Tuesday, November 9, 2010

The "return of the gold standard"


It seems like if not for rumors like, "we're going to return to the gold standard", the gold bugs would have no game at all, and since the public school system apparently no longer teaches history I suppose they will be successful in sucking in a few more gold bugs, before sticking the proverbial pin in that bubble.

To set things strait: the Nixon administration took us off the gold standard, back in the 1970's, because there wasn't enough gold to back the currency they wanted to create, so there sure as hell ain't enough gold to back our currency today. This was the beginning of the end for the US dollar, by the way.

You hear a lot of talk about money printing, but the fact is the vast majority of money creation, has been created out of thin air, by simply pressing a few keys on a computer keyboard.

Perhaps we aught to return to the cotton standard, since that is the substrate used in money creation. Paper currency is actually printed on cotton parchment, not paper, and Cotton has some value, unlike computer manufactured currency.

You may or may not be familiar with the service KGB? It's a company people can text (542542) any question to, and recieve an answer for only 99 cents. I actually worked as a KGB agent for a while, back when I was unemployed... but I was able to stumptheir agents, by asking them this question. "How long would it take to grow the cotton needed to create the parchment required to print 5 Trillion dollars?" (the amount of money the Democrats have wasted since taking control of the government (a little over 2 years ago). They answered: "Sorry, but there are a few questions a day that we can't answer. No Charge"

There is an answer to this question, but I'm sure it would take quite a bit of research to come up with an accurate one.

Perhaps the Chinese firm who recently downgraded our debt knows the answer.

China's Dagong downgrades US sovereign credit rating

NEW YORK | Tue Nov 9, 2010 12:21pm EST

NEW YORK Nov 9 (Reuters) - The United States of America's local and foreign currency long-term sovereign credit rating was downgraded by the Dagong Global Credit Rating Co, Ltd on Tuesday to "A+" from "AA" to reflect what it called the country's deteriorating debt repayment capability and drastic decline of the government's intention of debt repayment.

The potential world crisis resulting from U.S. dollar depreciation will increase the uncertainty of the U.S. economic recovery, according to the agency.

"Under the circumstances that none of the economic factors influencing the U.S. economy has turned better explicitly it is possible that the U.S. will continue to expand the use of its loose monetary policy, damaging the interests of its creditors," Dagong said on its website.

The U.S. debt burden can be relieved only to a certain extent through large-scale printing and issuance of the U.S. dollar, it said, adding that, however, "the consequent decline of the U.S. dollar status and national credit will block the debt revenue channel vital to the existence of the United States to a greater extent."

The ratings agency suggested the United States may face unpredictable risks in solvency in the coming one to two years and assigned a negative outlook on both local and foreign currency sovereign credit ratings of the United States.

According to their website, the Dagong Global Credit Rating Co Ltd is a specialized credit rating and risk analysis research institution founded in 1994 upon the joint approval of People's Bank of China and the former State Economic & Trade Commission, People's Republic of China.

Dagong is also a key credit information and credit solution service provider in China. (U.S. Treasury team; Editing by James Dalgleish)

Tuesday, October 26, 2010

Stock Market Myths Debunked

I got bored today while the Money Managers held the market up into the end of the month (window dressing) in order to give the illusion - by showing a high balance on their monthly statements (come out on the 1st of the month) - to show that there are big gains to be made by continuing to invest long term. I'm not sure why the SEC looks the other way during this kind of illegal activity, but maybe they'll take notice once the retail investor catches on to their little game.

Stock Market Myths Debunked

1. "The market doesn't like uncertainty"

The market actually does like uncertainty, as evidenced by the latest rally. Most investors have no idea what's going to happen in Washington with a lame duck congress in place, let alone who will hold a majority after the election. We also don't know what the fed is going to do, as if it matters. We are already at 0 interest rates, and it hasn't seemed to help the so called "recovery".

The future of the Euro and the Euro-zone is still in question, but the market doesn't seem to mind.

The future of the housing market is more than ever, uncertain, but the market doesn't seem to care about the consequences...

The Bank CDO market, and the survivability of the entire banking sector is uncertain,
just as it was when foreclosures rose during the sub-prime crises. Nobody has been able to even place a value on toxic derivatives, but who cares?

Future growth and earnings are uncertain.

The list goes on, and on, but the market loves it!

