Gurus Go Quiet, Like The Market

Market remains trending upwards on modest volume, whereas we would expect a higher surge in volume at the top (as positions rotate) or if a new bull (or bubble) were emerging. A pullback is due, and the Sp1150 level has been a congestion zone on and off in the past 12 years, so we may simply continue the drop that began today, after pretty much filling my topping range of 1158-1170, but it would need to build in volume as it falls to confirm a top. Otherwise, the next target is Sp1229, the 62% retrace of the 2007-09 drop.

Carl Futia thinks we head to ES1175 (the S&P in the emini) before fireworks begin. The STU had been holding to a top in Jan but now have had to pull back from that, and have no high odds count at this time, nor does Neely, who urges folks to stay out of positions right now - which should be no surprise if you had been following this blog for the past month, since we remain at the point of maximum entropy where such an exercise is speculative. The STU notes that the most complete wave pattern comes in the Naz, and it might begin to diverge down first before the broader indexes follow. Watch for that, but in the meantime, the trader should abide.

Much more interesting right now than equities are currencies and bonds. The Dollar Index has been in a wave 4 correction which seems to be ending. This consolidation coincides with the steady push up of equities, and a change where the DX turns up may be the pin that pricks the rise in equities. The long bond (30 yr Treasury or TYX) has been in a sideways pattern since Nov, but may also be poised for a move, in this case up in yields and down in value. Watch for breakouts in the DX or the TYX as an indicator of a change in the SPY. 

Comments

[David]

i have continued to maintain my view that this whole rally is a larger B wave of an irregular flat... although it did produce an additional X wave which carried it higher than i thought it would... C wave down is surely due as is the resumption of this bear market :-)

http://www.tradeyourwayout.com/

for those interested...

[nspolar]

Yelnick, in several previous posts we hear of the word entropy, in such a manner that the author (you maybe ?) seems to want us to know or want us to think he knows what it really means.

Do you really understand the concept of entropy?

Or are you just kind of like making big talk and trying to impress us lower class folk? Or can you walk that talk and lay it all out for us with a decent understandable conceptual description(s), as well as back it all up with use of partial differential equations?

So Yelnick which is it here? The real deal or bullshit?

I remain curious about this.

ns

[Hockthefarm]

nspolar:

I think you are being a bit harsh with Yelnick here.

Entropy is really a measure of a systems thermal energy that is unavailable for conversion into mechanical work. This is described as a system's degree of disorder or randomness.

A figurative example:

Tomorrow Yelnick mails a Mung Bean to all the readers of this board.

At 8 am all the beans are in a box headed to the PO. Represents a high degree of order and predictability.
Entropy is low.

1, 2 and 3 years go by. Where are the beans? We have seen a gradual decline into disorder. Entropy reigns supreme.

Translation: If you don't like the current view of where the markets and the economy are headed, wait 10 minutes, because the views are all over the place, just like the beans:

dS = dQ / T

To me he is using the word correctly. But forget about Entropy for a minute and look at other words Yelnick uses and the context he uses them in. It should be clear to all that he is one very intelligent individual. So why try and chit on a guy like that who is willing to share his views? That makes no sense at all, especially in view of all the pablum that shows up here.

Hock

[kokofx]

We need more info on currenies from ewavers in this blog....thanks for the good work..

[trendlines]

So, other than Prechter and a handful of folks, who DID predict the 2009 bottom? No, not me! But, check out the reav-view mirror on this long-term chart of the Hang Seng Index:

http://trendlines618.blogspot.com/2010/03/hang-seng-index-long-term-rear-view.html

[trendlines]

We are on the doorstep of a correction here IMHO. Although bigger than recent dips, not expecting a plunge. Here's an update on US markets:

http://trendlines618.blogspot.com/2010/03/s-dow-jones-nasdaq-russell-whos-weakest.html

[Glenn Loser Neely]

We wish DG would be quiet in this blog...for good

Glenn Loser Neely

[Chabazite]

On entropy, it is a concept that all people involved with the stock market should be familiar with. Basically substitute the words 'state of disorder'. I remember it from majoring in Chemistry paraphrased as 'systems naturally tend towards a state of maximum disorder', and 'the only way to bring order to a system is to apply energy.' It is an empirical law and applies to much of the natural world in the same way as fibonacci seems to. So, while a system can go through some physical process that decreases its own entropy, the entropy of the universe (which includes the system and its surroundings) must increase overall. In a nutshell, if order has been bought to the stock market what has been the cost! In the case of the US, $1T of increased entropy elsewhere.

