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As far as Bernanke being a student of history, here is the best rebuttal to that, that I've found. Americans will like this since it uses the French expenditures on the Maginot line as an analogy. They too were students of history - and studied the WWI Trench warfare in extreme detail in their approach to defense. Unfortunately, the world moved on - including the invention of the "Tank".


http://suddendebt.blogspot.com/2009/10/mr-berna...
<quote>
This massive expansion and radical transformation of the central bank's balance sheet is the direct result of Mr. Bernanke's theory that the Great Depression happened because the Fed did not immediately provide enough liquidity and credit to the financial system in the aftermath of the 1929 Crash. In his view, this eventually precipitated bank failures, the evaporation of depositors' savings and the transformation of a financial crisis into an economic collapse.

I am not going to argue with Mr. Bernanke's eminent academic research; his historical analysis of the 1930's is probably spot on. But I have an increasingly growing suspicion that this analysis - and thus, his current actions - are irrelevant to today's situation; that Mr. Bernanke is a general trying to fight today's war with yesterday's tactics and weapons.

My oft-repeated premise of this reasoning by false analogy, is best exemplified by the French wasting enormous resources to build the Maginot Line before WWII, a superbly constructed and equipped static fortification, only to see it immediately by-passed by Guderian's blitzkrieg panzers in 1940. Why were the French so short-sighted? Because they became mesmerized by their analysis of WWI trench warfare, when millions of their youth were massacred defending or trying to capture ill-equipped trenches. The response to their flawless analysis of the past was, however, entirely irrelevant to their future.

<end quote>

Anna Schwartz, who is 91 years old and wrote with Milton Friedman, essentially called Bernanke a dope in a WSJ article last year after the crash. She said his policies will do nothing to help the demand destruction and saving those who should fail will only harm the chances of recovery.

Steve

California started welfare again--anybody hear about this?

If this does turn into a good earnings week--I can see the VIX breaking into the 19's

And if it turns into a bad earnings week?

How the heck did you get 1122? I get 1123 whoa---and if this week is bad earnings, then the VIX is as it should be--bounce off 23 go to 29--at 29 go long again---

I think it depends on the majority (money wise) of expectations. Whatever the majority of money expects in earnings will determine the reaction. Bad news can still lead to a pop in SPX or a decline in Vix if it does not contradict the economic recovery fantasy - and is not as bad as expected. Here is a blog about expectations:

http://www.financialarmageddon.com/2009/10/not-...


It says maybe the Q3 bank earnings might put cold water on the green shoots myth - but it all depends, IMO, on expectations.

Banks are still insolvent. FDIC insolvent. Governments are broke and can't function without being massive demand for bonds. People are defaulting, credit constricting. Massive cycle. Not bottoming until issue has been addressed and reset. No where near that. Only fitting that banks will be the one to reveal the truth that this whole previous bull market was built on LOOSE and extreme credit, not on productivity or efficiency. Banks made money screwing people past few months but still in a world of shit-- LEVERAGE + DEFAULTS= BANKRUPT.

Maybe they can use smoke and mirrors but this will get nasty again at some point and it only makes sense that the catalyst will come from the source of the shit- the FED or BANKS.

Vardodger,

Shoot me an e-mail if you would at mktREMOVEguy@aolREMOVEdotREMOVEcom

You were the Devil Dog who had my six the other day, right?

Steve

In the San Francisco Sunday paper, the Chronicle, there is this freebie circular of Target with the front page featuring sales specials on:

Milk ($2.19/gallon), bread, bottled water, dry cereal, cheese, fruit snacks and cut-up bags of chicken breasts or tenderloin.

This doesn't reflect expanded consumer discretionary spending appeal to me but maybe in SF we are so busy paying for our over-priced housing, we need to scrimp elsewhere.

Ummmmm...... food is not a discretionary consumer item. Discretionary means you have a choice whether you buy it or not. Like furniture....

Exactly, my point is that if they are pushing these staples (yes) then people are focused on basics and not on less necessary items....thanks for clearing that up.

This predicts the next demise of the housing market. I think the more important point is how much is left for MBS purchases. While there may be diminishing returns - looks how far the first $700 BB or so have driven the SPX (and NDX and INDU etc...).
IF I play a game and apply Paretos' rule /law [the 80/20 rule], then $240 bb would give 80% of the gain in the SPX, and the remaining $960 bb would give 20% of the gain. Applying this, the FED has used roughly $700 bb - $240 bb = $460 bb of the "80%" portion of the MBS purchases. There is $500 bb remaining out of the total $960 or this 80% portion (the 80% of activity that gives 20% of the benefit.).
This means that SPX still has to go up 500 / 960 * 20% of the total gain, if the Pareto's rule applies.
Let's say that this is 11% of the total. We have gone up 1072ish - 666ish = 406 SPX points roughly. That 406 SPX points represents 100 - 11 = 89%. So the amount of points remaining in the run up of SPX is 406 * 11 /89 = about 50 points more, which would take us up to roughly 1122 on the SPX.

rut -roh. This sure looks like a lot of targets on various posters and blog's minds, including mine if we go decisively above BIG YELLOW. Look, I've got goose bumps. LoL.



http://www.prudentbear.com/index.php/thebearsla...

