Tuesday, September 4, 2012

Currencies' Relative Performance Since The USD Low

Yesterday I was talking with a friend who was telling me that it was his dad's 63rd birthday on Sunday.  Craig went golfing with his dad that day on a beautiful long Labour Day weekend.  [I'd better also spell it 'Labor Day' for our American friends or they won't have a clue what I'm talking about.  Just a courtesy to our pals south of the border who are still the only country in the English speaking world who can't handle 'u's where they 'think' they don't belong, lol.]


Anyway, Craig informed me that he'd also bought his dad a birthday present, a nice big juicy beef roast.  The price? $64.00.  Apparently my friend also had plans on dining at his dad's house after putting in 18 holes and shooting a score of 82.  But all this reminded me of one vision I remember from my youth, back in the days when I was an 11 year baseball star.  At least I thought I was a star.  My team mates thought I was the designated base stealer.  In any case the image came back to me as vividly as if it had been only yesterday.  I don't know why I have such a sharp memory for what seems like every day of my childhood, but whether that be a good thing or a bad thing... I do.  I remember incidents and conversations between adults when I was 2 years old and even younger.  I remember their names and faces... even as my mother was holding me in her arms while shopping for some sort of cloth.  Mrs. Reach was commenting on my eyes.  I remember riding my little bicycle as fast as I could on the sidewalk one day, turning the corner sharply only to slam into Mr. Eckmeyer's big belly as he came walking around that same corner.  Needless to say it wasn't Mr. Eckmeyer who got bounced 30 feet.  I've always been thankful that his big belly was soft or I'd still be picking my teeth out of the back of my skull to this day.  What a face plant that was!  Probably a record breaker but I digress...

My younger brother and I had piled into our dad's old '52 Chevy on a bright and sunny Saturday morning with our parents and we headed off to the local shopping center to hit up the old food mart.  No we didn't rob it, my folks had a few dollars.  Yes we were poor and the green Chevy was an old car even for back then.  But we had enough money for groceries.

About an hour and a half after leaving the house, my brother and I found ourselves sitting in the back seat of the car once again with grocery bags piled up so high between us that we couldn't even see each other, grocery bags between our feet and grocery bags in our laps.  The trunk was so full of groceries that when my dad finally coaxed it shut the watermelon exploded.  Our mom was sitting in the passenger's seat with grocery bags piled up between her and our dad, groceries on the floor between her feet and groceries in her lap.  My dad had a bag of groceries on his lap and a 10 lb. bag of potatoes hanging from his face, the bag clenched firmly between his teeth.  Yup, we'd gone grocery shopping alright.

Once we got home and started to help unpack all the goodies, I remember my mom saying to my dad, "Good Lord Eddie, can you believe the price of groceries these days?  Imagine that, $50 for just a car full."  And people wonder why, when every time I walk past the meat counter at the local supermarket, I tend to puke on the floor.  I realize that might be a disgusting habit but it's not because I don't love meat, it's because I have an incredible memory for visions from my youth.  And $50 for a boat load of food is one of my more cherished ones.  $64 for a single beef roast isn't.


So is it any wonder then that so many of us have this little quirk of wanting to know what our currency is doing relative not only to food items, but relative to all the other major currencies in the world?  Here in Canada we want our currency to be relatively stable and to remain relatively close to parity (or a bit lower if possible) with the American dollar.  So far so good.  It's an amazingly well managed pair and considering that those two currencies represent the largest single trading block between any two countries on the planet, it's critical that it remain well managed to the best extent possible.  Because god only knows, the last thing the Americans need is for their currency to suddenly tank and the Loonie to suddenly surge.  Imagine if we woke up one morning and realized that the Canadian dollar had quietly but steadily climbed until it became worth twice what the US dollar is.  The cost of Canadian crude to the USA would have doubled just that fast.  And the cost of all other Canadian exports would be so expensive we'd have a hard time selling them at all.  Nope... none of us want that... we want stability and relative parity if possible.

Other currencies and other pairings have relationships with each other that are just as important.  The Australian dollar and the Yuan have their own unique relationship.  The Australian dollar is also unique for another reason... its use in the currency carry trade casino.  It's for that reason that the Aussie:Yen pair is so very important as a measure of the appetite for risk.  Because when bankers can borrow Yen at next to zero interest and re-invest those Yen into relatively high paying Aussie dollars and bonds, they can just sit back and listen to the old cash register ring up profits day in and day out by investing money that they never even had in the first place.  They're using money they don't even have, and lots of it, to churn profits almost out of thin air.  It's a great gig when it's going their way.

But what happens when something goes wrong?  What happens when something that they weren't counting on suddenly almost scares the crap out of them, or at the very least causes their O-ring to tighten up just a little bit?  What happens when they get the sudden and undeniable urge to take a dump dump some of their holdings in order to reduce their exposure to risk?  The first thing they do, every damned time, is to unwind that risky currency trade they've got going with the Australian dollar.  They have to sell those Aussie dollars in a hurry, and at just about any cost, in order to pay back those Yen they borrowed... and in doing so, reduce their overall exposure to a very risky currency play.  It's a practice that will happen every time the biggest players get a scare.  And when they get a scare all of us had better pay attention.

About this time last year, the American dollar suddenly and inexplicably seemed to put in what appears to have been a meaningful bottom.  It remains to be seen whether or not the uptrend in the USD is going to continue but one would have to think that with 3 or 4 rounds of quantitative easing already in the books and another one being threatened, the dollar should have fallen right off the table by now.  Why hasn't it?  Because the evidence that deflationary forces are at work are becoming quite apparent if we look in the right places.  I've written several studies that provide overwhelming evidence that deflationary forces are indeed at work and have been since year 2000.  But that's not the topic of this conversation and I won't take that aspect any further today.

So since the American dollar put in what appears to be a meaningful bottom last summer, where does it stand relative to all the other key currencies in the world?  What have they been doing and where do they stand relative to each other?  In this simple chart we go back to the time of the low in the USD,  the beginning of May, 2011 and start from there.  On that day, every currency on the chart below begins with zero % fluctuation.  It's the starting point and from that day forward we map out the direction each currency has taken and the percentage move each has traversed since the first day on the chart.

Major Global Currencies Performance Style Since the USD Low of Last Summer.  Click here for a live and updating version.
It's pretty easy to see that late last month an inflection point seems to have been reached in several of the currencies.  The USD started to pull back.  Was that the top in the dollar?  Not likely... not likely by a long shot.  At least according to the evidence provided by several studies.that show deflationary forces bubbling and boiling just below the surface.  The $CRX story is the most amazing one I've come across to date.  So as could be expected, the other major currencies that do a lot of dealing with the American economy have gone the opposite direction that the USD has.  The Pound turned higher, the Swissie and the Euro did the same.  The Yen has remained relatively flat but the Australian dollar... what's up with the Australian dollar?  It's the only global player that is dropping along with the American dollar.  And why is that?  There can only be two reasons, a softening in the Chinese economy and/or currency carry unwind caused by credit contraction.  It's both.

