Dollar is Not Done

G20 seems to have spooked the US Peso, as it gapped down today and hit its recent intraday low (DX74.93) again three weeks into an aborted rally. The DX had broken its upper trendline, but fell quickly back below and now has not only stayed there (a false break) has now gone near the lower trendline. Ok, sometimes we see this sort of behavior near the end. Obviously watch the Dollar for guidance to equities.

Dow is off on a tear, but it had diverged from the other indexes by not breaking its lower trendline. Seems to be off to the 50% retrace at 10334. In the meantime the S&P is still below its recent high, and today snapped up to cover a gap at 1084.

I see a lot of readers are e-wavering. Understood, this market appears to have legs. I note that a lot of ewave blog sites have been flipping over the weekend. Interesting herd behavior! I am not ready to join the Weekend Wavers, however, and flip my view. I started the Zoran Project to see if statistical machine learning folks could validate (or invalidate) the wave principle and provide more objective guidance then e-waverers. The researchers are methodically looking into this, including looking at literature trying to see whether technical analysis has any higher predictability vs fundamental analysis. In the meantime will watch to see if the S&P stays lofty and invalidates the recent break down. 

Ah for a steady hand at the tiller and a bright light to guide us by!

Comments

[Michael]

Here is a great example of someone that uses Elliott Wave principles to chart the market, but who has VERY little market experience under his belt, and no "skin" in the game. He doesn't trade for a living, he simply writes a blog that attracts a lot of "perma-bear" losers that are constantly looking for a "crash". He's been a "Perma-Bear" for months and some feel that he is merely a marketing portal for EWI . . . and now he's turned bullish over the weekend. Hmmmmm... talk about a CONTRARY sentiment indicator if I ever saw one.

http://danericselliottwaves.blogspot.com/

http://kennystechnicalanalysisblog.blogspot.com/

This guy Daneric ( along with his buddy "Kenny" ) are some of the greatest CONTRARY sentiment indicators that I have ever seen in my 28 years of trading. The people posting on these blogs are incredibly dumb, but they will embrace the conspiracy "story" of the day in a heartbeat in order to make themselves feel better about all of their LOSING short positions.

These two "indicators" have been simply incredible. And whenever they have to abort their primary count for their "alternate" count, it is the biggest screaming BUY SIGNAL that you've ever seen!

Their continual bottom picking in the Dollar ( and top-picking in the S&P ) for the last several months has been one of several sentiment "indicators" that I have used to make a small fortune in the energy, coal, nat-gas, mining, and drilling names. These guys have been "Golden" in their ability to be absolutely WRONG for so long . . . Not sure if and when they will ever be right, but I'd like to send them a "donation" for being an incredibly CONTRARY sentiment indicator!

[olvster]

I wanted to thank you for your blog. I have been following it daily over the past year. What strikes me is that since the Government has been tinkering with the capital markets (directly and indirectly, through financial institutions and the Fed) there really is no rhyme or reason in the capital markets. Perhaps this explains why your projections are becoming more and more inaccurate? Can anyone doubt we are in a Depression?

[Mamma Boom Boom]

>>Understood, this market appears to have legs.<<

My favorite short term indicator is saying I should load up on puts.

[Hank Wernicki]

http://twitter.com/Frac_Man

[vipul garg]

Michael,
can you suggest me some good reads/exponents of trading systems based on moving averages/MACD besides appel, elder.

[Michael]

"My favorite short term indicator is saying I should load up on puts."

And what indicator would that be?
How often has this indicator given a sell "signal" and what is the average rate of return and duration of said signal? In other words, have you back tested this indicator over years of market history?

[yelnick]

Olvster - I am working on a post about embracing the W shaped recovery. In a W we should see positive numbers for a while, maybe as long as a year (3Q09-2Q10). It can fool the doom and gloom crowd. It does not mean we are out, but it means the massive global stimulus has an impact, which is no surprise.

[Ed]

You can add Neely to the group, he's now saying we are in for a large rally to 1200 S&P, then it will be a "good time" to short....Ha.

[DG]

You can add Neely to the group, he's now saying we are in for a large rally to 1200 S&P

If certain conditions are met.

Jeez, can people even report facts with the proper context? That's like the easiest thing in the world and yet seems beyond some.

If Neely said, "If I jump off the Empire State Building today, I will die", somebody would report it as "Neely says he's dying in the next 24 hours".

[vipul garg]

a break of 1093 will imply 1170-1200 levels on spx.
its time , law of averages since june caught up with neely!