<quote>
According to the FOMC, quantitative easing will continue at least until the end of the year. For one thing, the Fed has not yet bought all the $1.2 trillion of mortgage-backed debt it intends to buy – it is at $692 billion, according to its latest report, so has more than $500 billion to go. With such a large additional buyer artificially in the mortgage-backed bond market, and the government guaranteeing $1 trillion of mortgages through the Federal Housing Administration with down-payments as low as 3%, it is little wonder that house prices have bounced and the construction sector’s activity is up by 8% in the last month. This is not, however, a healthy housing market recovery; it is propped up by artificially easy money, both in terms of rate and availability. Hence at some point, when the money is withdrawn, the housing market is likely to fall back, with damaging effect on the nation’s banking system.

The difficulty of removing quantitative easing is illustrated by the fact that the two worst depressions in U.S. history were both caused by liquidity shortages. In 1837, the de-chartering of the Second Bank of the United States removed the primary instrument, Second Bank bills, by which inter-regional trade had been financed. In 1836 a Mississippi merchant could pay for New England textiles with a Second Bank bill, and give the seller full value. The following year, unless he had gold (scarce then), he could give the seller only Mississippi bank paper, which traded in Boston and New York at a 30% to 40% discount.

In 1930-32 the closure of the Bank of United States, a major New York retail bank, caused a withdrawal of deposits from the banking system and a cascade of bank failures that similarly devastated systemic liquidity. In both cases, depressions ensued, the two worst in U.S. history.
<end quote>

Ran some eps numbers through the formulas--For the INDU---
The dow is either 400 points too high for OCT or the OCT high is somewhere in between 10032 and 10400

I just visited perhaps the largest gun forum on the Internet. During a slow time (midday) there will be about 3,000 people online and when busy there have been 14,000 online.

A law enforcement officer asked in the general forum area where he should invest the recent $1,000 he has saved. He has received about 25 responses so far. They range from Apple, to biotech, to even GS. What was almost noticeably missing was a comment about the market going lower which was represented by just one person asking if he knew how to short the market.

This might sound typical, but one has to realize that these were people who tend to err on the side of thinking that the government will screw up whatever it touches, and on November 5th were buying all the high capacity magazines from online vendors (none could be found anywhere on Nov 6th) as well as ammunition, bullets, primers, and powder, all four of which remain in severe shortage. BUT....those responding are not bearish on the stock market. While not scientific, and many people won't even read the message, those who invest are reading his message and they are almost uniformly telling him that his money is safe in the stock market.

I just put up a poll in 1000 point increments asking where the Dow will close at the end of 2010 and will post the results in a week.

Steve

Very interesting. Much the same experience over here. Have just returned from a long trip, so have been catching up with all friends, family - without exception, they all thought that the recovery was for real and disaster had been averted. Comments when I attempted to warn them what's around the corner mostly along the lines of "how optimistic" etc.

Can't wait to see what result your poll gives, but I think we can all guess already...

You can't warn them. Been there, done that. Guess what happens when they sell and the market goes higher?

True, true - I'm foolish enough to think the upside/downside risk ratio at this point makes it worth that gamble though

During the dot com bust as the market was going down.....I was telling my friends to get out. What I didn't know was that they were actually buying the sharp pullbacks and many were destroyed. JDS Uniphase and Lucent wiped a couple of millionaires that I knew.

I lived in NJ with Lucent all around me. I know at least 10 long-term employees of Lucent who were fully invested in the company, worth well over $1 million, and now are unemployed or very underemployed. Very sad.

Steve

Ouch.

... just don't get too cozy, and be quick about it. ;-)

I think the word is out there, so I can sleep easy - how many will listen/act is another matter entirely... ;-)

Thanks!

My charts on $INDU, the Qs, GS and the buck. Nothing earth shattering btw, but I'm really liking the resistance points from a very old fashioned TA perspective. Hope you're all enjoying the weekend! :-)

http://tinyurl.com/ygk5b3g

Nice charts and post Keirsten! I agree this week should be interesting, I am cautious but may be growing more bearish as the week goes on. I think there is a high risk of this week's data being deflationary and uninspiring: http://www.briefing.com/Investor/Public/Calenda....

Bank earnings may be the "sell the news" event of the year for all the obvious reasons. I'm a bit fearful of 20 point ramp job Monday and Tuesday morning but I plan on unhedging around 1090 should we get there. 1120 seems a bit too obvious and I think that the defaults, nonperforming and econ data could catch a lot of people off guard come Wednesday :)

Indeed- there's the tricky part. Is GS already priced in for good earnings up here. I'm paying more attention to WFC the following Wednesday in all honesty and will be keeping a very close eye on them.

Ni-ice. Intelligent, succinct, and realistic. <thumbsup>!

Thx, sweetie. :-) After I looked at those charts and prepped them, I must say.. I'm REALLY looking forward to this week! LOL

I'm ready to swing both ways on next week, lol.