Without presenting any analysis on the Aussie:Yen currency pair and without really presenting any analysis here at all, I just wanted to provide this 'overall' picture of what the major global currencies have been up to since the day the US dollar put in what could conceivably have been a multi-year low.  I'm not making that claim at this time because I don't know for sure and I haven't done any serious currency studies for quite some time.  Suffice it to say, one glance at the currencies in the chart above and two stand out like a sore thumb.  The US dollar and the Australian dollar.  Personally I expect every currency on the chart above to reverse direction except one... the Aussie.  I expect the US dollar and the Yen to remain above the zero line, the others to remain below it and the dollar to outperform the Yen slightly in the months and perhaps years ahead.

Thanks for reading this far, and just a polite heads up.. if you don't particularly care for shopping stories please don't bother reading any further.  You can save yourself a bit of time that way.

All the best and until next time... keep smilin'.



================  End of article.  Additional entries below. ====================

Who said animals don't have a sense of humor?  This guy obviously does.  For me the funniest part is in the first 1/50th of a second of the video when "the plan" is hatched in the kangaroo's head.  He's thinking: "Ok, I'm gonna get this little pecker.  Watch this guys!"



Chart and chART courtesy of Papa Boule





170 comments:

  1. Hi AR great reminiscence
    FWIW here's my 4 hr Euro count
    Decline is imminent.
    There seems to be a wave missing, but that never stopped the market before

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  2. Lovely chart Greener... thanks for submitting it.  Man, I haven't seen you swing by here in a long time.  I thought you'd abandoned the haunt, lol.  Good to see ya.

    Yeah I don't think we're going to see the USD drop much more from here.  Some seem to think there's another huge downleg coming, no doubt thanks to more insane amounts of QE, perhaps perpetual QE.  But I'd say that there's already been enough QE to tell the story... it's not working to stem the forces of deflation.  The conclusion I still arrive at, no matter how I look at it, is that with trillions and trillions of dollars of debt globally, all of which has to be repaid, either nobody is going to default and all currencies will go to zero... or somebody's going to default and set off the entire chain of dominoes.  One or the other.  I think it's the latter.

    Thanks for swinging by bud... I realize that I don't do a lot to attract visitors.  I don't publish much these days because I'm so pissed off at the entire world of blogging that half the time I don't even feel like sharing what I'm looking at.  95% of the time I don't.  Every once in a while though I get a sudden urge to write something.  It strikes me right out of the blue like that.  This particular article I wrote in less than an hour, just because I felt the urge to work my fingers across the keyboard... and not much else.  There's really no analysis in this one... just blabbering.  Pieces where I really want to share an analysis take considerably longer.  I'm probably better off writing a novel because when I just let words flow I could probably knock off a chapter in a night, lol.  Some day I'd like to try it.

    Anyway... good to see ya and I 'do' apologize for not making this a more attractive place to hang out.  But at least it's here for those who are sick of the shit they see elsewhere.

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  3. Well I and others certainly appreciate you keeping this blog ongoing. It must be a big effort to prepare and post your analysis. I know it's kind of a chore for me to clean up my charts for public consumption, but in a way it keeps me disciplined.

    I still read your posts when they come up but haven't had a lot of time to contribute comments. At places like now when I think there's an important turn, I try to find time to post something. Overall though, I agree with you that the online blogosphere/forumsphere isn't always a model for civil social behavior or source for meaningful information.
    That's what sets your blog apart from the others, so thanks again.

    BTW, I'm going to see Springsteen this week. Trying to relive my youth for three or four hours. I'll let you know if there are any transcendental emanations in case I sneak backstage. I was trying to remember your friend novelist friend who had the story of the concert. What was his name again?

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  4. There seems to be a wave missing, but that never stopped the market before.


    I've come to think most major tops come with "unfinished" or truncated counts on the smaller degree level. I back-tested it a few years and found numerous examples of calls for one more little leg up that never came.

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  5. Well in any case it's nice to see you once in a while.  I wish I could claim the novelist as a friend but I haven't taken any steps to even meet him yet.  His name is Jeff Buick.  The story you're thinking about was related by Rich Hanf from Hamburg, New Jersey and you can find that amazing story again here.

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  6. Me too!  In fact I count on it happening that way.

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  7. Another interesting post at -
    http://bullbeartrendlines.blogspot.com
    Obviously a QE3 next week would send commodities up and USDX down   

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  8.  Great story love it!

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  9.  Agree with that.
    In the Euro's case, for the past few years most of the major tops have been rather drawn out affairs with sloppy ranges, while the bottoms have been clear and sharp. It's almost futile to try to count the chaotic range. You just have to be ready when it finally breaks out.

    My one concern is that it hangs around until Jobs Friday, then lurches around in spasms whipsawing and sucking up stops on both sides before settling on a direction. Seems to always happen that way. This Friday will probably be extra volatile because of the Democratic convention, ECB bailouts, robo-traders waking up from the summer slumber, etc.

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  10. Thanks for the link.  Even though BBTL is pretty confident that more QE will be announced next week, I'm not.  There's no justification for it as far as I can tell and the general consensus is that more QE at this point would kill Obama in the elections.  Who needs gasoline 50 cents higher at the pump between Sept 12th and the election?  In all due respect to BBTL, his opinion is just that, and opinion.  Same goes for me.   So, since we just don't know, the most prudent course of action would be to be right out of the market on Sept 11th and that's what I personally have planned.  The currency markets (at least the Aussie:Yen pair) is definitely pointing toward "risk off" yet equities just sit up here and defy that fact.  It's bizarre beyond description.  Let's face it... nobody knows, so in my humble opinion next week would be a good time to be sitting back and watch the slaughter from the sidelines.  Because one thing is certain, somebody's gonna get slaughtered.  But it ain't gonna be me, and hopefully not you either :-)

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  11. And you'll probably love this.  This is a "popout" from Jeff's site with some lovely music.  I'll see if it works here:
    http://www.jeffbuick.com/mp3popout.php

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  12. I was playing around with bringing the longer term into the shorter term picture, and this is something I came up with on the NYA.

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  13. Maybe the possibly missing wave up will come on a bounce tomorrow?
    But that Euro is at the resistnace line on the weekly ...

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  14. Philosophically; (1) limits at the ECB most likely will not change in order to allow for Draghi's "leaked" plan, and (2) the political side won't move on certain issues without panic-level pressure and bedlam.

    If everyone believes this will lead to a huge upward breakout, (3) everyone has bought in, to simply maintain this helium balloon (think hindenburg). I don't see upward buying as the reason for the breakout of the SPX, unless it's the PPT with their signature playbook as certain eyes might recognize.