[Chabazite]

The deception continues on both sides of the Atlantic ...

Government borrowing in February less than expected - http://news.bbc.co.uk/1/hi/business/8574018.stm
UK unemployment records further fall - http://news.bbc.co.uk/1/hi/business/8571625.stm
Vauxhall and Opel get £270m UK loans guarantee - http://news.bbc.co.uk/1/hi/business/8564896.stm
Gordon Brown says BA strike deplorable and unjustified - http://news.bbc.co.uk/1/hi/business/8567409.stm

All in time for the election in a few weeks time. Dr. Bubb, if something is going to happen to expose the bunch of crooks 'running' the UK at the moment, then it better happen pretty quick. The smoke and mirrors are quite dazzling!

[DG]

Another guy using the entropy analogy:

http://seekingalpha.com/article/194269-financial-markets-sovereign-entities-and-entropy?source=hp_wc

[DG]

We wish DG would be quiet in this blog...for good

Glenn Loser Neely

Since almost everything you post is simply an immature reaction to one of my posts, I guess that would mean you'd also go quiet for good.

Anyway, I will repost the link to charts I posted in the thread below outlining what I think is most likely at this point.

"Here are a couple of charts, using Neely's ending of the initial wave of the bear market at the March 2009 lows as a starting point.

http://img205.imageshack.us/g/spydailymarch5.png/

The rules governing wave-(B) are quite flexible and it could end tomorrow or it could go above the start of wave-(A), as the longest leg of an Irregular Triangle."

Basically, the market could end up respecting Yelnick's topping range or it could go higher, perhaps much so. Such is the nature of wave-(B)s.

[cloudslicer]

Has anybody been watching Japan?

It seams to be in its own little world now completely forgotten.

I commented on the possibility of a super cycle wave low on 03/09. But on think is clear, looking a monthly chart since 1989 would you be putting on short positions here?

The fact that I can find virtually no one that wants to even comment on this market makes me want to buy.

Bear markets end in silence.

[nspolar]

Hock et al:

Yes entropy can be defined by:

dS = dQ / T

But to use entropy the way Yelnick does in my opinion is incorrect. You might want to read this, and it insinuates many were bullshitted in their physical science courses, at some point along the way. And I agree with this.

http://entropysite.oxy.edu/cracked_crutch.html

ns

[www.thetechnicallycorrectdefinitionofentropy.com]

Hey, I'm available as a URL for anyone who's interested!

[Ed]

Now that Neely admits its too tough to figure out and he's "staying out", its about time for a 10% downdraft...I'll cover when Neely puts his short back on....

[Linda]

starting from the 98xx there is a possible a=c move here.
my time analysis gave a top in ~1hr before dows close at 10789..
we will either had the top or will probably have a top at that price in 2/3 hrs..

[Chabazite]

nspolar - you have just reminded me why I sold all my Chemistry textbooks on the day I finished my Chemistry finals (33 years ago) and vowed NEVER to look at the loathsome subject again. Until today, I hadn't! And with the greatest respect I don't intend to read your article for another 33 years! :)

[yelnick]

ns, Ilya Prigogine, a Nobel chemist, applied the concept of entropy to chaotic systems. I use it in that sense.

Systems tend towards order but are often at the edge of chaos, which he defined as entropic, where energy going in and out is balanced (or if unbalanced is balanced with internal entropy inside the system). This led him to describe self-organizing systems, which maintain a predictive memory - persistent interactions lead to self organization whose form is based on the past.

If I ever had ambition to extend wave theory, I would do it off that foundation,not a vague socioeconomics.

