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« Computerizing Wave Theory | Main | Free Week! »

Monday, November 02, 2009

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Michael

"The GDP report has an intriguing aspect that I have not seen picked up in the broader financial news: if global GDP is now on the rise, the demand for Dollars should increase. Maybe the drop in the Dollar was influenced by a lowered need for it as global commerce dropped. Hence a rise in economic activity would be bullish for the Dollar."

Yelnick, this has got to be one of the most simplistic views that I have ever read and doesn't even begin to take into the various growth rates around the world that effect foreign exchange rates, let alone the value of the US Dollar.

In any event, you might find Paul Tudor Jones' views on the Dollar, macro growth, and liquidity in the system rather interesting...

http://www.scribd.com/doc/21753600/Tudor-Third-Quarter-Letter

yelnick

Michael, yes, it is over-simplified, for a reason. I read the Tudor newsletter (I think it was up on Zerohedge) and I noted it still held to a weak Dollar view and a continued excess liquidity view. The bump in the USD may already be contradicting their analysis; we shall have to see if it continues. So the question is what part of their view is wrong? The view otherwise looks nuanced and well reasoned. But the market may be thinking otherwise, and sometimes the subtle view can miss the simpler truth.

If the excess Dollar reserves (more than is needed when global trade is down) are recycled into the carry trade, a short squeeze could emerge if global trade picks up.

Also, whereas logically the central banks should err on the side of excess liquidity so as not to repeat 1937, they appear to already be withdrawing liquidity as their confidence in the recovery increases.

I found the most interesting part of the Tudor newsletter the future cliff as this liquidity (and stimulus) is withdrawn after 2Q10; this comports with my view that the Summer of Disillusionment won't be until next summer, and the fall we might see in the next few months will be no more than retest of the Mar lows, if even that, while the real drop will happen in late 2010 absent a major change in global fiscal policy. But what if my timing and theirs is off, and the cliff is coming faster?

I would love to hear your views ...

elskid

Does it feel like gold is spiking and the dollar is NOT tanking? It seems to me something is amiss there. (not like ALL the markets are a bit amiss.)

Taz

I am looking for a slingshot to a new high at this juncture. Dr Copper, China, the Aussie $ and some corporate bonds remain locked in uptrends.

Taz

Michael

Elskid - Gold is strong vs the Dollar because of a central bank sale of bullion to India.

Michael

Looks like Warren Buffett just made a $44 BILLION dollar bet that P3 doesn't happen. Pretty impressive purchase by Warren.

Steve

highly informative Michael
Now I can cancel my Bloomberg subscription. WOW

Michael

Steve - That's pretty funny Mr. Troll. I doubt that you even have the $1700 per month needed to pay for a Bloomberg terminal. Thanks for the laugh. Too funny!

Steve

I was referring my $0 Bloomberg. I can cancel my Google subscription too.

WOW

Free

Looks like Warren Buffett just made a $44 BILLION dollar bet that P3 doesn't happen.

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

Somehow, I get the feeling he's one of those insiders who know what the government is up to. look at how his bets turned out during the crisis. I think too his bet is saying something about where the market is going.

P.S. so now we got buffet, tudor, barry ritholtz, jeremy grantham, marc faber etc etc who are saying no crash.

elskid

FREE,

" look at how his bets turned out during the crisis." BETS? Didn't he LOAN the gov't money and a guaranteed rate? A great rate if I remember right.!!

Michael

Buffett has been an investor in Burlington Northern for a number of years . . . But given his "all-in" commitment it certainly looks as though he see increased domestic economic activity ( demand for Powder River Basin coal, corn, wheat, steel, etc. ) as well as global trade to US ports. And if you've ever listened to a BNI conference call, you would know that 49 year old CEO Matt Rose is one of the best in the business. Looks like a very shrewd bet that P3 will never happen.

So Warren has essentially made a $44 BILLION DOLLAR BET on the U.S. and Global economies. I would suggest that this makes Prechter look like little more than a "salesman".

joe

I'd remember that Buffet is not very good at timing markets - he is good at being a long term investor. His view that the US will be stronger in 10 to 30 years I can certainly agree with. But it is equally true that he seriously mistimed his early 1970s investments by about 2 years. I have heard him admit that freely or prior CNBC interviews.
Joe

Sean

"In the 25 years I've been in this business, I have never worked on or considered producing such a product. Why? It is a waste of time. Like all things in nature, wave theory grows, expands, evolves. Computers can only do what they are told. They can't think, reason, deduce, induce or adapt. ... As a result, spending the time to learn Elliott Wave and NEoWave concepts is easier, more useful and more effective than spending years trying to get a computer to understand, interpret, label and forecast the future based on past standards of behavior."

