Thursday, January 6, 2011

Conflicting Head & Shoulders Patterns

I haven't blogged for ages; I do miss freelance writing - for kicks and giggles - and trying to keep up with everyone, but now most of my time is devoted to charting, and running the elliottwavehound.com website, and that requires 100% of my attention, and limited distractions.

Now that the site has been up for several months; I've reached a certain comfort level doing what I do. I think the hardest part of my job is being couped up at home all day, and more often than not, late into the evening, and by the time I'm done here, and showered I have to get out, and that usually means going out for another high calorie dinner, and an adult beverage or 3, and I was already over-weight! I wouldn't trade it for the world, but I do see a treadmill - off to the side of my work station - in my future. Many thanks to my loyal members/readers!

The last time I blogged I had called the top in gold, and the bottom in the dollar, and the threat of world wide starvation... but the market chose to ignore the fact, that the fed usually gets it wrong, and they have failed to do what it intended to do this time, (as interest rates creep higher), only to create a bubble in commodities and equities, among other places.

-Food inflation soars, govt admits to lack of tools to control prices 

- Record high food prices stoke fears for economy

-A Global Scare in Food Prices

If this continues I may be forced to eat cheap TV dinners in the same cubical I work in, but if you can't beat 'em join 'em, and I have enjoyed much of the recent rally - once the running triangle pattern was ruled out, and a 2 year zigzag pattern ruled in. So much for me being a "perma-bear". I'm more like a, non-Kool Aid drinking, realist, who enjoys the finer things in life, but one who recognizes that the love of money truly is at the root of every kind of evil.

Tonight, and over the next several weeks the market is downright dangerous. Not only because the Hindenburg Omen was triggered again last month, but because I'm seeing many conflicted charts, and toppiness on many charts, but because bullishness is at obscene levels, and that's your best indicator. This is one of those moments that causes me to lose sleep thinking about what wave 3 is going to look like, when the pullback into wave "b" resulted in the flash crash, but this isn't my first rodeo, and we're prepared for whatever comes. I suspect the powers that be will continue to drive certain sectors - like tech - while quietly taking profits in others (like materials for instance), for a couple more weeks, but if Materials sells off again in the morning, I would beat that sector like a rented mule. The chart is broken and the 2X short ETF play is SMN. Charting the SPX alone provides little insight into what's really going on in this market, and that brings me to the charts at hand.



I suppose one could argue that bricks and mortar have been replaced by plastic mp3 players, and if we can convince the Chinese of this, perhaps their 20 year bull market will continue as it has, but only at the expense of the free world. It's obvious looking at this chart, that the housing collapse was only used as an excuse to bring the market down. A grand scheme to rob the wealth of Millions of ordinary people - by scaring the daylights out of them - only to place their money in the hands of the Chinese, and the international bankers who own us (the ones who are the fed), and I'm sure this won't be the last time... The only other option is that our destiny is pre-determined by these geometric lines? I advise the average Chinese to start taking cash profits, if the $HSI ever breaks above 30k again, because you should know what comes next; the bubble word; and the end of your wealth.


There's always the chance that Prechter is wrong, and the market will break out to new highs, but not in dollar terms. Valued in dollars - as long as we continue to dilute our currency in an attempt to give the illusion of wealth - our stock market will never have the value it did in the year 2000. Nevertherless I'll continue to trade it as I see it, and enjoy trading both sides of it, as long as it lasts.

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