Applied to markets, they are usually at the edge of chaos (corrective) but tend towards order (an impulse in a direction) until they go back into entropy. Usually entropic conditions put the market sideways (flats, triangles, complex corrections) but as we are living right now, sometimes the choppy waves of a correction have an upwards bias.

[Hockthefarm]

ns:

Let's take a concrete example:

Refineries often raise 400 lb steam. They may let that steam down to 60 lbs by passing it through a turbine coupled to a pump. In turn, the 60 lb steam may be used to drive a reboiler. Now the condensate from the reboiler is essentially useless to the refiner because its entropy has increased to the point where no additional useful work can be garnered from it. The refiner puts work in to convert it back to 400 lb steam.

Order to disorder, or in the above example, useful to useless. Take your pick. I like Yelnick's use of the word.

Enough said by me,
Hock

[Michael]

As suggested here yesterday afternoon, coal, steel, and energy names have been a great short.

:)

[yelnick]

GLNs (you know who you are): DG needs no defending - he does a great job on his own - but I want to add perspective.

The Life of Brian video is about blind following, even when the guru says not to! DG is the antithesis of that. He has taken Neely concepts, extended them, analyzed them, criticized them, and created what appears to be a profitable trading system.

I have liked Zoran even though (as some critic mentioned) his early publicized work, which largely was based on Neely rules with a Gann overlay, were all over the map, as was Neely for a time around 2003. Zoran studied Ilya Prigogine and began to apply chaos theory insights to his work, and it got a lot better. I wish he had published his book before he passed away.

I have been scanning many ewave sites to see who is doing the same. I can point to a few which seem to be pushing the state of the art ahead: DG's is one, as is EvilSpeculator, where you have some quant jocks in the background working models; I am not sure of Carl Futia, but am watching; and I like Tony Caldaro even as I find his big wave count flip a bit premature.

Neely thought he had tightened ewave, and made it more formulaic, but over the 90s his rules evolved to a broadening set of formations. This is troubling as it appears Ptolemaic, the creation of ever more complex epicycles to fit patterns to theory. I think Tony Caldaro has a pretty objective approach, but it gets him in trouble at times.

If wave theory is more than a fancy form of mystic pop, it needs to make predictions which can be traded. Right now it is not doing well at that. Hence my search for the next breakthrough ....

[Chabazite]

Back on to Greece - Papandreou said he may turn to the International Monetary Fund to overcome Greece’s debt crisis, but the IMF option has already been dismissed by European Central Bank President Jean-Claude Trichet and French President Nicolas Sarkozy, who say it would show the EU can’t solve its own crises. See http://www.bloomberg.com/apps/news?pid=20601087&sid=a8gB0DOOXg.A&pos=1 That is a bit of a joke, since this is the first crisis that the EU has really had to face!

[Michael]

Pretty sizeable spike in the Dollar earlier due to rumors in the currency markets about another discount rate hike by the Fed.

[DG]

There could definitely be some unmentioned subtleties in this comparison, but here's another item to file in the "those who don't learn from history are doomed to repeat it" file.

http://seekingalpha.com/article/194197-market-value-of-high-yield-u-s-corporate-bond-index-relative-to-investment-grade-counterpart

[Mamma Boom Boom]

>I like Tony Caldaro even as I find his big wave count flip a bit premature.<

All bears must enter the 'Assimilation Room'. It's required, so that we may take out the 666 bottom.

1. Denial
2. Anger
3. Bargaining
4. Depression
5. Acceptance

[trendlines]

Hello Yelnick & folks, i'm no expert on Gold.
But, found an Inverse H&S pattern, with an upside target of $1400. What do you say:

http://trendlines618.blogspot.com/2010/03/gold-inverse-head-shoulders-target-1400.html

[Bird]

Michael,

I for one stood up at your short call yesterday. Bold and dead on. Nice! What were you using to make the prediction/trade?

[Michael]

Bird,

Thanks!

I am a very short-term trader that focuses on only one sector (Energy) because I find it too much of a distraction to jump from one "flavor of the day/week" to another.