Scary, isn't it? We're switch hitters?!? LOL

I have no knowledge of being a switch hitter, nor if I did have any knowledge would I be predisposed to reveal any information regarding said switch hit, maam. (g)

Steve

Well... ahem, nor do I in a Biblical sense, but as far as trading goes, I have no loyalties. LOL That said, I'll be ambidextrous with the trigger finger as thing move along this week. ;-)

looks like more blue pill action ahead ... bah, i'm off to the beach
http://www.screencast.com/t/J4zOn7XB

Interesting EW chart here: http://ewtrendsandcharts.blogspot.com/2009/10/w...
The pic: http://1.bp.blogspot.com/_mNgsiAj3Xko/StHybMbJ1...

Nice chart - like the fan. No different to Mole's soylent orange though - s/b labelled WXY.

ON the chart the chartist points out that all support areas, once breached, become resistance - how has SPX continued to march higher, then?

They aren't horizontal lines, it is like a fan with successively decreasing slopes. Once the trendline is broken it runs up the next, less sloped trendline until that is broken. As a bear the thing I like most about the chart is that it shows a plausible, imminent ending count for P2.

For all we know, 1080 could be the top but I'm not betting all of my money on it...ok,...ok,...maybe 10%. I'm scalping this pig both ways until the tide has turned. For those few bears that survived '99 &'00 and prospered later, you know what I mean. Hopefully, the Gann & EW traders did better back then, I don't know. I was strictly TA and got my ass handed to me more than once on tops.

I'm up to the same no good behavior, Night. Although I've been slowly building some longer term positions trades to the short side, I'm having plenty of fun scalping at this beast in the interim. I hope we all have a good time doing more of the same in the week ahead! LOL

You and Anna are downright scary at times. You girls have proven that anything that can bleed for three days straight and not die...is dangerous LOL.

It'll die. I did like something I read last week about this rally- to paraphrase.. too many people hate this rally, and until everyone falls in love with it, it can fool us all. (think it was Barry Ritholtz)

<thumbsup>

Two people calling for a crash very very soon: Mahendra and JG Savoldi. Mahendra has a 80% success rate.

http://www.baminvestor.com/blog/2009/10/massive...

http://www.mahendraprophecy.com/LatestFlash.asp...

Mole's up/down volume chart from last week - just playing around, added some EMAs - they wouldn't seem to preclude new highs, but they highlight the waning strength of the rally nicely

http://stockcharts.com/h-sc/ui?s=$NYUPV:$NYDNV&...

Watch the USD on Sunday night:
http://www.safehaven.com/article-14699.htm
The 30yr auction on Thursday was a salvo across the bow of the FED. They were told that they could not continiue to borrow $100 bb per month at ridiculously low rates while holding the USD's head underwater.

<quote>
It had to have seemed like central banker heaven for the Treasury to be able to sell well in excess of $100 billion of paper (net) every month in a declining currency, at absurdly low interest rates and -- best of all -- with buyers tripping over one another in a rush to buy it!

The relatively paltry $12 billion auction of 30-year bonds Thursday, however, has violently shaken folks at the Treasury and the Federal Reserve out of their complacency and smugness. Though the market was pricing the 30-year's yield at 3.98% just prior to this auction, the bonds left at an effective yield of 4.01%. Though not a disaster on the surface, it could be -- and was -- taken as a signal that Uncle Sam's ability to sell his debt under the recent very favorable conditions is not unlimited after all; especially when there is such a lack of interest on his part to lift a finger to defend the currency that paper is denominated in.

Like rats leaving a sinking ship, holders of the longest-term Treasury paper began selling. In a mere 24 hours, through yesterday afternoon, long-term interest rates as measured by both the 10 and 30-year Treasury issues spiked a quarter of a point higher. This took at least some of the starch out of the continuing, gravity-defying rises on Wall Street, where stocks most likely would have closed at decisive new highs for this cyclical rally had rates not spiked and given the giddy bulls there a little pause.

<end quote>

thanks gmak

i'll be watching

Big week in terms of earnings. Careful how you tread water until the smoke clears. I still expect Thursday's professional gap to be filled short-term. No reason to be short at this point, but watch for signs of a double top.
http://tinyurl.com/yz2rmfr

Back 8-9 months ago,,,

I laid out a scenario of what i thought could happen,, in the Markets,going froward,,,"Back then we were only going down"Back inn the February time period....

i stated that a Huge Rally could happen Soon ,"So be Careful Here" where we could Bounce off 660 ish on the SP-500 AND Rally to 1050-1100 area,,,,,And that ,if this would ,Happen,,,,it would be the Greatest Short Opportunity ,Of a LifeTIME,,," Now this i Based on Cycle Work ,etc,,,, i went back to find these Posts,,that i did back then on ,,,ES....

Here are the links....

http://www.screencast.com/users/chartwiz/folder...

http://www.screencast.com/users/chartwiz/folder...

-----------------------------------------------
And here we are today,,, Pretty much all said would Happen ,,,,DID,,,,Only i didn't profit at all......As much as i should have,,,even KNOWING THE future,,,,

My Point is, :The Market has away of screwing with your Mind....And grabbing Profits away from You..!!!

Too much has happened since 8 months ago--You better start doing some oppositie thinking too! ---like, how quickly does the dow get to 12,700? That 12,700 number should be on the other side of all your formulas

So Joe - I guess the question is... have you sold your Atari yet?

