Prechter Moves the Markets

In the '80s it was Granville, in the '90s it was Henry Blodgett, and now we have ... Bob Prechter!? Bespoke charts how David Tepper spiked the rally last Friday, and suggest that Prechter's call Monday afternoon for Dow 1K drove it back down. Bob says this is the repeat of the last four times that investors over-committed to a market, pegging high-yield bonds as potentially the bubble that is about to burst like dot-com's in 2000, real estate in 2005, commodities in 2008. His bearishness of course carries over into stocks.

Monday's STU picks up on this theme, headlining that the market has now triple topped at 1150 - the top back in January 2010 and the left shoulder of the large head & shoulders pattern - and seems to be unable to punch through. This next chart from ContrarianAdvisor shows the Fractal Finance plateau going back to Nov 2009 with a false break above in April and the almost invisible (at this scale) false break below in July. You can see the smaller degree triple top since the Flash Crash as well as the larger degree triple top coming at the flattening of the Hope Rally in this year-long consolidation:

Is the top in? We have a consensus of sorts across most blog sites that the low last Thurs was the end of a fourth wave and we are in the fifth wave, with the most likely target 1158 (where C = A) by the end of the week. Of course, it might have ended today with a thrust out of a fourth wave tringle, but more likely breaks in:

• a down-up move (waves BC in a count from Daneric) or 
• in an ED with legs 2345 to go in short order, converging to an endpoint

Take a look at the Naz compared with the S&P in this chart from MarketThoughts:

Comments

[Account Deleted]

Dow Jones Futures before opening bell

[Whitebear]

I was short the market going into Monday when I saw Michael and the likes openly welcoming 1170 and then 1300. Now, I think I need to close out my puts prematurely with this Pretcher piece. How come Pretcher has to open his filthy mouth everytime the market goes up 200 pts? It's sad that Michael and the likes will likely be proven correct in a few days until Pretcher turns bullish with an alternative count.

[Greg]

Yeah, Prechter(who?) moved the market... Please!!! With all respect, have a glass of water.

[Learnin' Larry]

Great post! So cool that Prechter made the market swoon! I still don't completely understand the markets but, thanks to you, I'm learning, I'm learning!

Also, did Precter's call for financial collapse in the NYT a couple of months ago make the market shoot up? In other words, does Prechter have a reverso-power when he is in print as opposed to television?

[Mamma Boom Boom]

You guys just keep leaping from bullish to bearish. But, the trend is up. Mamma says so!

[Anikitos]

so the new indicator is a Negative Pretcher Corelation?

[Chuang Tzu]

I was short the market going into Monday when I saw Michael and the likes openly welcoming 1170

SPX 1170 is what the Hurst cycle amplitudes are saying. Its not my personal opinion, its a mathematical projection of the Hurst FLD.

[Chuang Tzu]

If you look at the SPX now, it looks like wave 4 is complete and we are now in the 5th wave to 1170.

Stay long.

[JT]

"so the new indicator is a Negative Pretcher Corelation?"

Where have you been?

Prechter's been a wonderful CONTRARY indicator for the last 18 months. He is not a TRADER. He writes a newsletter. Interestingly enough, many fail to understand this important distinction.

[JT]

"It's sad that Michael and the likes will likely be proven correct in a few days until Pretcher turns bullish with an alternative count." -Whitebear

What's really sad are people like yourself that can't stand the fact that there are TRADERS out there that actually trade hundreds of thousands of shares per month, don't drink from the Prechter P3 "Kool-Aid" that you and your ilk froth at the mouth over, and have bought all of the "dips" over the past year and a half (especially in the natural resource/commodity sector) and have made a TON of money being right about the trend, and bullish.

When veteran traders such as Michael point to specific and significant "trends" and sector rotation (rather than listen), people like yourself do nothing but dismiss, with naive contempt.

Had you bought shares in Exact Sciences (EXAS) which he posted here early in the year as his "Stock of The Year" you would have more than doubled your money by now, and become familiar with one of the greatest opportunities in the medical diagnostics marketplace that appears to be on the verge of ground-breaking technology that could potentially eradicate colon cancer, the #2 killer of Americans over the age of 50.

But no.
You don't listen very well because you are a LOSER. Keep drinking the "Kool-Aid" my friend!

[RT]

http://yelnick.typepad.com/yelnick/2010/08/a-simple-explanation-of-the-great-recession-and-why-it-has-years-to-go.html?cid=6a00d8341c563953ef0134869c010e970c#comment-6a00d8341c563953ef0134869c010e970c

[JT]

Incredible reversal in Gold and Silver from earlier weakness this morning...Prechter and Hochberg have blown those "counts" as well.