The Coal and Mining sector has had some huge gains over the past several weeks and I simply noticed that they started to act "heavy" yesterday afternoon,(names like ACI, BTU, CLF, and MEE) and shorted them accordingly as they began to drop through some key moving averages that I use. Some of these names that I follow in Coal actually came back into the "range" after making a new high, which is bearish.

Also, nat-gas has been selling off for most of the week and it was only a matter of time before stocks like APA, DVN, PTEN, and HP would take notice of reality.

I have always maintained over the last 12 months that as long as the commodity and energy sector maintained a "bid", the SPX would not get hit. It should be very interesting to see how this sector responds to this latest "peak" in prices, and whether or not a decline of some duration can be sustained.

Remember, these stocks are big Beta names that can easily swing 5% in a day. The hedge-funds love barreling into these puppies and they can be RELENTLESS when they start to TREND. One must be extremely nimble in trading them and know when to admit that they are wrong, else suffer the consequences.

Good Luck to All!

[trendlines]

My apologies folks. Target for Gold should be around 1300, and not 1400. Made a mistake. Can't edit my earlier comment, but same link. Post edited

[Chabazite]

Just wondered whether anyone else had anything to comment about this headline: 'Consumer Prices, Leading Index Point to U.S. Expansion Without Inflation' Full story http://www.bloomberg.com/apps/news?pid=20601087&sid=aelcqRcQtoB8&pos=1 The bit that caught my eye was 'expansion without inflation'. Is that technically sustainable over a period of time? Are there any other examples of where and when that might have happened?

[Dave B.]

There's an awful lot of excess capacity out there in the Economy.

[Chabazite]

Yes, I suppose excess capacity may lead to short term 'recovery' without inflation whilst people are getting back to work, but I am not sure its sustainable for long ...

[Mamma Boom Boom]

>'expansion without inflation'<

It's just words, meaningless.

[Michael]

This is a first . . .

-730 on the NYSE A/D Line.

[Mamma Boom Boom]

>This is a first . . .
-730 on the NYSE A/D Line.<

Interesting! Too bad it doesn't represent reality.

[kaori]

Yelnick,

Can you pinpoint any sourche to read more about this Zoran what did he discovered ?

I never had heard such a name before.

[yelnick]

Kaori, start with the link on the left column, under Yelncik Themes, to Zoran Bifurcation Theory

[yelnick]

Chabazite, regarding expansion without inflation: the US had its best growth years from the 1870s through early 1900s with a slight deflation. I would contend that a general reduction in prices due to productivity, which shows up as deflation but is the good sort of deflation, is the best circumstance to be in. Think of how much PC and HDTV prices have fallen.

[Michael]

"Interesting! Too bad it doesn't represent reality." - Mamma

The cumulative NYSE A/D line does in fact reflect the reality of this rally, given that it broke out awhile back and hasn't shown any divergences whatsoever. The majority of E-Wavers kept talking about how the rally was weakening and how breadth was horrible, but they must have been in fantasy land because this chart says quite the opposite, and has been a great indicator of how strong the market has been, with new highs on the NYSE back to 2005 levels.

http://stockcharts.com/h-sc/ui

Anyone that has been trading this market from the short-side and ignored this indicator has gotten crushed, especially recently when it broke out to a new high in late February... even though the S&P was still at 1100.

I don't know about you, but a +65 point S&P rally based off this indicator is a tremendous trading opportunity and return.

[wakeupsid]

Yelnick is frustrated jerk, topping and pooping technical indicator with his idiotic theory

He also deletes bad post, he is a communist doesn't allow freedom of speech on his blog.

Tejas

[Glenn Loser Neely]

DG and Yelnick are now in love. How sweet!

What is next? DGWAVE.COM? or DGloser.com

DG, I dare you to post your trading results for the last 6 months... If you prove me that you are making a good living for 6 consecutive months I will never make fun of you again, and I will respect you. (Your McDonald's salary does not counts)...

Since I am sure that you are NOT a good trader. I will keep posting what I think about you..

You are a loser and you are just wasting your time in this blog. Get a woman! This might help you to discover that you are not what you think you are.

GLN

[Glenn Loser Neely]

wakeupsid,

I agree with you... no freedom of speach in this blog.
See you... they will ban your IP adress for ever..