I believe we are in the Zone ,,,Here where-Time and Price will Meet,,,,if it's last quarter-or - 1st quarterof 2010....,,,

October was been a Big Reversal Month for Decades,,,We are close,,,,,could this Market dodge the October Bullet,,,Donno,But it's my opinion,,,that at any time here,,,this week ,next week,in a Month,,,,,This Market will get Knocked Out....i will be adding to my short position,,Next week,,,,

I will hold a Garage Sale,,,, Sell my Atari 2000,,,,LOL,,,,and Swatch Watch collection.....and use that money to Buy More SDS.....LOL

Ditto that, Joe. I need to send you an e-mail later this afternoon, btw. CYA then. ;-)

>I will hold a Garage Sale,,,, Sell my Atari 2000,,,,LOL,,,,and Swatch Watch collection.....and use that money to Buy More SDS.....LOL

A man after my own heart. :D

SPY 60m ... trying to time the market is often a crap shoot... But I usually give it my best shot anyway... looking for the best match with fibs and fib time extention works sometimes... however, unless price breaks down ( I use my get the money indicator for that)... nothing on this chart means a Tink...
http://screencast.com/t/Xf1xugRp

Hey Anna : I'm updating my hardware in November. I would like to reduce it to one computer with four monitors. Currently using two computers & three monitors. Any suggestions from you or anyone else would be appreciated.

think about keeping at least 2 PC's. And having adsl/cable + wireless

if something fails you're still connected

Good point and yes it has happened to me on more than one occassion.

Murphy does not forgive...

My biggest concern is having multiple video cards on one computer causing heat problems, Has anyone had this problem?

Check out this site

http://www.realtimesoft.com/multimon/guide/vide...

Sounds like you may well be able to get away with just one card

Good link, appreciate it.

Apple is due out 10/19 after the market I am looking for a low risk high return spread to do for earnings, waiting for tomorrow to really get a feel of the price action to pick stricks, but looking @ the Nov. 200/210 or 210/220, I fully expected my price target (I Had way before Cramer, the dunce) of 203 $ to be met
http://tinyurl.com/yk6pk8o

I don't know squat about options (starting to learn them because of your posts). My question is would it not be simpler to just buy a smaller position (puts or calls) vs doing spreads in both directions?

for earnings they run up the I.V on options so to do a straight call or put depending how much they run it up will take out your profit after earnings comes out whether you have the right direction or not. So with a spread you neutralize the I.V. by selling a further OTM strike. This not only lowers risk, but neutralizes much of the IV. because you are not only buying an expensive option, but you are selling one...hope that makes sense :)

Just to show you how much I don't know, what does I.V mean?

http://www.optionstradingbeginner.blogspot.com/...

I googled this hope it helps?

thanks bergs, IV = volitility, i would have never have guessed. I thought it was like inside slang.

FYI: TOS upgraded their system Saturday morning and my charts took forever to load. I defraged the hard drive and it improved tremendously for anyone else having this problem.

>TOS upgraded their system Saturday morning

Thank you for mentioning that. I was wondering why it wouldn't start yesterday. Working great now.

night me too WTF, I am ordering Profit Source a smoking butt software that has Ew analysis on it . it's expensive but the best I have ever used, I am over TOS. :)

Right now, I'm trying to "thin down" my software. I have like 5 trading accounts and would love to thin them down when this market eventually bottoms out and see who is left standing.

Hi Night Profit Source is a trading software only not a trading program, I need software where I can do EW's fibs, gann and it's clear the TOS is junk :)

IMHO...its the best of the worst. Try Fidelity, Scottrade, Etrade, Schwab.... What trading platform do you use?

currently TOS and it's mediocre at best. The charting software that is, the trading platform I am fine with :)

I have Metastock but currently don't use it. I was kinda looking for a 1 stop source for trading, markets, and charts. TOS was the closest that I found. I'll check out "Profit Source". Thanks

Hey Night it's www.profitsource.com and its pricey but it's the best I have ever used ;)

Thanks....I'll check it out. What data source do you use?

E-Signal :)

P.S. : Expanded Flat in a Bear Market Page 47 Bible:

http://www.screencast.com/t/QORz3BQwnitY

jaxon

One thing I've done which I found interesting is to draw trendlines from the close rather than the highs of respective pivotal days. This yields a rather interesting result. By the way, you probably recall that this is advice given by Elder in Trading for a Living.

Also, I've re-labeled my chart to accomodate the ratios I've been referring to. Please note that the A waves measure cuts the move from March to now in half. Interesting?

http://www.screencast.com/t/QfCZMohoQtJe

jaxon

for SH and 33 and anyone nutty enough to follow this stuff, here are two components of my worksheet for the interesting 10/18/09 new moon:

1. 9/19/08 -> 3/7/09* = 169 cds
sq root of 169 = 13
13 + 2 = 15
15 X 15 = 225
3/7/09 + 225 = 10/18/09

as you can see, this is a very clean Gann SoN scenario.


2. the 1.272 back extension from 10/18/09 hits 3/7/09 and 1/6/09.



* 3/7/09 was the exact midpoint of the 11/4/08 ->7/8/09 Time Segment, which itself was a perfect Lucas Series double defining a Lindsay H-> L-> L.

