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« Oil Approaches the Breaking Point | Main | Tech Stock Smackdown »

Wednesday, January 19, 2011


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Great read.

Roger D.

God, Bernanke hasn't a clue. I guess he never heard of a borrower's expectation of getting paid back. If you lend money there is a risk premium,+ time + interest. The more this idiot incures indebtitness the more the risk premium rises. Not to mention the inflationary expectations added in. People expect to be paid back on time and without out fear of future bankruptcy or hyperinflation. The exact example is Greece or Ireland for example, credit spreads keep widening over time because of the risk premium. Why not get the most interest now before the country defaults, knowing the probility of getting your principal back is non-existant.

The market will and has acted perfectly given the above principle. I might not have explained it,as a economist would or a central banker,but it seems that,that is what is actually playing out here. Now Bernanke has created another echo bubble in the stock market. Increased the size of the upside down debt pyramid to unsustainable levels and increased inflationary expetatations 60 pct since the announcement of QE2.

If you wanted to make sure a deflationary depression would be the result I don't think you could inact a better plan to insure that outcome. Yes Ben Bernanke of all your economic theories learned you never really learned how the "market" is the final arbiturer of your policies and right now they are giving you a failed grade,soon to be marked "F" for failure on so many levels. Sadly for the rest of us were just along for the ride.

Roger D.

Roger D.

I might add also,that world equitity markets are topping right now in Asia,Europe and here in our America. The Euro has a top in place also setting the stage for the greenback to vault to the top of a multi year formation. Todays action was decidely bearish as the Wilshire 5000 was down 200 at the low and the Dow held up creating a dangerous devergence. The "rubber band" effect is now in play and something has got to give. the next few days should prove interesting.

Roger D.

Wave Rust


"Monetary policy responsibility cannot substitute for government irresponsibility - Jean-Claude Trichet

Fed prez's have been saying this for decades.

It wasn't a Fed prez in the wells of the House and Senate who politically vilified anyone who they could possibly blame for the financial crisis in Sept 2008.

Pelosi and Reid were and are an embarrassment to American history, but they were only the latest of the cowardly "lions" of the Senate and House ,,,, both parties culpable for decades.

Yet, these people are re-elected over and over by sheople voters.

Somehow, we'll get through this crap. We always do.

In the immortal words spoken today by the Salesman-in-Chief, "We want to sell you all kinds of crap (like our bonds)."

Uncle Sam has crap for sale!

But, really, yelnick, either disaster lurks around every economic corner, or, it doesn't. For me, that is a matter of perspective on markets and people, which much more positive than what Niall sees.

wave rust

Roger D.

Wave i off the top in the SPX cash should take us down to 1250 area,a bounce and then 1040 target after that. All in a straight line? Maybe not but it should be pretty quick.

Roger D.

Account Deleted

ES Bearish Engulfing pattern


That bearish engulfing candle worked pretty well in silver last week. This morning it's looking at QE2 in Yelnick's image above.


The problem with all interventionist economic policies is the failure to grasp cause and effect.

If you were trapped in freezer with an economist he would simply tuck the thermometer inside his coat until it registered 70 degrees and proclaim there was no danger of freezing to death. When hos fellow trapees complained they couldn't feel any difference he would put the thermometer in his mouth until it registered 80 degrees. When, by chance, a passer-by opens the freezer door and the actual temperature finally rises, he would take this as proof of the efficacy of his method.

Economics IS NOT science - there is no control in the experiment.


That's what behavioral finance is trying to correct. Introducing observed social psychology into the models. You'd think after irrational exuberance the Fed would have caught on.

da bear

EWI has silver in a giant B wave off the January 1980 high.
I think that this is also the best count for gold.
What does this mean? ... the rally from 1999/2000 in gold and silver may very well be a HUGE sucker's rally and will end very badly. If the wave A low for gold was $250 over a decade ago, and wave B top was $1,430ish then a wave C low could approach $450 an ounce.

For symmetry, the wave C low in gold would coincide with the ultimate low in US stocks, Chinese stocks, Japanese stocks, and maybe real estate too.

Deflation in Main Street, excepting the corner grocery store (or Super Wal-Mart).
Now there is talk about deflation in the Beltway and at City Hall.
Next up will be whiffs of deflation on Wal-Street.

