prechter's three future scenarios.   The logic of timing of the Surge below the fold. 

The Surge will come first in the NASDAQ, by tech stocks (including Yve's beloved cleantech). The early indicators will be in IPO interest re-emerging.  Historically tech stocks can do very well at or near the bottom of a recession, as the market looks for yield, and sees it in growth. The Surge wil be driven by the Global Scramble for Yield, which will next see high yields in tech, the best refuge of the past 30 years, or the first outpost of the new wave, depending on your point of view. 

Right now the markets are oversold, so a relief rally is due, probably starting the first few days of the new quarter, and possibly getting us back to Dow12K.  As indicated by the VIX, which is only slightly rising, the market is no where near a lasting bottom, and is not showing the type of fear and capitulation required.  After the big drop, wait for a few days where the market churns around Dow10K, where we see huge volume without much movement, indicating a rotation from selling to buying.   

But this relief rally (if it comes) is not the Surge.  The prior conditions for the Surge are (a) the end of the commodities bubble, since that is providing the one last refuge for yield before rotation into tech, and (b) the end of this period of uncertainty/correction, which is putting investors on the sidelines. 

The commodities bubble will likely pop by September, when the ECB is expected to raise rates, and the Fed had better raise rates, but you never know with bubbles.  Several steps by the Treasury Dept. & Congress could pop the bubble, but they seem disinclined to act: really back the Dollar, not just jawbone; and close the so-called Enron loophole, which has cause a 2-3x rise in the long side of commodities by funds de-leveraging from the subprime world of stretching for incremental yields and finding out they were unexpectedly assuming much higher risk. 

As for uncertainty, as I have been writing for several months, the end of this correction is likely to be when the outcome of this upcoming election is clear. Normally this happens in May, but sometimes waits until after the Conventions in August, and sometimes is not clear until after the election - 1994 mid-year for example, or 1980 and the Reagan victory.  Unless something screwy happens over the summer, I do not see either of these conditions clarifying before Sept, and the odds are increasing not before Nov. 

We may be in one of those 'standard' patterns where you sell in May and go away until Nov.  Either way the election goes, I expect a rally from Nov to April, given the optimism that comes from a new leader.  I suppose if we have a cliffhanger as in 2000, we could have continued negativity into Jan., but this election is a 'change' election, meaning whomever wins, the hopes of the electorate will be lumped into the victor.  Even in the depths of 1932, FDR carried hope with him when he took power in March 1933, and the market turned on hope for the next 4 years, until it became clear that FDR's policies had failed to get us out of the Depression, and War loomed on the Continent.  Right now, let's get those four years, and hope this time around we have sounder economic leadership. 

Comments

[LoneStarHog]

Simply put, there is NO commodities bubble, as I have addressed in other posts with valid supporting data.

Again, there is NO commodities bubble.

Buy gold/silver and the equities and get outta anything U.S. Peso denominated.

LoneStarHog

[I.Sosceles]

damn.
are there still people using the word "sustainable"?
i like prechter sociobabble. especially when he talks about dropping hemlines.
come on, yelnick.
i asked you the central question before: did super cycle wave III end?
and the answer is:.....
Hint: Prechter's page one count is incorrect. that's the fucking beauty of it all.
for how many years has he been posting this chart?
are we really going to have an abcxabcxabc for wave....

this orchestrated decline is over.
we are in the "noise" phase.

[deacon]

the ballistic 1968 and 1978 years had the same poor june result, and the election year chart had the last 1/2 of june down, we look oversold enough for the end of month trade: "The SPX gained 753 points from January 1995 through the end of 2004 (10 years). But, had you purchased the SPX the day before the last trading day of the month, and exited on the opening of the fifth trading day of the month (and you stayed out of the market the rest of the month), the gains were 820 points. That's right. Those six trading days, on a net basis, led to all the market gains. The remaining 14-16 trading days of the month led nowhere. Sixty-four percent of the trades were successful."...i have all the links to the above comments and the july historicals over here:
(http://www.traders-talk.com/mb2/index.php?showtopic=90444)

[slow to cancel]

What's the scoop on gold, guys and gals? Two gap-up days in a row. Are they exhaustion gaps?