10/17 is what i have, Fri or Mon

hit or miss?

one of the whiz kids came up with 1114



lowbrow

1114... That's a nice #. Would hit a trendline from 10/11/07 if that was the high on 10/19.

10/18/09 is a Sunday isn't it ?

yes, so the trade date would be friday or monday. fwiw, i always post calendar days (cds) unless otherwise indicated.

"the universe is in business every day."

A lot of the thinking is around price. In a liquidity driven rally time may be more important than price, as value, p/e etc has no meaning. Looking at earlier patterns from march of this year, this would suggest a selloff prior to earnings (end june/early july, end sep/early oct) run up into earnings (mid july, mid october), pause on OE friday (17 july, 16 oct), new highs post OE, mild selloff to end of month (end july, end october), resume rally to newhighs in next month (early august, early november), selloff into OE (14/17 august, 20/23 Nov), recovery and selloff at month end (end aug, end nov). So based on this theory next week should peak on 15 Oct (post GS, post C, pre GOOG, pre IBM) , mild selloff and new highs on 20th (post aapl earnings), and end of month selloff commencing soon after possibly the very next day 21 oct (post wells fargo earnings). Now if some price experts would care to put some numbers on that scaffolding it will be a roadmap.

Off to bed... About 1/2 done with that big honking post. Can't think any more, and I suspect my computer feels the same way. Keep your eyes out tomorrow...

Skål!

Long ideas:
BUCY http://screencast.com/t/b7hyIc6O
FLS http://screencast.com/t/z4KXNRRkcI
OII http://screencast.com/t/xLEWxZtxES2
FSYS http://screencast.com/t/wildpwvqyR

Some short ideas (yes I still believe that stocks are actually capable of going down in price)
ISRG http://screencast.com/t/k9ad4kMm
CTSH http://screencast.com/t/6Q2S6WbJQ
NEU http://screencast.com/t/PAgfO6Gq8N2
BP http://screencast.com/t/VBTZmWduRxff

In the "I don't know" category FSLR - long above 163.32ish, or short on failure to break above 159ish
http://screencast.com/t/C53iGWxth

Thanks Mole. Let's just call it a "working vacation" and make everyone happy-LOL. This is not based on EW, but a possible evil scenario would be a drop to 1045 range on SPX, sucking in bears only to reverse and form a inverse head and shoulders.

On a serious note fellow ratlings, I read an article about 6 wks ago on chrismartenson.com which mentioned that the Chinese have made it clear that the Fed needs to wrap up their QE by the end of the month and then start draining out the excess liquidity. It implied that they would be looking for confirmation of this in early November. Then I was referred to a video where this guy who seem pretty knowledgeable about the market refer to the date of Nov. 9th as a pivotal day: http://www.youtube.com/watch?v=X5GEU5F_WdA (skip to 6:30 if you don't have time). Just throwing this out there to see what you think. Maybe the light at the end of the tunnel will be a freight train after all!

bananaben

thanks for this good post. Love the video. Also I posted below you a response to Leo about Dr McHugh pointing to a Nov 9th turn date.

Thanks for the video bananaben... I added it to my weekend update on my blog. Very interesting. However, I'm not waiting till November 9th to go short as I believe the top is already in, or will be this coming week. I'm taking another short position on Monday or Tuesday, as long as we don't close above 107.65 on the spy.

If so, then 110 is next stop... an should be the finally stop. I feel that too many people are now expecting to rally to the 1100 area, which reminds of the "head and shoulders" that formed and broke the support line at 870 in early June. It was suppose too keep falling, but instead rallied up to now with 1080 as the high.

Too many people on one side of the trade, means the market will go the other way.