    In either case, I don't personally see the advantages of having any indices at these levels if only for propaganda purposes (yes this buys into the view that the ppt often has a big hand in these things). Neither the technical side looks good, nor does it seem reasonable in presenting the stock market as an indicator that "all is well".

    To boot, (4) silver and gold look primed to drop if there is in fact a panic, and would serve well to extend the life of the dying petrodollar.

    Speculating of course.

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  15. Gold and silver exploded upwards during the typing of that post, I don't believe the bond buying monetization bazooka has started yet though, no news on reuters.

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  16. Haha... that's the way the damned markets work.  Every single time I make any sort of prediction, the market makes an ass out of me for a day and 'then' complies with my instructions, lol.

    You made good points though and I agree with all of them.

    Off to bed now.  I'm speaking to 'me', not 'you', lol.

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  17. LMAO.  "resistnace".  Exactly how many beers have you had tonight Greggor?

    What the hell... let's have another one.

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  18. Evening all..
    just sayin G'Day really.
    Like your story AR. Reminds me of when I walked around a corner in primary school, only to go face first into the ample bosom of our teacher, Mrs Davis (aka Pickle Face). Not a pleasant experience for either party.
    AUD=AR's canary.
    That's one reason I just can't believe that big bullshit..er bullish triangle on the AUDUSD daily everyone seems to be in love with. Ain't happenin.

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  19. This market is driving everybody to drink

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  20. One more touch higher might look better although there's so much messy overlap at this point that it's probably useless to count squiggles. The news in the next 24 hours will likely push the price over the edge one way or the other

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  21. Oops. Better dust off those alternate counts. Again.

    It makes sense that these types of moves occur at a top -- if that's what this is. I think of them as resistance to the growing downward pull of a coming wave. One more desperate dance before everyone gives in and admits the party is over.

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  22. The NYSE has diverged from the S&P by making lower highs since the '07 peak. It's been in a BIG triangle and it's now bumping up to the long term trendline

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  23. Sigh. It's hard being a bear.


    I used to try to warn people that a serious economic collapse is coming. But it's kind of like Noah warning people that rain is coming, but every day the sun just keeps coming out. After a while they stop taking you seriously.

    Noah was smart enough to just keep building his own boat. I also have a feeling Noah was smart enough to not risk his money making side bets on when the rain would start.

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  24. Even though the Aussie:Yen is bouncing today, and rates are climbing as well, the action in the markets (including today's little burst) is still in a massive divergence with both those markets.  It's amazing but either the stock market is leading the currency markets and the bond markets (which are both at least 10 times the size) or they're lying.  The Euro is up 'slightly', the USD is 'slightly' lower, gold is up suggesting that market is sniffing the inflation aspect of today's Draghi Queen Fairy Dance.  WTF knows, but the illusion just keeps getting more and more right out of The Matrix.  Maybe it goes on forever.  But I doubt that... I think reality comes roaring back with a fury right after the election.  Complete with a market crash of the century, total civil breakdown and martial law... all starting immediately after the election.  Like the next day.  I have absolutely no doubt the trap is going to be sprung in Obama's next term.  And no, there is absolutely no question about whether or not he'll win.  I admit that I was wrong when I first suspected that he was being set up as the fall guy.  The evidence is now clear, on the day he was elected it had been decided that he would be a two-term president.  All the 'politics' between then and now have been a distraction, nothing more than a sideshow as history is now in the 4th chapter of Hitler's playbook...
     for the second time.  Geez... I guess I went a bit off topic there, lol.

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  25. For sure, that Noah was a trooper.  He stuck to his guns and once the deluge started he was on the right side of that transaction.  What a ride that must have been.  I heard that he hedged his bets all along the way though by selling out of the money calls on sunshine and the premiums paid for the yacht.  Not sure if it's true though because I don't think JPM was in business that far back.  Satan was though, and right now he's busy trying to take over the entire world.  Looks like he's gonna be able to pull it off in my humble opinion.  Where's God when we need him?  It sure makes me question religion I can tell ya.

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  26. Hahaha ... that's a good idea!
    So tired lately.  This market was driving me to run more miles, but my acheles tendons where they attach to my heels are both very sore.  So ... have to rest up.  Not good for stress toxins or sleeping.
    Very nice post by the way good sir.
    I can't post here during the day usually (blocked at work)(.

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  27. And I didn't know that daily triangle was why Richard was leaning bullish.

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  28. I think the SPX hit the upper wedge line of that 2-3 year bearish wedge that Daneric has been posting lately.
    New high yes, so no minor 2 of P3, but still very bearish.
    Have you seen that count?

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  29. Yes, I've been feeling like I know how Noah must have felt.  Wonder if his wife believed him.
    I've given up telling most people also ... since I first told friends and family in 2010.  A tad early it appears now.

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  30. I've seen it. And it's a very interesting count. It may "work," but I still hold to the idea that the SP500 is too distorted to tell where the actual social mood picture is. And you'll note that the AUD/JPY and DGOW are still behaving, even though the wave 2 high may not quite be in yet.

    Here's the thing. If that SP level is as overinflated and distorted as I think, it will have a lot of catching up to do when the falling starts in order to get back down where actual social mood is. Like a crash after a meth binge.

    I suspect there's one more big surprise push higher coming with a QE announcement. But AR makes a good argument against -- that politically they might not want commodity prices rising into an election. I think it's a toss-up. A lot of people think the markets are a barometer of how the economy and THEY are doing personally. So the PTB may go with QE in order to sell some sizzle into elections.

    That means a possible new high on US indexes. I'm just going to watch the GDOW and Aussie/Yen and see what happens there.

    But the storm is nearing. And it's going to be a big storm. I think it will start with a failure of QE. And if that count on the AUD/JPY and GDOW is right, that may very well happen on this next round of it.

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  31. Back to the drawing board on the NYA. That wasn't an EW triangle (oh, I guess it still might be, technically, or still have a chance of being one). But it was a classical TA triangle, that's for sure, and price is now above (not just on the NYA either - more breakouts across the board). Daneric must be fuming.
     
    I thought that the probabilities favored a pullback and I took partials into resistance. Hat tip to those who did no lightening up.

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  32.  We are almost at 360 points off the Oct 4 low of 1074.For Gannites that is important because 360 is the number of degrees in a circle and equates,amongst other things to the year.And we are almost a year from.a low that was 360 points away,so time and price are almost in balance,or "square" as Gann liked to call it,and such situations often lead to a change in trend. Anyway,just something to watch.I was rather hoping we wouldn't have to wait till the end of the month for the decline to begin but we shall see.It could be that we top before then but that the decline starts to accelerate on the one year cycle.The way to play this is to watch weekly candles imo.No signal = no trade.Its just a setup.

