Interview with Glenn Neely: The Long Term Market

Glenn Neely has provided some recent audio clips on his site which lay out both his current views and his longer term market view. You can listen to them here:

Glenn Neely on Gold

Glenn Neely on "2012"

Glenn Neely long term view

The primary chart discussed is from his Jan08 Monthly Update, which is below. You can also download here: Download NEoWave Jan2008 chart.
For those not familiar with NeoWave, the reason this isse came out in Jan08 is that under NEoWave rules, the call of the end of the bull market from 2002 was not made until it confirmed the break down. This also gave Glenn superior knowledge of the form and duration of the subsequent change of trend. 

We of course followed his red line down and broke the 2002 lows. How might this now unfold? Glenn sent me this second chart, which shows a potential triangle unfolding. In the simplest view, we are in a four or five year bear market, which goes from late 2007 towards bottoms in 2011 and 2014 (or thereabouts). Glenn's interviews talk about how after the next drop we *might* get back to recent levels but only after inflation makes them worth less.

Comments

[graspthemarket]

Very interesting. Thanks for posting thing. I need some time to digest this material. Thanks again.

Jason

[Glenn Loser Neely]

What a loser!!

Just hear the voice of this loser!!

HIS SERVICE SUCKS!!!

[Roger D.]

I beg to differ, the 2002 top was the orthodox top of supercycle wave 5 which is actually marked A. The market then traced out wave A down bottoming in 2002(marked B) and then wave B up in 2007(C), down to 667 low(D) and finally a 5 wave thrust up here currently(marked E) in a large triangular top.

Now what follows is a historic crash wave, bottoming in about 6 months time at about 350-375.

We will then bottom and rally in three waves back to about 550 and then start the final wave down to about 200. After that I see a sideways choppy market till about 2015-16.

Cheers,
Roger

[Roger D.]

I beg to differ, the 2002 top was the orthodox top of supercycle wave 5 which is actually marked A. The market then traced out wave A down bottoming in 2002(marked B) and then wave B up in 2007(C), down to 667 low(D) and finally a 5 wave thrust up here currently(marked E) in a large triangular top.

Now what follows is a historic crash wave, bottoming in about 6 months time at about 350-375.

We will then bottom and rally in three waves back to about 550 and then start the final wave down to about 200. After that I see a sideways choppy market till about 2015-16.

Cheers,
Roger

[MHD]

The biggest credit bubble in history, more debt than you can imagine(and growing ever faster), and the worst is over at S&P 667. Dream on all you ewavers. Even Tony C. has become more bullish in his long term outlook. Only a couple of months ago Tony was looking for 400 on the S&P sometime in Mar 2010. Neely not too long ago was looking for 400 also as a potential bottom.
Other ewavers I follow are more in the EWI camp.
Anyone who thinks the worst is over and the low is in, with a country that has as much debt as the USA, must be high on some of the best stuff ever grown.
Neely has a hard enough time predicting short term moves, let alone long term targets. Out of curiosity, I followed him for years and was not impressed, and would not trade his views short term or long term.
Has Yelnick also become less bearish? I believe your preferred target was also around S&P 400.
One more point about Tony C. I think he was predicting Dow 30,000 as the market was near its high. Then Tony thinks S&P at 400 by March 2010. Then S&P around 667 by June 2010.
I could also go on and on with Neely, but why bother.
This is... in my opinion, just a bear market rally (reinflate that will fail).
Ludwig Von Mises will prevail! Sadly, the USA is on a path called insanity.

[Roger D.]

Let me make the correction here:

I beg to differ, the 2000 top was the orthodox top of supercycle wave 5 which is actually marked A. The market then traced out wave A down bottoming in 2002(marked B) and then wave B up in 2007(C), down to 667 low(D) and finally a 5 wave thrust up here currently(marked E) in a large triangular top.

Now what follows is a historic crash wave, bottoming in about 6 months time at about 350-375.

We will then bottom and rally in three waves back to about 550 and then start the final wave down to about 200. After that I see a sideways choppy market till about 2015-16.