Red

Hi Leo
Saw you post here and let me add this. There is a Bradley Turn date at this time plus this was post by Dr McHugh this weekend
~~~~~~~~~~~~~~~~
The next phi mate turn date is scheduled for November 9th, 2009 +/- a few trading days. After
that, the next phi mate turn date is scheduled for December 2nd. The coming November 9th, 2009
phi mate turn date is interesting as far as its timing with key turns from this Bear Market’s start back on
October 9th, 2007. Check this out:

Wave (A) down started on October 9th, 2007. The first major leg down of this Bear Market saw
prices fall from 14,164 on October 9th, 2007 to March 6th, 2009. That decline lasted exactly 17
months, and is labeled Supercycle degree wave (A) down. From that 6,469.95 bottom on March 6th,
2009, we have seen two significant waves with the third and final wave of (B) up finishing very soon.
The first subwave of (B) up was Cycle degree wave A-up, which lasted 68 trading days from 3/6/09 to
6/11/09. The second wave was Cycle degree wave B-down, and lasted from 6/11/09’s 8,877.93 top to
July 8th’s 8,087.19 low, 18 trading days.

Now it gets interesting: If wave C-up of (B) up completes its top on our next scheduled phi
mate turn date of 11/9/09, it would mean wave C-up lasted 86 trading days which happens to be precisely the same length of time that waves A-up plus B-down took, 68 + 18 = 86 trading days. This
mathematical relationship increases the potential importance of 11/9/09.

Further, the ratio of wave A’s time, 68 trading days, to C’s time if C tops on November 9th, is
approximately (to one one-hundredth decimal point) .786, which is the square root of 0.618, or phi
(.786 x .786 = .618).

Further, the rally from March 6th, 2009 would be very close to 50 percent of the time wave (A)
down took at November 9th, and would last precisely a Fibonacci 8 months.

None of these interesting mathematical relationships provides certainty wave (B) will top on or
around November 9th, however, markets love order, and it looks to us as if that date would allow wave
(E) up to finish its five waves around then, if in fact it has not topped with this week’s 5 wave rally.

Thanks Douala... Did you watch that video on the site? Interesting huh?

Excellent video.... Leo... I listened to several parts a few times. Scary stuff for us Americans...

I also dug up the article:

http://jsmineset.com/2009/08/19/the-countdown-t...

I don't think the implosion will happen - instead I agree with Steve in that video. Either way, early November is a critical period. Remember remember the 9th of November!

I did read your post on Dr. McHugh but I'm very skeptical of these types of relationships and even TA in general. The major waves predicted by EWT does hold some water though and I love Mole's bearishness!

I'm surprised that they've waited this long. Do they really expect to get paid? Do you think Americans will cut their entitlements in order to do so? How will they do that when they have no plan for it and are proposing additional massive spending in the form of another stimulus pkg. and national healthcare plan? BTW, they somehow try to defend this healthcare proposal as saving money. Hullo? Not sure what those boys are somkin' but whenever the govt. gets involved prices go up. ALWAYS. Let's see Fannie, Freddie, Ginny, Sally, Medicade, Medicare, etc....ad infinitum.

One thing I've done which I found interesting is to draw trendlines from the close rather than the highs of respective pivotal days. This yields a rather interesting result. By the way, you probably recall that this is advice given by Elder in Trading for a Living.

Also, I've re-labeled my chart to accomodate the ratios I've been referring to. Please note that the A waves measure cuts the move from March to now in half. Interesting?

http://www.screencast.com/t/QfCZMohoQtJe

jaxon

Very interesting - can you find that article for me? Didn't see it at Chris' site.

I should add that I disagree with the author about the short term implosion of the dollar. Bernanake would be totally crazy to accept renomination only to preside over the complete collapse of the dollar. This is a man who got a 1590 on his SAT but then again I think L. Summers scored high too. I believe he will take action to wind down QE knowing the consequences otherwise. Whether he is stopped or not remains to be seen. Medium term (24 mos. + I think the dollar is toast.

Took me a long time to find it again (which is why I didn't post the link in the first place). This article was under the Daily Digest for Aug. 24th on CM:

http://jsmineset.com/2009/08/19/the-countdown-t...

I don't know the source, but there it is for what it's worth. Be brave bears - this may be a tough week ahead and I am braced for higher tape unfortunately.

I'm surprised that they've waited this long. Do they really expect to get paid? Do you think Americans will cut their entitlements in order to do so? How will they do that when they have no plan for it and are proposing additional massive spending in the form of another stimulus pkg. and national healthcare plan? BTW, they somehow try to defend this healthcare proposal as saving money. Hullo? Not sure what those boys are somkin' but whenever the govt. gets involved prices go up. ALWAYS. Let's see Fannie, Freddie, Ginny, Sally, Medicade, Medicare, etc....ad infinitum.

One thing I've done which I found interesting is to draw trendlines from the close rather than the highs of respective pivotal days. This yields a rather interesting result. By the way, you probably recall that this is advice given by Elder in Trading for a Living.

Also, I've re-labeled my chart to accomodate the ratios I've been referring to. Please note that the A waves measure cuts the move from March to now in half. Interesting?

http://www.screencast.com/t/QfCZMohoQtJe

jaxon

Bought THLD on Friday pullback............., might continue to hold.

Here's some newer music by wolfgang (not amadeus):
http://www.youtube.com/watch?v=Q4MXFOMpVIw

Here are some great stats.

http://news.yahoo.com/s/ap/us_meltdown_by_the_n...

Aloha all here is my contribution of thought copied evilously from Tony C any one else good at wave counting want to try this and confirm his thoughts, sure lines up a lot of dates and projections all the way to just shy of the coveted round number 1100. TIA