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  33. That's always good to keep in mind -- the distortion of the SP500.  And therefore we have to expect it might more likely deviate from any count we give it.  More likely than less manipulated indicators of mood.  I agree with your scenarios -- it's going to be epic, and the next QE3 could fail very quickly.  And it'll be interesting to see how long the bounce from the 31st European "solution" lasts.  It could be measured in days.  But nobody will get too rembunctious to short before the Fed speaks next week.  i have no idea if we'll bet it, but my hunch is we get the usual ... "se stand at the ready to do something if needed."  But the election surely looms.  Obama might be whispering into Ben's ear. 

    Speaking of social mood, I thought it interesting that Hilary's meeting with the Chinese went so terribly.  The Chinese felt more free than ever to express their displeasure with the U.S.  For supporting Japan perhaps in the fight over those islands that have oil.  Sounds like the beginning sounds of war in the future.

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  34. P.S.  I was thinking about what you said and Daneric's wedge count.
    And it occurred to me that this could be shaping up to be the count/shape that is the hardest to trade.
    If we get very fast fall like you suggest, that could be very little chance to get short on the way down.
    And if we get a new high and an overthrow of the wedge that would be hard to ride out being short.
    And the bulls will think it's confirming a bull market.  So both bulls and bears will be hurt.
    And it could crash like AUDUSD did in 2008 -- and there wer no tidy little wave 2 retraces really.
    Gulp.

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  35. AR....a propos our dicussion of CadUsd there do seem to be an awful lot of people using this as the key risk indicator.I wonder if that is a erecent thing.i have no perspective as I never really followed it.
    Here is a tweet from Nouf earlier today
    Wavepatterntraders
    ‏@Nouf_wpt




    US stocks higher, its VERY SIMPLE
    USDCAD lower = US stocks higher, you can fight it or embrace it, lose
    $$$ or make $$$ which do you want?

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  36. Yep. It's easy to connect a few dots and see this thing unfolding as a worst-case scenario.

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  37. This is a prime example of how US market tickers are distorted social mood metrics.

    -- Real social mood, down. Result? Businesses don't hire, don't expand, poor jobs market.

    -- Bad jobs data = increased chance of QE. So, bad social mood news is good news! Markets soar.

    Until the critical point is reached when intervention helium can no longer inflate the balloon enough to overcome the growing weight of a huge declining social mood wave.

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  38. DK if you're around,
    I think calling calling that e wave of the Yen triangle may have been premature. It's entirely possible that today's regurgitation was c of d. Looks to be holding for now at trendline support (the trendline which began at the June 1 low.
    Just a thought - the zigzags of triangles always seem to give the worst fakeouts.

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  39.  Daneric won't even give it a second thought until 1576 is breached on the S&P

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  40.  Hang in there Papa we're almost done

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  41. If I'm not mistaken Papa, a similar sort of thing happened after the crash of 29.  Correct me if I'm wrong.  But it seems to me that after the crash, the depression ensued yet stocks just climbed and climbed, in the face of ever worsening economic data.  True, we haven't even had a crash yet... but this same annoying, bizarre, twisted move higher in the face of bad and worsening global economic conditions has happened before, thanks of course to the Fed.  Mind you, the crash of '29 was also courtesy of the Fed (which had only been in existence for a dozen years at the time).  They were more effective back then, lol.

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  42. Thaks AR. I tend to agree but I noticed that a lot of folks smarter than me at trading currencies (not a small group !) like Geno and SJ were using it,DK too maybe (?)  As you say I dont quite get the logic either.

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  43. Because there isn't any.  They're young, lol.

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  44. Greener sounds like he's your dentist, lol.

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  45. I was thinking it's more like watching the last act of a classic Hitchcock thriller -- one I haven't seen before. And I keep holding the popcorn tub up to block my view. 

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  46. Some called this bounce quite accurately.  SJ mentioned USDCAD as his signal, and i don't watch that one.
    But after the fact, I should have seen this one coming by watching the AUDJPY 4 hourly chart.
    It broke out of that down channel at 8 pm on Wednesday night.  Before the big announcement (already leaked).
    And the MACD crossed up also.

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  47. I've been suspicious that the down move started by looking at the weekly volume on AUDUSD.
    Not sure if we have a v of C of 2 here, but the volume of that decline was MUCH less than prior 5 declines.

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  48. Looks like that's pretty much how it works. Slow-motion ripple effect. Markets start climbing back before all the effects of the crash are done. All it takes for markets to climb again is for investors to become confident the bottom is in, no matter what the economy's state.

    But actually the crash of '29 only started the major 3-year drop. And what a stunner -- from a high of 381 to a low of 41. A 90% drop. Check out the chart below. It would be like a fall today from 1400 on the SP to 140. The market didn't reach bottom until 1932. Then there was a kind of "false start" and another drop back down to 50 in 1933, then a market recovery the rest of the decade, while the Great Depression went on pretty much the whole decade. Note that the market peak of the whole decade in 1937 was only 194 -- still well below the previous high of 381.

    http://stockcharts.com/freecharts/historical/images/djia19201940s.png 

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  49. Incredible chart.  Thanks for looking that one up for us.  I was just too lazy to do that before I left my comment above.  I stand corrected about the timing of it all.  You'd think I'd have all that firmly stored in my memory by now but to be honest I never did study about what really happened back then... how and when the various phases happened.  Thanks again.

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  50. That is very steep ... with not much of a 4th wave!  that 5th wave was even more brutal than the 3rd too.
    That is a very good chart to keep in mind for the near future!!

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  51. nice charts from Korelli    http://korelli.typepad.com/blog/2012/09/spx-update-6th-september-2012.html

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  52. Korelli said: "That said, the MACD shows that momentum is waning and a divergence with
    price is unfolding, which leads to the view that it is only a matter of
    time before the SPX turns lower"...

    ... which immediately reminded me of this weekly chart because the MACD has been in that condition of showing a neg. divergence for 2 1/2 years now.  When we're looking at 'overbought' conditions in the RSI, stochastics, etc. while in a bull cycle, we're actually using the momentum indicators in reverse of what they were designed for.   That's not how they're supposed to be used.  And that's the biggest mistake investors make when using momentum indicators.  It's also the very reason Wagner always makes rookie statements like "the stochastics never worked the whole time", lol.  Of course they don't work if you don't know how to use them.  For Wagner it was like a 12 year old boy trying to read a novel with the book held upside down and crying out "mommy, I can't make any sense out of this stupid book".

    In an up market, we're supposed to be looking at the momentum indicators to hit 'oversold' condition so we can identify an entry point to go long.  Same holds for the MACD.  So although Korelli is right in that it's only a matter of time, one would be advised not to hold his breath for it.  It could still be months down the road.  Or it could be tomorrow, but the MACD doesn't know and neither do I, lol.

