The 1938 Analogy Continues

We have been following the 1938 analogy closely.  See this prior post.  The market has approached the 2-4 line, the upper trendline of the whole wave down from Oct07 to Mar9, and bounced.  One of two wave actions is expected: a strong run up continuing, or a second test of the 2-4 line.  For wave counters, we are in either in wave 3 of [2], or wave 2 of [2] is breaking as an ABC where a final C wave to retest the 2-4 line is ahead.  Odds favor the first count, a strong run-up towards Dow10K. 

Neely today had to pull last night's short recommendation, and now is standing back.  He had been calling this pretty well on the way down, but in late Feb, just before the Mar6 bottom (intraday) / Mar9 (closing), Prechter put out a bulletin saying time to get out of short positions, the wave [2] bounce is nigh.  My view of Mar9 was it was a bear trap, not a bull trap - the bears would prepare to short what thought would be yet another failed bounce, and would miss the great Obama Hope Rally.  This seems to have happened, as many bearish pundits still expect this rally to fail.  Prechter and the STU are now in the catbird's seat, and remaining firmly bullish for a multi-week or month rally. 

Comments

[george]

EWI has done a good job
so far since the top.
Neely's cautious approach
has done very well also.
really appreciate your
updates Yelnick!
thanks,
george

[EN]

Wonder if it will attack the 200 day moving average.

Is Neely still holding the view that this is the final rally before the second phase and final plung down kicks in?

Don't know why I really care . . . I find all these predictions kind of fun to follow . . .

[Mike McQuaid]

The SPX bottom is in. RSI(14) is over 50, MACD had zero line cross on top of a lengthy positive divergence since mid October. A parade of selling climaxes appeared in Oct., Nov. and March. The bottom was March 6. The index now trades above a flat 50dma.

[Mike McQuaid]

Label SPX 826 March 25 intermediate wave 1. Label 779 March 30 minor wave A. Anticipate label minor wave "strong" B centered on April 6 or 7.

[da bear]

i can see this rally going until late May. but we have waves i and ii, and are somewhere in wave iii. so just follow the waves i guess...

da bear

Wake up and smell the tulips!

[Robert Murdoch]

It doesn't strike me that we even had a wave 2 of [2]. If this rally only goes until late May there is no way that it will achieve STU's prediction of 1050 SPX and 10000 DJIA.

I think the SPX will top out at about 960 to 980 and the DJIA will top out at 9200 to 9400 with a non-confirmation from the transports.

I see that a lot of people still think that this is a wave 4 rally and there is a wave 5 down of wave [1] to go. Certainly that is not the case, is it?

I don't believe STU is of that view. What is Neely's take on all this?

[Chas]

I have my money parked in a short-term Treasury fund waiting for a good shorting opportunity.

Is there a better place to put my money where I can get a better yield with safety. I'm thinking a Ginnie Mae fund, a TIPS fund, or short duration CDs? Others?

What do you think of the safety of this fund? I believe that it's yielding about 4.5 - 5%.

http://rps.troweprice.com/Files/internalfundfacts/FXIF.pdf?pn=105292&pnlc=0000

[george]

Chas,
i looked over the holdings of the t rowe price link
you provided. the fund appears to have shorter term
annuity contracts guaranteed by the listed
insurance companies. also corporate bond holdings.
you are in a safe treasury fund now. safer yet
would be an all treasury money fund that has
zero flucuation compared to your current fund.
also, after the subprime mess the u.s. government
agreed to maintain a dollar per share value into
the immediate future of all money market mutual
funds. i think it will end in jan.2010 when the
maximum FDIC limit is set to return to 100,000 from
it's temporary limit raise of 250,000 per bank account.
george

[Chas]

Thanks, George. I currently have 10% in the fixed income fund above and 90% in T Rowe Price Treasury Money Fund. To get out of the fixed income fund completely, I'll have to roll over the 410K into an IRA (which I can do since I'm no longer with the employer).

In general, is there any advantage in being in an IRA vs a 410K aside from the issue above?

Is a money fund the best place to park cash, or are there better yielding safe alternatives?

My plan is to short the "Obama Rally" with GRZZX since I can only buy mutual funds wihin my 401K account.

[Anonymous]

Any comments on this wave analysis would be appreciated. This guy has been dead on accurate for over a year, and he is calling for a pretty severe crash in both gold and SPX.

http://siliconinvestor.advfn.com/readmsg.aspx?msgid=25528107

http://siliconinvestor.advfn.com/readmsg.aspx?msgid=25527846

"All the Elliott gurus have the general markets in a Big C here. I do not, I do not like crowds. If this is not a Big C what does that infer for the future? ...