Looking for a big short squeeze in the dollar. Long term, wave B top occurred in 2000/2001. Wave 3 of C ended in 2008 before the infamous Fall 2008 Financial Meltdown. Since then the dollar has been in a wave 4 upside corrective rally. a 'c' of 4 up could target the 97 to 105 range. ... in historical terms it would be a replay of 1931 where cash is king and banks collapse (as well as long bonds). Then we get wave 5 of C down in the dollar as it falls to a new low, perhaps as low as 50 on the US dollar index. This would correlate to FDR's devaluing the dollar and raising the price of gold from $20 an ounce to $35 an ounce. ... shortly after that we will probably be discussing Amero wave counts.

If gold does drop to $450, then a Great Depression reprise of a 2 to 1 stocks to gold low would mean a DJIA low of around 911.

da bear

Mamma Boom Boom

dabear, have you ever tried 'ecstasy'?

Just kidding! Actually, we're on the same page, for the most part.

Mamma Boom Boom

>"In fiscal 2010, US private sector GDP actually contracted an estimated 0.1%; but with public sector spending growing at 6.3%, the government was able to claim an overall growth in GDP of 2.6%. Uncovering the truth in this way, we see that the US private sector also contracted in fiscal 2008 and 2009 by -0.5%, -9.7% respectively, so the private sector is still in recession after three years."<

So what happens when the big 'G' is forced to cut back, as I have said will happen starting this year?




Roger, you and your never Ending Diagonal crap. You have created the biggest never ending diagonal. A world record. It's infinity. I'm sure you will mis the real top mid year. There is no sign of a top wherever you look. Markets right now are almost neutral, ready for a resume. Last year bears where screaming mid summer "Head & shoulders top!" and after that fiasco "Hindenburg Omen crash october!" A lot of noise wich a real trader doesn't see or hear. I,m sure they all miss the real top by mid summer.

Hank Wernicki

Tomorrow :

GOOG pops

GE pops

Market rallies

Mamma Boom Boom

Hank, let's us just say 'I'm Skeptical'.


Hey mamam what about "the big short"? something new to say?


wave, couldn't agree more. the point of my post is not that The Bernak has made a mistake, but he Fed is trying to fix a problem that the fiscal side needs to address. Hence give Ben kudos for trying to be a hero even as his theory is shredded by the real world. If stocks drop, what does he do next? He could try QE3 but if the economy continues to sputter at some point he will have to simply back off and toss the problem back to Congress. In other words, like an enabler to an alcoholic, he will have to change to tough love on the drunken Congress. BTW $120 oil may force his hand before stocks.

Mamma Boom Boom

jjj, you trying to say something? Spit it out, boy.

Mamma Boom Boom

Would this be enough to produce outrage? Nothing else seems to work.


mamma, on outrage: Cal has banned the 100 watt incandescent bulb. The ones in the stores are being sold off, than nada. Let's see what happens when they cannot buy more. Outrage? Or acquiescence to the green police?



Should we buy up all the light bulbs and then sell them on eBay in a few months?? That would stimulate demand and increase GDP!


rnb65 - I already stockpiled! The Green Police want us to live in dimly-lit cold places with sweaters on, driving slow vehicles and recycling our food scraps into compost heaps. I must say, I prefer living in the future rather than their past.


Who would have the audacity to vote for repealing affordable health care for 32 million Americans while gladly accepting generous, federally subsidized insurance for themselves? 237 congressional health care hypocrites!

Mamma Boom Boom

The day ended on a very weak note. Follow-thru tomorrow?


"affordable"? Really?

Obamacare is going to raise everyone's insurance costs and probably cause higher taxes on top of it.


Yeah - I get something like you get Roger - some kind of pullback - and someting that tests the last run up and then it goes bad. In some number of weeks - it should be quick.

We get similar numbers - the fact is that to me - the difference between DJIA 11500 and 12000 - are so inconsequential - don't really register.

These divergences should be a red light to the bulls now. Really.


Wave Rust


"If stocks drop, what does he do next? He could try QE3 but if the economy continues to sputter at some point he will have to simply back off and toss the problem back to Congress. In other words, like an enabler to an alcoholic, he will have to change to tough love on the drunken Congress."

If ever stocks retrace more than 62%, he'll be paddling with a wet noodle. The one thing that still might work is to raise Fed Fund target again by 25bps to let Congress know he means business. That would push even more people out of bonds and into stocks.

I think Bernanke needs somebody in Congress to lead, with which he can work with in parallel to bring down spending. Maybe Boehner ,,,, aint holding my breath in anticipation though.

When the majority leader in the Senate calls the visiting president of Communist China a dictator in a TV interview while the Prez Hu was meeting with our Prez. (Hu does Reid think he is, telling America twhat it already knows? Hlen Beck??