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  53. Here's how Prechter counted it:

    http://oi45.tinypic.com/726m3c.jpgAlso '37 - '38 and his thesis that we are repeating that pattern:http://tinypic.com/view.php?pic=2guwj1j&s=6 Long term Dow:http://home.earthlink.net/~intelligentbear/com-dj-lt.htm Adjusted for inflation, some count that whole era from '29 - '50 as a big (4th wave?) triangle, which then may have lead into a big ending diagonal with more leg to go:http://home.earthlink.net/~intelligentbear/com-dj-infl.htm 

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  54. Here's that whole late 30s - early 40s decline
    http://www.alphatrends.net/wp-content/uploads/19371943DOW1.png

    People complain that nowadays nefarious outside forces are distorting chart patterns, but the c wave of that decline is as ugly as it gets. 
    Amazing to think of the force behind the ultimate turnaround in '42

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  55. That looks like about a 55% drop in 5 years.  What a nightmare.  I wonder what 'force' was behind the ultimate turnaround in '42.  Oh... I know what it was!

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  56.  Thanks AR.But isn't the logic of that that the positive divergence at the March 2009 low should also have been ignored becuse the market was in a downtrend ?

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  57. http://oi49.tinypic.com/2r6lmk1.jpg
    Now that I look at it, that could be a big b wave triangle from '38 to mid '41. The a wave encompasses the swing/jump/big band height (Benny Goodman plays Carnegie Hall, Count Basie stompin at the Savoy, etc). The b wave was a big flat that concluded with France falling to Nazi Germany. Then we sailed through the rough seas of c, d, & e as the winds of war swept across the world. 

    The C wave after that seems short compared to the A. It should have gone longer, but the world was literally pulled out of the depths and saved. When they refer to it as the Greatest Generation, this chart tells me there's no doubt that it was an appropriate description

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  58.  and why does Ron Walker (the chartpattern trader) take counter-trend signals from MMM macd  histogram divergences if that is so ? (it seems to be a succesful strategy quite often)

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  59. Yes, that's true all the way down including on the day of the very low.  Nobody had a clue that was the low at the time, only in hindsight did we see it.  In the purest form of TA, we need signals other than divergences to confirm that it was indeed the low.  To quote one (of many) places in StockCharts' library of indicators:

    "Before getting too excited about divergences as great trading signals,
    it must be noted that divergences are misleading in a strong trend. A
    strong uptrend can show numerous bearish divergences before a top
    actually materializes. Conversely, bullish divergences can appear in a
    strong downtrend - and yet the downtrend continues. Chart 6 shows the
    S&P 500 ETF (SPY) with three bearish divergences and a continuing
    uptrend. These bearish divergences may have warned of a short-term
    pullback, but there was clearly no major trend reversal
    "

    We only use pos. and neg. divergences to make entry decisions if we want to convert from investors to gamblers.  I sir, are a gambler.

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  60. As you point out Ron uses divergences all the time.  It's one of the few faults he has IMO because they've blown up in his face just as often as not.  I say that with a lot of respect for the guy because he's actually very good in my view.

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  61.  interesting ,thanks AR...I'm pretty sure the triple M strategy is not his own but one he got from someone else and Christian at PSA uses divergence a lot too...I shall be more careful in future...indicators are not a part of Gann at all of course,but then neither is sentiment

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  62. Nice historical charts and counts, thanks!  Surely an applicable time to what awaits us.

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  63. About two months ago over at Pretzel's I went into a great deal of detail about the proper use of momentum indicators including several charts to demonstrate exactly what I was getting at.  It was a real epiphany for everyone who read it and they were quite thankful to have been shown the difference.  That particular commentary (and the dialogue that followed between myself and others) was quite popular so after all was said and done I felt quite good for having contributed it. 

    I had included some good charts and what I did was to blank out the lower half of the RSI and covered it with a banner that said something to the effect "What are you looking down here for?  We're in a bearish cycle!"  The idea was to get the readers to understand that in a bear cycle, the oversold conditions are not only "not to be feared", they are "what we want to see".  The pos. divergences that develop in a bearish cycle are nothing more than a heads up that momentum to the downside is waning, but they're not to be mistaken for a "buy" signal if we're in a bear cycle.  The readers got the message once I had blanked out the oversold half of the indicator so they couldn't even see it.

    Of course, when those divergences 'do' develop, we 'do' know that they 'are indeed' warning of waning momentum.  The mistake we make though is to automatically expect that they're signalling a reversal.  They aren't... at least not necessarily one of any size.  Even the tiniest reversal can 'undo' those divergences and we have to start all over again.  In the meantime, investors took the plunge and are now caught on the wrong side of the market.  I guess I should know, I'm just about the guiltiest guy on the planet for having fallen into that trap until I finally realized that I was using the indicators backwards just like everybody else does.  I no longer do and now I'm trying to get others to become aware of the mistake they're making.

    I mistake I made though was that I never noted what date that commentary at Pretzel's happened nor did I bookmark those pages.  I should have because I wouldn't mind revisiting it sometimes so I can properly slap myself upside the head for forgetting (ignoring) my own knowledge.

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  64. Thanks Greg, it's always easier to count the past than the present LOL.
    I checked on stockcharts.com and C was almost exactly .382 *A, abnormally small

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  65. Nice discussion. You learn something new everyday, well, hopefully anyway.
    I might add that there are different degrees of divergences as well. http://www.investopedia.com/articles/trading/04/012804.asp#axzz266Sqj8oN https://www.google.es/#hl=es&sclient=psy-ab&q=class+a+divergence&oq=class+a+divergence&gs_l=hp.3..0i30.79484.86094.0.86312.18.13.0.5.5.0.422.3703.2-6j4j2.12.0...0.0...1c.1.GNpQlAJm5GI&pbx=1&bav=on.2,or.r_gc.r_pw.r_qf.&fp=26fcb09ed16337cf&biw=1024&bih=593The chart AR posted above shows Class C bearish divergences on the SPX, the weakest of the 3 classes.

    There are also double, triple, and sometimes, quadruple divergences. Of course, the more important, and the more numerous ultimately show what AR is talking about in terms of momentum, that is to say, that momentum is slowing, and the more important the divergence, and more numerous the divergences, also raises the odds of a reversal. This normally leave us at an inflection point where the trend either continues or it doesn’t, hence the importance of respecting the trend and interpreting the indicators within their existing environment. Oscillators even more so than momentum indicators should be used to identify long entries in uptrends and short entries in downtrends.

    Ron Walker uses divergences to identify possible *counter trend* entries in combination with the 50 SMA above/below the 200 SMA rule. The 50 SMA above/below the 200 SMA rule prohibits long entries when the 50 is not above the 200, and the opposite on the short side, UNLESS you’ve identified a favorable counter trend divergence. (I believe that he continues to use those rules – along with the many others he employs in addition.)