[MachoMan]

As for your comment on ewavering, this is a tough spot for the counters. While most have jumped into the P3 camp following their fearless leader Hotchberg, some have not (granted they are in the minority). I'm not sure how many tops thy will call, but they and EWI will eventually get it right. Ignoring the dollar's demise and the strength it adds to the market is moronic. "They" will sink the dollar as far as the globalists will let them, and "they" are reaching that breaking point. Sadly the corruption that exists at the fed and with supporting the banksters is rampant. No "theory" works in this environment. Sound fundamental TA still works though. I think you need to avoid this herds mentality.

As for the post below regarding Daneric and Kenny, It is inaccurate and not at all factual. You should always be skeptical of people that write such degrading comments about others (especially form this one "Michael" that roams the web bashing these two and has been banned from both sites). I would recommend visiting those links that the poster provided. They don't get millions of hits cause they suck.

[JayJay]

"As for the post below regarding Daneric and Kenny, It is inaccurate and not at all factual."

And just what is it that was said that was not "inaccurate and not at all factual"???

I've visited those two blogs on a number of occasions and it certainly does seem to be a home for "perma-bears" that claim to be short 24/7 but haven't lost any money during this 60% rise in the market

[Ron S.]

I used to visit those blogs ( Kenny and Daneric ) and I think that Michael is pretty much spot on with his assessment. These guys have been extremely bearish for the last 200 points in the SPX and act as though they've never been hurt from being so bearish and short. They also have a very big tendency to allow their bias to creep into their analysis as they can be frequently found "fitting" technical indicators to what they hope and wish to see.

As for getting kicked-off their blogs . . . that's pretty easy to do if you've been making money as a Bull. They don't want to hear it. They only want people to post on their blog that drink from the same "Kool-Aid", subscribe to the same conspiracy and market manipulation theories, etc.

I doubt that any of these people trade the market actively. I also doubt that the majority of the people posting on their blogs have much market experience under their belt.

:)

[Ed]

From Neely an hour ago

"So far, the S&P is following the reddashed
projection line almost exactly.
That gives the “wave-(B) isn’t over”
scenario greater weight, which means
one more, larger rally is underway. If
correct, I would expect a top near the
1200 level. Optimism should get very
high by then, allowing us to go Short."

Says nothing about 1093, so there...Point being, he's calling for another 10% upside.

[Larry]

MachoMan = Shanky

Pretty obvious.
He's yet another one of these bloggers that drink from the same exact Kool-Aid that Kenny and Daneric do. He is admittedly a PERMA-BEAR and also writes a blog. But he claims to have not lost any money shorting the market, and claims to be an investment "advisor". But one look on Kenny's blog and he's found posting 30-40 times a day there. Not sure what investment "advisor" lives on an E-Waver blog.

Looks like he's come to their rescue here on Planet Yelnick. Hi Shanky!

[DG]

Neely is calling for further upside IF a specific condition gets hit. As of now, he's saying the market can go either way until it crosses one of two lines.

That's the proper context to put his update in. If we don't cross that line and then don't rally another 10%, you can't say he was wrong because he clearly made crossing that line a precondition.

Again, I don't understand what is so difficult about reporting facts and forecasts in context.

[Mark Anderson]

Today, I noticed that there was a poster who posted on Daneric's blog a factual post, citing that on Nov. 2nd, the CBOE put/call ratio spiked to one of the highest readings of put buying since the low back in March.

He was immediately flamed by all of the "Perma-Bears" and chased off the blog. They just didn't want to hear it. Michael is right. Reality is not rewarded on Kenny and Daneric's blog.

[TC]

The same thing happened to a poster last week who was of the opinion that news is important as a catalyst to the market. Kenny didn't want to hear any more of this poster's opinions and the questions that he posed to Kenny regarding how one might incorporate news into E-Wave. End result, Kenny "black-listed" the guy.

The poster then made a post on Daneric's blog today highlighting the fact that the "G20 Meeting" over the weekend was a catalyst for the Dollar falling to a 15-month low today in dramatic fashion, and Daneric deleted the guy's post.

If you don't drink from their permabear Kool-Aid, you get banned and black-listed. It's as simple as that. They post lots of pretty charts, but their interpretation of Elliott Wave Theory and its principles leaves much to be desired.

[G2]

I get the distinct impression that Daneric has closer links with EWI than he lets on as there's just not enough band width in the day to run the site, trade and have a full time, non-market related job all at the same time. And if he doesn't trade, as has been suggested, then what's the point unless he's receiving outside support?

