Neely Joins the January Club, Calls the Top

Glenn Neely press release: the S&P 500 is forming an important top and is preparing for a multi-month decline.

Due to the substantial advance following March 2009’s low, many investors and analysts believe the worst of the economic downturn has ended. However, based on NEoWave theory, the opposite appears to be underway. The relentless, almost illogical advance of the past 10 months is coming to an end. This pending top will be followed by a significant 3- to 6-month decline, retracing 60 to 90% of the 2009 rally.

Comments

[cloudslicer]

Monday -> dollar down, stocks up.

Like clockwork.

[Hockthefarm]

Steve Keen is mentioned a lot by Dent. Here is his latest on Uncle Ben and the Holding Company:

http://www.debtdeflation.com/blogs/2010/01/24/debtwatch-no-42-the-economic-case-against-bernanke/

Dent figures the Dow must hold 10K or the top is probably in.

Hock

[Hockthefarm]

From Sy Harding's board:

"Speaking of their size, there are more than 8,000 banks in the U,S. In 1988, just over ten years ago, the four largest controlled 5% of bank deposits in the U.S. Thanks to the wild merger and acquisition binge thereafter, in 2009 the four largest banks controlled 35% of U.S. deposits."

H

[zendo]

Poor Neely.... seems like he is trying so hard to correct his previous erroneous June Top call.

I won't be surprise his multi-months decline prediction will not be materialized if the Kress Cycle is in force.

http://www.marketoracle.co.uk/Article5820.html

[dc]

This looks more and more like the expected weak bounce. Next stop 1070.

[Bird]

I gather Neely is got a triangular formation in mind. It's Neely vs. Prechter!

[cloudslicer]

Tony Caldaro called the top of the wave from the July lows over the weekend. He will base the long wave count on this move down since the move off the July lows can be labeled a 3rd wave.

I make note of this because he did not change hist stance during the September,October,November corrections. To my knowledge this is the first change to his charts since July.

When your not flipping and flopping your counts aimlessly from one day to the next and are able to make changes only a few times a year it raises the probability that your have the correct wave count.

[Eventhorizon]

Cloudslicer,

Tony is a very patient and disciplined analyst. I feel RP's problem is he really really wants a deflationary depression to take place in his lifetime, so he constantly allows his bias to influence his analysis.

As an aside, like the gold bugs, RP should be careful what he wishes for.

Tony often seems slow to declare a change in trend in hindsight, so for him to declare the bear market rally over in the space of 3 days is unusual. In the past we have had weeks of "up trend in jeopardy" - not this time!

[chuanWAVE]

".....This pending top will be followed by a significant 3- to 6-month decline, retracing 60 to 90% of the 2009 rally."

Whoever this Neely or STU or the groupies of the January Club are, they soon join each others for the next 3 or 4 weeks to eat crap for dinners.

This week (Jan25 to Jan29) is a whole week climb to a new high of S&P1170, follow by a week (Feb01-Feb05) of normal retracement to S&P1150-1140. Then another whole-week-climb (Feb08-Feb10) to S&P1200...........

They maybe a two-weeks to ONE-MONTH correction (nowhere near the 3-6mths/60-90% retracement they wish for) to S&P1000 starting with a panic circa Feb21 Feb22 , but that's what the "elite" America wish for, with their China-Curse, Obama-curse,Jewish-curse......

I believe there's no need to "curse n swear" when making market-calls, it's a simple straightforward matters, either you are right or wrong, ying or yang; there is no necessity to curse Chinese or Jewish,Obama or Bernanke ......

S&P 500 INDEX,RTH(SNP: ^GSPC)
Mon, Jan 25, 2010, 4:03PM ET - U.S. Markets closed
Index Value: 1,096.78
Trade Time: 4:02pm ET
Change: Up 5.02 (0.46%)
Prev Close: 1,091.76
Open: 1,092.40
Day's Range: 1,092.40 - 1,102.97
52wk Range: 666.79 - 1,150.45

[Hockthefarm]

chuan:

"Whoever this Neely or STU or the groupies of the January Club are, they soon join each others for the next 3 or 4 weeks to eat crap for dinners."

Hahahahahaha! Thanks.

Just what a market should be,
Hock

[Greg]

Yeah, P & Neely & Tony call the top so we can all short at the bounce and get riiiich!!! Isn't it easy just to read a blog and make a killing. The market will collapse but we will all be reach and enjoy the rest of our life next to the beach drinking pina coladas. I like it!

[DG]

Greg,

I guess we should all sit around with our thumbs up our ass waiting for someone to take care of us, then?

WTF is your point? None of the people calling for a top, whether they are right or they are wrong, had anything to do with setting the market up for a fall. Prechter, Neely and Tony C weren't the ones selling "green shoots" and "don't fight the Fed" and "the worst is over" BS, were they? And, actually, unless you just started reading this blog today, it actually wasn't "easy" to be patient, preserve capital and wait for the right moment to deploy it (even, again, assuming this is the right moment), so even if this does turn out to be "the top", it will only have been "easy" in hindsight.

[Greg]

DG,
On your first point, some of the followers of P,Neely & Tony C DO INDEED expect their gurus to give them the ultimate sell signal & take care of them.