    The triple P and triple M *Histogram* concepts were developed by Alexander Elder. (I highly recommend his book, Trading For A Living, to everyone who still hasn’t read it.)

    Here are a couple of articles by Ron on the subject:http://technical.traders.com/tradersonline/display.asp?art=5103http://technical.traders.com/tradersonline/display.asp?art=5267

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  66. do you have a date and/or link re: your post, AR?

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  67. update, i just read the part about you not noting the date, sorry

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  68. Alexander Elder...of course. Thanks HR I might dig that out

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  69. I dug back and found some of them.  That conversation spanned more than two weeks off and on but I believe it started with comment #118 on Pretzel's post way back on May 31.

    The links to the charts in that comment no longer work because they're now so far in the past that the annotations don't show up.  And I just don't have time to create them all over again.  BUT, the image (shown below as well) still works on PL's site.

    Then the discussion picked up again with comment #225 on June 16th.  There was a link to this chart which was one of the subjects of the discussion.

    I know there was more conversation but I just don't have the time to go through it and do it all over again, or to search out all the dialogue.  But hopefully the links above and the chart in the image below will get you on the right path.

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  70. Social mood did not drive the SP to a new high. Intervention did. But the struggle against an increasingly risk-averse social mood has resulted in that big ending diagonal Daneric charted. And it does suggest a breathtaking drop ahead.

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  71. Junk Bonds Vs Long Term Bonds 
    Terry Laundry's chart shows the risk on/risk off right at the pivot point. Of course, we all knew that anyway as we wait to hear the Great Bernank speak on Thursday.
    http://stockcharts.com/public/1172710/tenpp

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  72. Gorgeous 3 Bedroom Bungalow For Sale.  2010 - Aussie-Yen Blvd.  MUST SELL!

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  73. That's a great ratio to be observing Tom, thanks for the chart.  The beauty of that pair is that both of them have been in existence for decades longer than either JNK or $TNX so we can look much further back with those two.  With the added bonus that FAGIX tracks almost identically with JNK.

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  74. aud/jpy setting up for a backtest for one more high?

    http://i.imgur.com/uUfwU.jpg

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  75. I'm at a complete loss for valuable opinion on that one Papa.  That bastid is getting very, very difficult to get a handle on.  It's just so totally up in the air right now.  Wish I had more to offer.  I 'am' posting some stuff on PL's though that's got some value to it, in case you're interested.  Your comments there are more than welcome though.  I've got a hunch I know why you're not posting there much, but it's still a good group.  Both bullish and bearish leanings are 100% respected and appreciated by 'all' over there.  It's very refreshing and helpful to be in a room like that.  They're good people.

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  76. For what it's worth, here's what I think is going against that count -- It would mean aud/jpy is pretty much last to the "new wave 2 high" party, and it hasn't behaved like a lagging indicator before.

    What could be a possibility though is, say, QE is announced, aud/jpy gets reluctantly dragged to a new wave 2 high, but then turns first and leads the way back down.

    All WAGs of course.

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  77. I've got a hunch I know why you're not posting there much, but it's still a good group.

    If you guessed "too lazy to log in" then you guessed right. ;) I do visit there quite a bit. 

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  78. LOL.   That's not exactly what I was thinking but I trust you unreservedly.

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  79. great post, things are really warming up. The awesome guys over at http://sentiment-trader.blogspot.com.au/  posted a good point as that 2008 have STILL NOT YET been busted, even though charts look healthy. 

    They also noticed every day or the past few days,  that there was heavy selling at the close right before bell. Hmmm. 

    Gunna be a wild day I think, helmets with chinstraps required infront of the QE meeting. 

    Qe1 did not work, neither did qe2, so if they expect us to think qe3 is gunna works they can go get **CENSORED** I guess you get my drift. 

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  80. Yeah, I get your drift.  So tell me, how is it that the "awesome guys" over at sentiment-trader.blogspot have the same IP address you do?  That seems rather coincidental considering that their site has been in existence for exactly 10 days while the "real" awesome guys over at the "real" SentimenTrader have been trading for 20 years.  No offense, but I just find your glowing praise of a 10 day old website just a bit too much to stomach.

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  81. Both seem possible.  But I've been thinking the AUDUSD could be headed for a retest of the weekly resistance line ... there's one here to in the AUDJPY a bit higher, but not as high as a retest of that line.  It likes to restest lines tho, the aussie ... seems it's nature.  Or a new high above 1.06 or near there ... maybe a v of C of 2, or a truncated v.  It often has stop run overthrows ... so will be watching 4hourly bar for signs of confirmation of a trend change.

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  82. I lost track of how to get to that place ...

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  83. I think it's amazing that the long term bonds have the same ending diagonal on the same timeframe.  Stunning.

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  84. Ugh. I do not like thinking about the "no safe haven for assets" scenario. But there it is, the possibility.

    An awful lot of people could wind up, um, rather miffed.

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  85. http://deepwaveanalytics.com/forums/

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  86. Hey Greggor... I'm having a bit of an epiphany tonight.  The Euro has clearly broken higher and the USD is breaking down as a direct result.  Because the Euro is the one single currency that has the highest percentage of weight in the USD Index.  I think we should be thinking of the current moves in currencies as the Euro being the cause of it all and the USD falling in sympathy, rather than an outright lack of demand for the USD.

    One would think that it just makes common sense that if Draghi's plan to print, print, print to an "unlimited" degree as he said were in fact implemented, then the Euro should be absolutely tanking.  But it isn't.  Why not?  What does a surging Euro mean?   What could possibly cause a rising Euro in the face of the prospect that Draghi's plan will be enacted?  It's impossible to have both. 

    So the Euro is telegraphing that it's about to come under sustained and heavy demand.  That can only mean one thing... Draghi's plan is not going to be implemented and Europe is about to enter a nasty bout of deflation.  What could cause that?  Well for one thing, Draghi's full of shit.  Second, it must be that there's going to be some sort of crisis there... a default, whether it be the failure of a giant bank or maybe even a small sovereign.  Whatever it is, the Euro is telegraphing deflation (in Europe) loud and clear.  So European equities should be falling any day now and at the same time, with pressure on the American dollar, US equities should remain under pressure to keep rising.  UNLESS and UNTIL... the first default, whatever or whoever it might be, might get out of hand if it happens to start a series of dominoes toppling over. 

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  87. Thanks Dan ... that good sir is a very very interesting thought.  Deflation first in Europe.  Wowzers, hadn't really thought about that.  It would explain this rise in the Euro, and would explain it if it keeps on rising.