[Whitebear]

Somehow in this blog, when someone disagrees with Michael's take on the market, he has to agree with Pretcher's???? The fact that I don't agree with Michael does not mean that I have to agree with Pretcher. A loser is one who fails to comprehend a simple paragraph. There are tons of stocks that are comparable to EXAS. Have you tried REE, GWG.V, POT? How about going long gold since 2001?

[Buckster]

September 28, 2010 – NEoWave Institute’s Glenn Neely, internationally regarded as an
Elliott Wave innovator and creator of NEoWave technology, believes the S&P’s near future is surprisingly positive with a probable gain of 75-100 points.

“The S&P will continue to move up or sideways for the next two-to-three months. The market has transitioned into a General Predictability phase, based on NEoWave principles, so I’m now able to map behavior for the rest of this year,” Neely says. This bullish market behavior may take many by surprise, he explains, given the market typically declines in October. “By late 2010/early 2011, the S&P will closely approach – or exceed – the April 2010 high. As a result of increasing valuation, I expect economic conditions to improve for the rest of this year,” Neely says.

Neely built this short-term bullish forecast on his recent, on-target S&P predictions in August and September 2010.

[Buckster]

Dow `Super Boom' to Drive Average to 38,820 by 2025

(Bloomberg) - The Dow Jones Industrial Average will surge to 38,820 in an eight-year “super boom” beginning in 2017, according to Jeffrey A. Hirsch, editor in chief of the “Stock Trader’s Almanac.”

“All previous major economic booms and secular bull markets were driven by peace, inflation from war and crisis spending, and ubiquitous enabling technologies that created major cultural paradigm shifts and sustained prosperity,” he wrote in a press release sent with the 44th edition of the book.

Hirsch’s forecast comes more than a decade after James K. Glassman and Kevin A. Hassett predicted the Dow would rise to 36,000 by 2005 in “Dow 36,000,” a New York Times bestseller. The 114-year-old average ended 1999 at 11,497.12 and sank as low as 7,286.27 in 2002 following the Internet bubble. The Dow then jumped to a record 14,164.53 in 2007 and fell to 6,547.05 in March 2009 after the worst financial crisis since the 1930s.

“He’s got some crazy number on there,” said Frank Ingarra, a Stamford, Connecticut-based money manager at Hennessy Advisors Inc., which oversees about $900 million. “We’ve had probably one of the worst 10-year periods in history, and I think there’s just too much overhang with the government for it to get to those numbers.”

259% Surge

The Dow closed today at 10,812.04, meaning it must gain 259 percent, or about 8.9 percent annually in 15 years, to reach Hirsch’s projection. It has lost an average of about 1.3 percent a year since the end of 1999. The Standard & Poor’s 500 Index slipped 0.9 percent a year including dividends between 1999 and 2009, the first negative return for a decade since data began in 1927, according to S&P.

http://www.bloomberg.com/news/2010-09-27/dow-super-boom-will-drive-average-to-38-820-stock-trader-s-almanac-says.html

[Chuang Tzu]

SPX doing exactly what it should...

Uploaded with ImageShack.us

[Chuang Tzu]

Notice the super bullish 'right-translation' in the 3/4 day cycle.

[ROLF]

Notice the perfect 5 wave retrace to the underbelly of the 200dma? Kiss of death.

http://stockcharts.com/h-sc/ui?s=$SOX&p=D&b=5&g=0&id=p14176930693

[ROLF]

Yelnick,
Methinks Neely's call has been trumped by Prechter's!Distribution to the sheeple's has been quite obvious.A gap down tomorrow would be the coup de grace.

[yelnick]

ROLF, yes it appears Bob got the jump on Glenn's big PR announcement today

[Kevin Martin]

Ironically, Prechter himself would say that news (e.g. an announcement from him) can't move the markets. Social mood does that.

Anyway, we are not at a major top. CPC not low enough. TRIN not spiking enough. No major A-D line divergence.

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3568637

Clearly, I like Elliott Wave Theory too, but it is not a panacea. Prechter will find a wave count to fit to all of this when it's done. He has successfully called, like, five of the last two major market turns. That's a 250% success record, right?

[Chico]

Prechter moving the markets? There was a time (mid-80s) when he actually could. But he's been so awful for more than 20 years I can't believe anyone takes him seriously anymore.

[Roger D.]

prechter is a nat compared to the Fed. The POMO's since the beginning of September have produced the final parabolica and laid the groundwork for another crash. The third crash in 10 years,and this market will make top tomorrow.