I just don't get a comfortable feeling about Reid as a leader. I think he took too many headshots and he needs to get back on his meds.

BTW, Tepper's on cnbc tomorrow at about noon eastern

wave rust

lots of sell signals for Roger to enthusiastic about.

stay calm, roger, the sells are just short term ,,,, for now.

is prechter short yet? :))

Wave Rust

Incandescent light bulbs will have a black market.

Can still get 'em in Mexico and probably Canada.

smuggling light bulbs into the US could become a real problem for Border Patrol agents. I wonder if a drug sniffing dog can be trained to find GE 60 watt bulbs?

wave rust

Goog poped after hours

GE too

1275 holds tonight, then a rally



Google looks like trouble too. Silver too.

Alot of people think we are doomed, but there are still great ways to make money. Even while the economy is collapsing around us.

I subscribe to the guy from australia and his FFT economic newsletter at that guy has called many big events before they have happend, including the stock market crash in 2008 and the current financial collapse of the US. (currently happening) I found him from a friend last year, and he has some important work.

His oil calls are insane, and I have been making good money with them. He is well worth a look, if you want to keep two steps ahead of the sheeple out there.

I am worried about my financial future. Is anyone else nervous out there?


wave, Cal jumped the gun by a year, so right now we can get them from NV or OR, and mail order. Next year US is supposed to ban, but I suspect this will be unwound. CFL's suck big time and LEDs are not ready at the right price points. CA will stand alone with this inanity.


wave, the STU is getting more confident at the top is in. A reversal will do that for the bears. Tomorrow is options expiration, and usually a jink happens at the open then squat all day. Next week will be a better tell.


Alot of people think "a lot" is spelled "alot," but there are still great ways to make money. Even while the economy is collapsing around us.

I subscribe to my FFT economic newsletter at and I have called many big events before they have happend, including the stock market crash in 2008 and the current financial collapse of the US. (currently happening) I found myself from a friend last year, and I have done some important work.

My oil calls are insane, and I have been making good money with them. I am well worth a look, if you want to keep two steps ahead of the sheeple out there.

I am worried about my financial future. Is anyone else nervous out there?

time to cover my shorts

STU thinks top is in? Ugh.

Hank Wernicki

they may be correct ( STU ) !

a little pop tomorrow ,it should fail and then back down


To anyone who has read the 'advertisement' for Forecast for Tomorrow on this page and was thinking of subscribing, don't. It really isn't worth the time or the effort.

I'm also a former subscriber to EWFF and can't decide which newsletter is worse, so I think you get my point.

Wave Rust

mondays after expiration aren't much of a tell either, especially when the pits have ripped everybody a new one in expiry week.

mondays are for unwindings and rewindings.

but i have a small problem with this being a top for the move from august. the dips of 3-5 days have wreaked havoc with bears and the bearish expectations.

Tuesday and-or wednesday could be giddyup days. or it could go lower.

Hank Wernicki

My forecast worked today , maybe it's luck -:)


Mamma Boom Boom

>My forecast worked today , maybe it's luck -:)
Hank <

Which forecast? Certainly not the one where stocks were going to rally. If this is a rally I'm ten feet tall. See where it's at this afternoon.


All the puts are shaken out today. Dow made finaly a high today, others are lacking because they put already a high in. So next week is a good week for shorting the market.

Account Deleted

GOLD Chart


Iceland 1, Ireland (who knows, game on)

From Mish's board:

Irish Government Collapses, Six Cabinet Members Resign, Election March 11; How To Negotiate Haircuts

"In a fitting tribute to a disgraceful performance by Irish Prime Minister Brian Cowen in which Cowen crammed losses of Irish banks down the throats of taxpayers, his government has at long last collapsed. Six cabinet members (40%) resigned representing justice, health, trade and enterprise, defense and transport. Earlier in the week his foreign minister resigned making the total six."

So maybe it is becoming politically correct to tell people to fuck off. If the above doesn't say "fuck off" I don't know what does. It is about time.


Wave Rust

sounds like an Irish tea party

wave rust

Mamma Boom Boom

>Yesterday, on the same day that California Governor Jerry Brown reinstated the “fiscal emergency” for the Golden State amid a $25+ billion budget gap, the University of California announced some $4 million in bonuses and pay increases.

At the regents meeting Thursday in San Diego, UC officials reported giving rewards of $150 to $41,205 to nearly 1,500 UCSF employees who met performance targets, raising the pay of some campus executives to above market rate, and providing 10 percent raises of about $20,000 a year to three executives at their Oakland headquarters.