    I'd been thinking Draghi's plan was limited by the German's.  He said unlimited buying but there are conditions.  From where I'm from, that sounds like limits.  There was also some fancy word that meant no extra printing.  They are going to buy bonds of short duration and fund it with selling bonds of longer duration.  Supposedly.  From what I read of other's summaries.  So I was thinking the rising Euro meant the market thought we'd get QE3 and dollar printing first before Euro printing.

    Then I don't have a count on the Euro, so maybe it's doing some wave 2 of some sort. 

    But a bank failure in Europe is a very real possibility, and their rate of debt destruction might very well be the greatest at the moment.  Thanks for sharing that thought! 
    Cheers!

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  88. I might have had the count wrong a couple of months ago but I sure called the QE date right. Now I can start that paid subscription site. Get ready to click those PayPal buttons. I'll also accept Domino's Pizza coupons.

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  89. I could do a 2000-word rant, but it just boils down to this:

    This looks like the final blow-off rally of this wave, wherever and whenever it tops out. This round of QE is "open ended," so it will be the one that fails, whenever that happens to be. And that will pop the bubble.
    (And I'm not worrying about the US indexes blowing up supercycle conuts, because US indexes are a tampered-with, unreliable social mood scoreboard. Plenty of reliable non-US-centered indexes are still nowhere near challenging their all-time highs, meaning this is still a wave 2 of large degree, and a huge wave 3 down is in the offing.)

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  90. GLD Approaching Fib Fan and TL Resistance 9/13/12

    http://britefire.wordpress.com/2012/09/13/gld-approaching-fib-fan-and-tl-resistance-91312/

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  91. I remember reading in EWP that B waves are liar waves.  The fundamentals are terrible, and it rises anyway.
    I like Daneric's count with this whole rise since 2009 as a B wave with a C to come.

    I think you were right about targeting a retrace to the extension of the old support line (1.0578).  Or the AUDUSD looks that way.
    I'm also struck by a FX guy's claim that most of the time these big announcements the move is 90% completed by the time the announcement hits.  I think the big boys knew about this many days ago, and they've run it up on not-in-the-know people.  Now I wonder if it will be done real soon.   The AUDUSD has several resistance lines it's running into (the other it got thru at 1.054 ... longterm resistance on the top).

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  92. You also were the person who gave me the idea that QE3 could be the exit plan for big banks to get out of their positions from QE1 and QE2.  Very plausible.

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  93. Just for fun, let's say the "90% done, 10% to go" estimate is accurate. I did some maths (and, as we know, maths is hard) and came up with targets of 1525.59 on the SP, 14132.24 on the Dow (almost-but-not-quite to the all-time highs on both indexes), and between 85.21 to 86.74 on the AUD/JPY, depending on whether you figure from the 8/21 high, or the high right before QE was announced.

    Interestingly, the GDOW (if influenced the same by QE) would peak at 1979.55, still short of breaking the wave 2 count on it.

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  94. Hey AR,

    SPX just hit our Bat Pattern target of 1472.43.  This is a .886 retracement of the 1576-666 crash; could be a biggie.

    https://pebblewriter.com/learn/harmonics/bat-pattern/

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  95. Thanks buddy.  Slightly off topic, I take it my guess of 1411 for the S&P didn't make me the big winner yesterday?  Like... I didn't win the car, right?  Mind you, I'm not whipping myself at all because I didn't think Bernanke was that desperate.  He did this for some reason we haven't seen yet.  He front ran something.  Something big is coming.

    Yeah I'd have to agree that the next pullback should be pretty hefty.  But I have to admit bud, I'm starting to see a whole plethora of signs that very strongly suggest that we're not seeing what we think we're seeing.  Rather than make me write it all over again let me just point you here.  I'll just make this short and to the point... I can envision 1885 on the S&P by 2017.  Man, wouldn't that catch a lot of EW theorists off balance?  If it weren't for EW Theory, if I'd never even heard of it, I wouldn't even be considering a bearish case right now... other than that the next pullback, however big it is, is imminent.  The Euro sure isn't considering a bearish outcome from here.  The USD sure isn't.  Neither is gold.  I'm not calling for 1885 by 2017 by any means but just saying that I can now see reasons why it's not impossible.  But I'm going to have to see 1285 on the S&P before I'd consider it as dead.  The Twilight Zone man... it's possible.  Of course we'd be looking at an entirely different world if that happens but all I can say with any degree of certainty is that whatever the world looks like 2 years from now, none of us has even conceived of how hellish it could be.

    Wish I could stay and chat more PW, but I've got an appointment with my psychiatrist in an hour and I'm in a bit of a panic because I can't seem to get all these giraffes out of my apartment.

    Have a great weekend :-)

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  96. I'm just wondering how the hell my giraffes got into your apartment!

    I tend to agree re the upside.  I believe this Bat Pattern reversal will be like that in Jan 2007, when SPX lost only 100 points or so (first two charts.)  And, because Benny wasn't there to catch that market, this might not be anywhere near as severe as that.

    IF this does get going to the downside, I see 3 good targets, as I blogged earlier (3rd chart):

    Each of the dotted yellow lines above is a Fan Line from the 2007
    high.  FL A is through the most recent high of 1426.68 and currently
    sits at about 1425 -- a 49-pt pullback from this morning's high.  It
    also has the benefit of keeping the Elliott Wave folks happy with the
    upside case, as it would keep SPX higher than the April 1422 high.

    Fan
    Line B is through that 1422 high, and currently sits around 1407.50. 
    It intersects with the lower bound of our red channel on Sep 24 and
    would potentially keep the channel alive.  It also intersects around
    there with the .886 of the current pattern -- a legitimate pullback as
    we push toward the 1.618 extension of a potential Crab Pattern at 1518 
    (just saying...)

    Fan Line C is through the April 2 high, but
    without the shadow.  It's obviously the most extreme of the three, and
    would cause SPX to lose the channel it's currently in.  It also
    intersects with the Big Bat's (1576-666) .786 -- the next major Fib
    lower (of May 2011 1370 high fame) around December 31 -- a long, slow
    decline.

    Of the three, I'm most attracted to B.  I think it'll be
    appealing to TPTB to keep this rocket ship on track, and what better way
    than to keep it in this incredibly steep channel to the moon.  It also
    intersects with one of our big red channel lines [see: What A Wonderful World]  that originates at the October 2007 shoulder, so it could be seen as a back test of that.

    Any
    pullback should be at least to 1444, the broken green and red channel
    lines from our study yesterday and the mid-line of the channel we've
    been in since June 4 at 1266.  Not a formal forecast,
    just intra-day noodling from your humble, sleep-deprived
    servant.

