Freeloaders Unite!

I’m on the train again, cruising back from San Diego to Los Angeles. This has been the first time I ever took Amtrak in the U.S. and I have to admit, at least this particular route actually is not too shabby – even for a spoiled megalomaniac as myself. I purchased a business class ticket and the seats are comfortable and relatively clean. I got my lappy in front of me sitting on an airline style fold out tray – I got my trusted Sprint modem and here I am blogging while cruising at a mind boggling speed of about 60 mph. Okay, so it’s no Japanese bullet train and the tracks is a bit on the wavy side, but hey – it beats sitting on the freeway for three hours.

A quick reminder – our friends over at Elliott Wave International are hosting their occasional free week again – so this a great chance for all you freeloaders to get a peak at their Short Term Update:

I’ll be in touch tomorrow with a quick look at where we are in the wave count as well as a few lines in the sand. I did sense a lot of trepidation and concern when reading the comment section Friday night. Obviously many of you are expecting another rip higher which would be a huge kick in the groin for us long term put holders as Mr. VIX would surely descend back to base camp. I for one have been ignoring the red in my account in the past few days – let them rip it higher and push down volatility – all I see is another opportunity to increase my exposure to the short side. But that’s how I and Berk roll – and as you all should know by now – we’re both completely crackers.

Cheers,

Mole

This entry was posted on Saturday, November 7th, 2009 at 8:39 pm and is filed under Elliott Wave Theory. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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Implicit Trader

Review of Friday morning's trade.
http://implicittrading.blogspot.com/2009/11/if-only-it-could-always-be-this-simple.html
jaxon

not sure there is much left in this. the internals look ominous. technical damage aside there are divergences in pretty much all indicators. and just look at the volume. market looks VERY, VERY HEAVY. of course, i could be wrong, but i will be most surprised if this market does anything but descend rapidly. my thought is that we begin mineutte 3 of PW3 Monday. look out below.

BTW, do you think passage by the house of the Health Care bill is going to help the markets? (-:
KidDisco

I do, actually. the implication is that the dollar will weaken thanks to the additional spending over 10 years.

As we all know by now, that is stock positive...
jaxon

There is the small problem of who will pay for all this increased
spending. Since we are not going to be able to even service our debt
by that time, much less pay it, my thought is that we will default at
some point. Not sure that will be good for the markets. (-:
Forget trying to inflate our way out of this mess, ala Peter Schiff,
our creditors will not allow it, as in bond market collapse, and
besides, it would mean the Fed would be destroying itself.

Sent from my iPod
KidDisco

yes, i agree that at some point, people will wake up to the fact that
a falling currency is really an indication of an economy in decline.
however, for now the theme on wall street is weak currency = strong
markets.

i'm not saying this new spending is necessarily bullish. just saying
that if one were to make a guess, one would have to go with recent
market drivers...
jaxon

the technicals SEEM to speak otherwise in terms of intermediate direction.
we are at a serious inflection point.
KidDisco

its true, technicals are not looking good. i would agree we are *near*
an inflection point. i'm not ready to say we're there yet. mostly
because with really bad news in the form of unemployment, the markets
did break to the downside. it seemed to me that the markets were
actually waiting for confirmation of BAD news so that they could push
forward with their dollar carry trade backed by a Fed that will keep
rates low as long as the economy is weak.

i'm not saying this is sustainable. if anything, if/when the
correction comes, it will be even more violent since more suckers will
have been lured back into the markets. but in the mean time, my money
is still on the market continuing higher.
jaxon

BTW, the Fed's stance can also be interpreted as a lack of
confidence in the recovery. I actually think this is what we're
seeing. There will be an increasing flight to safety which will
reinforce the dollar having bottomed and the coming rally in the dollar.

Sent from my iPod
KidDisco

i understand what the fed's stance means fundamentally. nevertheless,
this is how the fed has always stood. nothing has changed to indicate
things are getting anymore worse, only that they're not getting much
better and that the fed will stay low for as long is needed.

bears have been calling tops since mid april. i know because i'm a
bear. nevertheless the market has done nothing but go up since then
and there is nothing here that really suggests otherwise.
jaxon

PS: IF, and that's a BIG if, the market were to go up further I would see it as a golden op to back up the truck and buy even more long term OTM puts.
KidDisco

oh yes... this i completely agree with. i think the time to load up is
near.
jaxon

Be careful and good luck.
charles_smith

Healthcare bill is not a done deal--Senate could take weeks. Politically, the entire rally can be seen as leading up to the passage. Once it's passed then TPTB can let the market implode. Could see a "relief rally" that the issue has been "resolved."