[Anon]

The problem with standing in front of a 3rd of a 3rd is that it's a 3rd of a 3rd for EITHER direction.

[molecool]

Yelnick - are you getting my emails?

[David]

So Michael you've spent 28 year of trading and you are so successful that you spend your time posting on yelnick's message board.

Mhhhmmm ...

ahuhhh ...

sure.

If I spent 28 years of trading being successful I wouldn't be trading anymore I would be retired living off of an annuity.

That's OK, I understand the need to pretend. Whatever turns you on.

[Michael]

David,

Feel free to post your e-mail address and I will be more than happy to send you a copy of my trading blotter for the last several days, in which I have once again taken advantage of USD weakness to benefit from gains in ACI, BTU, CNX, and JOYG.

As a professional courtesy, I would expect you to reply with your trading blotter as well.

Thanks.

[TC]

"If I spent 28 years of trading being successful I wouldn't be trading anymore I would be retired living off of an annuity. That's OK, I understand the need to pretend. Whatever turns you on."

Hey David, did it every occur to your "pea-brain" that he might be managing a pool of money, and not just his own? Ever occur to you that he might be managing a fund or a family trust?

Sounds like you have much to learn.

[Dave]

TC
Sounds like you need to connect dots.

[David]

TC,

Yeah, a money manager who spends his valuable time posing on message boards. Last time I checked the successful one make more in in hour than rest of us make in a year.

Also if you are using Dan's and Kenny's sites as contrary indicators the most obvious thing you would never do is tell anybody about it. You wouldn't want to change behavior patterns now wouldn't you?

BTW: Thanks for the pea-brain comment your class act.

[David]

One observation on the XLF today. It stopped right at the point to the penny where it needed to to invalidate a minuet wave 4 up.

So, if tomorrow we reverse and close below the 50 dma on the XLF its still a valid 5 wave form to the downside.

Other than that bears have almost nothing to show for their efforts.

If we make new highs on the S&P then I would say the odds shift to P1 of C5 being the primary wave count.

[Virginia Jim]

1929-1987 Spiral Calendar Analog update. That's a wrap. DJIA closes above the predicted "final high" so the model is broken. It was exciting but it is failed. To boot, I haven't checked but price likely gapped above the lower ascending wedge trend line indicating the wedge morphs higher and possibly a blow off.

The scary thing is that this isn't a market reacting to internal market fundamentals. This is, IMO, the dollar carry trade. This appears to me to be the hyperinflationist's view of the government, most recently embodied in the health care bill, doing a stock split on the dollar. If that's a case, why try to chart the market? Chart the dollar.

Good luck everyone cause we (our children) are gonna need it,

Jim

[TC]

Jim,

Are you finally giving up on your "numerology" and coming around to trading off of the US Dollar? What took you so long???

And as for your comment on a stock-split on the Dollar . . . you are aware that the Dollar fell 40% during the time that Bush was in office, right?

[Michael]

"BTW: Thanks for the pea-brain comment your (sic) class act."

Dave, just as I suspected.
You conveniently ignored my comment about providing me your e-mail address so that we could exchange trading blotters. Why is that? Is it because you don't trade for a living and simply sit around surfing the Internet and getting into "pissing" matches that you have no clue about?

Seems like you're the one that is the "poser" my friend.

:)

[joe]

e-wavering - that is funny Yelnik.

It does feel like its a lock that the Dow would continue upward. That point is where you have to sell. If it feels right, do the opposite.

This dollar breakdown today - I wouldn't put a lot of stock in it (good pun?) - I am not looking for the $ to blast to the moon - just not fall anymore.

Your right of course, this is all about the dollar.

Another good post Yelnik.

Joe

[TC]

"Also if you are using Dan's and Kenny's sites as contrary indicators the most obvious thing you would never do is tell anybody about it. You wouldn't want to change behavior patterns now wouldn't you?"

You don't get it.
Those two blogging sites and their "followers" are about the closest thing that you can get to a fanatical religious cult. They will not be changing their behavioral patterns anytime soon. Spend a week or two on those blogs and you will see for yourself, the "cult-like" following. It's like Jim Jones and "Jonestown" all over again . . . only this time they have lead their followers to financial ruin.

[Kristian Damkier]

EW is dead. Prechter & Co. will have to eat their own recent predictions. Yelnick too has been far too flamboyant in his outspoken joy
of the 3rd coming to make ewavers rich on the costs of all the others. Hybris does not pay off. The more interesting question is this:
How come traditional EW cannot keep up with this market? It's a bull market and has been from March. Come up with something new
folks. As Bob Dylan said: Things have changed.
K.D.