2. "Treasuries don't provide the return that equities do"

Treasuries do provide a return, whereas equities may or may not... so treasuries actually have value, and will provide a better return when a market, or the civilization that drives that market, is in decline. Nobody ever lost their entire nest egg investing in treasuries.

3. "The market will be held up by the PPT or some other invisible force"

If this were true crashes would be a thing of the past, yet the crashes continue. Where was the PPT in 07-08? The PPT is real, but their job is not to hold the market up when it's already near recent highs. Watch for them to come in around SPX 300.

4. "Equities have real value here"

Many fall into the value trap, and end up holding their losing positions all the way down, to zero in some cases. The equities market is a market like any other market, in which the value is determined by the highest bidder, not some theoretical PE ratio. In a crash all stocks are sold at any cost, so it could be said that equities have 0 value, or at best only a perceived value.

5. "The Market can stay irrational longer than you can stay solvent"

This is a good way to try to scare people out of their position, but the market never stays irrational for very long. I haven't covered 1 share over the past month, until I took a small profit a couple days ago, and I'm plenty solvent, and as long as the charts tell me wave 3 is in play I will stay short. If you can't learn how to patiently build a position, by buying/selling into strength/weakness, into a top/bottom you will never win at this game.

I suspect that certain members of the federal reserve bank, and their associated hedge funds, have simply used this earnings season as a final opportunity to shake out some weak handed shorts, while at the same time sucking in every last retail investor, before they rob the wealth of America, as they did in the last depression... and throughout history. All I would need to see next week to confirm this believe in my mind, is for the fed to surprise the markets next week by tightening, or even pulling the QE2 rug out, but all that I write is only the opinions of the author (disclaimer).

6. "The Market is forward looking"

If the market is forward looking then the market would only rally on future perceived earnings, not backward looking earnings, helped by frivolous government spending, short-term dollar weakness, and cost cutting.

7. "The federal reserve will hold interest rates low"

The market actually sets interest rates, and the federal reserve follows the markets lead. Interest rates may be historically low right now, but the market wants higher interest rates, as evidences by the inflation play, and just this year: "Chairman Ben Bernanke set the stage for higher interest rates here in the US; explaining in written testimony that in “due course” the Fed will “begin to tighten monetary conditions to prevent the development of inflationary pressures.” Source cnbc: End of an Era: No More Easy Money?

8. "The Dollar is weak"

I suppose this is a way for the news media to try to convince the average investor, and the public at large, that we are not in a deflationary spiral, or as the spin doctors like to call it, "a negative feedback loop", or perhaps something has been added to the water supply in order to block folks long-term memory. The Dollar has actually continued to strengthen over the past 2+ years, and it's going to rip again, as the global meltdown continues.
$USD - Weekly Candlesticks: "

via StockCharts.com

"

9. "We are passing this debt on to our children"

If the Baby Boomer's can't pay their own way, what makes anyone believe that their children are going to pick up the tab. Are we expecting a population boom, followed by another round of industrial and technological booms? If not, then we are using this phrase as an excuse to continue subsidizing a bankrupt generation.

10. "We are in a recovery"

I think the Bulls have said this so many times they actually believe it themselves, but to those who have bought into this rally over the past 18 months, and still holding... to believe otherwise is unacceptable to them. It would mean that the decades of greed is dead, and that they will soon be the next to join the ranks of the unemployed, and their wives may no longer have any reason to put up with them. Most money managers would prefer to jump from their office windows, and many more will before we see a real recovery. Recovery will come when nobody expects it, and when few are looking for it. Recovery will come when most have given up on recovery.

Wednesday, October 13, 2010

Tuesday, October 12, 2010

When Cramer says "don't worry" you better start worrying

I don't usually watch Cramer, but I happened to catch him this evening declaring victory after today's big 10 point rally lol

He was telling his fans not to worry, and that the people who are worried - like myself - I suppose - (because I attempt to keep my members out of harms way)- have missed the boat, and caused others to do the same, and about to lose their clients. The truth is I'm happy to miss a 120 point rally on the Dow, when the risks far out way the reward. It's not the 10 point Dow rally I'm worried about it's the continuation of the flash crash (wave 3).