Roger D.

[Mamma Boom Boom]

>and this market will make top tomorrow.

Roger D.<

http://movies.yahoo.com/movie/1800128449/info

[Roger D.]

Mamma, why doubt me a clock is right twice a day. Twenty one days to a top sounds very logical to me.

How's your dog doing btw? does the poor thing still piss upside down?

Cheers,

Roger D.

[Mamma Boom Boom]

Roger, keep hanging in there, your day will come, 'in spades'.

Dog can't get it right, told me he wants to join the circus.

Neo-Mamma

[da bear]

JT,

actually SLV has a projected wave five top at $21 off the early February lows.
So silver could top here.
From the early Feb. low GLD is approaching five waves.
From the late 2008 lows gold is also nearing five full waves.
On a long term kitco chart, if gold's wave 4 low was in the fall of 2008 then the wave five top could be in. I looked at a 10 year chart connecting the point at which gold began to take off around late 2005 (wave 2) and the Nov. 2008 low (wave 4). On this chart gold has actually had a slight throw over three times.
However, I think gold is currently in a 'B' wave.

da bear

[Paul]

da bear, I agree with your gold's wave count. I've noted the same thing ever since gold broke June's high of 1265. I think 1362 (2x 681) may be the final high.

[Carlos Santana]

Comments please on the dollar wave count (prechtors/hochberg); take a look at the count from late 2009 starting with 74.17 and the top at 88.71; what is a reasonable alternaive to their count? the current decline from 88.71 looks like something other than their ABC count with their target of 78.23 to 77.28.

[yelnick]

Carlos Santana, you wish for some black magic on the Dollar's evil ways? I have a post Wed morning on QE2 with a chart of the Dollar Index. It shows the mighty buck in a downward channel off the 1985 peak of 160 in the DX. Channels like that either mean an impulse down or a zigzag. A zigzag could be nearly over, meaning a big Dollar Rally, except that we have not yet gone to the lower channel (which is below 70 and falling). So a relatively positive bad scenario is a sudden rush to the lower channel and then a bog bounce.

A much more dire alternative interpretation is that we have a long ways to sink:
- wave 1 down went from 160 in 1985 to 79 in 1992
- wave 2 went to 120 in the 2000-2002 time frame
= we are in wave 3 down.

We would be in a corrective wave 2 of 3 at the moment. Dollar destruction just ahead! Read the post and draw your own conclusion.

QE1 wasn't really QE as much as trading some emergency measures for higher quality holdings (I have written about this recently). QE2 might be somewhat the same, shoring up the Fed balance sheet and buying the very large number of Treasuries that we plan to issue in the next 12 months, but not monetizing the economy. If the Fed panics this could get out of control; but so far the Fed under Bernanke has been behind the curve, not ahead of it, so I would not expect the panic stage until the economy double dips, if it does.

[Trailblazer]

LATEST FROM ROBERT McHUGH:

Dear Subscribers,

The Latest Tuesday Market Newsletter, issue no. 1424, September 28th, 2010, is now available at www.technicalindicatorindex.com To access this report, simply log in and click on the Daily button.

For those of you with busy schedules, here is an executive summary:

There is great danger dead ahead. This is our warning. We gave you one just before the 2008 stock market crash. The markets are speaking loud and clear. Tonight we are willing to share with you exactly what we wrote to our subscribers because we care that you know about the coming danger to markets and economies, the danger that the markets themselves are telling us is coming.

Gold rose sharply Tuesday, striking a new all-time high both intraday and on a closing basis, and landing well above 1300. A year ago we started showing a Bullish Head & Shoulders bottom for Gold that had an upside target of 1325. At the time Gold was around 1000. Well, that 1325 level is very close at hand tonight, a 30 percent increase in one year. Our Conservative Investment Portfolio has a significant position in Gold, and has had that position for several years. Our subscribers have gotten the benefit of this portfolio model, an integral part of our services for subscribers. We show that bullish pattern again on page 19 in tonight's Tuesday Market Newsletter to subscribers. The U.S. Dollar is crumbling and U.S. Treasury Bonds are rallying hard. We have been calling for all of this price action in these three markets all year. How did we know this? The charts told us. The market patterns told us. These patterns have been warning that the Central Planners will debase, devalue, the U.S. Dollar in an attempt to goose stock markets and make pretend they are helping the economy. This is precisely what is happening. Quantitative Easing is the terminology the Fed is using for devaluation of the U.S. Dollar. They are slick with their erudite phrases and nebulous words in perpetrating their deceit upon the American people. The next domino to fall is the stock market.