Cheers,
Roger

[yelnick]

MHD, my view is that manias retrace to their start, which likely means around the 1994 levels (Sp400, Dow4K). But I don't expect it quickly; more like around 2011 at the earliest and 2014 more likely. Next year may simply retest the 2002 or 2009 lows, and then bounce; but 2011 is likely a lower low. In the near term I expect a Santa Rally, which most likely ends in early Jan but could keep running into Feb. I have also seen a reasonably prediction of it running into May/Jun.

Like you, however, I expect the Austrian Chickens to come home to roost. You can postpone the deflationary depression that follows a credit bubble, but not bubble your way out of it. Instead every reflation attempt deepens the eventual denouement.

We are living in a macro-economic petri dish right now. First Greenspan then Bernanke have tried to prove that massive liquidity can bridge through the credit crunch following a bubble. Greenspan;s bet was lost in 2008. Bernanke's is likely to be lost in 2011.

[MHD]

Yelnick, I wanted to also thank you for posting info on Karl Denninger. I started to follow his posts about a month ago and find him very interesting to read. He's like a super BS detector.

[ted]

There's maybe 4-5 people who subscribe to his site...nobody cares what he has to say...just look at his Alexa ranking for his website..it's 1.5 MILLION. That means NOBODY CARES. No matter how you dress things up the Alexa ranking can tell if hes getting subscribers, and it's not looking good.

[ted]

This is the site that people care about these days:

http://Elliottwave.info

[KRG]

Ted: Subscribers donot need to visit his site as they get e-mails.

If you have any doubt on whether anyone cares what he says, take a close re-look at the above chart of January 08. If that doesn't convince you (or any other Elliott enthusiast) of the power of his theory, then please let us know any other alternate methodology that can produce such forecasts

have a good one; cheers

[ted]

Neely bastardized Elliott Wave with that "Neowave" garbage. None of that XYZ crap ever works. As much as I hate Prechter, I'd rather listen to Prechter than Neely

[MI]

What a waste of time?

I feel sorry for anyone following anything related to Wave. The fact is you can label any randomly drawn line anyway you want all the time.

[DG]

ted,

I have almost 60 Neely subscribers who also have asked for access to a subscriber-only blog I run. All of those people heard about my blog through Yelnick's blog, which is where I gave the info on how to get an invite. So, whatever percentage of Neely subscribers there are that visit Yelnick's blog, I have a percentage of those and that's 60 people. I have a hard time believing that even 1% of Neely's subscribers are also subscribers to my blog, which means that I would put a realistic number of subscribers for his services at 6,000.

Then, if you go here, you'll see that Neely's freebies get more downloads than anyone else.

http://www.traders-talk.com/mb2/index.php?showforum=45

There are quite a few traders who value Neely's advice.

MI,

The fact is you can label any randomly drawn line anyway you want all the time.

No, actually the fact is that you can't do that.

[DG]

KRG,

If you have any doubt on whether anyone cares what he says, take a close re-look at the above chart of January 08.

Not only was the January 2008 call a very timely one, anyone who knows Neely's work will also remember that it was one of really only three times he was bearish after the bottom in 2002. He got sort of bearish in the spring of 2006, then reversed himself after a decent drop that didn't have the speed and depth he was looking for, and got bearish after the big drop in early 2007. It took him a while longer to get bullish after that drop, but he did.

I say that because even if Prechter called the top in January 2008, it was one of a dozen or more calls for a top he made along the way, whereas Neely rightly saw that despite some speed bumps on the way to new highs, that's where it was going.

[JT]

And what has Neely done for 2009 besides getting tremendously "whip-sawed" because of his inability ( as you have said on several occasions ) to EXECUTE?