I believe there is good reason to be worried, when the pied piper of stock land tells you not to worry. The fact that someone would say such a thing should alert you to the fact that he is worried. After-all people who aren't worried don't usually feel like they have to go around announcing it to everyone.

If my record was less than 50% accurate as "By most measures (in 2009), Jim Cramer did worse than the market" (Source Barrons) I'd be worried too. Cramer had a good record during his hedge fund days, but I believe a stock picking monkey would have done at least as well during the 1990's bull. I would give my left nut if I could go back in time and trade in the 90's - knowing what I do now - but I have to trade the market we have.

As long as Obama's darling General Electric continues to pay Cramer's salary, while giving him a public voice via CNBC cable television, the poor retail investor will continue to be led down primrose path, and whether they win or lose Cramer is sure to keep his cushy job.

I on the other hand would expect to lose at least 50% of my membership if I'm wrong even 40% of the time. I feel I'm already on thin ice, after calling the top again today, but the evidence is indisputable, take it or leave it.

I suppose, because Cramer used to make his living crushing the same investors he now claims to help, he feels like he has a bone to pick with the shorts, but I think most shorts don't behave unscrupulously. After all the crash of 08 (wave 1) was mainly the result of longs liquidating their positions, in the form of fund redemption's, and the shorts who sold certain banks to 0 (zero) only did so, because they are in fact bankrupt.

I get the feeling many hedge funds are afraid to short this market, because they saw what happened in 09; rules can be changed to prevent shorting regardless of valuation, and to be honest it's a crowded trade, because of the recent emergence of the retail short. Short selling used to only take place on margin, but since the emergence of the short ETF, everyone thinks they have the wherewithal, and the determination to be a short seller. The bears have always been traditionally out-numbered 10-1, so this has never been an easy business, and just as it is in Las Vegas, when you're shooting from the don't pass, all the players who are betting on the pass line, are out to get the don't-better.

Monday, October 11, 2010

I have some questions about the (so-called) "recovery"

Since I answered all (and I haven't screened anyone) the questions posed by (mostly) upset bulls who have been on the losing end of the trade for over 10 years now, in the spirit of fairness, I thought I'd ask some questions, and then post your answers.

1. If money printing is the answer, why hasn't the Zimbabwe economy recovered?

2. We've all heard Obama say "green energy" is the answer to the recovery. Would you spend $42k for an electric car, and how long before this new technology is affordable to the average Joe?

3. If Electric is going to replace gasoline, what happens to the oil industry?

4. Since clean electric is supposed to replace gasoline, can I expect my electric bill - which has already gone up 1000% (from $30 to $300) over the past 20 years - to skyrocket in the future?

6. If oil is on the decline (due to Obama's recovery plan) who will replace Saudi Arabia as one of the main purchasers of US treasuries (debt)?

7. Almost everyone believed tech, and the housing market would continue on an upward trend forever. What makes the people who believe the same thing about the equities market, and the gold trade, any different in today's market?

8. Since the investment class (the baby boomers) are retiring, and the population in decline, where is new investment capital supposed to come from?

9. If market manipulation is the answer, why hasn't it worked in Japan? Do you simply believe we are we smarter than the Japs? Note: I only use the derogatory term "Japs". because you would need to have a racist point of view to believe such a thing.

10. Some people have claimed that wave 2 can't result in a triangle pattern. Are you ready to concede you were only lying about the known and documented Elliott Wave Rules, in order to pump your bullish position?

11. Jim Cramer says the market has broken out into an inverse head and shoulders pattern, do you believe him, even though the accepted literature says otherwise (must be confirmed by volume on the breakout)?

12. Now that China has replaced the US as the #1 global economy, how can the US benefit. Do you expect America to become an export economy again.

13. I've heard many traders who are much more experienced than I say, the current rally is due to the fact that fund managers must put money to work, and other traders attribute the strength of this rally to the shorts being squeezed. At what point do the fund managers run out of ammo, and why haven't we seen high volume if shorts are covering?

14. Would you rather continue lose money on the long side (as most investors have done over the past decade), than make money on the correct side of the trend? In other words is investing like a sport in which you root for your home team, regardless of whether they continue to lose year after year?

