Stocks in a Coiled Spring, Fundamentalists in a Fetal Position

Scott Adams (Dilbert) had a priceless column in the WSJ on why it is smart to put your money on companies you hate. He of course picked BP (which he argued is at a bottom) and Apple, which he says he has hated for five years and should have gone in then. In the course of it he trashes most investment approaches, including Technical Analysis:

Technical analysis involves studying graphs of stock movement over time as a way to predict future moves. It's a widely used method on Wall Street, and it has exactly the same scientific validity as pretending you are a witch and forecasting market moves from chicken droppings.

Wonderful satire, but sometimes the real world is dumb and dumberer - such as today, where the pundits asserted one cause of the market's rise and the same cause for its later fall:

• the market went up on the Fed's remarks that the recovery was still on but the improvements in employment were only "modest"
• the market fell on the Fed's Beige Book which showed that the recovery is still on but in some areas growth is "modest"

This reminds of a recent day when in the morning the fundamentalists stated that the market went up due to higher oil prices, which pointed to improving demand; then later in the day when the market fell back said that the market fell due to higher oil prices. which pointed to a future slowdown. 

The fact is these sorts of justifications du jour are simply nonsense delivered in ponderous tones of authority and have no better weight than astrology. Scott Adams take note!

To push this point home, simply note that the fundamentalists are all over the map on what happens in the next few days, and if anything are a bit bullish since we have tested the Dow9835/Sp1045 (the Feb low) now four times and not sustained a break below. 

The STU notes we are now in a coiled spring of a triple nested 1-2 which typically precedes a major move, in this case hard down. Whereas during the run up the right move was to buy dips, this time it is to sell blips, as the market is unable to sustain a rally: "Each near-term rise is swatted back." While investors are watching the Feb5 intraday low, we have now had two days closing below the close that day, and the two lowest closes since seven months ago, last November 4 at 9802. 

We could fall off the cliff tomorrow, or fall after a little more sideways action to swat back another bullish attempt and wear out the bullish interest with a fifth probe of the 9800 level. In either case the chicken droppings and all that are forecasting a coming fall. Let's see what contradictory and hopelessly shallow pontification the fundamentalists concoct when that happens. 

Comments

[Mamma Boom Boom]

According to the chicken entrails, some bid buyers moved in today.

[min]

"Hock wrote:

I didn't start the Prechter service until 2009."

OK, Well I can see why I don't make sense to you.

I'll leave you alone and let you discover his tactics first-hand.

I became a subscriber shortly after the tech wreck. EWI's constant bragging about how they were nailing all the moves in that bear market suckered me right in.

I didn't fully apreciate what was real and what was hype untill I sustained severe losses which I've now completely erased.

Hopefully you'll do better following his lead.

At this point I can do much better without his input.

Our risk tolerances and objectives are very different so it could work out for both of us.

Take care.

[Wave Rust]

PRECHTER
coming on with Maria Bartiromomo

gold crash coming is the tease !!!!!!!!!!!!!!1

wave rust

[min]

Come on Prechter!, come on buddy!, get it RIGHT! just this one time!

Gold $300 wasn't the top nor was $400, $500, $600, $700, $800, $900, $1,000, $1,100, $1,200 and your still here!

You gotta get it right this time otherwise you'll make me into a liar.

You know, I stick up for you and tell people you get it right 1 out of 10 times so you owe me!

Come on buddy just this one time.

Doesn't matter if you say up or down just be right for once!

Plllleeeaaassseee?

[EN]

This is starting to have the look of a large triangle, starting at this year's high. More meandering and then blast off NORTH.

[DInTheMoneyTradingSpeakEasy]

Welcome, you're catchin' on. Now keep it hush! If EWI catches wind of this they'll jinkx it and spoil it for all of us.a good thing

[HighSchoolKidTrader]

Rust;

Is this a new interview?

When is it taking place?

Got a link?

[Wave Rust]

Hock,

"I want people putting 20% down to buy a house on my street, and then I want to see them hustling their asses off in their 30's and 40's to pay the thing off."

Robustness is an ideal as is Taleb. If you want 20 down and only hard working people to get a house (first, find them a job), then I would say that you will get the housing version of "only criminals will have guns if guns are banned."

The problem with housing now isn't the leverage (leverage happens), it is the combination rising housing, land, materials and labor prices that over time, 3-5 years, combined with ever higher and higher leverage that results in a parabolic.

So, in the year or two ahead, RE of all kinds will find a bottom that then holds for a few years, giving the moneychangers the belief that it's safe to re-enter the leverage temple.

Every 20-25 years, the RE market gets silly and sinks the stock market and the economy.

"Creates a very robust consumer, someone that can take heat from time to time as the garbage is stripped out of the system."

Too much middle class and lesser incomes and wealth has already been destroyed. Slower wealth destruction allows for countering by other means of wealth creation.

