A lot of people have asked for an update, so I've taken my stock updates from Jan 2009
...and Nov 27, 2009 (click to enlarge):
And I've appended my new thinking (click to enlarge):
As I've been saying but would like to reiterate, the major W5 on that chart (Wave A bottom) will likely happen in or around 2012. My target for Wave A is Dow 3,800. Time is difficult to estimate, and basically unimportant compared to the price target being achieved.
In other words, if EW's indicate that nature has programmed poker players to stand up and walk away from a poker table after losing $X, it doesn't really matter how many hands it takes to lose $X. That said, we might instinctively read into the same metaphor that time, or the number hands going nowhere, plays some role in the human decision making process.
Hi FDR, according to EWT what numbers do you see for the DJI on the bottom of major 3 and on the top of major 4?
ReplyDeletebtw, 3800 for major 5 is quite scary!!
Thanks a lot!
With regard to the nature of programmed poker players, currently it is the shorts who have been feeling the pain for the last year.
ReplyDeleteWould it be wrong to assume that a spike in short covering will drive volume up dramatically before the next down leg begins?
"Would it be wrong to assume that a spike in short covering will drive volume up dramatically before the next down leg begins?"
ReplyDeleteIn the macro picture, volume contracts during corrections (counter-trend moves) in either direction. In the micro picture (lesser degree waves) there are impulsive moves both with and against the trend.
FDR
ReplyDeleteLooking at the DXY, the $ is at around 80 and a year ago it was at 90. Does it have to move up another 10 points to get to the same buying power or does it have to move up less because of some of the deflation that has taken place since then?
Thanks
"Looking at the DXY, the $ is at around 80 and a year ago it was at 90. Does it have to move up another 10 points to get to the same buying power or does it have to move up less because of some of the deflation that has taken place since then?"
ReplyDeleteRuss,
Exchange rates are unrelated to the dollar's buying power. The reason is that the amount of currency is not zero sum in either denomination.
In other words, if I cut the number of circulating Euros in half, and I cut the number of circulating dollars in half, buying power will double but the exchange rate will not change.
Today we have deflation in all major denominations, exchange rates only reflect differences in the rate of change, not direction.
I thought you might like this headline as a keepsake
ReplyDeleteGood News for U.S. Markets: Dollar, Stocks Move Together- CNBC
Now that stocks and the dollar are moving in tandem again, it could be a signal for investors to put more money into US assets. For much of the 2009 rally off the March lows the two entities had been in reverse lockstep. When the dollar would fall, stocks would rise and vice versa.
All of the stars are aliging with Barrons calling this market cheap with the S&P trading at 13 times 2010 earnings and only 10 times 2011 earnings. Barrons is calling for $100 of earnings in 2011, does anyone think this is possible? I think last year in the shit storm the S&P earned $60.
ReplyDelete"For much of the 2009 rally off the March lows the two entities had been in reverse lockstep. When the dollar would fall, stocks would rise and vice versa."
ReplyDeleteThat's because some stocks are priced in dollars.
Do you ever have self doubt on your market calls?
ReplyDeletewith retailers showing stronger profits because price increases are sticking, where are the next logical price increases to show up? I would think retail would be the last place for price increases to occur, but companies like JCG are proving that higher prices are here and people are paying them. Are these the first signs of renewed inflation? I see that you showed deflation by showing pictures of sales at department stores, so it is only logical that when the sale signs get thrown in the trash and prices go higher than they were 2 years ago, that deflation has also turned back into an inflationary environment.
ReplyDeleteThis market is insane. I picked up some FAZ and it went up for an easy $1000 and now I'm down 3k-4k. I have a simple rule when I started swing trading is to never sell at a loss. Only broke that rule once, and glad I did. So anyone here want to take a stab at when this current bull wave will run out of steam?
ReplyDeleteWith all of the talk about deflation, I'm still trying to wonder what's to stop them from simply and steadily buy up shares with their fake money? What if the Fed does this without charging intrest just so people can say that the market is up, we can't be in a depression?
Anonymous said...
ReplyDeleteDo you ever have self doubt on your market calls?
---
No. He has been calling 2008 crash since 1908!
Are you a bull or a bear ?