[Brian]

Everything depends on tomorrow according to EWSTU.

[TC]

Agreed 100%

Once again, Prechter is admitting that there is "new evidence of an emerging buying interest for stocks". You've got to be kidding me? Where have these people been for the last 8 MONTHS???

They even go so far in saying that if there are strong market internals in tomorrow's session, then they will have to revert back to being in P2.

As Gomer Pyle used to say . . .

"Surprise! Surprise!"

[The Gondolier]

Virginia Jim,
I haven't given up on your theories. The Indu is too easily manipulated by the PPT and the SPX is far more indicative of a comparison with 1929 DJI.If the SPX can pull it off, you may have a chance at being right.

[chartman]

"..dollar is not done "... DUUUHHHH....the howling tonight on the perma-bears' sites... priceless!

[philippine fred]

common sense should prevail here that there is a low risk/high return trade staring right at you.

Short with full leverage today with a stop at 1101.37

You will either be dancing with delight in a few weeks or lost a few percent of your account and been stopped out over the next couple of days. You could also reverse to long at 1101.37

you could do the same trade for silver here as well

[Michael]

The SPX clearly showed a 5-wave pattern down off the 1101 high and into the 1029 low of Nov. 2nd. The Elliott Wavers are hanging by a thread on this rally in the SPX somehow being "corrective". If the SPX clears and settles above the previous closing high of 1097.91 you can literally throw EW out the window. That having been said, I wonder if all of the E-Wave bloggers will still be drinking the "Kool_Aid" then?

Right now, we are only 4.83 points away.
:)

[Larry]

Did anyone see how low the TRIN closed today?
.28

I believe that that is the lowest close for the TRIN since late March. Sure seems like the "beginning" of something, rather than the end of something!

[DG]

The SPX clearly showed a 5-wave pattern down off the 1101 high and into the 1029 low of Nov. 2nd. The Elliott Wavers are hanging by a thread on this rally in the SPX somehow being "corrective". If the SPX clears and settles above the previous closing high of 1097.91 you can literally throw EW out the window. That having been said, I wonder if all of the E-Wave bloggers will still be drinking the "Kool_Aid" then?

Right now, we are only 4.83 points away.
:)

Posted by: Michael | Monday, November 09, 2009 at 03:29 PM

I never had that labeled as a 5-wave move, so your blanket statement is incorrect.

[joe]

Short with full leverage today with a stop at 1101.37

I would consider waiting a little bit. If there is follow thru tomorrow - and hopefully is - then there could be a very good short entry available early Wens for maybe a couple weeks. I understand your stop level, but I'd consider rasing it a little bit if I were you. I wish you the best of luck.

Joe

[Hank Wernicki]

I wrote XXX on Thursday (6:49 am edt) warning of this rally with a target !

It was reached today ....... exactly !

No response yet ... maybe everyone was busy ?

Hank

chart is on the home page

"So it goes" .. Kurt Vonnegut

[DG]

I believe that that is the lowest close for the TRIN since late March. Sure seems like the "beginning" of something, rather than the end of something!

Posted by: Larry | Monday, November 09, 2009 at 03:35 PM

That is possible.

[Michael]

"I never had that labeled as a 5-wave move, so your blanket statement is incorrect."

Perhaps you didn't, but Prechter and Hochberg sure did.
:)

[Rob]

The concern I have about Wednesday is given it is Veterans Day volume will be extremely light and who knows how high they can take it.

However at the close today, Tony Caldaro said "short-term momentum ended extremely overbought."

[joe]

If it is flat or up wens AM and there is follow thru tomorrow - a big if - I am looking to sell wens AM.

Joe

[JT]

Of course short-term momentum is extremely overbought!
You don't have to be Tony Caldaro or a rocket-scientist to figure that out.
Geeez!

[DG]

Perhaps you didn't, but Prechter and Hochberg sure did.
:)

Posted by: Michael | Monday, November 09, 2009 at 03:49 PM

Yes, and maybe they'll finally get off their duffs and learn Neely's "Essential Impulse Construction Rules". It's only about 12 pages of text and has saved me many thousands of dollars in trades I didn't take because I didn't get suckered into thinking something was an Impulse.

[Michael]

DG, are you saying that Robert Prechter and his associate Hochberg give Elliott Wave Theory a bad rap and black eye?