15. Who is the fed (historically), and who's best interest do they have in mind?

Wednesday, October 6, 2010

Further fed easing won't spur growth (re-edited)

I'm sure this is a shocker for the Bulls, who have now fallen in love with the commodity trade, as they continue to price in some future hypothetical US Dollar destruction, but hyper-inflation and inflation are 2 different things, and during a currency crises, the $USD is your best safe haven, not gold, not oil, not corn, not cotton.

Until the fed finds a way to force folks to spend their money, as they have over the past 70 (boom) years the market will continue to contract, because money printing in itself, doesn't cause the velocity of money to increase.

And even "If" the fed, or the government, does step in, they are likely do so at a capitulation market bottom (as they did at SPX666), not at a capitulation top at the end of a wave 2 (where we are today give or take a few points).

I removed (several weeks ago) this chart from my published charts, during the latest rally, because it's hard enough holding into rallies like this, without staring death in the face.... You can see on this long term chart, I also called the top of primary wave 2 a little early, but a wave 3 isn't something you play chicken with, as evidenced by the flash-crash, but the flash crash was only a shot across the bow, and the 08 crash only the 1st inning.

Wave 1's typically look like a pullback to be bought, and this one was no different. This is why Elliottician's refer to wave 2's, as suckers rallies;
take a good long look at what these dreamers just bought into:
$SPX - Weekly Candlesticks: "

via StockCharts.com

"

If a small wave E can rally 120 points in a just few weeks, the same market can lose half it's value (500+ SPX points) in an intermediate wave 3 of a primary wave 3 , in the same amount of time, but actual time-lines are somewhat unpredictable.

Monday, October 4, 2010

We made the Hall of Fame!

I didn't want to announce it until I had confirmation, but I just got
the email from stockcharts.com. I'm psyched!

We should have confirmation of wave 3 tomorrow. The bulls are in love
with the upside, but the smart money has already sold and gone short,
while the MM's were forced to put money to work over the past couple
days.

The market does what it will on its own time line

--
Sent from Gmail for mobile | mobile.google.com

Wednesday, September 22, 2010

There's always a bull market somewhere

There's always a bull market somewhere, and here it is!
It's the inverse 20 yr.bull market:(look closely)


Notice the clear double bottom, followed by higher highs? I believe we could see a breakout this time!

The lower red support line should be green. Sorry for any confusion

Thursday, September 16, 2010

Black Swan

Tonight I was doing my 1 hour "homework" as per Jim Cramer's instructions, and I came across this. I can't believe I didn't see this earlier!
$VIX - Daily Candlesticks: "

via StockCharts.com
"

It's amazing to see the kind of mass hysteria (sugar high) a wave "E" produces:
It seems like everyone is in love with this rally, and the gold trade, and convinced that the dollar is weak, and inflation has returned, regardless of the facts.
$USB - Daily Candlesticks: "

via StockCharts.com
"
I'm tired of the deflation/inflation debate, so I'm going to put it to rest.

Fact - Home prices are falling. That's a no-brainer.
Fact - Wages are not rising, because there is more demand for jobs than workers. that amounts to 0 wage inflation.
Fact - There is a high demand for dollars, even though interest rates are low. Try getting a loan lately, or re-financing your mortgage? Just wait until Joe developer goes to refinance the ARM, on those strip malls he's been robbing Peter, to Pay Paul for. Commercial ARM resets peak later this year, and we're only in the 3rd inning, because construction projects planned years ago are just now being started. Where will the demand for future projects (retail and residential space) come from, when there's already a vacancy on every corner?

Some $50 trillion dollars have been destroyed in this crises, and the minuscule amount of money that has been artificially pumped into the system can't make up for that.

Nations, and individuals have been borrowing beyond their means for the past 50 years, since the gold standard was done away with by the Nixon administration. If Canada, the US, France, Greece, Italy, Ireland, India, Japan, Switzerland, the UK, and Germany are going to re-inflate their debt bubbles, where are the 100's of trillions of dollars going to come from?

When there's a demand for dollars (like anything else) it's value goes up.

So why is gold up? The same reason Oil went to $145.29 as the economy was falling off a cliff. The same reason Jones soda stock was pumped to $30. It's because the stock market is a crooked casino where valuation means little, but as long as there's a sucker born every minute we will continue to see the same 'ol pump and dump play out over and over again.

