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« Call 911 | Main | The STU Speaks »

Monday, September 17, 2007

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MHD

THE FED doesn't set the fed funds rate!!! The fed fund and discount rate follow the 3 month bill so a 1/2 point cut should happen today if history is any guide. Since the spread between the discount and the 3 month bill is 1.8 a 1/2 point cut should occur with that big of a spread. If the spread was 1 to 1.25 then a 1/4 point would be in the cards, but the market is telling the feds to cut 1/2 point. It doesn't matter if one thinks it is right or wrong to cut rates. THE FED justs FOLLOWS the market. IT does not set the rates!!!!

Mario

Gentlemen, place your bets. Rien ne va plus.

Matt

Yes MHD, "THE FED justs FOLLOWS the market. IT does not set the rates!!!!". Why everybody keeps thinking that the FED has the magical power to set rates? It doesnt PERIOD. However, they have LITTLE power to engineer the rates...

When I put my tv on, all I heard is : The FED is gonna cut the rate by their magical powers...". When I put my open the newspaper, all I read is : "The FED is gonna cut the rate by their magical powers...". When I go to university (HEC Montreal), all I heard is : The FED is gonna cut the rate by their magical powers...". When I go on the WEB of lies all I read is : The FED is gonna cut the rate by their magical powers...". Im sorry this is complete BS.

Monsieur Yves Lamoureux, I would like to know your point de vue on that. I mean please give me a respond.

Having saying that, I also think on lets get physical.

Thanks for the article.

MHD

Gonna need more than 1/4 per month to keep Repub's in office. 1/4 isn't going to help adjustable rates starting next year. 1/2 point and many thereafter is the only way to make the near future look good, but also makes sure a financial disaster is even worse.
We shall know in a minute.

Econotrader

MHD, if as you say the Fed just follows the market, what's the need to appoint people with academic credentials like Bernanke at its helm? Just give those jobs to high-school graduates with basic administrative skills. And have them stop compiling the Beige Book and all that stuff, if all they need to know is the 3-mo bill rate.

Eventhorizon

So, is the STU eating crow yet?

cstradingman

This is by far the most profitable trading day I have ever had! I could not believe my eyes but as the last few days went on, more and more people were betting on a quarter point cut. I was watching the fed funds futures and I was perplexed. I knew fifty was coming and a rally but not this big a rally. This was awesome!. Don't be fooled there are many more rates cuts coming!

Voice of Reason

Just curious, cstradingman... Did you actually trade?

So many people talk about "profitable" days and all that has actually happened is they sat and watched their notional profits rise.

Paul

Remember, the same thing happened in Jan 01. Fed announced a half point rate cut and stocks skyrocketed. Then markets sold off for the next several days to give back all the gains. And when the fed actually did cut the rate, stocks sold off even more.

aa

3 of iii of (3) of (iii) of {3} of [iii] of *3* of *iii* of "3" of "iii" of |3| of |iii| of #3# of #iii# of '3' of 'iii'.

Whew.

*Tired*

THE BULL

PRECHTERS CHARTS ARE UPSIDE DOWN

CRASH WILL BE TO THE UPSIDE

call 911 !!

Monday, September 10, 2007
Call 911
Today's STU sees a nested 1-2 wave setup for a iii of (3) of 3 to start tomorrow or Wednesday. (It might have a little down-up to go to finish a little wave ii ABC correction.) If so, should be a persistent and deep drop at least to the August lows of Dow12.5K.

Matt

Econotrader, I dont know MHDs answer but I would say its about CONTROL and POWER, POWER ultimately. Its more than you think... a game far bigger than the "markets"... How can I tell if the FED is gonna raise/cut rates for days in advance and this for 5 years?

hey we better stay on topic i guess, i wouldnt say more than that.

Yves

As it has been pointed out the Fed targets the federal funds rate established by the market.This is the rate that banks charge each other on overnight loans of federal funds.However the Fed can influence that rate by adding or subtracting to the money supply through open market operations and also change long term rates.Today's action reconfirms Bernanke's nickname of "Helicopter Ben".

george

Yves,
you wrote back in july (or was it august) you were going to buy bank america stock and wachovia bank stock. your reasoning was they would take advantage of the smaller banks subprime exposure. did you buy them?
if so, what are your sell targets?
thanks,
george

Yves

George , we did buy them at the first low early in August .Then ,fear had peaked in options and our thrust analysis indicator.We also bot Morgan Stanley and Goldman Sachs as they have the smallest exposure to subprime.We are selling 3 positions and keeping one bank.Buy the rumor, sell the news, go to cash.The count on financials is extremely clear especially that people dont understand the size of what is in front.There is some realy good name that we will put on the list soon.Great franchise ,low price more on that later...As I said before the volatility is ahead better be nimble to have success.Bernanke has made its move now watch China in case its the next move

dow predator

I WARNED YOU GUYS!! ONE WEEK AGO!