I never followed Neely, but this statement really reveal that he is a snake oil salesman, bitching everything else and touting his "River Theory". He made too many conflicting statements to sell his River!

Why? Here are the principals through centuries, and even today we are trading by Livermoore rules:
1) Human Nature Never Change. Same game and bubble has been blown and collapsed before, CENTURUIES. Never change

2) This is why we have Technical Analysis, because Human Never Change. TA capture the flow with clear support/resistances and pivot points. How good is your system is another topic.

3) If Human Nature Evolve constantly, then There will be No TA, No Elliot Wave, No River. And NO Subscription to sell. :)

But somehow Neely is soooooo smart that he think Human Nature constantly Evolves, and only his subscription River can catch that? Fxck Him x10!!

Michael

"I'd remember that Buffet is not very good at timing markets - he is good at being a long term investor. His view that the US will be stronger in 10 to 30 years I can certainly agree with. But it is equally true that he seriously mistimed his early 1970s investments by about 2 years. I have heard him admit that freely or prior CNBC interviews."

True.
But my point was that he would not be making such an acquisition right here in Q4-2009 if he thought that the domestic and global economies were about to go back down the tubes "P3" style . . . Otherwise, he would wait for a less expensive acquisition price. The fact that he has made this move now speaks volumes about the economy, in my opinion.

Steve

>Otherwise, he would wait for a less expensive acquisition price.

Same question was asked previously. CNBC video clip.

Buffet said he knew and would not wait.

joe

What do you guys make of Bill Gross heavily buying long term US Treasuries - it has to be grounded in his view of dollar strengthening, doesn't it? I know he expects yield curves to tighten, but if they do, that should propel the dollar anyway.

He must be betting of the dollar, at least indirectly.

Dollar does keep going up despite reason - up again today.

Joe

twitter.com/DrBubb

"USA stronger in 10 years?"

It is not impossible, but I reckon it is highly unlikely, so long as:
+ Malinvestment and financial speculation are the main "engines of growth" in the economy,
+ The government is wasting trillions of borrowed money propping up faltering industries,
+ Productive parts of the economy are set to be taxed at higher rates.
+ US dollar Oil prices are being driven higher by rising consumption in Chindia, while the dollar loses strength,
+ The US has not even begun to hack away at the source of oil addiction, a massively inefficient suburban living arrangement

I live in Hong Kong, and I know what an efficient wealth-producing economy looks like. The US doesn't have one. Until political and business leaders start addressing ALL the real issues (see above), the US is on a one-way path to wealth destruction.

Rodney

If the news "Storm" comes it will probably be in waves. And those waves tend to follow fractions as created by the ratio of consecutive fibonacci numbers. I believe fibonacci numbers were discussed previously but the are the result of rabbits mating, for example.

1 rabbit.

1 rabbit

mate = 2 rabits


plus child = 3

mating plus child = 5

then 8 then 13 etc.

FIBONACCI NUMBERS ARE THE KEY TO THE MARKETS. The limit ratio is .612

This is the "Golden Mean of the Ancients" and the reason that wehn Robert Prechter says "We are about to crash!" he has actually fact-based math and not some weird theory to back him up. He uses ratios to help determine whether we are in a subminuette or grand wave or "GRAND WAVE III" for example.

I have subscribes for many years to Elliott Wave Forecast by Steven Hochberg and Robert Rougelot Prechter. IT IS THE AUTHORITY!

Prechter saw this coming and you can, too. They have a website

www.elliottwave.com

and they are filled with interesting tidbits about modern culture and politics. THEY SAW THE HILLARY CLINTON THING COMING YEARS AHEAD OF TIME! How? They use Fibonacci and Socionomics applied to Elliott Wave reason/cause and effects of mass psychology.

Prechter was, of course, a Yale psychology major. He has the creds. He will be right once again!

min

Michael;

Tracking with you on no P3.

Scary correction (too some) yes.

Prechteric Armageddon P3 no.

Although a strongly uptrending market is still a few years away in my books.

Frank C

What are people's thoughts on the relationship of these fibonacci numbers (like 13 and 55) to the cycles of human behavior bettern known as Elliott Cycles?

Yelnick wrote to "stand aside". Is this what the patterns suggest?

Happy trading.

Frank

Free

" look at how his bets turned out during the crisis." BETS? Didn't he LOAN the gov't money and a guaranteed rate? A great rate if I remember right.!!

Buffet bought a lot using his own money as well. I get the feeling he is in the loop with the bankers and Fed.