[updated April 2012]
After successfully calling the [top in gold] in august of 2011, I've since removed my bearish stance on gold. In 2012 I see Gold going to all time highs, with an upside target over $2000.00, however I don't suggest chasing gold until you see my gold chart. Become a member of elliottwavehound.com and you receive access to my long term gold charts, as well as alerts to any necessary revisions to my long term forecast. 


Monday, August 30, 2010

market timing and 3X ETF's

I knew I was either going to look like a genius, or a total idiot today!
I wish I knew what is going on in the UK, but whatever it is it's causing flight to safety in the dollar.


I received a large donation, last week, and when I thanked him, he said it was the least he could do, because after all I am the "Prophet of Profits", and sometimes I do feel like I'm predicting the future, but the future is today - the news just hasn't hit the street yet - and Greek default, that's bigger than Lehman defaulting right? Right

I was kind of amazed when my trading account hit a new high again today, even though today's sell-off didn't result in a new low on the SPX, but this is what happens when you short the proper sectors, and allow 3X ETD gains to compound in a momentum trade. Compound gains are what give FAZ, and other 3X ETF's, the ability to go from $100 to $10.

 It's as hard to hold into a rally (in a bear ETF), as it is to hold through a dip, and at some point you start getting that nagging feeling that you're getting just a little too greedy, until the anticipation starts keeping you up at night, because you know that once the larger trend changes, the same ETF's you fell in love with, is also capable of taking 40% of your money in just a few hours.

The other reason it's easy to get shaken out, is that we technicians think we're so damn clever, that we can time every move thinking "we can get back in a few bucks lower", but after getting burned enough times doing this I believe this is just another excuse to psych yourself out. You get nervous and sell, and then you're afraid to put the trade back on. It's self defeating! If you were able to take profits when you saw the $VIX selling off on Friday, and then chase the short trade today, you're a better trader than I am. I've always said, "I'm a better chartists than I am a trader". It takes time to master anything, and some never do. I will.   

I've achieved a certain comfort level trading 3X ETF's, but I also understand the risk. If I wasn't so impatient (greedy) I'd trade something less volatile, but the time is short.

Saturday, August 28, 2010

Runnoff and timelines

Many charts are conflicted, and that points to an unstable market, and a possible playing out of the so called Hindenburg Effect/Omen. When I say conflicted, what I mean is; IBM has topped, while AAPL has bounced off support. At the top of wave 2: The dow topped at a lower high, while the SPX hit a new high. The VIX is way over-sold, while Treasuries are near all time highs.

A crash is coming, and it's just a matter of time. Sometimes I use the word crash to describe a steep sell-off, but here I'm taking about a crash in which curbs are triggered (maybe over several days), and it's been a while since we've seen that kind of action. 3 1/2 years. I actually prefer not to see a crash, because 3X ETF's seldom see the gains they would in a more sustained sell-off, plus a 4000 point crash would likely result in several months consolidation (more sideways action), and we've seen enough of that!


Respect for your elders: I was fortunate enough to watch my father trade in the decade-long '70s bear, so at least I have some second-hand experience, while most fast money traders have known nothing but upside, and quick recovery, their entire adult lives, I'd like to think I'm more of a realist.

It may take many years to reach absolute bottom, and this is evidenced by history. Even the puny debt bubble of the 1920's took nearly 3 years to unwind, and the market didn't recover for more that 20 years, and we are following the same plan (higher taxes and more government spending)! How much longer is this one going to take?

Commercial building momentum is just now beginning to slow. To top this off we have an entire generation of investors (the baby boomers) who are all about to run for the exits at once. Nothing the corporate government media complex says is going to convince these old timers to gamble what little they have left in their retirement savings, on the roulette wheel that is the casino stock market.

I only hope that the house of cards stays glued together long enough, to provide us with a volatile trading environment, for the next few years, because if the derivatives market crashes, so goes the swaps market, along with the whole kit 'n kaboodle.



Monday, August 23, 2010

Perma-bulls', Pontificators, and crooked politician's

Blagojevich said he needed the $50 he received for each autograph to support his family. But he also said it was "a way to get out among the people," presumably including some who could be on another jury. Full story

So, $50 will get you a corrupt politicians signature, or access to the best charts on the Internet.



Trade the market you have, not the one you want:

The perma-bulls' and the pontificators', (on CNBC) continue to argue with the market, and will probably do so all the way down to dow 1000.

