search elliott

  • Google

Enter your email address:

Delivered by FeedBurner


  • Where From?
    free counters
Related Posts with Thumbnails

« Are We Repeating the 1930 Rally? | Main | Is the China Boom Bogus? »

Wednesday, August 19, 2009


Feed You can follow this conversation by subscribing to the comment feed for this post.


Hi Yelnick,

With reference to Neely's - "Both indicate he expects a surge as well, in the S&P and the USD." - Is the implication that both the USD and the S&P will strengthen together during this final surge?


JAy, let me be precise on Neely: his emergency bulletins did not predict a surge but instead had day traders out of the market until the pattern clarified. Obviously he sees the risk of a melt up not a melt down. On the Euro, he sees it ending an up pattern. I then drew the implication that US stocks and USD will strengthen.

In contrast, the STU is quite clear on the USD - they see it beginning to run up to Dollar Index 90.

I haven't commented on bonds much recently as both have an unclear pattern in front of them, and differ on the pattern. The STU sees bonds in a triangle for example.


So the correlation between equities and the USD would break temporarily?


Neely kept his count the same today; indicating that the market has topped in the mid-August window. I think he got out merely to preserve capital.

I got a daily sell signal Monday and sold the retracement today. 1000 is an important Gann S&R level. Time will tell but the DOW topped pretty much where the weekly pivot point suggested it should (9400) which was also near the .38 retracement of the bear leg down.


A question for the technical analysts...does the current chart of the S&P 500 look like a head & shoulders bottom?


It is strange that people are comparing the current rally of 22 weeks to the 1929-30 rally that went slightly higher in price % terms, yet they don't acknowledge that the time it took to do the initial drop was much quicker than the current drop, which took 17 months. If we look at the time for this rally to be a % of the time taken to do the initial drop, we have longer to go before the next turn. Reasonable?


Jay, yep

Rich, this rally has been pretty sharp (as in '30) and hence should fall at a similar slope (Gann). But the corrective action that follows may go on for a while.


In fact, the rally off the initial low in 1929 was 22 weeks, which when divided by the 10 weeks it took to fall, gives us a time target for the current rally of 2.2 x the length of the initial fall. 17 months x 2.2 = 37.4 months or over 3 years! Would anyone like to comment on this?

Forkoholic Serge | Elliott Wave Forkology

Free issue of "Pitchforking your way to profits" Daily Market UPdate.
Subscribe today! Only $3/day - cheaper than your morning coffee at Starbucks !


Yelnick and others:
Excuse me for bringing forward a fundamental issue in a technical blog but there is one more thing that puzzles me because i did not see any reference to it in any report , blog , analysis on the current crisis .
I have read that production efficiency in the us improved with a whopping 6% + in the first half of the year compared with expected 1.5%
Now this must have an influence too, but i never saw it not even mentioned less quantified.


If we've topped, or if we have another surge first, I don't know what everyone here is expecting, but I would think the decline to come would be an x-wave, with higher highs to come next year. A five month rally is unlikely to be all of the rise.

sahil Kapoor

The rally is getting too overstretched here. Moreover cyclical trends are now working against the uptrend. A rally that can suck everyone in would eventually get sold. Important to be very cautious for being bullish.
Recency Bias

Mike McQuaid

SPX daily, alternate count, Cycle wave 3 commenced July 8. Rally to July 27 and the correction to Aug 17 portrayed a primary wave 1 and a running correction wave 2 to be the fractal junior of the same pattern of March 6 to July 8.
Upper Bollinger band (20,2) went flat early Aug followed by a middle band tag that reversed and now the price is heading higher as the lower band rises. Since May RSI(14) converges with the price.
This pattern should go higher.