There is nothing more difficult than tracking a bear market rally. Just when you think you have it figured out, out of the blue comes a subtle twist. Since Primary wave B looks like a simple zigzag: Major A SPX 956, B SPX 869, C 1080 (+). Then the internal structure of the current Major wave C should be similar to wave A. For more than six months everything was fine, and Major C was simply following the posted wave structure of A, until last week. When the market pulled back to SPX 1041, appearing to end Minor wave 4, but then the rally failed at SPX 1070 and made a lower low. The first reaction was a failed Minor wave 5, or an expanding ending diagonal. Not being a fan of either failed 5th waves, nor expanding ending diagonals, it was time to look for a slightly different alternate count. Project, monitor, adjust when necessary.
Since the drop after Minor 3 SPX 1080 overlapped Minor 1 SPX 1039, the rally from Intermediate wave B SPX 979 no longer looks like five impulsing waves. It certainly appears to be more of a corrective advance. Keeping in mind that Major wave C should be similar to Major wave A. The internal wave structure, including the recent overlap, will also have to fit into the entire wave structure of Primary wave B. We have identified a pattern that fits. If we count Major wave A (SPX 667-956) as a double zigzag, then we can count Major wave C (SPX 869-1080 (+)) as a double zigzag as well.
For Major wave A its first zigzag, Intermediate wave A, would be SPX 667-876 (209 pts.). Then Intermediate wave B to SPX 827, followed by another zigzag, Intermediate wave C SPX 827-956 (129 pts.). In this scenario Intermediate wave C is a perfect fibonacci 0.618 times the length of Intermediate wave A. Major wave B then followed and bottomed at SPX 869.
For Major wave C its first zigzag, Intermediate wave A, would be SPX 869-1039 (170 pts.). Then Intermediate wave B to SPX 992. Now the second zigzag, Intermediate wave C begins with a Minor wave A SPX 1080, a Minor wave B SPX 1020 and Minor wave C underway. Should this second zigzag, Intermediate wave C, also take on the same fibonacci 0.618 relationship as in Major wave A, then at SPX 1097 Int. C = 0.618 Int.A. Also, for Primary wave B, at SPX 1097 Major C = 0.786 Major A. Plus consider that we have two OEW pivots enclosing that level: SPX 1090 and SPX 1107. Finally a 50% retracement of the entire bear market is at SPX 1122, and at SPX 1125 Major C = 0.886 Major A, plus here we have another pivot SPX 1133.
To sum it up. Should SPX 1070 be exceeded then the failed fifth wave scenario has failed, and the market is likely following the above script. Posting this wave count as the alternate in the DOW charts, and placing the expanding triangle scenario on the back burner for now. It's always an interesting market.

Top at 1100?

http://4.bp.blogspot.com/_aGIcMkGtZHI/StEvCjbeE...
http://2.bp.blogspot.com/_aGIcMkGtZHI/StE0B7lzc...

Break out at 1100 ;-)

Them's some frightnin' charts

Meh - who knows - it's one line in the sand - many have met their demise in the past few months. Trust me mate - nobody knows for sure.

Mole if you could, being the master, check my post above and run it through your evil brain and give a opinion, thanks rat Jerry

Mole's chart has a very similar target and was drawn using similar methods. He mentions a fib multiple level of wave W (which is what your dude is calling Major wave A. W is correct) that looks to be pretty close to 1097, which is a number that I also came up with. So yes, the person you are quoting sees the same price cluster of resistance as most of us. Not knocking him, just saying that Mole's chart pretty much says all that in a picture. Perhaps if he tossed a chart up of longer timeframe than 3 months it would help, but then it might be too "cluttered." :-P

Skål!

Berkshire , thanks for the response. The other counter is Tony Caldero from elliot wave lives on link to his blog here for your review, it is a modified version of counts and Yelnick even referenced his count as a viable option to STU count, what I like is various methods are now coming to the same point and if that line does get broke then we have some serious revaluating to do on our beliefs. Links to his charts are at bottom of blog on stockcharts. Again thanks for all you and Mole do.

http://caldaroew.spaces.live.com/default.aspx?s...

http://yelnick.typepad.com/yelnick/2009/10/last...

that was below the belt :-p

I will never forgive him ;-)

why? scared that he might over-evil you?

He seems a promissing student.

"The force is strong within you little one, the dark side awaits you!!"

ROFL.. A promising student... If you only knew...

Skål!

why? here we only know what people post.

But now I'm curious

I know my man, I'm just playing with the charts :P

Picking the top is as hard as picking the day the world ends. So, does the world end on December 21st, 2012? I don't know? Is the top 1100? Beats the hell out of me! (So has this market by the way)

Yeah I know, I remember when I was 16 yrs old (10 years ago) I used to tell my mom I didnt wanna study because the world was gonna end in year 2000 lol.

It might end soon if Bin Laden wins a noble peace prize too!

The world will never end as long as obama is alive. He'll save us.

Just like he's saving our dollar!

Here's a few cents and some observations.
I trade my 401K accounts differently than my main trading accounts, because they have a much longer horizon.
I've ejected all my longs at this point in these accounts, because most of the stocks are back around their highs....AAPL, GS, BIDU.....bla, bla. I just don't think there is more upside there.....but.....
I will however, take the indices at lower prices so I sell (and have been) puts right under the 50DMA around a test of the 50DMA....vix is usually elevated. I sell puts on SPY, QLD, TNA, GLD and TLT.
The market will tell me if I'm right or wrong by giving or taking my money.

After getting hammered on my TLT puts this week and enjoying profits on the others, I have to conclude fear is really leaving the market. The VIX, which I like higher because it defines put pricing also tells me that fear is really bottoming.

I know what I'm gonna hear.....oh thats a sign we're going straight down......ok......maybe, but until the short trade can make money like the long trade you know where I'll be, cause I'm here to make money.

Mole, let me know if you want my prescription for meds to develop thicker skin, nec in these times.

What you got?