[MHD]

DG.... I guess your faith in Neely will be tested within the next couple of years. To me, Neely's longer term outlook is the least likely outcome. We are either in another V shaped recovery and 667 will not be revisited, or total disaster is about to happen with a break of 667, and much lower lows to come. The biggest credit bubble in history should see A down, B up, and C down to lows below A. The pattern Neely displays would mean this credit bubble blowup is really minor, as well as the real estate mess. Believe that as you will, and good luck! I think you will need it.
Also, not long ago Neely was looking for 400 on the S&P. Then as the market marched higher, Neely said this was an even worse omen for the markets, as his fast decline to 400 would take longer, as in slow grind, and meant that the economy was in worse shape than he thought. Now he has changed again and new lows are not in the charts. If your views of the market change so often, do you really have some theory that works more than it fails, or is it really a guessing game you are playing.
At least with EWI, they give reasons why they think a certain event is about to happen.

Trading or investing by using wave theory....may the luck be with you. As MI said in a previous post, you can label a pattern many ways and one will probably be right. The question is which one.

[DG]

JT,

Yes, 2009 has been a bad year for Neely overall. But, let's put that in perspective. I went back and looked at Neely's performance since the market really turned down hard in the Fall of 2008. Since August 18th, when Neely entered a trade on the basis that a huge drop in the S&P was about to happen, he's up from 22% to 32%, calculated from his trading and stop movement recommendations, depending on which of his timeframes you use for your trading. In that same time period, the market is down 14%.

2009 YTD, Neely is breakeven to up 6%, again depending on the timeframe, so he's underperforming and has missed a big rally. As I've also said, the irony of it is that he had his subscribers go long on March 9th. Had he just stayed in that trade, we wouldn't even be having this conversation because all of his subscribers, including me, would probably be retired.

Typically, when looking at trading methods, you'd want to select the method which had a longer-term positive track record and be more wary of short-term outperformance, which anyone will tell you is more likely to just be random noise.

[DG]

MHD,

I am not a huge fan of that longer-term count, either, quite frankly, so I don't feel any particular need to defend it. When Neely first came out with that count, I wrote out a rather long post on my blog about what I thought was specifically wrong with it. I do think that C should go below A. But, all that will be revealed in time and the important thing is to be prepared to catch the reversal off the top of B, since C will be a minimum of 38.2% of B, which is already implying a move of nearly 200 ES points.

If your views of the market change so often, do you really have some theory that works more than it fails, or is it really a guessing game you are playing.

I'm getting tired of repeating it, but the only way to know the answer to this question is to do your due diligence. I've done it, but feel no need to provide it to you. You don't think I know what I'm doing? Fine, that's your right. All I will say is that I think it is seriously short-sighted to make a decision about a trading method based on a couple of calls over a couple of months when that trading method has a 25-year track record. Perhaps you can explain that one.

As MI said in a previous post, you can label a pattern many ways and one will probably be right.

No offense to MI, but I don't really care about what he says. His post shows absolutely zero sense of having even done the most rudimentary due diligence into wave theory versus other forms of technical analysis or the different types of use of wave theory for trading. I might as well as the next person I run into on the street what he thinks about wave theory.

[Hockthefarm]

Interesting thread. Seems both Neely(I've never followed) and Prechter are both calling for deflation for the next 5 years.

That would be complete suicide for a government whose only focus is asset inflation by any means. When people had to work hard just to eat, government control was easy. Folks didn't have time to bitch and force change. Today, government has switched to massive debt obligations to keep folks in line. Volcker speaks to it here:

Volcker: What complicates this situation, as compared to the ordinary garden variety recession, is that we have this financial collapse on top of an economic disequilibrium. Too much consumption and too little investment, too many imports and too few exports. We have not been on a sustainable economic track and that has to be changed. But those changes don't come overnight, they don't come in a quarter, they don't come in a year. You can begin them but that is a process that takes time. If we don't make that adjustment and if we again pump up consumption, we will just walk into another crisis.

SPIEGEL: As chairman of the Economic Recovery Advisory Board, you advise President Barack Obama on how to prevent such a recurrence. Is he following your guidance?

Volcker: We have various working groups that work on and make recommendations on particular problems like retirement programs and social security. We made some recommendations on financial reforms which were not accepted, but that is part of the game. The president is more eloquent than I can be on these issues. Getting it done as compared to talking about it is a problem, but we have some suggestions along that line.