Also we have to remember this funnels trillions of dollars into all the players--big pharma, hospitals, insurance, everyone stands to gain at taxpayers' expense--so the market might love it in terms of guaranteed profits. Key point in the bill is there are NO significant cost controls.
jaxon

perhaps. the news can be taken many ways. my thought is that the Republicans are united against passage. this speaks volumes. but even more importantly are the technicals in my opinion. they seem to be indicating an imminent turn down as i indicated in my previous post. my EW count is as follows:

http://www.screencast.com/t/huXJq6HFPvQL
charles_smith

FWIW here's my read of the charts. Goldpacker and others (McHugh) have noted the timing convergences around 11/9 and 11/17. Quick exercise: count the days in the last 3 rallies and each lasted 10-13 days. Last top was 10/21 at 10,119 DJI and the recent low was 9678 on 11/2 (9 days). 11/3 was a nothing day so I count the current rally as starting on 11/4 which would put the next high target on 11/17 or so. (11/4 + 10 days)

Each rally ran about 600 points, so add 9,700 +600 = 10,300 which is on a lot of analysts's targets as the top (Orlandini et al.) and some here have also mentioned it.

MACD is in a bullish cross and full stochastics are still rising. Gold still have a move to make to the upside (1130, 1180, whatever)and the USD may well re-test recent lows or hit 73 just for good measure.

All this lines up to the top around 11/17. I would love to see a blowout move to DJI 10,700 and SPX above 1120 because that would seal the deal.

Good post, goldpacker, and thank you Berk for the basic option strategy. If VIX falls back concurrent with the high next week, buying OTM options on the short side will be one of the great profit opportunities of the decade IMO. Mole, good to have you back in the saddle to call the final top....you da man.
Vardoger

Possible 1084 target for tomorrow. Some other SPX charts as well. The asterisks on gap chart are recent intraday gaps, if anyone has the intraday gaps since March let me know so I can add them to the chart.

http://dl.dropbox.com/u/737329/SRspx2.png

http://dl.dropbox.com/u/737329/SPXgaps11-09.png

http://dl.dropbox.com/u/737329/1084gap.png

http://dl.dropbox.com/u/737329/SRspx.png
Bart7

Prechter interview a few days ago on cnbs..
http://www.elliottwave.com/cnbc-11-05-2009.aspx
Bart7

Mish on the proposed trader transaction tax, yet another dumb idea brewing in Congress;
Financial Transaction Taxes Would Cause Stock Market Crash
http://globaleconomicanalysis.blogspot.com/2009/11/financial-transaction-taxes-would-cause.html
Congress is discussing a horrible idea, putting a "transaction tax" on every stock or option purchase or sale
More at link above, these are his closing thoughts;

Tax Would Increase Volatility And Reduce Liquidity
I am aware of several large hedge funds that would move their operations overseas if this measure passed. If I am aware of some, I am sure there are hundreds more.
Think of the implications on traders thinking about stepping into a plunging market to buy. With this transaction tax who would want to step in? It sure won't be the LTBH clowns because they would already be in.
Right now shorts and short-term traders are the only ones who might step into plunging markets. The former to cover shorts, the latter to take a chance. Both provide much needed liquidity. The traders could count on a stop loss nearby where they can exit if wrong.
If this bill were to pass, there will be no one willing to step into plunging markets. Liquidity would immediately dry up.
Proposed as a way to soak the rich while decreasing volatility, this bill would soak all stock holders and increase volatility. The markets will crash if this bill passes. Of course Congress is doing so many other stupid things, the market is likely to crash anyway.
goldpackers

I am sure the majority expect a big sell off Monday on health care but I believe WStreet expects Senate to make the Bill friendly. Would love to see a dump Monday to 1050 a bounce then down hard to 11-16/17.
Must break 1061 to 1066 Monday to be bearish.
goldpackers

Gann turn 11-9/10 and especially 11-16/17. Had thought that would be a low. A series of turns in December.
Wave count so far is an ABC down. Thinking this is an X wave to ~1076 that completed Friday or this M/T.
Expect another ABC down to 1000 +/- 20 points. Favor this scenario. MOnday will tell.

Bull count would be an ABC down complete and a final rally to 1100 to 1120. From there I expect a FAST move down to at least 1020.
Guest

moorso at Tides, Trends and Trading shows a "high" Wednesday, Nov 11, and a "low" Monday, Nov 16. Has been calling "turns" within a day or two the past couple months I looked at --
http://tidallyspeaking.blogspot.com/

And his calls are usually within a day of those at the Xyber9 pay service ($125/mo US), based on gravitational pulls on the earth. Free charts of calls are published after the fact, here --
http://xyber9.com/Xyber9/AllForecasts.aspx?ForecastCode=UW
rhae

I do have some lines pointing at Nov 11
http://www.screencast.com/t/2cuPg3lUTuFI
Guest

From George Ure today: "My best guess (and no, I don't make recommendations on investments, sorry you're on your own here) is that the market will go off to set a new high next week, or the week after, and we could see 10,400-10,500 in the Dow.

