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« Prechter and the Long Term Count | Main | Cramer Has Another Monica Moment »

Tuesday, January 19, 2010


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You sure assume China can maintain viability as a country for a very long time (for ten more years).

I strongly expect to see China in open revolt before the end of this year. You seem to believe the next great war will wait for some time - all signigicant wars fought in the last 160 (post the industrialization years) errupt with 7 years of an economic collapse. One can look to Revolutionary pariods of military History forward or key - as I do in the events of the past 160 ears that envolved American as the signigicant power, The average interval between the financials collapse and the opening gunns of the world war are between 6 and 7 years - the avergae being 5.5 years/

A long time ago in grad school - calculated that when China failed to deliever 7.5% sustained grotwh that they would become the posterboard kid for the next national war. I postulate that if truly had such growth they wouldn'y needed these cyperspace shut downs and thath they would not be occuring like this. I strongly doubt the the numbers they produce are anything more than scribbles on a paper.

In short - they are now or will be missing that quota that the Wen goverment needed when he assumed power - as the compromised candidate is is trouble - so will go China.

To put it another way - they are just a culture bomb waiting to implode.

PS - I calculated the expected death tolls inn the KV World War would kill about 580,000,000 people and will being in the last area of theiiScnd wrols was that failed to get resolution fro th end of it - so for get the mddle ease or europe. World War Three is like to start in the countries involved in the CHina Burna Theater, - ie CHina of India and a


PS - I calculated the expected death tolls in the IV World War would kill about 580,000,000 people and will begin in the last area of the II Secnnd wrolds war that failed to get resolution from the end of it - so for get the mddle east or europe. World War Three is likely to start in the countries involved in the CHina Burna Theater, - ie CHina or India because is thye last truely unresolved major areas of the war to be so "left hanging" so tp speak.


vipul garg

'errupt with 7 years of an economic collapse'-- joe

"ie CHina or India because is the last truely unresolved major areas of the war to be so "left hanging" so tp speak."-- joe

joe, so where do u see the economic collapse ?
and i dont think you ve been to india ever or lately.
i can tell you that no major war is going to errupt in india or because of it.


Yelnick: I have felt that the porous southern border was mostly purposeful.
We need a hardworking low wage force, to stimulate our economy.
Although most of these folks do not pay taxes, and people complain that they are drain on our economy - I think the drain is more than balanced!

Also those immigrants (mostly illegal) from the south, keep our population from decreasing. They will further be used in the military, providing citizenship for enlisting.

Unfortunately, as the recession (depression) worsens, these immigrants will become scapegoats for all that is wrong in the U.S.

Hadn't thought about it, but your China comments seem spot on!


Yelnick: Another great article - insightful and full of stimulating ideas.

Pulls us out of the humdrum of daily economic news and starts us thinking long term.

MHD far as Ewaves are concerned, where do you find problems with Tony C. and Neely's views? As you know, their outlooks forecast that the worst is over even though lower prices are headed our way. How the blowup of the biggest credit bubble in history is over and we are on our way to new bull market highs is hard for me to swallow.
I might also add that Bob P. predictions would be much more accurate if the government had done nothing and let the markets alone. Tax credits, stimulus all over, trillions spent here and there, bailouts all over the place, and you delay the collaspe for a while. Bob P. makes a fool of himself quite often with timing, but his long term macro views will probably turn out correct. If the predictions in his book come to pass, that is where he gets his Dow predictions on price , whether you think he is too pessimistic or not.


Looks like Tony's counts are confused. One of his counts was blown up after yesterdays rally so his other count should be the correct one with wave 5 to come. But the markets are not cooperating as we have now in one day gone below wave 4. So unless Wave5 exceeds Wave 3 by less than a point and Wave 5 lasts for one day, then I think this Ewave specialist is banging his head very hard!!!!


Tony will probably have this decline as a Wave 4 in progress with Wave 5 to come. I'm sure that when he changes to that count, that soon after he will change that count as well. As long as I've followed the waves it is rare that any current wave count is correct.
The only real interesting thing currently about all the Ewavers is that most have a bearish count, with some much more bearish than others.
If the bear market is over, than so is Elliott Wave Theory in my opinion. The macro picture should prove the Ewavers correct, but the market is at times insane as it is now, so who knows.



"You sure assume China can maintain viability as a country for a very long time (for ten more years).

I strongly expect to see China in open revolt before the end of this year."

Are you living very long time in Asia or China? If not, your expectation or calculation would be simply groundless and will be proven WRONG by the end of the year!

Do you want a bet?



"joe, so where do u see the economic collapse ?"

The collapse occured in September 2008 and was or is (depending on how you look at it)impacting world wide. The last war left two significant smouldering political issues that resulted in the British freeing India and then the India/Pakistan break-up and of the communist rise in China.

The "next war" does usually address the open issue of the last war - really - As Versaille ended in WWII.

As to the cycle - it is 3 to 7 years after a financial event. From an American perspective over the last 160 years you could look at the major wars this way:

Panic of 1857= Civil War in 1860
Panic of 1907= WWI in 1914
Depression 1930-1937= WWII in 1939 (or 1938 depending on how you look at it).

You can go back to the revolutionary period in the late 18th century and find a similar pattern if you want.

It appears to me that major wars follow significant financial events between 3 and 7 years after the event.

And I haven't been to India - been to Sri Lanka though.
I have no idea why that would matter.


After following Caldaro for some time I came to the conclusion he is a closet turtle. He can be right about the trend but can never spot the key turning points nor has much success even with the wave structure at higher degrees. I stopped following him when he failed to forecast the 3 of 3 of 5 in Sept of '08 which was obvious to even the most amateur of EW wanna-bes.