I will finish up by just saying my wave counts across the board are pretty bearish. They have continued to get more bearish really, as this bear has moved along. I have seen no bottoms and to get there I believe we yet need a big wash-out move down, to wash out and pop the fear bubble. I do not know if it started today but I think it should start in here somewhere. Today I note that every indice I show on my indice list is red, and this includes gold.

To get a wash out move this is also something else I want to see ... everything moving in unison.

The DOW per my analysis has been in counter trend corrective mode, since about Oct 13th. The trend is still down. Every leg since that point I have charted as a '3'. We need 5 legs complete to end this and head down and we are in that area. The whole series is also downward sloping as well, which is very bearish. If you look closely at what the Dow is doing it is falling through one line of support after after, then each time rallying up to the backside of what it lost. This ain't boolish action. It shows weakness. If the Dow crumbles do not count out a sub 4000 bottom."

[george]

chas,
if you are out of work i would wait until better days with a steady paycheck
before going off the deep end shorting the market rally based on expert opinions because there are few new jobs. be careful if you have never taken risks in the markets. many people find out to late. please do not risk money
that you may need to live on...but if you are set on proceding i will continue answering your questions.
chas,
says-
I'll have to roll over the 401K into an IRA (which I can do since I'm no longer with the employer). you can rollover into a brokerage firm IRA.

chas says,
In general, is there any advantage in being in an I
IRA vs a 410K aside from the issue above? IRA you can get from scottrade,ameritrade etc...trading stock exchange traded short and long gold funds, bond funds short and long, stock funds short and long, etc...they are stock exchange traded you can get in and out all day long trading.

chas says,
Is a money fund the best place to park cash, or are there better yielding safe alternatives? money funds are used for liquidity in between trades i don't think of them as an investment. an interesting fund stock exchange traded that you could buy is the symbOL BIL this is a short term t=bill fund. zero price change like cash. extremely safe and the commission with discount brokers would be 7 dollars. get in and out anytime of day and it is highly marginable.

chas,
as you go on your internet trading journey you will see a signature
that many others have since used as their own or one similar too it. i originated it on the Elliott wave international delta email list back in the 1990's i will sign my name with it below. i thought of good luck/ and the word trading and came up with "good trading" when i signed my emails under the anonymous name of 1.618 as a user name on that EWI delta email list.
good trading,
george

[Chas]

Thanks again, George.

I worked for a Fortune 500 Company for 23 yrs. I was laid off on October 31 and started a new position in another state on December 1. I took a 10% hit in base salary, but I'm in two bonus plans so I should meet or exceed my salary and the cost of living is lower. Plus I got a 15K signing bonus, so I'm whole for the first year at least. I lost 1 week of vacation (5 -> 4) but I figure that's not too bad. The company has an A+ relo plan and I'll make another 15K on the move.

I'm renting a nice three bedroom house for $300/month including utilities and phone, and I'm inclined to stay there until the dust settles. Just have to sell my place back home.

I took my pension from my employer as a lump sum so I have to manage my resources well if I hope to retire since there's no annuity to fall back on. Between my pension, my 401K and my IRA's I have about 800K. My house is paid, I have no debt, and I have about $250K in cash. My wife has never worked but she could work if she had to. I guess I'm not a typical American! My biggest expense is education for my two kids, but private school is 1/2 the price here so that's another savings.

I'm 48 so I still have some time to save. Not interested in day trading, but I'd like to play the swings with a small percentage (10 - 20%). My only equity holding is HSGFX (~90K). As you can probably tell, I'm a very conservative investor.

[Mamma Boom Boom]

>>Any comments on this wave analysis would be appreciated. This guy has been dead on accurate for over a year, and he is calling for a pretty severe crash in both gold and SPX.<<

I think your 'guy' is like a baby robbin, all mouth and ass.

Ned

[Anonymous]

>>I think your 'guy' is like a baby robbin, all mouth and ass.<<

His track record has been stellar, and made some amazing calls. When the BKX was in the 40's he said it would go to 20's. When UYG was at 5 he said it was headed to 2.

http://siliconinvestor.advfn.com/readmsg.aspx?msgid=25201085

Do you have an actual criticism of his wave analysis?

[Upstart]

Robert Murdoch,

Agreed: Where is 2 of [2]? Seems like odds would favor EWI's 2nd intepretation. The 22-week cycle would ideally bottom in April, so maybe a bigger pullback comes at some point.

[SH]

For last two weeks, Neely gave one short ES recommendation which he canceled immediately.

How often does Neely provide trading recommendation per month?

[DG]

SH,

It depends. Since October, he's executed 30 "Hourly" ES trades, about 5 per month and fewer on the Daily and Weekly timeframes. That's a little misleading, though, because almost half of those trades happened in October, when he thought the first stage of the bear would be finished. Since then, it's been about 3 per month. He takes what he sees the market giving him.

Hope that helps.