"Same for mergers: creating global reach and passing all the synergies on to the stake holders. What a crock of chit, I want 10 Bof A's grinding the chit out of each other daily. It is more robust. So what if 2 or 3 drop by the wayside because they are poorly managed."

None of your Bof A's will survive in a global market. Local or regional finance is too low margin, unless the bank is dominant in coverage. Coverage is capital intensive.

"The European Union created this big block to garner economic efficiency. The Euro is going to disappear because the big block is unstable."

The Euro will fluctuate.

"Capitalism and robustness go hand in hand. When government eliminates the robustness, capitalism can't survive."

Fed and state government either creates or chokes conditions for capitalism (see the Chinese and Vietnamese Communist military dictatorships and their robust economies).

Get ready for Obama's Choke the Financial Turkey Reform Act. Looks alot like the effect that the Smoot-Hawley Act had on the rally from the October 1929 crash lows.

Hoover hated the bill but eventually was coerced into signing it. When it is obvious that the Senate will either be 50-50 and the house goes to dead even or Repub, Obama will try to pass the most nefarious of his marxist ideals- control and taxing of the internet.

Obama is much worse than Hoover ,,,, at least Hoover was an engineer. Neither was ever a governor or a CEO type.

Obama is worse because he is a craven power craver. Hoover was a loyal American. People just "KNEW" Roosevelt was gonna be great! HA! The 2nd socialist president nearly destroyed the US. Term limits prevent that long of time when evil runs the country.

Have you seen the billboard with Bush #43 that asks "Miss me yet?" I think that should have been a Jimmy Carter picture.

wave rust

[yelnick]

Thrill, I think BMO is correct that (a) commodity bubble has burst (look at Copper, the Cunary in the Commodities Pits), (b( Euro austerity will drag Asia and the US down, perhaps not this year but certainly next (especially aided b US tax increase), and (c) therefore credit crisis II is coming

[Wave Rust]

prechter interview is probably available now on the cnbs video page.

basically, the world is still in a handbasket being tossed into hell's fire.

too bad asbestos is still banned. there's no winter in hell.

wave rust

[JT]

"I didn't start the Prechter service until 2009." - Hock

And therein lies your problem.
Sounds like your data-set and experience with Prechter has been absolutely miniscule.

Try going back to 1993 and Prechter's "Lost Decade" if you want to really see how "good" the man was.

Since you admittedly do not trade the markets, perhaps the rhetoric of Prechter and people like Rosenberg appeals to you.

But if you actually had some "skin" in the game, you would quickly see that those guys are nothing more than pundits who market newsletters.

[psycho_puppies]

Yelnick,
What do you make of the action in the trin today? Lowest reading ever.. http://stockcharts.com/h-sc/ui?s=$TRIN&p=D&b=5&g=0&id=p52114045518

[DG]

"I didn't start the Prechter service until 2009." - Hock

Well, you may have been lucky, then, in your timing.

I say that using Prechter as a "big picture" socionomic guide is fine, but I wouldn't let the guy count waves (or anyone else at EWI for that matter) for my worst enemy. The tales others are telling you are all-too-true.

[da bear]

Prechter's problem is that we are in a MILLENNIAL WAVE FOUR and not merely a Grand Super CYCLE wave 4. We are though in GRAND SUPER CYCLE C. WITH wave 3 of SUPER CYCLE 3 coming up.

Bad News: MILLENNIAL WAVE FOUR will last a few more years and take the DOW down to about 50 and will result in the deaths of 99% of the planet and the total destruction of the world.

Good News: After this there will be a 1,000 year bull market (As per The Bible and Prechter's Elliott Wave Analysis -- not necessarily in that order).

After one last downturn, commodities will rally fiercely over the next decade or two (until the world ends) in a BIGGIE McBIGGIE WAVE 5 SUPER-BLOW OFF as per my analysis of a CRB chart dating back to 1650 and the Book of Revelation.

da bear

P.S. Does anyone have a wave count for Gulf 9-11 aka Operation Black Hole aka The Obama Nation of Desolation Goes to Florida?

[Wave Rust]

yelnick,
credit crisis II will be swifter and more of a surprise to the public and corporate suits.

forward contracts for commods will be shattered and the BRICKS will take a an "every man for himself" panic overnight.

their currencies will get crushed. "How you like dat global market stuff now" I'm guessing it happens just before the 2012 general election. Maybe Obama declares Marshall Law, dissolves Congress ,,,, nah

wave rust

[Roger D.]

Mamma,

The truth is the only thing matters is the Euro, the economy,earnings and what ever else is the du jour don't enter into the big picture. Whenever the banks have their computers running the show, breath and other indicators don't mean diddly.