I still see them arguing with the so called "flash crash", and now making claims that it was intentional, when the SEC has officially stated that they found nothing wrong.

The flash crash, proves the markets are unstable, and if Jim Cramer really cared about his fans - more than his own ego - he would have told them to "get out", a long time ago.

The fact that Jim Cramer is so popular, or that there even is a cable show called "mad money", while the market has remained flat, over the last 11 years, points to the overwhelming bullish public mindset. It's not logical to claim that investors are overly bearish, while at the same time Jim Cramer's popularity continues to soar.

I wish I had $20 for every time I heard someone on CNBS, announce that "we won't see a double dip", as if the worst financial crises in 70 years ended in only a few months in 2008. A collapse of the global financial system, may have been temporarily avoided, but that condition has hardly even begun to filter down into the rest of the economy. It took decades to get into this mess, and it's going to take decades to get out of it.

The market is not valued according to past earnings - propped up by deficit spending in the govt sector - it's valued on future earnings, and those future earnings are questionable at best.

And what about the M&A story. Sounds Bullish, but if the cash on the corporate balance sheets isn't spent, it's going to be taxed, and without acquisitions, there won't be future growth. I'm sure most folks are completely unaware that during the last great depression, acquisition became a necessity, and i expect entire sectors will be consolidated into the hands of a few...

Ignore GE owned CNBS, and the crooked politicians who helped get us into this mess. Once we get to the point where people roll their eyes when you talk about the tremendous gains to be had investing in US stocks, rather than continuing to beat a dead horse (investing their hard earned money in it, only to lose over the long term), we'll find a bottom in the US markets.

We're not there yet 

Sunday, July 4, 2010

Targets, and time-lines

Re: Targets: I am often asked, "where do you see the S&P 500 going over the next year, or what are you long term projections"? This question screams, "I want it all and I want it now, and if you don't give me the answer I want, I'll find somebody - else - who will. 


I'm not one for Bullshitting my clients in order to keep them, so I gave him this answer - paraphrasing:

"I keep several valid long term projections, because no matter how good of technician you are; nobody knows where the market is going 2 weeks from now. This is why the charts need to be revised continuously." 

Of course this isn't the answer an impatient person wants to hear, so I suppose he's off chasing unicorns somewhere... 

If you want to hear the bear truth on how it's going to be, read Prechter, but realize the market trades on it's own time, not yours!   

Re: Timelines: Timelines are hard to predict, but generally, after a period of selling it's reasonable to expect a much longer period of consolidation. Timelines also vary according to individual wave characteristics, as well as the larger wave sequence. Wave 4's tend to consolidate for longer periods of time - naturally - because wave 3's are typically more powerful and longer, and sideways triangles - many stocks continue to trade in. 

In a high volatility environment you see timelines speed up, and this is why we call it a traders market. The secret to beating the market consistently is to avoid sideways markets, and to not trade when direction is unclear, but most traders don't have the patience to wait for golden opportunities.






Saturday, June 26, 2010

Re: Market Manipulation

I tend not to believe in manipulation until I see it, because if it could be proven that the free market was no longer free, but being manipulated; no long term investor, in their right mind would continue to invest in it, but I've been seeing some things in the charts, and from the media over the past few years, some of which can't otherwise be explained away, nor should they be ignored.
1. The $VIX selling off methodically & un-naturally - from the Christmas Holiday of 08 through May of 09; during a time when the market would have normally been covering it's back - buying put protection. We also saw the $SPX rally over the same period, on low volume, and with no normal standard Fibonacci retracement, while CNBC pundits' continue to argue - all day long - that 10% corrections are all that are required in a "Bull Market", while 10% is merely a pullback.

2. I witnessed the China Chart $CZH paint all zeros over-night, and then reverse course (short term bullish); this was just before china released it's latest manufacturing numbers, soon after Hillary Clinton and Tim Geithner were seen visiting China. This was the same day Jim Cramer - of Mad Money fame - pumped Exxon Mobil, and China. Telling his fans that a "soft landing" in China was a buy, although up to this point he had recommend holding any china stocks - other than BIDU.

3. The financials ($DJUSFN), the $SPX chart tends to hold up better than the $INDU, and tech ($DJUSTC) (when normally tech leads the market). I've also seen CNBC repeatedly tell their audience, that traders "watch the $SPX, not the $INDU".