[SH]

Is there "Hourly" trading recommendation options other than "hourly" secion on his regular comments and private consultation?

Also, how is his hourly trading recommendation compare to neely river theory technology?

Thanks

[Donna Kline]

Chas -

First, let me commend you on 1) your cash position 2) your intelligent recognition that 'long term passive reliance on equity gains' is an era that has passed. You are miles ahead of the average American. I invest in leveraged mutual funds. The funds that I have found to work well for me are: DXSSX, DXQSX, RYIRX, DXSLX, DXQLX, RYRSX. There are several more that are of value. I also invest in iBonds and TIPs, buy them straight from the Treasury at www.treasurydirect.gov. See my blog at www.donnaklinenow.com for more.

Best,
Donna

[DG]

SH,

No, I was referring to the Hourly timeframe on the trading services. I don't know of any other trading services he has.

The Neely River technology is his way of trading when he doesn't necessarily see a clear wave count. Sometimes he recommends Hourly trades based solely on that technology and other times he waits for Neely River and NeoWave to be in synch before making a trade.

[TObject]

Segway in talks to buy GM,
Unveils new revolutionary "Garbage Bin" two-wheel concept vehicle
;-))

http://news.cnet.com/8301-11128_3-10213863-54.html

[Robert Murdoch]

Where do STU and Neely find us in the current wave count?

[Martin]

Hi DG,

I am trading according to NeoWave and the results are good, my email address is martindeo@gmail.com, could you send me an email so I can speak to so someone who also believes in Neely.
Thanks

[fred]

I, too, believe in Neely. If you pay regularly your wishes will come true and you will find the answer in the River. Good fortunes and blessings to all of true hearts.

[Tom]

DG, can you send me your email or write to tranphilly@yahoo.com? I have some questions/ideas on Neely that I wanted to bounce off you.

[Dick and harry]

Help me become a true believer in the true ways of the great arstist neely and tell me he is not a man who only makes money from people who buy the ideas he is peddling.

(DG is NOT Neely. DG Makes sense and can spell and doesn't swear) :-/

[DG]

Dick and Harry,

It sounds like you might have had a bad experience with Neely. I don't know. What I do know is that every successful trader has a method. Now, we can argue until the cows come home whether it's the method that makes them successful or just luck, but I will say that if it was just luck, one would expect at least one dart-throwing monkey to be a successful trader over a meaningful time-period like 25 years. As I've mentioned on many occasions, my best estimate of Neely's long-term returns is 35%/year, unleveraged, which is about the same long-term returns as Renaissance Technologies, considered the top-tier of hedge funds, even better returns than Soros.

P.S., I don't swear on this blog because of respect for Yelnick. In real life, I cuss like the worst kind of cussing sailor. I am a stickler for spelling, though. All those pop quizzes in elementary school really put the fear of the spelling god into me.

[Skeptical McDubious P. Agnostic]

How do you know that every successful trader has a method?

[DG]

Skeptical,

Read "Market Wizards" and see if everyone profiled in there doesn't have a method. Also, check out Brett Steenbarger at http://www.traderfeed.blogspot.com/, who's done a lot of empirical studies of successful traders and what they do leading up to and managing their trading. None of them appear to just say, out of the blue, "I'm going to make a trade now. I'll flip a coin to see if it should be a long trade or a short trade and I'll throw a dart at a list of markets to see which market I'll trade." Doesn't work like that.

[Forkoholic Serge]

Today I’m excited to introduce to you first issue
of “Forkoholic” Newsletter. For now it’s a quarterly
publication with focus on Elliott Wave Forkology,
Market Fractals and Market Cycles.

In this issue:
INDICES IN THE WILD
$SPX(S&P500) 2ND QTR PROJECTION
PARTY LIKE IT IS 1938…NOT
SENTIMENTAL SENTIMENT
THE STATE OF INDICATORS
NEVERENDING CYCLES
NEXT CIT DATES
DOLLAR COLLAPSE
GOLD RUSH 2.0
Forkoholics 1000 Club Lifetime

http://forkoholic.com/newsletter1.htm

Thanks
Forkoholic Serge.
Follow me on Twitter http://twitter.com/Forkoholic

P.S. Spread the word - send this e-mail to a friend who might be interested

[Mamma Boom Boom]

>>Today I’m excited to introduce to you first issue
of “Forkoholic” Newsletter.<<

What, no farm animals and redheads?

-------------------------

BTW, seems like a downdraft brewing. Just a hunch! (there's that reference to redheads, again)

Ned

[Upstart]

Aw man, Forkoholic, I was hoping you'd give your yelnick buddies some free sample excerpts. :)

[Upstart]

DG, I hope I spelled excerpts correctly.

[DG]

Upstart,

You get the spelling gold star today! Those "c"s after "x"s are tricky.