[Mamma Boom Boom]

HogMaster, you have always had problems dealing with reality.

Your pal,

Ned

[LoneStarHog]

Well, well, well...I wonder if you are the old Ned from the old Elliott Wave Forum?

Reality: I said the following on that forum - was completely trashed for it - starting in early 2003:

1) Get outta the U.S. Peso
2) Get into gold/silver and equities
3) Get into oil/gas
4) Get outta real estate
5) Get into certain foreign currencies

Now, NedBaby, check the performance of these investments since early 2003, even though I had stated that I got into these areas starting in 2000.

If you have ANY integrity, NedBaby, you will admit that I did post the above on NUMEROUS occasions.

YOU, NedBaby, was always one of my biggest critics and even now you can't be HONEST!

How is that BIG real estate investment going in Ohio, which I believe you entered in 2004?

BWHAHAHAHAHAHAHAH!!!!!

LoneStarHog

[TObject]

LoneStarHog,
if you watch cycles we could expect top in gold in April 2009
with all commodities topping in 2010

[Mamma Boom Boom]

Hog Master,

Yes it is I.

Some of what you say is true, and I'm going to give you tons of credit for it, right here and now. You deserve it, big guy!

Yes, you have always been a hard money advocate. And as it turns out you were absolutely correct, gold and silver have done well.

And you were always a dollar slammer. It is down, but is not and probably will not get to 60 as you promised.

Not too bad, so far, though.

I don't remember you ever uttering a word about oil, gas, or real estate, though. But, that could be 'just me', I'm getting old.

You say 'numerous' and again that is correct. Of course, it was only numerous when metals were going up, and you always become scarce when they were going down. (he..he)

As for my project of 2004, it never got off the ground. A couple of the investors changed their minds.

A lot has happened since then, though, I just don't remember what.

Your Pal,

Ned

http://www.bushongbusiness.com/webbbs/

[I.Sosceles]

ignore the noise

[slow to cancel]

O.K., I hear nothing, I.Sosceles. Now, what do you want me to pay attention to?

[TObject]

slow to cancel "what do you want me to pay attention to?"

Wow! EWI even trains people to behave like dogs ;-)

[Chas]

A trigger for the surge?

"If the head of the CFTC would go public in declaring that they are going to limit speculation in the near future, and that could happen at any time, the response in the oil futures market would be instant, with demand and price dropping. How much would they drop? I have no idea. But, and here is the point of all of this, the stock market is likely to act positively and jump dramatically. Just as the price of gas has been overly blamed for all of our economic ills, so will the response to some possible gas price relief be overzealous on the up-side."

http://www.amazon.com/gp/blog/id/A28DJWXSMYDZNT/ref=cm_blog_blog/002-5976823-7701636

[Chas]

A trigger for the surge?

"If the head of the CFTC would go public in declaring that they are going to limit speculation in the near future, and that could happen at any time, the response in the oil futures market would be instant, with demand and price dropping. How much would they drop? I have no idea. But, and here is the point of all of this, the stock market is likely to act positively and jump dramatically. Just as the price of gas has been overly blamed for all of our economic ills, so will the response to some possible gas price relief be overzealous on the up-side."

http://www.amazon.com/gp/blog/id/A28DJWXSMYDZNT/ref=cm_blog_blog/002-5976823-7701636

[EN]

I have a little survey question for all readers of this blog:

How many of you care about wave theory for the sake of making money versus intellectual curiousity?

Thanks in advance,

EN

[Bill C]

How many of you care about wave theory for the sake of making money versus intellectual curiousity?

I am trading short term interest rate futures and I use wave counts as guidelines to whether I want to scalp from the long or short side. As far as whether we are going to have another depression, that is purely intellectual although it has influenced my investment decisions.

[LoneStarHog]

A Trigger For The Surge?

Uh, here we go with more of this oil SPECULATOR crap, with the mindless following the government-controlled media.