Rubb M.Y. Loins

Hong Kong isn't an efficient economy, it's a sheeple hive —different dynamics all around.

Frank C.

>>Buffet bought a lot using his own money as well. I get the feeling he is in the loop with the bankers and Fed.<<

'Ya think D'Freebee 'ya Think?


Michael

"Buffet bought a lot using his own money as well. I get the feeling he is in the loop with the bankers and Fed."

You clearly have no idea about how Berkshire and Buffett work. Buffett has access to very cheap cost of capital due to his insurance companies (annuities). That's what makes the Burlington Northern acquisition make sense, even though he paid 18 times earnings for it.

philippine fred

Buffet was down 40% by March 2009 so is that genius.....only right that the old chap should buy very close to the secondary peak if it is, the past bull geniuses get carted through the streets during the following bear market, few know when its time to leave the table.

What I found interesting is the latest m armstrong ditty where he says that ALL the corporate bond index defaulted in the 1930's, that is rarely mentioned.

Free

You clearly have no idea about how Berkshire and Buffett work. Buffett has access to very cheap cost of capital due to his insurance companies (annuities). That's what makes the Burlington Northern acquisition make sense, even though he paid 18 times earnings for it.

-----------

I was not refering to Bershire's purchases. I was refering to Buffet's personal purchases. Got tired of bashing Prechter that you have moved on to other folks as well? Or trying to shift focus from being bashed by some of the folks here? :)

Free

Buffet was down 40% by March 2009 so is that genius.....

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

Perhaps you're refering to his purchases through Berkshire?

We won't know what his personal purchases are, and how well they are doing.

http://seekingalpha.com/article/100599-buffett-likes-to-be-early-don-t-rush-to-follow

DG

You clearly have no idea about how Berkshire and Buffett work. Buffett has access to very cheap cost of capital due to his insurance companies (annuities).

I'm assuming you mean "annuities" in the broad sense of recurring premium payments which provide a steady cash flow stream, because Buffett doesn't play in life insurance in any major way, which is the industry that actually provides annuities.

In any case, it's not as if Buffett can just take money from his insurance companies and use it for purchasing other companies. Those insurance companies need to have reserves set aside for claims and need to be mindful of the relationship between those reserve ratios and rating agency ratings. Even if he were to substitute Burlington stock for cash in those reserves, the NAIC would lower his RBC ratio because equities never get valued the same as cash or bonds in that formula.

DG

Hong Kong isn't an efficient economy, it's a sheeple hive —different dynamics all around.

Posted by: Rubb M.Y. Loins | Tuesday, November 03, 2009 at 10:43 PM

That sounds kind of racist. Are you trying to say that Asian people don't do anything but follow the herd?

DG

Michael;

Tracking with you on no P3.

Scary correction (too some) yes.

Prechteric Armageddon P3 no.

Although a strongly uptrending market is still a few years away in my books.

Posted by: min | Tuesday, November 03, 2009 at 05:28 PM

I've never bought into the idea that we ever had a P1, so I agree no P3 on the horizon. We could still get new lows, though.

Michael

"I was not refering to Bershire's purchases. I was refering to Buffet's personal purchases. Got tired of bashing Prechter that you have moved on to other folks as well? Or trying to shift focus from being bashed by some of the folks here? :)"

Are you one of those college kids that I was talking about the other day that have nothing better to do but post on a website about Elliott Wave Theory and fantasize about being a real live TRADER using real money instead of "Monopoly" money?
I mean, how else could any ADULT misspell the word "referring"?

college kids

>Are you one of those college kids

William Ackman, Bill Gates, Michael Dell, ...
They were all college kids when they made things different.

It's not about age, but your brain.

If you still do not know.

Ronald

Actually, Buffet's gains were closer to 38%. 34 is a Fibonacci number. Coincidence? There is no such thing!

Fibonacci numbers are truly everywhere. Remember Baskin Robbins? 31 flavors PLUS vanilla, chocolate, strawberry. 34 ON THE DOT! And I doubt the owners were thinking "Let's do fibonacci number." It just happens.

EWT has had an intersting expose on the appearance of these amazing numbers and their existence continues to inform PRechter's analysis. Check it out. It's only that sort of "outside the box" thinking that let's you call this GRAND SUPERCYCLE crash/end the way PRechter has. Impeccably. And he still has not received much credit from the mainstream press.

Suggest you read "At the Crash" and "Elliott Wave", which might be free with subscription.

Happy trades!