I provide this information not to dissuade from following Caldaro but to suggest you know how to use his information if your style is consistent with his.

Btw, out +18 pts short NQ and 120 pips long USD.CAD.


Very insightful Yelnick, welll written. China and India are both economies of the next decade for sure, although they will achieve greater heights in a completely different fashion. A mini 'social event' in China is inevitable probably sometime within the next 4 years, but will be a minor one. Real social unrest in China is probably at least a decade away. India will plod along higher at a gentler pace. And an eventual showdown between the two giants (with US & Russia taking sides) is very likely in the next two decades. Civil war/unrest in the americas/europe are more likely - not the time yet for Asia.

But i agree with you. There wont be another US for a long time to come! China's too closed, inward looking and homogenous. India's got too much historical baggage. But between the two, i'd place my bets on India for long term growth, and China for its volatile mix of possibilities.


Actually I hope you are right Torn.

vipul garg

And I haven't been to India - been to Sri Lanka though.
I have no idea why that would matter.

it matters when one says world war 3 is going to start from india.

i live here in india and i can tell you,india is on a trajectory that is relentlessly up and i am not saying out of a desire of being patriotic on a blog post.a war is simply not in any scheme of things in foreseable future.

a financial crisis/ recessionary times / prolonged period of low growths etc are hardly economic collapses .
in fact governments in most countries of decent sized economies have understood the need for inclusive growth, reducing disparities and so on.


Vipul - You can't envision a border dispute errupting with Pakistan, a conflict over Kashmir???

The financial events that seem to precede wars some years in advance do NOT necessarily start at the flash point. I mean no disrespect to India - but please don't tell me it is somehow issolated from the world markets.

And I did not say India exactly - I said somewhere in the old China Burma theater - a place where the war did not fully settle the political situations. That is where the flash point should be - if history is any guide.



Anon.... couldn't agree more with your observation.


"After following Caldaro for some time I came to the conclusion he is a closet turtle. He can be right about the trend but can never spot the key turning points nor has much success even with the wave structure at higher degrees."

I noticed this several years ago, as well.


If you have followed history of India, India has never went to war with any country in the last 3000+ years. Kashmir is a problem because India helped liberate Bangladesh and Pakistan wants to do likewise. There are too many issues there I agree but India never attaked any country before Independence or after. The non-violent struggle should justify the pacific nature of the people.

Pakistan is a failed state and its CDS trades twice that of Greece and worst than even Dubai. They do not have the resources to go to war.

I however see rising tensions between China and India over issues concerning Tibet and Ladakh, Arunachal Pradesh and Sikkim regions of India where China is trying to beef up military presence.


There is an old saying in China....

"Summer insects (died before winter) are not qualified to talk about Ice!"

We have quite a few here in this blog.


Rohit -

The mughals did.

And I would never underestimate the ability in war of India - to assume that since many are Hindus they are somehow more pacifist - I would point out to you that Christians are supposed to be very pacifist - take a look at what happened from the first crusade forward. DO you have any idea what the Christian pacifists did in Jerusalem then?

Look further than the past few decades of history -



MHD, we have what looks in the S&P like a rare expanding triangle fourth wave, or possibly a flat that started on the second peak. SP1130 is a line in the sand for the degree of this wave action. We might know by end of day today. Better way to use ewave is wait for the Bifurcation out of a wave pattern to confirm the new trend. We haven't bifurcated yet. Catching the precise top is a loser's game. Catching the trend change is how to make money


MHD, I think Neely's long term view is reasonable, but his wave count right now is a bit odd (a funny shaped triangle).


Yelnik - this thing was always likely to pull back below 1130. It almost certainly has to rally one more time and take out 1165 on the S&P before it can really fall.

I thought we had a similar count - do we?



Joe, that is a reasonable perspective (bounce of 1130, break at least 1158).


I noticed Yelnik you are always about 200 dow points closer to reality than my projections. I thought we got a tradable short at 10300 a number weeks ago - and your 10500 number turned out about right. I thought we could get pull back last week into expirations of 10400 or so and it was more like 10500+. You thought 10200 would hold and I thought it had to break to about 10,000 the time before.

You are good.

You know - if you charged to get on your site I'd pay for that before I'd ever pay Prechter.

Anyway - thank you for doing this site - I know you are not doing it for the money.



Goodness gracious, never went to war with any country for the last 3000 years indeed. Someone's forgotten the war with China, the war with Pakistan, the war with Hyderabad, participation in both World Wars, the war with Burma, and the endless conflicts between Viijayanagar, Delhi, Marathas, Kabul etc and that's just recent history. As for Hindus being pacifistic someone is getting his ideas of Hinduism from Hare Krishna, the influence of Hinduism in Indian politics is - as arguably with all religious political parties - extremely xenophobic and aggressive, with most all moderates being secularists. And don't kid yourself that in the independence era it was any better - it was much worse. Hindus, Moslems and Sikhs were slaughtering each other left right and centre, hundreds of thousands died amongst them Mohandas Ghandi himself, killed by a Hindu. Even during the Raj there was a continuing succession of religious riots and conflict. Once India and even worse Pakistan got their hands on nuclear weapons a nuclear holocaust became an inevitability. As with much else it's just a matter of time.


That is about right Wavist - and it is just a matter of time. Scares the shit out of me.


Ben Conner

great post. i certainly buy the thesis that the 2nd belle epoque has ended and that we are looking at years of instability. there is no precedent for economic growth on declining human capital. however, i wonder whether warfare is viable with column or v demography

Penny Stocks

It is really posted well and it is appreciative. Thanks

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