4. We also recently witnessed the media's poor attempt at damage control when the market finally did reverse course - on the day of the so called "flash crash". Markets have crashed throughout history, yet they want us to believe than some sort of technical glitch, or electronic markets is to blame for this latest downturn, while there is no evidence to support such a claim.

It's a well known fact that NBC is owed by GE, who is part of the current administrations economic dream team, so much of the above can easily be explained by a carefully coordinated conspiracy, perpetrated against the American people, by the corporate/government/media complex, in order to keep the public hopes up. They know as well as I, that recovery isn't possible unless public sentiment turns positive, and if capitalism fails, they all lose their jobs, including the politicians. When people get hungry; there will be social unrest, and governments will fall, as we see this already happening in Greece. These are the green shoots I believe we need to pay attention to. I don't hope for a terrible outcome, but I also know that markets will correct, and that manipulation can do nothing to prevent it. Risk will be priced in, and with over $100 Trillion in outstanding U.S. liabilities, we are a bankrupt nation.

Granted: Most of the above may also be explained by herd mentality, but there are other things which can't.

Case in point: The REIT: Annal Capital Management (NLY): I have the chart posted on on my blog, and in my public charts. Yesterday I saw the predicted "island reversal" with my own eyes, but when I loaded it into my ticker I was surprised to see NLY up. I checked the chart again a few minutes later, and the candle had clearly gapped-down - below the island formation - and was slowly rising. I was busy charting Friday morning, so I figured there must be some simple explanation, and didn't think much more about it, but when I looked at the chart later that evening; the candle I had seen earlier in the morning, is now grouped together with the others at the top, just as the zeros painting on the china chart, and gaps down on the $VIX, are no where to be found.

Today: Yahoo charts show the NLY gap down on Friday, but yahoo ticker shows the stock ended up at the end of the day, as well as after hours. yahoo "profile" information: Index Membership: N/A

Here's the screen shot:


And here's the screenshot from my public charts (daily candles) Index NYSE:
NLY - Daily Candlesticks: "

via StockCharts.com
"

If I'm missing something here; please respond here, or contract me though my public charts link.

I'll cover next weeks game plan, in a separate post, so check back later this weekend, or before Monday's open.

Tuesday, June 15, 2010

Trading the "double dip"

It's all coming back to me now


I vividly recall the massive short squeezes, followed by 1000 point market drops; that shook most of us - leveraged ETF swing traders - out on both sides of the trade... left bleeding, and watching our tickers in shock, as the trade that got away from us plays out right before our eyes; afraid to chase it; wondering where we went wrong, but nobody had ever attempted to trade a monster like this one, and we were fools to believe we could get our heads around it. 

But this time will be different 

Waiting for that big wave. I hope to catch many more moves this time, but when the bottom comes in, let there be no second guessing, because 2X - 3X ETF's can lose 1% per minute, once the larger trend changes. I recommend that nobody in their right mind trade these things, so are you still with me!?

Predicting it is easy; trading it is the difficult part. 

The best we can do it to follow the big fishes, in who's wake we swim in. These are the Wall Street-Smart billionaires, who sell the bubbles at about the same time most small fish get caught-up in the excitement. "You're gonna wait too fat boy!" 
Once a generation their sights set on making "Mad Money", in stocks, real-state, tech, china, or tulip bulbs, you know it's time to sell. When all hope is lost someone will be left to pick up the pieces. 

We are the market timers.

Saturday, June 12, 2010

Welcome to the elliottwavehound.com public blog!

This is my first blog, started in 2008.
 
I'm exited to have more room to write here! There are times when I feel the need better explain what I'm seeing in the charts, and list a number of possible outcomes, and I was unable to adequately do so,within the limited space stockcharts.com allows.


For some time I had been bouncing around the idea of adding a live chat room here - but on several test runs chat proved to be too distracting, and contrary to popular belief, it is better to trade alone. 

Herd mentality is a dangerous thing; It's what caused the biggest boom in recorded history to end in a bust that may continue to play out for several more years/decades. It keeps many perma-bulls clinging to the belief that the economy is in recovery, where there is none.


The charts speak for themselves, while emotion (the traders worse enemy) tends to feed on itself. The one benefit of live chat, would be the ability to announce a bottom/top in real time, but only in a live trading (room) situation.