The trin today was .14 Now something is fucked up. In the space of a couple days you have record extremes. Talk about insanity in the markets. All historic tops have this charachteristic and they always CRASH.

The EURO looks to have completed a abc up so should start down tonight taking the market with it. The only smart guys were GS, as they were dumping their stock today and the rest of us poor SOB's are just along for the ride.

Roger D.

http://www.screencast.com/users/parisgnome/folders/Default/media/85670cb6-14bf-4c85-bfcd-61c9a7d0f58b

[Wave Rust]

actually, i'm quite bullish for the markets ,,,, long term too.

i'm optimistic that BHO will resign and and joe biden will become king for a day.

i'm optimistic that the correction will bottom by the end of the year.

i'm optimistic that alot of congressional snails from both parties will get dumped in November.

i'm optimistic comcast will fire all the commies on cnbc and msnbc and nbc.

but then i thought disco was bad too ,,,, especially when the beegees turned into disco darlings.

i'm optimistically in cash. :-))

wave rust

[Hockthefarm]

Wave:

Interesting. But I'm not buying this:

"The problem with housing now isn't the leverage (leverage happens), it is the combination rising housing, land, materials and labor prices that over time, 3-5 years, combined with ever higher and higher leverage that results in a parabolic."

Nothing down, no need to ever make payments and you tell us what you make created a massive, totally false demand for housing. Land prices and wages took their cue from that. Why would I care what I paid in wages if I'd already sold the house at massively inflated prices?

Hock

[yelnick]

psycho-puppies, TRIN daily is liable to swing, albeit this is a huge swing. TRIN 4 DMA is below 1, which is bullish, but TRIN 10 DMA is still above 1 by a fair amount (2.3). We seem to be entering one of those periods of increasing swings up and down. These usually signal major moves ahead. Money is sloshing back and forth in the market tub, showing the ship is in rough seas. Volume is relatively low. BP drove a lot of the move today (it and other oil sector stocks).

My take: bull trap.

[DG]

The only smart guys were GS, as they were dumping their stock today

You have some evidence of this?

The EURO looks to have completed a abc up so should start down tonight taking the market with it.

Really? I hope for your family's sake you are not trading with real money. Holy moly you are clueless.

Look at the FXE. It wasn't breaking down at the end of the day, it was breaking out over the early morning high. Shit, man, that is not a pattern you have any logical reason to call "complete" until it confirms it by having a "larger and faster" drop than any in the time from yesterday's low near the close (119.42) to the closing high today of 121.06. The "largest and fastest" drop in there was from 120.97 to 120.4 and took 105 minutes. Until something bigger than that happens in less time than that took, any declines are just corrections within that same pattern. Heck, even if something larger and faster happens, it could still wind up being just a correction within that same pattern.

This is how you add discipline to your wave counts by incorporating LOGIC into them.

[Roger D.]

DG go find a mental midget female to have fun with. You are boring.

Roger D.

[DG]

Roger,

That's rich coming from a guy who says the same fucking thing every fucking day and is wrong every fucking time he fucking says it.

Fucking hear me?

[DG]

Also, there's a very easy way to get me to stop criticizing your charts: Post some better fucking charts.

[Roger D.]

Good night.

http://www.screencast.com/users/parisgnome/folders/Default/media/76eaa1f9-064e-45cb-a80e-f5fd1e5849a8

[usdollar]

ABC X (irregular flat) A done, we are now in wave c of B, top June 25. Wave 1 of C will be done in the end of July, intraday Dow 8000-8400. Next top Oct 20, Wave 2 of C. Maybe this whole move down will be a fractal of the flash crash as I see it as a possible elongated flat, with djia 2000 before Christmas, followed by a new extremely sharp X correction, Usd will tank down to 60, til the end of 2011, deflationary tsunami will follow from this point on.
I might be wrong.

The 5 waves up from March 2009 crowd expects this, and will see this down move to 8-8400 dow as a wave B, followed by a new "high".

[usdollar]

USD should hit 98 or so first on the index first.

[usdollar]

da bear, I agree with you, but I think dow will go much lower than 50, try 0.

[T Burton]

Why stop at DOW 0? I say let's go for DOW -14000!

We can have ourselves a little alien attack led by the Bilderberg Group and ET massacreing Humans with his finger tip laser yelling "Humans Go Home!"

Meanwhile we send Will Smith and Bob Prechter up in f-23s to try and slow these fuckers down a bit...

While all this shit is breaking, a few can scurry over to Tom Cruise's fortified underground bunker in Colorado and another group heads over to Denver International Airport's underground Armageddon complex with Jessie Ventura.

The Jessie Ventura group then takes out Obama and all the Craven Banksters and Politicains that don't deserve to live and feeds them to ET while the remaining humans in the Jessie and Tom camps kick back for a while and then emerge to take advantage of the 1000 year bull market.

How's that for a plan?