ReplyDeleteFDR,
ReplyDeleteIf Blackrock is right and the DOW takes out 14k again next year, would you change your count? It looks to me like this is acting more like an A wave of an expanding triangle in the DOW, we saw wave from the 2007 high to the 2009 low. Just thinking that maybe a lot of people have the overall count wrong. I guess time will tell, but I think Prechter thought the DOW would collapse in 1995 at 3000 and his target was 400. What did it do, it tripled. There is plenty of cash flying around to propel the market because the volume is so low that it requires very little capital to move it in percentage terms. I know you speak of volume, but there is plenty of volume for the average Joe to take advantage of buying and selling. I like Prechters work, especially his bit about having the intestinal fortitude to handle massive gains, that is why I have not sold yet. The gains in this market are like none i have ever seen. I did not have much money last year, but now I can almost retire and I am only in my late thirties. I trail a stop on the ES below the recent lows and use Prechters site to see where the breakdown points are, but they keep holding and propelling us higher. Good luck trading, I enjoy reading your blog
http://caldaroew.spaces.live.com/blog/cns!D2CB8C5EBA2ADE86!72247.entry
ReplyDelete"Do you ever have self doubt on your market calls?"
ReplyDeleteNo. Short term timing is always difficult if not impossible to gauge, but price targets are knowable within definable boundaries. An Asteroid could hit the Earth at any time, but that's ok because most of the time it won't.
If you doubt your ability to call the market, you shouldn't have any money in it, right? Would you buy a car if the dealer had the right to take it back at any moment and keep your money? Would you drive it without insurance (some might, and that's a good answer)?
I honestly do not understand people who put money in stocks, or whatever for that matter, without knowing what's going to happen at least in the macro. I know the gov't wants every citizen making mindless monthly payments to their corporate owners, but that's because they want to pin a pile of your money for the taking. Worst case, if you win a hand by accident, they take half upfront then half again when you tip over.
I don't get it.
McCormick and Schmick's raised the price of their Fish and Chips from 12.95 to 17.95 this week! I have a friend who bartends there in Chicago, he couldn't believe all the new pricing. He said the restaurant was picking up steam and they are trying to raise prices into the momentum. That is a large increase. Were restaurant food prices rising this fast in the Great Depression?
ReplyDelete"With all of the talk about deflation, I'm still trying to wonder what's to stop them from simply and steadily buy up shares with their fake money? What if the Fed does this without charging intrest just so people can say that the market is up, we can't be in a depression?"
ReplyDeleteBecause as fully corrupt as the Fed is, they have yet to secure the right to print money to stuff directly into their own pockets. They still need to launder counterfeit money through a bank and a borrower. No borrowers, no cash in circulation.
That's why they've been having a fire sale, offering the counterfeit cash at 0%. But people don't want to buy cheap, or even free leverage that makes them poorer. And that's why the "money supply" (really the currency supply) has been in total free fall for two years.
People who think the Fed is printing haven't seen the numbers. Factually, the Fed is draining harder than they ever have before. Why they are creating a depression intentionally or accidentally is at least debatable, but that there is mega-deflation is not.
How do you position size if you have an endless timeframe for the crash. If you are short, there has to be some point in which you can't stomach the loss, literally. If that point is so high that short term thinking doesn't affect your position in any way, then your position would be so small that even getting it right won't make enough money to do anything with ;)
ReplyDeleteFDR an interesting (and short) read on wealth distribution, the real purpose of the stock market and a fascinating explanation of this bizarre, zombie-like action. Seems the traditional bag holders (middle class investors) are having none of this rally. So with the "host" dead or dying, the parasites are left to fight among themselves for survival.
ReplyDeletehttp://www.oftwominds.com/blogmar10/wealth-distribution03-10.html
People are panicking out of the dollar and into any asset that is not nailed down. How is this deflationary? I feel you may have lost your way, the good news is, like Prechter, you too can change your count on Friday.
ReplyDelete"People are panicking out of the dollar"
ReplyDelete0.14%? The line can't get much longer to get in. The money supply continues to drain faster than ever before:
http://www.shadowstats.com/alternate_data/money-supply-charts
For the past two years the Fed has been sucking dollars out of the system like there is no tomorrow, and there might not be.
"Anonymous said...
ReplyDeleteMcCormick and Schmick's raised the price of their Fish and Chips from 12.95 to 17.95 this week! That is a large increase. Were restaurant food prices rising this fast in the Great Depression?"
I'm looking at a menu for a Chicago area McCormick and Schmick's and it says their Fish & Chips are $13.95. Either you're a liar or that was the fastest hyperinflation period in history. I'll just go with troll..and a bad one at that.
What now?
ReplyDelete