Mole, re-read the message, it is self-contained....when things get rough, you gotta decide how and how much you want to get involved. Self-preservation.

Thank Ye' Mole for ye' analysis...now go get some booty!

Now there's one pirate that shivers me timbers.

I wanted to make a comment about theme-based market trading. There are some bank earnings coming out this week, and I'll be watching them closely. Apparently, there was a recent rumor that GS had lost a ton of money on a derivatives bet. Let me comment on rumors in general:

1) Rumors are often generated by hedge fund managers who want to short/buy ahead of it and then reload at lower/higher prices. They do it because they have metrics they need to meet, and it's the easiest way to do it. The most nefarious case I remember was back in March/April when a rumor was spread that the government would take stake in the banks and dilute shares. I remember FAZ was up 40% that day. Total BS. Hedge fund manager mania. You need to be able to explain every move in the market. If it's based on a rumor, it's probably a false signal.

2) Every primary move in the market is based on a theme. Think the 2003-2007 bull market -- all about the housing boom. The trend ended on the housing bust.

3) In order for this wave up in the market, the prevailing themes must be contradicted. I would argue that bank earnings and a housing recovery are a key part of the theme. If banks disappoint this week, we could see the start of P3. If they don't, then I would tend to concede that the market marches higher.

For that reason, this is a huge weak for the market, with JPM, C, GS and BAC reporting. I remember many analysts who actually took the time dig deeper into the bank earnings last quarter noticed that the earnings came on one-time things like selling part of their business. To beat this quarter, the banks will have to do it the old fashioned way -- by actually making money. They might do it -- I'm not saying they won't. But there is a risk of some problems this quarter. Specifically, Wells Fargo insiders are selling ahead of earnings.

They were able to spin bad earnings in previous quarters to a positive slant, I think this time there will be enough stories to spin to the positive. Nobody is going to talk about off balance sheet stuff and since there are virtually no rules on marking assets to reality, that part of the business will be opaque.

The only parts of the business which will show obvious downturn and can't be lied about easily are default rates on things like consumer credit cards.

This is the latest Bank shit list... No need to rush... I guess the reason they have not declared yet... Must be because FDIC is about bust?
http://cr4re.com/PBLOct909.html

click on some of those blue links on the right, Like Cease and Desist .... Gawd

But there is a risk of some problems this quarter. Specifically, Wells Fargo insiders are selling ahead of earnings.


when are earnings? for WFC

There's significant P&F resistance between 1080 to 1105 going back to 1998. Does anyone have a top in this area using other forms of analysis?

http://www.screencast.com/t/yWjo61Xc

bring a line from the 2007 top, put it at the 1080 top and see what that line held...

Not sure I follow. My point is that this area was significant in 98, 01, and 04. We sliced right through as support last fall but should still be valid as a resistance area.

i mentioned that if you draw a line from 2007 line to may 2008 high it is, currently, close to 1080

it held then, it can hold now

lol, you mean break Charles Dow's rule of trend lines only being 45 degrees.... Guess Charlie didn't like his charts cluttered either. I see what you mean though.

trend lines slope depend on how high the madness went before the correction

Seriously, top post as usual, and discretion is the best part of valour

have a nice trip and try posting once in a while, the girls just drive this place a bit too happy and berk, well berk is your exact opposite, sometimes you're too dry (synthetic to the extreme) Berk feels is lines are lonely without 200 lines around it (but nice work berk)

Just promise us that, whatever project you're about to embark on, you'll keep this blog

best regards

Excuse me... I think a number of my charts are less cluttered than the top most chart posted here. Just for you, I will only post charts. NO LINES, FIBS, NOTHING. And you tell me what I am thinking. Sound fun? (Actually it is, and you will get a taste of my games later this week, but that is not the point).

Personally, I feel a chart is useless unless you can tell me what you are thinking. I try to annotate as much as possible to make sure there is no misunderstanding. And the only chart I have posted here with 200 lines on it is the $VIX:$SPX chart, which has so many lines it crashed TOS more than once while working on it. Also note, that when posting in front of a bunch of people, it is usually a good idea to include alternate possibilities (more lines) so you don't appear as someone who is always recalculating (especially true with EW).

Alright. That was my rant, and I know you meant no harm, I just have to stick up for myself. You have not seen a busy Berk chart yet (minus $VIX:$SPX). And you likely won't. :-P

Skål!

Annotate the hell out of those charts! It is very helpful to see exactly what you are thinking. Thanks for all your work.

by the way, I' looking forward for your vix:spx, I'ma Pastafarian at heart ;-)

~~~ \ / ~~~
~~~00~~~
~~~ / \ ~~~

Best FSM I could do.

thanks, any midgets mountains and trees?

true enough, but I was rubbing mole's ego (not that it needs it) and there was 1 or two charts by you that I asked myself if I had taken LSD.

Nevertheless, I stated that a perfect balance would be in between you and mole.

no offense meant, and if you go to disqus you'll see I gave you another sugestion on the bulish index with 2 moving averages, you'll see you'll draw quite a few lines on that one.

Last point, I am grateful for the posts, by you, mole, the girls, and all the other who just link charts and post comments. The fact that I'm a stuborn bastard is just my problem. But I read and see what all of you post, I'm not stupid nor ungrateful.

best regards

Don't worry about their complaints, Berk-meister - I for one appreciate your charts, cluttered or not. If I've learned anything in the past year it's that opinions are like assholes - everyone's got one ;-)