Consumer Confidence is in the outhouse tonight. The Conference Board announced that Consumer Confidence fell sharply in September in spite of the recent stock market bounce, falling to 48.5 from 53.2 in August, the lowest reading since February 2010. We need confidence levels to be in the 90's as an indication of economic strength. This indicator is miles from that measure, is headed in the wrong direction and fast.

As far as stocks are concerned, we are focused on three items tonight: First, there is a developing Rising Bearish Wedge pattern we show on page 17 in Tuesday's newsletter to subscribers. It is a pattern for wave 5 up of e up to finish wave 2-up. This pattern is about half complete Tuesday night, and should finish by Thursday or Friday of this week. Then wave 3 down will follow, a dramatic decline.

Second, there are worsening Bearish Divergences between the 10 day average Advance/Decline Line indicators and prices. The A/D indicators are falling while prices rise. This is a sign of a clear and present danger for stocks.

How will we know 3-down has started? This is the third item we are watching Tuesday night. The answer is when all our key trend-finder indicators move to sell signals, and when prices fall below the bottom boundary of the Rising Bearish Wedge in process from September 24th. Get ready.

Stocks have formed a Head & Shoulders top pattern during 2010 that is remarkably similar to the Head & Shoulders top that formed in 2007. We show those charts on page 10. If 2010's pattern follows 2007's, stocks should fall very soon and very hard.

We now have sell signals in the Daily Full Stochastics for the S&P 500 and Industrials Friday, occurring from overbought levels, and the Weekly Full Stochastics are overbought. The Daily Relative Strength Indicator is overbought in the S&P 500 and Industrials. Once we get new sell signals across the board in our key trend-finder indicators, we will have confirmation that wave 3-down has started, a decline that will likely be dramatic. We got a new sell signal in the NDX 14 day stochastic Wednesday, and a new sell signal in the Blue Chip 14 day stochastic on Thursday, suggesting markets are deteriorating.

The Industrials rose 46.10 points Tuesday, closing at 10,858.14. NYSE volume rose to 104 percent of its 10 day average. Upside volume led at 77 percent, with advancing issues at 70 percent, with upside points at 86 percent. S&P 500 Demand Power rose 3 points to 393, while Supply Pressure fell 4 points to 351, telling us the advance was moderate. The Demand Power Indicator rose decisively above the Supply Pressure Indicator Friday, September 3rd, triggering an "Enter Long" positions signal, and remains there Tuesday. New NYSE 52 Week Highs fell to 171, with New Lows at 14.

The McClellan Oscillator rose to positive + 46.38 Tuesday. The Summation Index rose to positive + 3,387.43 Tuesday.

The percent of DJIA stocks above their 30 day moving average remained at 96.67. The percent above 10 day remained at 73.33. The percent above 5 day rose to 80.00 from 60.00. The NYSE 10 day average Advance/Decline Line Indicator rose to positive 211.7, remaining on a "buy" signal from September 2nd, 2010, when it rose above the positive + 120.00 threshold necessary for a new "buy." Our three Blue Chip key trend-finder indicators (other than the Demand Power/Supply Pressure Indicator) remain on a "sideways" signal Tuesday. The DJIA 30 day Stochastic Fast remained at 96.67, equal to the Slow, remaining on a "buy" signal from September 1st. The DJIA 14 day Stochastic Fast fell to 80.00, below the Slow at 86.67, remaining on a "sell" signal from September 23rd. The Fast had to rise more than 10 points above the Slow for a new "buy." The S&P 500 Purchasing Power Indicator rose to negative -74.16, remaining on a "buy" signal from September 1st, needing to fall below negative -80.16 for a new sell.

The NASDAQ 100 rose 1.44 points Tuesday, closing at 2,012.43. The Russell 2000 rose 7.14 points Tuesday, closing at 675.43. The HUI rose 13.06 points to 513.55 Tuesday. November Gold closed at 1309.3, hitting a new all-time intraday and closing high; Silver rose to 21.69, while November Oil rose to 76.34. The U.S. Dollar fell 0.40 to 78.93. Bonds rose a point to 134^07. The VIX rose 0.06 to 22.60, remaining on a sell signal from September 7th.

Check out our AUTUMN Specials, good through Sunday, October 3rd, 2010, including an amazing 7 months offering for only $179, or 2 years for only $459 at www.technicalindicatorindex.com . If you are enjoying your subscription, please tell a friend. We also offer a 4 months for $99 budget friendly deal this week.

Best regards,

Robert McHugh, Ph.D.

Does anyone know what Frank Barberra is calling for???

[larry Moroz]

for someone just learning, who is Michael??