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Thursday, September 09, 2010


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Hank Wernicki

Friday : BIG RALLY


Yelnick, this triangle doesn't obtain in the DOW. What pattern in the DOW would we propose to be congruent?


upstart, you can see the triangle in almost every index, including Naz, Wilshire, Russell. The alt count that could fit the Dow is a double flat with an X wave from the June high to the July low. An X needs to be simpler than the two corrective patterns it connects, and this one is. It implies that the Dow may go to a new high while the S&P does a triple top and the Naz falls short.

Steve Hochburger

The Dow Jones goes to a NEW HIGH???


Duh' Fundamentalist

Look at the pretty pictures the bullish technicians have made Igor. Never mind that demand in the economy is punk and there is no driver to deliver that demand.
The Feds are employing more people that ever before. American manufacturing that was 33% in the 1930's is around 9% now and headed lower. The Fed has bought up commercial real estate and will probably do more buying to improve Bank's balance sheet (not that FDIC will notice with a record number of Banks ready to give up the ghost, 99+er's will help with foreclosures). Yes Igor, I like that you are short. That is the way I am staying too.


Funny how the BEARS continue to point to the 1930's when in fact, the US Economy is dramatically different today.

Also interesting is the perennial claim (and most ignorant) assumption that there is a strong correlation between stock prices and the Economy.

Research studies ( as well as common sense ) tells you that such a correlation is not valid, and in fact, is actually NEGATIVE.

The Economist/Market strategist types like David Rosenberg at Gluskin-Sheff have no clue. To them, stock prices have gone "nowhere" over the past decade.

Try telling that to someone that trades for a living!



Tell that to Greenspan and Bernanke. They think it does and they did a study on the effect stock prices had on consumption.


The top trendline on that chart seems to be improperly drawn on that symmetric triangle. It would seem that it should originate from the April high. The trendline was broken today.

Hank Wernicki

the Triangle does not fit on a line chart <<


Move A to 1010, count 5 waves down from 1219 to 1010, count a from 1010 to 1129, b from 1129 to 1040, and c from 1040 to 1112 and you will notice wave c would be
.62 X a, a normal fib for a pennant. So you do have a running B but it still has a bit to run. Wave c should over at 1112 or so.

Account Deleted

S&P 500 EOD analysis: LINK HERE


The bullish option, you have an inverted H/S formation with a 1250 target.


My suggestion with regards:

Account Deleted

Dow Jones futures daily chart analysis: LINK HERE

Sherman "double long" McCoy

This is the most well reasoned post you've made in a year. Well done.

Repo 105

We should celebrate the 1 year anniversary of the first move of the 2.

They have moved it so long that they recently had to replace all the keyboards at EWI offices because everyone had worn the plastic off the 2's and i's down to pure metal.



"Tell that to Greenspan and Bernanke. They think it does and they did a study on the effect stock prices had on consumption." - Les

And yet here we have the stock market above SPX 1100 with retail investor volume only accounting for 11% of the daily volume, not too mention the FACT that there have been net OUTFLOWS from the US stock market to the tune of $48 BILLION since April of last year.

Given your logic regarding a strong correlation between consumption, the Economy, and stock prices it would appear highly unlikely that stock prices would have rallied as they have.

But in reality, the Dow has rallied 3500 points.

Just like the SPX rallied 11% last Fall as domestic mutual funds saw OUTFLOWS of 13 straight weeks to the tune of $36 BILLION!

So where's that strong correlation you keep talking about between equity prices and the Economy/Consumer?


PS. Alan Greenspan also held the incorrect (and admittedly wrong) belief/assumption that the Real Estate market was not a NATIONAL market and therefore would never have an adverse effect on the Economy. He believed it to be a local market.

He also believed that publicly traded financial institutions would always PROTECT shareholder equity. Yeah right.

He also felt that there was no "Bubble" because there were no signs of inflationary pressures on wages and that was the most significant factor in his mind when it came to determining whether or not a "Bubble" was occuring.

He was obviously WRONG on all three counts.


"Friday : BIG RALLY"

Hank, to what Friday were you referring?

P.S. You're market calls appear to be very good just not perfect, yet!


"Given your logic regarding a strong correlation between consumption, the Economy, and stock prices it would appear highly unlikely that stock prices would have rallied as they have."

The market has declined this year as the rate of growth of GDP has decelerated during the course of the year.

The stock market has been lagging the economy by roughly quarter. It bottomed in Q1 2009 while the rate of growth of real GDP bottomed in Q4 2008. The stock market rallied as the growth rate of the economy gradually improved over 2009.


I believe we are looking at a triangle wave B (blue), however I belive wave A (blue) needs to be moved to the right where the red wave (b) is on the graph. Which would get us to be in wave (c)(red)up of B right now. Wave (e)of B will most likely be done in and around October 20 turn date. Then it will turn ugly for the bulls. First target would be around 8000 on the dow.


I believe the big top formed a few month ago was wave C of X of an irregular flat. We have very soon formed wave B of the next ABC down. I believe it might turn into a large fractal of the flash crash, wich could take the dow down to under 2000 before the end of January. Then we would get a sharp correction, getting us back up to around 38.2% getting dow in the range around 5800. Something catastophical in the markets such as some kind of derivatives crises???. So 8000 or ugly 2000 is what I see. USD should come up to around 95-98 range on the index, which would form wave 4 on the huge ending diagonal from the 80s.

The alternative would be 8000 on the dow, and wave b down on a huge triangle, where wave c, d, and e will form over the next 2+ years, before the dollar explodes to the upside, and the dow will get killed all the way back to under 100.

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