Rubb M.Y. Loins

"EWT has had an intersting expose on the appearance of these amazing numbers and their existence continues to inform PRechter's analysis. Check it out. It's only that sort of "outside the box" thinking that let's you call this GRAND SUPERCYCLE crash/end the way PRechter has. Impeccably. And he still has not received much credit from the mainstream press.

Suggest you read "At the Crash" and "Elliott Wave", which might be free with subscription.

Happy trades!

Posted by: Ronald | Wednesday, November 04, 2009 at 09:21 AM "

Mr.Ronald McDonald I just want to say that your Ronald McDonald House is truly amazing. It has been a fibonacci 21 years since its inception and has only gotten better. Well done sir.

But Mr. McDonald sir, regarding Proctor, the press did give him a lot of credit:

In 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, except his timing was off a fibonacci 13 years.

He is right about these numbers appearing a lot though. I don't think he set out to be calling a top so early do you?

Rubb M.Y. Loins

"That sounds kind of racist. Are you trying to say that Asian people don't do anything but follow the herd?"

Nah. The thought never crossed my mind. Everyone knows the Chinese are true inovators they invented fireworks and paper money for gawds sakes.

Well ok they are presently a little bit rusty but it's all good give them some time.

Mamma Boom Boom

Mr. Loins, I can see your quite a learned man. Let me ask you, have you any conclusions on Michaels apparent life long background as a Troll on Yahoo message boards? All thoughts would be appreciated.

Rubb M.Y. Loins

Ahem, Ahem, yes, yes, I am quite a learned man aren't I.

Well, first of all let me say you need to learn the proper use of th word "your" which is a possessive pronoun old chap.

As opposed to "you're" which is a contraction of "you are" —quite alright quite alright you just do it so often I thought I'd point it out, no harm in that I hope?

Chinese

>Everyone knows the Chinese are true inovators they invented fireworks and paper money for gawds sakes.

Chinese drywall as well

Mandarin

They also do killer illegal software copying

Michael

Enough said

DG

Nah. The thought never crossed my mind. Everyone knows the Chinese are true inovators they invented fireworks and paper money for gawds sakes.

Well ok they are presently a little bit rusty but it's all good give them some time.

Posted by: Rubb M.Y. Loins | Wednesday, November 04, 2009 at 09:49 AM

Can you tell us the jokes about how blacks like watermelon and fried chicken next? Sheesh.

Rubb M.Y. Loins

I don't know that one perhaps you could elaborate?

DG

I don't know that one perhaps you could elaborate?

Posted by: Rubb M.Y. Loins | Wednesday, November 04, 2009 at 10:40 AM

Oh, a specialist in anti-Asian racism, I see. Good to know you don't have a prejudice against every ethnic group, I guess.

Ned Bushong

As a proud gay man I don't appreciate these kind of jokes

Mamma Boom Boom

I thought the new setup was suppose to eliminate these fools.

twitter.com/DrBubb

"Hong Kong isn't an efficient economy, it's a sheeple hive —different dynamics all around"

Rubb, I dont know what that means, but it is an intriguing soundbite.

Wealth is being generated in HK, and not much in the US these days. And it is taxed lightly here too. It seems like most US wealth is squandered in transfer payments and malinvestment. And US leaders are focussed on all the wrong things, like pleasing voters who are clueless about the longer term challenges their economy is facing. So welath will goin on being destroyed until American people wake up

Mamma Boom Boom

>>So wealth will goin on being destroyed until American people wake up<<

Bubb, it won't happen.

Rubb M.Y. Loins

Bubb why don't you think it will happen?

Ron

Whoever said Prechter gets attention in the press is kidding himself. Prechter has been denigrated by the media and buried behind "hot" "in vogue" lightweights like Jimmy "I love commodities" Rogers and Nuriel Rubini. Prechter, as far as I'm concerned, is the only one who has nailed this market, and not just recently.

He wrote "Elliott Thoery" in the 70s! He predicted the great bull market AND the great GRAND CRASH III that we now experience. So he is not permabear. He uses Fibonacci numbers, which to my knowledge no one else uses because

1) they do not understand them

2 they don't want to

OR

3) They have no sense of imagination and curiosity

Fibonacci numbers are not just random ordinary numbers like 6 or 19. They appear AGAIN and AGAIN... in swirls, whorls, mass action, psychology (Prechter is a Pscyh Phd or Masters I believe?)and, yes, the stock market. Ignore fibonacci numbers at your peril.

IF you are not mathematically inclined (even if you are) I urge a subscription to the EWT as a way to gain insights into the way these amazing numbers appear again and again in the stock market and, more importantly for those who want to make money, what they tell us about the future.

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