My point is that if it were so easy to make money... Especially when all gurus agree.

On your comment about patience and capital preservation... people who followed their gurus and traded their bias on derivatives would have been wiped out by now.

[DG]

On your comment about patience and capital preservation... people who followed their gurus and traded their bias on derivatives would have been wiped out by now.

There's a group of you who are obsessed with the idea that a bunch of people out there are loading up on puts and having them expire worthless. Who does that? And, even if they do, Livermore went bust many times doing stupid stuff and he always learned from it and came back. The law of the market is the same as the law of the jungle. Kill or be killed. The way to use a "guru" is the same as anything else. Find out what his strengths are and follow his lead in those areas. Where he is weak, use your own judgment or stand aside. Anyone who did even the slightest bit of due diligence on Prechter would know that he is TERRIBLE at short-term timing. Since that's the case, who the f*ck would buy any time-sensitive product based on his forecasts? "A fool and his money", man.

On your first point, some of the followers of P,Neely & Tony C DO INDEED expect their gurus to give them the ultimate sell signal & take care of them.

I'm sure they do. I guess I'm not sure how that's different from people who hand over money to their mutual fund manager every month. In fact, there's more transparency in what Neely does than there is in the mutual funds I've held in 401k plans. I'm not even sure how it's different from the ultra-HNW individuals who gave over their money to Madoff, frankly. How many of Madoff's clients were quoted as saying how well they slept at night knowing he was managing their money? And Madoff was one of the most respected men on Wall Street.

My point is that if it were so easy to make money... Especially when all gurus agree.

Three guys is now "all gurus"? WTF do three newsletter guys sounding a bearish note matter in the grand scheme of the Wall Street/CNBC/Bloomberg/Federal Government world of "buy, buy, buy!"? And who's saying it's "easy"? As I said, unless you happened to start reading this blog today, read this post about Neely and decided to short the market because of it, trying to catch the reversal using Neely's recommendations has been anything but "easy". Neely has been trying to catch a top for almost 9 months. How is that "easy"?

FWIW, I usually read your posts and think "Here's a guy with something intelligent to say". I thought that last post was just sophomoric.

And you know what? I'm GLAD the market might tank PRECISELY because all the data I've seen says that Joe 6 Pack retail investor HAS NOT been buying equities during this rally. That only means that institutional buyers will be the bagholders this time. I guess all the bullish cheerleading in the world couldn't get ole J6P to part with his money when he could see that the economy was still in the crapper and circling the drain.

If I ever were to read that this whole rally was a ploy by Obama/Bernanke/Geithner to get the proprietary equity trading desks loaded up with inventory before pulling the plug on them, it'll be the first action of those three morons that I will respect.

[Bird]

Too vitriolic DG.

[DG]

Bird,

I didn't realize I was amongst such sensitive people. Did I say anything untrue?

[Bird]

Maybe not. But I thought Greg had a valid point too. We all seem pretty relieved to be finally able to jump on the bear bandwagon and, with the help of our fearless gurus, it all suddenly seems clear. I take it Greg's point was that chances are it won't be quite so easy when all is said and done.

By the way, I think the effort of our favorite gurus to pick the top is not just a sideshow, it is part of how we think through our own views, even if we do not worship the ground they walk on. So I hope they keep at it. It is very exciting sport.

To me, real top picking, in advance, would be before the big confirming move down. And before any other guru stuck his neck out. That may not be relevant to your trading style, but it is to mine.

[DG]

I take it Greg's point was that chances are it won't be quite so easy when all is said and done.

Depends how you trade it. If the time is right, just go short and let it ride. Wouldn't even have to check the position for a few months at this degree of wave.

That may not be relevant to your trading style, but it is to mine.

The market's "Law of One Price" makes it irrelevant to anyone's trading. Just because a "guru" calls the market top in advance doesn't mean he gets extra money in his account when he closes the trade. And, anyone trading a market call without confirmation is just guessing.

I went short last Tuesday less than 8 points from what is so far "the top". I didn't necessarily care if it was "the top" when I went short. If it turns out to be, it still won't make me any more money than if I had said "Short now because this is 'the top'". With accuracy like that I don't really care about any other aspects of the trade. Once you work out the internal logic of the market during a specific timeframe, a trade management strategy geared toward that logic will work just as well at a top as it will at a bottom as it will in the middle.

[Bird]

It's not the guru's call that I care about, its mine. And while I usually would not enter without confirmation, the point is that seeing it as a top in advance is relevant to my having a sense that I understand something about what MAY be happening.

I was also short DIA 1.19.20, position placed at 13:18:18.

[DG]

"Guru", "you", whomever. Neely waited for one set of signals to go short, but I've developed a second set of NeoWave-based signals and went short from a higher level on that basis. Still wouldn't mean anything if I had accompanied my trade order with a conviction that it was "the top".

Yes, you want overall context because that determines the trade entry logic. Where you are in that context is irrelevant. Whether the market tells you to take a short trade a day after a rally has started or a year after it started is irrelevant to the P&L of that trade.

[Bird]

I can't disagree. At the end of the day, P&L is counts.