More evidence of bullish sentiment extremes:

Mike McQuaid

BKX bank index, weekly, breakout off the resolution of the bull flag at the July 8 low. Daily, trading range off Aug 8 top has 46.46 resistance and support off the May high. Trend is up.

trend is uppy

I don't know everyone. I agree the uptrend is still up, but it seems like we need to sell off a bit more than we did to rest around 960ish before a push to near 1050-1100. The support line wasn't even close to being tested, but then again I have been surprised by other thrusts in this rally. I know we broke through 1000 again, but we'll see I guess....


miguel, productivity went UP during the Great Depression. Firing people but keeping machines leads to higher productivity (fewer hours per unit produced) even as production overall drops. One of the most interesting stories of the period is IBM. It had been taken out of the Dow in the 1939 and not put back in until 1979. In the late '30s and especially in the '40s IBM did very well selling punchcards to replace people. (Companies had lots of back room tabulators of accounting). In general across the Depression companies let their core plant lie fallow but invested in productivity enhancement like IBM punchcards.


TSE curse vs Chinese curse 3:
Now Dow ticker shows
12:40pm ET: 9,319.82 Up 40.66 (0.44%)
Dow Jones Industrial Average (^DJI)

I expect Dow to close UP +95 pts today to 9372

Tomorrow Aug21 UP +164 Closing Index 9536--very close to my target 9600 posted yesterday.

Let s see.....


Not burning Prechter here, but....

What was the explanation of not seeing this deflation period after the 2003 bottom? Just an off count, just curious because I am not a EWI subscriber.


tallho, your question is a good learning moment - the deflation was short circuited by the Greenspan Bubble that led to the housing and commodities' blow-offs in 2006-08. I blogged in this at the time and summarized the situation in this post, with links to prior posts:

Also here is a discussion of good vs bad deflation.

I called what Greenspan did the Kondratieff Indian Summer. Greenspan specifically said he knew how to prevent the deflationary depression that follows a credit bubble, and used the term "Kondratieff Winter" to describe it. His prescription was to reflate aggressively, and he did. It postponed deflation and led to a worse bubble than 2000. The Austrian Economists discussed this years ago: you can postpone the eventual deflation, but not prevent it; and the more you try to reflate the worse it will be.

We now have set up a great experiment, and we are the guinea pigs! We shall see whether Monetarism (Greenspan) plus Keynesianism (stimulus) can actually prevent the K-Winter, or whether the Austrians have been right for the past 70 years.

check it out

If you draw a Fork fom [2003 low/2007 high/2009 low] you get one HECK of a nice bull market lurking ahead.


Thanks Yelnick. I just see more of the same sort of tactics out of Bernanke to reflate again. If it isn't this setback, then will it postpone to even greater degree in the next couple of years?


tallyho, it worked in 2004 because banks jumped in and lent it out like crazy. but it is not working right now. same thing happened in the GD: the Fed rapidly tried to reflate but banks wouldn't lend. the drop of rates was as rapid in 19290-1931 as today. rates went back up in 1931 when a worldwide financial crisis hit, then went back down again. the banks did not lend for all of the same reasons we are experiencing today. this was Mises core point from the Austrian perspective: at some point the old magic no longer works because the actors fail to follow the script.

you will see who wins this experiment between now and 2011. if Helicopter Ben pulls this off he will have disproved the Austrians. The second wave of mortgage defaults is beginning. I think we muddle along into summer 2010 and then the trouble overwhelms the Fed. I expect late 2010 and early 2011 to be one of those historical moments we wish we didn't have to live through.

Hank Wernicki


The 7/29 240m 9:30 am generator bottom for the DOW 30 ( Child ) is iterating perfectly.

IF we make a new high, your 10,000 target ( Parent ) can be achieved easily.

Sitting on the fence right, but things are starting to look very Bullish again !



Hank, thanks for the update. BTW if you would like to lay out the fractal situation I would be happy to provide a guestblog. Possibly you will want to wait past options Friday and the Aug24 date of infamy (1987) Monday



Does your Dow comment mean that
is now off the table? If so, at what point do you abandon a prmising looking fractal?

I had posted some questions before that you probably missed (the Y-Man is so prolific these last few days you will probably miss this too):

"Hey Hank,

How do you locate your fractals?
Do you consider both the price AND time in identifying a potential parent-child relationship?
Or perhaps are you looking for a sequence of highs and lows without requiring specific time-price relationships / ratios?
How similar do they have to be for you to consider them self-similar?"

big foot

Tallyho - yes only one of many "off counts" Prechter has authored then justified and buried

The comments to this entry are closed.