I POSTED THIS ON SEPT 11 2007:

The Dow Predator warned you about this rally.
Odds are we we will see 13,700 again before Sept is over.

Bears are in trouble.

Dow Predator

Posted by: Dow Predator | Tuesday, September 11, 2007 at 06:43 PM

The next 400 Dow Jones points should be to the upside.

One more thing...in 2000 we did the same we tested the 84.1 before breaking down again.

Dow Predator

Posted by: dow predator | Tuesday, September 11, 2007 at 06:50 PM

dow predator

Watch out for 13,800!

If this rally is going to stop. I will stop @ 13,800.

Keep close stops! If we start trading above 13,800 then is bullish.
A top near 13,800 means we are topping wave B.

Long live the bull...long live the bear.

Dow Predator

Ps. learn how to trade like a predator!! wwww.marketmentor.com

skierwaver

13800.... this is where the two swings up from the Sept 10 low would be equal to each other. Sounds to me, DP, that you are considering the possibility that the index may be tracing out an ABC-X-ABC starting from the Aug low. And, of course, if ~13800 doesn't hold, then the odds would be higher that this rally is a "third" - in which case we would be likely to see new highs.

rc

I was surprised the fed cut 1/2. As someone said above, helicopter ben for sure.

So, all is well now that the fed decided to fix things. Except... the dollar took another beating, oil and gold jumped up. And, the 10-year barely budged... hmmm.

And for what? To keep housing propped up and unaffordable for prospective 1st time buyers? To cushion the consequences of bad financial decisions? To rob Peter through inflation to pay Paul? Stocks are on a tear again, and the average person is going to pay at the gas pump, grocery store and Walmart.

There's no free lunch. Lowering rates doesn't create prosperity or magically satisfy consequences that need to be paid.

DP & skierwaver: 13800 dow is a good line in the sand; even better is a double-top.

rooster

Yelnick, Interested to hear what the elliot wave boys are thinking now.. Are they joining the bull crowd or are they still thinking this is a wave 2 or b wave correction.. cheers

Followthe TREND

rooster

Why in GODS name do you wan't to know was theeese goofs thinck.

??????

rooster

I want to see if their eating humble pie yet???

yelnick

rooster, we will find out this evening. I cannot believe how many times since 2002 the STU is on the 3 of 3 alert and instead we end up with a big rally! My guess is they still count 1-2 with the 2 wave going towards 78% retrace. More likely this puppy bottomed in August and is on the way to the final Surge into 2009. Since after many rate cuts the market pops then fades, this might end up breaking like Neely's initial view, as a triangle (meaning it may still drop one more time to complete an ABCDE, but not much, before we start the surge).

Klamath

Richard Russell of Dow Theory is still super bullish since the Dow Theory breakout and bull market confirmation months back

(Excerpt from Richard Russell’s Dow Theory Letters)

“What we are experiencing is a global bull market of titanic proportions. It involves not only the US and Europe . This primary bull market involves the nations of China , India , Asia and Africa . In scope, it’s a bull market unlike any that has ever been seen before.

As older subscribers know, I’m always studying the action of the market and, occasionally, I must revise my thinking – in order to get in line with the reality of the situation. I believe the “bear market” of 2000-2002 was the correction that divides the second and third phase of this longest and greatest of all bull markets.

In other words, I believe we are now in the early stages of the third and most speculative phase of this great bull market. How long this phase is fated to last, and how far it will carry on the upside, I don’t know. But it should be an absolute whopper, ending in rising inflation and maybe even hyper-inflation.” (12-Sep-07)

Richard Russell’s Dow Theory Letters, POB 1759, La Jolla, CA 92038

JerryC

If Prechter doesnt turn bullish soon, hes completely brain dead, unconscious and oblivious to facts of this titanic global bull market.

Definition of insanity is repeating the same mistakes over and over, how long will Prechter remain insane? Another 20 years?

