Monday, April 18, 2011

Where She Stops, Nobody Knows

[Disclaimer]:  This post has more words than most of my posts.  This is where I get into trouble.  I'm very visual and I think I probably communicate better visually, which is great for trading and elliott wave because it's all in the chart, but it's hard to chart politics and narrative, hence the disclaimer, people get real touchy about the politics.

I said I would take a wait and see approach to the top of this wave, but that is well... it's irresponsible is what it is, and it's really not true.  I had a zone in mind, I was simply keeping it close to me.  I have a love hate relationship with this blog.  I keep it as a history of my thoughts on the market, so that I can prove my reasonings post trade, but I don't necessarily gain anything from it so it's hard to justify telling all.  Not that I know all, I would just like to avoid being a target of some fat pocket hedge-fund looking to fade someone's trade.

So, that said, targets are good.  They give you just what the word implies, a target to aim at, to shoot against.  Without a target you are just blindly shooting, with a target you can build strategies.  Where is the target?  Nobody knows.  We can only guess.  Some guesses are better than others, because they really aren't guesses, because a guess implies a certain element of random choice.  Targets are anything but random.  You can come to a target many different ways, there is no right answer, but there is a wrong answer, and that wrong answer is not having a target.

If you've skimmed through or skipped the fluff, the bands above show where I'm looking for this 5th to terminate.  Somewhere between 1370 and 1440.  Ideally I would like to see an either or and not somewhere in-between the two.  There really aren't strong points of resistance between them.

In terms of Time, I would first suspect that this summer from May to July is when I'll be on high alert for meaningful trend change.  If everything looks good, or something develops my next choice would be sometime in the first half of 2012.  Based on the wave-structure I see today, I would lean toward this summer. 

Politically, I think QE3 is a hard sell with the rest of the world raising rates.  If they do push for a QE3, look for the "assured destruction" rhetoric similar to the way congress complained the original 700billion bailout was sold as the only option to stop a world collapse.  Even without a state sanctioned program, I would be suspect of the Fed turning off their programs.  They've hired the staff, and when government creates a position, it seems to be hard to remove it.

Possible Big Picture:
1)QE3 never materializes.
2)Market falls going into 2012 elections
3)Market collapse is handled politically much like the Iraq war, and we vote for Obama because we fear that changing presidents risks an already delicate situation.  I think a lot of the republican moaning about the debt situation is a clue that we won't have a consensus in congress allowing QE3.  This republican move will be blamed for triggering a new leg down, and ensure a democratic win in 2012. 
4)After bringing the market just below the previous 666 lows, the inflation machine kicks back in, catches a real economy that will be putting in a base and we start another great bull leg.

Prechter's flat count from the 2000 highs really doesn't hold water anymore.  The scale is not looking correct.  What's more likely is some type of ABCDE triangle much like the 70's.  Obviously my optimism is a function of where the market currently sits.  I'll probably be screaming bloody murder at 600, but we are all victims of the emotions.

There was a zerohedge piece earlier on why not hyper-inflation, which I completely agree with, I had even said the same line of thinking in some comments previously.  But I would imagine that it's not massive deflation either.  It would be more sensible to have one more moderate bout of deflation and then allow a slow boil inflation to resume.  The thinking is that there would be no hyper-inflation because then all the debt becomes worthless, and you could pay your mortgage on a month's pay.  But massive deflation risks the entire system where money would be worthless, and that probably would not benefit the elites.  Basically it's the 70's all over again.

Thursday, April 14, 2011

Chart Art

Wednesday, April 13, 2011


Silence is also speech.  ~Proverb

It's like I said earlier, the local peak we saw was what I would call one of five.  I'm being brief because there's not much to say, and there's no point posting everyday about the same themes that hopefully you can track yourself.  Some people might like for the top to be in, but especially with the way it's being sold in the media, I would be extremely skeptical.  "How to play the sell-off?"  I don't know, maybe buy it?  TNA comes to mind...

Anyway, since I have nothing to say, why don't we all just sit back and learn to cook.  My good friend and culinary connoisseur, Dick Booze, has done it again with his jam up job showing us how to do Spanish Tapas the right way.

Monday, April 4, 2011