SPIEGEL: The U.S. has not yet instituted any kind of reform policy. What we see is the government and the Federal Reserve pouring money into the economy. If one looks beyond that money, one sees that the economy is in fact still shrinking.

Volcker: What should I say? That's right. We have not yet achieved self-reinforcing recovery. We are heavily dependent upon government support so far. We are on a government support system, both in the financial markets and in the economy.

Bottom line is that Obama is doing everything to sustain the asset bubble and drive consumption. If N&P are correct, Obama will fail big time as will equities and asset prices. If N&P are wrong about deflation for the next 5 years, I'm sure they will be dismissed completely, as they should be.

I do know that the Prechter group has been calling for a top in gold for at least 6 months, and for a strong multi year run for the dollar. You can only drive with the rear view mirror for so long. At some point they will be dismissed if their views prove to be inaccurate.

Hock

[joe]

Yelnik – I am beginning to doubt the Santa rally is very likely.

Firstly, it appears to me that part of that rally at the end of last week had a lot to do with Dubai World – that someone knew that Abu Dhabi was going to pay up and not let those bonds start to implode. The rally in our market coincided with the dramatic up tick in those junk bond prices. Even last night that payment was reported as doubtful – and then the news.

Secondly, if Goldman Sachs is going to get the bonus payments in stock, they have a vested interest in keeping the price as low as possible – until they get the stock. Goldman’s example may be followed by others in the finance community.

Thirdly, there was no dollar dump again this weekend. It did pull back a little but certainly no crushing move. If Roger is right (and I think he is) it has already pulled back overnight to its likely retrace and would be moving towards 77 now.

Fourthly, there will be tax selling now to cover off the short term gains made since the March rally. If it happens with any volume (and there has been very little volume lately) it could start something. It was an unusual year with such a strong rally – there would be more motivation to sell losses into the year end than normal IMO.

Mainly, I just think too many people expect the Santa rally to happen for it to actually happen.

Joe

[yelnick]

Joe, think of the Santa Rally in wave terms not cyclical terms. I will do a high level post to discuss.

[vipul garg]

Gold has to go below 800$ to give evidence of a long term 'deflationary ' scenario if gold and deflation are co related.
i have little clue myself on the linkage but people all around do talk like that.

now it will take out of the world catastrophic event to make spx break the lows of 667.the floor is established at 750 levels.

[DG]

now it will take out of the world catastrophic event to make spx break the lows of 667.the floor is established at 750 levels.

It seemed like the 2002 lows would take a world-catastrophe to break, too, but all it took was a couple of bank failures! If we look back and connect fundamental events to the initial leg down, we primarily see subprime real estate as the big story. Well, the next real estate story is going to be prime loans, which is much bigger than subprime and impacts far more in consumer spending, employment and bank balance sheets.

If the low was in, I think the FASB would already be forcing banks to mark to market their mortgage securities. In fact, they are talking about extending the moratorium on those marks.

I still think we should see 500 to finish wave-(C), which satisfies "degree" and "pattern implication" issues that are not satisfied at the current lows.

That said, aside from Neely himself, vipul is the NeoWave analyst whose opinions have the most weight with me. Finding myself in disagreement with them both doesn't make me happy. But, as I said above, I care about catching a reversal of wave-(B) more than I care about the forecast of how long wave-(C) will be.

[vipul garg]

DG:
But, as I said above, I care about catching a reversal of wave-(B) more than I care about the forecast of how long wave-(C) will be.

thats the important thing and the focus.its worth a lot of trading money.

[trader]

nice charts.. zero substance Neely....nie try :)).. keep working at it...

[DG]

nice charts.. zero substance Neely....nie try :)).. keep working at it...

Posted by: trader | Monday, December 14, 2009 at 09:52 PM

I have my criticisms of Neely over the past 9 months, but that anyone could say that his call for a possible break of the 2002 lows in January of 2008 has "zero substance" is odd.

What would he have to have said in January 2008 for you to consider it "substance"?