The executives, who have various financial responsibilities for the UC system, will earn between $216,370 and $247,500 in base pay.<


Brown's budget cutting includes $1 BILLION from UC and CSU, not too mention another $400 million from the community college system

The real issue for UC is PENSION REFORM.

UC pensions are calculated as a percentage of the average of the last 3 years of pay, capped at $245,000. For a 30-year employee, the max pension is therefore $183,750 - - - whether their final salary is $245,000 or much more.

Right now, some of UC's highest paid executives are claiming that they will threaten UC with a lawsuit should they not see that $245,000 cap lifted, as they claim was promised back in 1999 under contract, contingent upon the IRS lifting the cap back in 2007, which the IRS did.

This would add $5.5 million yearly to UC's underfunded pension liability of $21.6 BILLION.

There would also be a one-time $51 million dollar cost to make the increases retroactive to 2007.

Mamma Boom Boom

Twice, this week, the 30 year bond has broken down.



"sounds like an Irish tea party"

Indeed. What will be really interesting is naming the absolute morons in Germany/France and UK that actually lent the money to these useless tits in the first place. If it falls to the tax payer, whole political systems will disappear imo.


Wave Rust


even better is the news of a new bank opening in the US - the international communist bank of china!

I assume they've come here to loan us some of our own money back to us, and, then they can do all the derivatives over there in Jing Bay.

Then they'll take those CDO derivatives and sell them here, while demanding we buy their bonds, or they will cutoff our supply of small plastic toys for McDonald's Kid meals.

So, in about 20 years, we can expect to see china have its next Tianamen Tea Party (bring your own tanks).

wave rust

good thing the world is round, because the whole global market thing is circular.

Roger D.

I have come to the conclusion that there is a very good possibility that this market could blow off here. Look at a weekly chart of SPG which is a REIT. It has formed a triangle for the last 2 1/2 months it has a target of 120 and would probably take 4 to 5 weeks to complete,price 120 are,which would be a double top. If it takes out 90 on a drop,the triangle would be a topping formation.

Roger D.



Interesting reply, thanks:

Hock, a couple of comments on your comment about SUVs and the price of oil.

"First, the erosion of the manufacturing base, which shows up in stalled middle class REAL wages, started in 1973 when we went off gold, and so may be an unintended consequence of the floating currency regime. Steve Keen has modeled this, and Antal Fekete has theorized about it, that in an 'irredeemable dollar' regime (it is not precisely a fiat currency because it isn't directly created by Treasury) the banks shift from commercial lending to speculation, and this accelerates as the central bank backstops risk."

Fair enough. But I don't think you can talk about the erosion of the middle class in Western society without talking about the massive increase in the global labor supply via China. And cheap, cheap labor at that. Western capitalism must take advantage of this factor of production and it has. Surely that is the elephant in the room. And trade barriers will solve nothing because by definition you are limited to a domestic market.

"The increase in banskster profits comes out of the pockets of the middle class, as in effect investment in real growth infrastructure is starved as money flows to speculation."

Agreed. The easiest thing to sell is something people don't understand. The whole thing was packed with fraud.

"Second, a simple correlation between the price of energy and economic growth is vivid. It might be the West rose due to coal than oil more than anything else."

Yes, but what kind of economic growth? I think you are comparing Bethlehem Steel and Detroit to Apple and MSFT. Heavy industrial manufacturing is finished in the US. That GM nonsense was all political. It won't be repeated. Those folks may as well be train porters. It would be interesting to see CAT's US energy consumption by decade for the last 60 years. I bet it is quite low now.

This implies expensive energy will kill US growth. We need to instead strive for energy too cheap to meter.

My answer for base electricity is Thorium, the next best thing to Fusion.

It is more complex of how to solve for transport. Right now Oil is it. Theoretically, coal can be converted to diesel, and natural gas can be used for heavy vehicles, but both solutions are more expensive than oil below $100."

I can't refute this out of hand, but I do not believe it is true for NG.

Expensive transport will hurt growth. I support EVs since they are one possibility for rotating our fleet to a long term and potentially cheaper alternative - but we would also need to commit to Thorium. Or, perhaps oil is largely abiotic, meaning not from compressed biomass but from forces deeper in the Earth. If so, many wells will refill from deeper flows in the Earth. Already many wells ARE inexplicably refilling. It might be that oil is an unlimited resource; we have simply drained the biotic oil first and have not searched for the abiotic pools."

If we do transition, we will need a fuel to get there. Let's use something we have in abundance right here at home. Natural Gas.

Good stuff Y. You got me thinking.


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