skierwaver

An SPX Expanded Triange starting from an orthodox top in early June? Does seem to make sense. This would imply another scary decline into a "seasonal" (higher) low - and then, it's off to the races. If we will get a three-wave decline - followed by a rally - I'll become a true believer... :)

 noam

hi,you are speaking a lot in your blog about STU, Bob Prechter etc,the guy is wrong since i started reading him, the stuff that he writes is nice and facinating but non of that conected to reality.every decline since sp was at 900 he labeled as a third of third . any retracment as second wave and that just in the stock market. in gold he called for under the 450 mark and we are knoking on the last highs like that in silver, and in the us dollar he called 2006 as the year of the dollar, i think you know very well where the dollar is now.he is calling the market now bear market, after the all time highs in any almost any known indexes and to deal with that he invented the dow in terms of gold .so if you see hime tell hime that the last time i checked sp contracts were traded in dollars.as you are suspecting i was once a subscriber but i withdrew as the things got worse and worse(like year and half ago).his articles are well written but it looks to me that mabye he has an hidden agenda and that leads me to ask you a question;is it possible that he is working for the guys in wall street?is it possible that because of his repoutation and his wide range of subscribers that they are using him to there advantage?i am sure that people lost with him a lot of money and that money ended at the other side,waiting to your answer.thanks

yelnick

Noam, never met Bob, never took a course. Not a chartist but a mere blogger. Introduced to his work around 1987 by a good friend who does know Bob, knows Glenn Neely, was part of the Foundation on cycles that many of these folks were involved in 20 years ago. Many of Prechter's methods have diffused into Wall Street (ABC counts, trendlines, etc). I suppose some follow him, others use him as one of several contrary indicators (eg. that Prechter could sway a lot of day traders and the smart money can pounce on them with short squeezes and similar). But I would be surprised if this was anything more than a small ripple in the tides of Wall Street. Prechter has a strong integrity streak about his work, so I would be very doubtful he is in cahoots with anyone. He would rather be right than rich.

skierwaver

Agree - there is absolutely no reason to doubt Bob Precher's personal integrity. IMO, his problem is that a) he works with long term counts, and b) I think he falls in love with them. The latter can be a pretty big problem. Been there, done that.... :)

There are usually several "legitimate" counts out there. For example, right now SPX may be competing an ABC-X-ABC up from the Aug low - this is still a possibility. We may also be in an Expanded Triangle, with a test of the lows due in the near future, and with a bullish outlook. Otoh, we may be already in a wave 3 up... and heading towards new highs.

Different counts - bearish, bullish.... I think it is one's personal responsibility to chose a stance and to find an entry which would offer a good probablity of success - and would allow to control risk.

Anyone who is following anyone else blindly has only himself to blame.

Min Duong

Yelnick:

I agree with you, Bob would rather be right than rich. Unfortunately he cares so much about being right he doesn't seem to care one bit how many people he takes down so he can continue to have the opportunity of some day making his dream come true. To me he is one sick individual!

I disagree somewhat with skierwaver. Yes, you should not follow people blindly, you should do your due diligence, etc. etc. On the other hand, new people getting into this game have to start somewhere and, unfortunately for them, EWI is everywhere and the well-written garbage is pumped out in such volume that most Newbys will probably run into it and fall prey to the deception constantly being belched out. With inadequate experience to be able to see or smell the B.S. they don’t stand a chance. Who anointed Prechter as “Official Newby Fleecer”?

If Prechter takes his integrity streak about his work seriously he could do more to let subscribers know the extent of EWIs actual market forecasting prowess (practically non existent) before screwing people so bad they would rather forget it all happened than speak up. Several people I know have written in more than 50 times over the past three years and asked EWI, “why they don't make their track record more well known?”, in some small part of their large, robust web site. Not one response! Seems like the money is important after all, no?

Do you know of another legitimate profession that puts up with this kind of deception?


It's one thing for EWI to give their opinion, it is quite another to have them continually represent that they can correctly forecast market direction as a matter of course. By my actual informal tally of over two years of STUs, EWFFs and EWTs they get it right about 1 in 10 times —seems like that would be statistically impossible yet it happens.

An individual’s desire to be right should not be allowed to affect people’s lives to this extent. And I thank you for the opportunity to write about this as getting the true dirt on EWI is not that easy to get unless you subscribe and go through the various painful stages of disappointment. This should not be necessary.

skierwaver

Min Duong:

Your points are eloquently made - and well taken. But please recall that there is an enormous volume of negative publicity about EWI and Bob Prechter out there. Whenever his name is mentioned, nearly always someone responds with criticism - and often, with hatred. In order to be "fleeced" by Prechter's [admittedly frequently] faulty practical advice, a person would have to be a newby not only to trading and to Elliott, but to the Internet as well.

To me, Elliott Waves are a philosophy of the markets. They are a description of how they breath and how they work. However, as a trading tool most of the time they cannot be used alone. I was probably lucky - when I read for the first time about wave extensions and about double and triple "threes", my reaction was -- "Oops...." And indeed, all those "counts" continuously keep misleading traders - in all time frames. Prechter is merely the most visible among al wave commentators.

The smartest remark about Waves was made by John Murphy, who is not even an elliottician. He stated in one of his books (I'm paraphrasing) that when he sees waves clearly, he may trade them, but when they are not obvious, he simply ignores them.

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