Ask yourself a question as to whether or not the price is as a result of SPECULATORS in the Futures Market: HOW do you explain the spread between BRENT and FUTURES? It is simple PROOF that the Futures Market has virtually NOTHING to do with SPECULATORS.

Oh, but don't let the FACTS get in the way of being a mind-numbed media expert.

LoneStarHog

[Mamma Boom Boom]

[How many of you care about wave theory for the sake of making money versus intellectual curiousity?]

I use it in all trades.

[Mamma Boom Boom]

Hog Master,

I see your neck has not gotten any less 'RED', and still your opinion is the only valid one.

Keep up the good work.

Your pal,

Ned

BTW, Yelnick, pay no attention to those who bad mouth the way you operate your blog. Run your business the way you see fit. IMO.

[I.Sosceles]

en,

it has perhaps greater value for the longer term than the short term. with that being said;
in conjunction with other TA indicators, it's another tool in the arsenal and a very respectable one at that. you need to keep your own count and you need to be able to defend it. unfortunately, that takes years.

[TObject]

Chas "the response in the oil futures market would be instant, with demand and price dropping"

Actually the drop will be short-lived.
It will last exactly the time it takes to open a new account in Dubai or St. Petersburg, Russia, and move your money there

[yelnick]

EN, I have traded with it, and backed off trading, and always found it intellectually interesting.

Chas -- spot on. Warren states it well in his latest post. For those who think the oil price has gone up parabolically since Oct07 due to fundamentals, why have so many other commodities also gone up from that time in that fashion? Oil traders play the basis, not the price, and can chase the price sky high (or down to earth). When a bunch of funds take long positions under the guise of commercial interest, the price can rise fast and foolishly until the music stops, at which point it will fall fast. It seems as if since October the long position from 'speculators' has increased from 30% to 70% of oil trades, a huge increase on the long side that is disproportionate to commercial interest.

[Hank Wernicki]

I have a Screaming Buy for the NASDAQ today @ 11:30 am this morning ...

The Surge will begin <<

[TObject]

Screaming Buy? did it wake you up?
wait couple of days - we have not had capitulation yet
ECB could hike rates

[Hank Wernicki]

What do interest rates mean to the markets ? Nothing Sir !

Today is the IT bottom <<<<<< Rally into the rest of the year <<<<<<<

[Ham Actor]

Yes this is a low, but the surge is delusional. I don't hold with the rally into the rest of the year either. We will now get the proverbial dead cat bounce. It just happens to have hit the 10th floor balconey.

The market for now is over sold and the Dow will rally and find resistance at the Jan/Mar lows. As said before, support has become resistance and this is where the rally will end, before more legs lower. All downhill until Dec as previously advised.

[TObject]

Today is the IT bottom <<<<<< Rally into the rest of the year <<<<<<<

Hopefully you're using Jewish calendar year ;-)) just kidding
wow! what can I say? good luck!

[min]

E-Waves are a good trading tool when used with other TA indicators. A good dose of objectivity and parking of one's bias outside the front door is also essential to make it work. This last ingredient is what Prechter and Hochner are missing since they always see "bear", manage to place the most emphasis on other indicators and so end up missing major uptrends every time.

[TObject]

U.S. Freezes Solar Energy Projects
http://www.nytimes.com/2008/06/27/us/27solar.html?_r=1&oref=slogin

[Upstart]

Is EWI still hanging on to the triangle in gold, with the latest rise being a continuation of C?

[LoneStarHog]

The 1954 price of GM at it's lowest was $10.36.
Today it's $10.45 at it's lowest, so far.
Using the Feds (bullshit) "inflation" numbers, today's $10.45 equals $1.30 in 1954.

Gold was $35 per ounce. The GM low in 1954 was then 1/3 of an ounce.
One third of an ounce today is over $315.
In gold, GM today is actually worth slightly more than 1/100th of an ounce.
Or in 1954 terms, 35 cents. A penny stock!
Is that total collapse or what?
Oh, wait, this is too much REALITY, let's get back to everyone's ILLUSION.

LoneStarHog