GLN

[graspthemarket]

Yelnick,

Great work and interesting insights. Thanks again. I would like to point out a situation that may not have been analyzed yet (on the real estate front)...at least not that I've read about. Maybe you could shed some light. With all these short sales/forclosures, what will happen to the Condo Associations' balance sheets?

Associations have probably factored in a buffer zone for the people who usually don't pay, etc. However, those buffer zones have got to be wearing thin. I'm thinking that there are two ways to rectify the balances sheets: increase assessments or cut back on maintainance. With finances already strained, associations have probably ruled out increasing; therefore, leaving the property to become more run down and value decreased for the owners. With decreased values that hightens the probability of more short sales/forclosures--a vicious cycle. Is there a way to quantify this possible negative effect on the real estate market because at one point condos were "selling like hotcakes" for lack of a better phrase.

I believe this will add stress to the already unstable market.

Thanks for any thoughts.

Jason

[DG]

" I will never make fun of you again, and I will respect you."

I don't care about either of those things.

[David]

i have posted an update for the asx 200 for any aussie traders out there interested....

http://www.tradeyourwayout.com/2010/03/asx-200-daily-chart-update-elliott-wave.html

enjoy the weekend!

[Glenn Loser Neely]

DG,

You already answer, what I suspected... you are loser and a gambler..

Tell us the truth... How much have you lost in the last 6 months?

Ja ja ja.. DG alias the neely shill is a loser.. get back to your mc donald's job...

[Anon]

I'm reminded of a time a couple years ago when oil was trading about $120/bbl. I was interviewing with an oil and gas company shortly after I had gotten into trading. They did a team interview and all the interviewers wanted to know was my opinion of the price of oil. They asked questions about oil supply/demand being in a new paradigm and the emergence of China as being a key driver, etc.

I simply told them oil was at some stage of a bubble and that at some point those who controlled the crude contracts would give them up for the right price. They couldn't grasp this explanation since it didn't make sense to the very logical ideas and facts they were parroting from whatever sources. There are those who are incapable of logical, independent thinking and this is as it must be for the proper functioning of the markets.

On a separate topic, while I would agree the markets are about chaos, the resolution of the chaos is all about the one moment of clarity that comes at major turning points often on the back of something fairly innocuous. The keys are to have the patience, the perspicuity of mind, and the stamina to wait for those moments and trade appropriately.

[DG]

"You already answer, what I suspected... you are loser and a gambler.."

Hey, if that's what you believe, knock yourself out.

Why should I do anything to satisfy your curiosity. I don't owe you a damn thing.

[manav]

the one thing I have seen about RP's writings in EWT after reading it for 5+ years now is that when we starts citing others who are in his camp, it shows that fundamentally he is feeling a little "iffy" to put it mildly about his current call and he is justifying it, to others and to himself, my citing non-EWI supporters. For instance, I remember during 2006-07, he cited Marc Faber a number of times as being on his side in calling for a crash. ANd he then had to eventually fit the count to the market. Something similar seems to be going on here - in a couple of issues earlier he spoke about Harry Dent being on his side and in this latest one, he has cited Diamond being on his side. RP is a brilliant man but I guess we all resort to, unconsciously or otherwise, to crutches to bolster our case.

[Glenn Loser Neely]

DG,

Do not fool yourself...you are a loser. You have not made money as a trader.
That is why you are here defending your boyfriend Neely, he is also a loser.
I am telling you I know Gleen Neely and he makes money from his business not from his trading. His method is worthless.

You come to this blog to find a life. What a loser you are, you spend your time here answering anonymous posts and fighting with people that is smarter than you. You already spent hours building your "secret" gay blog... You are here to justify your gambling problems.

The day you really want to learn from someone that actually makes money from the market every single month, I cam guide you my son. But you have to be humble...

Face it, you have discipline and emotional problems, that is why you keep losing money. Bark whatever you want, we both know the truth about your trading.
I enjoy bashing and humiliating you, and I will keep doing it as long as your buddy Yelnick does not bans me. Ask for his help, and cry like a little girl.

Glenn Loser Neely