"That in turn - following yesterday's discussion of 'time to crash' behaviors - would put the next real low sometime this winter to early spring 2010 and then one last good run back up from there before the end of economic life on earth begins in the August/September period of next year."
http://urbansurvival.com/week.htm

Interesting that this timeframe lines up, more or less, with Terry Laundry's T-Theory projections.
AS2009

Sounds cool .... in India, trains are a way of life and very comfy too - specially the AC classes :) ... there are compartments w/o ACs too ... have a great trip home Mole and looking forward to your updated count ...

Berk - missed your BB post on Friday lunchtime - but sounds awesome :) - looking forward to the "additional details" lesson this weekend :)
dreadwin

I had the pleasure of taking the high speed train from Frankfurt to Ulm (Germany) recently, and it was a fantastic experience. Light years better than the train experience before that one: from Wuhan to Chengdu: 26 hours, no AC, through southern China in the summer. That's a trip where you really want the AC. (it wasn't available on that train ...!)
Guest

"An Australian psychology expert who has been studying emotions has found being grumpy makes us think more clearly."
http://news.bbc.co.uk/2/hi/health/8339647.stm
Stainless_Steel_Hamster

any finish around to complete the grumpy squad? hypertense germans and portuguese already present
Guest

Yeah, I saw that study, too.
Guest

Market Settles In To A Range....Lateral Base Continues... Jack Steiman has generally been bearish, but now sees little chance of a big down, but rather a trading range.
http://www.swingtradeonline.com/
Guest

Mole, too bad this wasn't the weekend when hundreds line the tracks and "moon" the train passengers (around Laguna Niguel?) That would have been fun!
Stainless_Steel_Hamster

Mole, make a safe trip home, dinner's in the oven and children are crying for a count/line in the sand post

;-)

p.s. we should get a new low, bpspx still at 73, but... look at vix's sure looks as a megaphone bottom with an E missing, if it reverses at 36 near november 12... jump ship
BigHouse(Aka Mr Vix)

*********The House just passed health care reform bill.....*****
de3600

Assholes
BigHouse(Aka Mr Vix)

Since its quiet tonight, check out this you tube video. This guy on the bike was a nothing..After a major company saw this, they used his tricks in one of there ads...The power of you tube. The stuff he does on his bike is insane...

http://www.youtube.com/watch?v=Z19zFlPah-o
BigHouse(Aka Mr Vix)

I live near Greenwich Ct. I took a ride down Greenwich Ave today. It's known to have alot of high end stores. I was with a friend who is a native of Greenwich who also owns a store there....I counted about 6 empty store fronts up for rent. It does not look good for Commercial real estate.By the way Greenwich Ct is known as the capital of Hedge Funds.....Next week i will try and take Pic's of the Avenue. If there is any good news, it's that Ralph Lauren is opening up on the Avenue..Good luck Ralph lol
Dr Livesey

Check my Post @BWM about the discussion of a big picture or can we go higher
http://www.bostonwealth.net/2009/11/07/the-discussion-of-a-big-picture-or-can-we-go-higher/
Stainless_Steel_Hamster

very close to my initial assumptions on the general wave counts.

underestimates the power of GS driven b and B expansions and 5's overboost.

Minimum target CAN fail and might just barely be hit as in july BTW target now is same as what was hit in july... place where 5 would hit the end. boost was bigger now, might just drop to 990 +-30

p.s november was 3, this 4 is weirder than most
string01

I really wish we had trains in this country like the EU and GB.
Someday.
z12run

In the U.S., 40% percent of the freight is moved by train while 28% goes on the highway. In Europe, trains carry less than 17% of the freight while 73% goes on the highway. I suspect the vast geographic distances have an impact on the movement of both passenger and freight by train.
Stainless_Steel_Hamster

not GB, they had nice trains during the industrial revolution, they still have... the same old trains
string01

They have a mixed bag. I've ridden some nice cars from Manchester to Glasgow. Virgin runs a nice service.
Stainless_Steel_Hamster

remember doing paris to the channel in a flash and crawling to london as a snail, lines can't haldle the speed (now when you use tgv for paris brussels... that's something, I hour flat)
ultra

It's all cool this side of the channel now that they have finished the h/s line into London St Pancras.

And they appear to have finished the west coast upgrade too - just came down yesterday from Liverpool in a smidge under 2 hours - British trains are good shocker....
Stainless_Steel_Hamster

didn't know that, I was based in paris and in 2003 or 2004 (before the RBS Natwest purchase) had a meeting with natwest to sell them a private label card software and remeber the train was slow as hell since we left france
rhae

Once took a train from Southern Spain (Rota) to about 1/2 to Madrid... Old Steam locomotive... Thought I was riding with Jesse James... slow but reliable...
Eva S

US trains are probably 50-70 years behind European or Japanese trains, but it does beat driving the car and wasting your time in the traffic. Spain has amazing high speed trains called Ave
http://www.renfe.es/ave/
charles_smith

Yeah, that Amtrak run from San Diego to L.A. is pretty darn nice. Berkeley to Sacto isn't bad either....
I only want a final rip just to get this rally over with ASAP. That's why I have my "final blow-off top" voodoo doll out and Jimi cranking "voodoo child"....

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