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  97. So the giraffes came from your place?  You're in New York City right?  And NYC is only 22 miles from Calgary I think.  So yeah... I kinda wish you'd kept them under better control my friend because now I'm stuck with 'em.  By the way, how 'did' you get them outta your apartment?  And as to the matter of you being a "sheep-deprived servant", no worries there's lots of sheeps in my apt. too.

    You bet Pebble, I'm starting to see all kinds of evidence that has really got me thinking about $4000 gold.  And you know about as well as anybody what the implications of that would be.  I'm absolutely considering the long side once I see what the next pullback looks like.  What Bernanke unleashed isn't fully appreciated I don't think.  So I can't think of one single reason why we should be expecting any kind of a market crash now.  No sovereign country in Europe is going to default apparently.  The ECB will just buy up whatever bonds are required to prevent that.  NO LIMIT.  What we're talking about here is the complete obliteration of whichever fiat currencies need to be sacrificed.  Period.  Lesser currencies like the Canton and Enderbury Islands Kiribati are probably a safe bet though.  Those types could surge in value.  In fact, those islands would probably end up being a paradise if they aren't already.


    You know what?  I have many, many friends with similar interests on the interweb or whatever it's called who I'd love to be able to shake hands with and talk about these topics on a daily basis with.  You're right up there at the top of the list bud.  There are many others too (I need to say that so all my other buddies don't feel left out... there are many).  But you're right up there.  I wish we all lived in the same city and worked on the same floor... of our own big office building.  Our condos would all be on the top floors, overlooking something like this laid back Vancouver marina in the picture.  The pubs would be located on the main floor so that when we fall over the balcony in a drunken stupor at 11:00 am on a Saturday morning we won't fall far, just onto the beautifully manicured lawn 3 feet below.  Oh well... a guy can dream.  To hell with that... let's make it happen!

    Yeah, all of a sudden I'm really doubting that the next pullback is going to be of any size at all.  I admit that it 'could be' a whopper but I firmly doubt it.  Bernanke's move was just an incredible game changer.   The goals of his owners are very clear now.  A crash will not be permitted at any cost.  And that includes complete and total destruction of the US dollar if necessary.  What incredible bastards those bankers are.

    Anyway partner, I wish you nothing but the best as always and honestly do hope to meet you and some others before I leave this world.  All together... as a group.  Well let me put it this way... I'm not leaving this world until that happens.

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  98. So the giraffes came from your place?  You're in New York City right?  And NYC is only 22 miles from Calgary I think.  So yeah... I kinda wish you'd kept them under better control my friend because now I'm stuck with 'em.  By the way, how 'did' you get them outta your apartment?  And as to the matter of you being a "sheep-deprived servant", no worries there's lots of sheeps in my apt. too.  As well, every once in a while my neighbor's dog drop in to watch TV with us.  His picture in shown below as well.  Let me tell ya, he's not the easiest guy to get out of the place either when there's a program on that he likes.

    You bet Pebble, I'm starting to see all kinds of evidence that has really got me thinking about $4000 gold.  And you know about as well as anybody what the implications of that would be.  I'm absolutely considering the long side once I see what the next pullback looks like.  What Bernanke unleashed isn't fully appreciated I don't think.  So I can't think of one single reason why we should be expecting any kind of a market crash now.  No sovereign country in Europe is going to default apparently.  The ECB will just buy up whatever bonds are required to prevent that.  NO LIMIT.  What we're talking about here is the complete obliteration of whichever fiat currencies need to be sacrificed.  Period.  Lesser currencies like the Canton and Enderbury Islands Kiribati are probably a safe bet though.  Those types could surge in value.  In fact, those islands would probably end up being a paradise if they aren't already.


    You know what?  I have many, many friends with similar interests on the interweb or whatever it's called who I'd love to be able to shake hands with and talk about these topics on a daily basis with.  You're right up there at the top of the list bud.  There are many others too (I need to say that so all my other buddies don't feel left out... there are many).  But you're right up there.  I wish we all lived in the same city and worked on the same floor... of our own big office building.  Our condos would all be on the top floors, overlooking something like this laid back Vancouver marina in the picture.  The pubs would be located on the main floor so that when we fall over the balcony in a drunken stupor at 11:00 am on a Saturday morning we won't fall far, just onto the beautifully manicured lawn 3 feet below.  Oh well... a guy can dream.  To hell with that... let's make it happen!

    Yeah, all of a sudden I'm really doubting that the next pullback is going to be of any size at all.  I admit that it 'could be' a whopper but I firmly doubt it.  Bernanke's move was just an incredible game changer.   The goals of his owners are very clear now.  A crash will not be permitted at any cost.  And that includes complete and total destruction of the US dollar if necessary.  What incredible bastards those bankers are.

    Anyway partner, I wish you nothing but the best as always and honestly do hope to meet you and some others before I leave this world.  All together... as a group.  Well let me put it this way... I'm not leaving this world until that happens.

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  99. Used to be in NYC.  Back and forth between there and LA for years.  Escaped up to the central Calif coast a few years ago.  Love the island idea, though at a max 23' elevation, Kanton will be submerged years before I can afford it.

    This Bernanke biz does change everything, but it can't go on forever.  Not sure how much his QE will help when we tumble over the fiscal cliff with the help of a credit downgrade in a few months.

    Many folks have pointed out the diminishing value of each successive QE.  Much of this one's lift was priced in prior to yesterday.  So, I don't know.  Maybe 1553 is all we get.  Hmmm...

    QE1:  1228-666 = 562.
    QE2:  1422-1010 = 412 (73% of 562)
    QE3:  73% of 412 = 300 points.  1266+300=1566.

    1553 is the Fib 1.618 extension of the 1370-1074 plunge -- a perfect little Crab Pattern and double top to take us into the end of the year???  I feel a forecast coming on.  I should probably lie down and let it pass...

    It's been years since I've been to Vancouver, but you never know.  We'll figure out a get together at some point. Have a great weekend!

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  100. When I mentioned the island I didn't mean to infer we should move there.  BUT, let me tell you about one that would be a candidate.  It's absolutely fantastic... Saltspring.  It's heaven.  Gotta run but I've got a mit more to say in response here.  No time left righ.....

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  101. This is the Best damn trading indicator on the planet

    Follow it for 2 weeks FREEwww.markethighsandlows.wordpress.com

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  102.   no reason to try to be a hero shorting this market. gold is still my major play but as said obama doesn't need a downturn in the market before election. maybe after the election we head back down

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  103. I like your maths estimates.
    AUDUSD closed the weekly candle right below that resistance line.
    Sad to have missed my chance to get short at 1.06 with a frozen computer and a meeting.  But maybe I'll still have a chance ... this is a beautiful line to get in on with a fairly tight stop.  Rare moments these, sitting on a line in the sand.

    I think it's amazing ... there is a possibility that this QE3 event was a buy the rumor, sell the news event.  And that would catch many by surprise.   Could be the exit plan that the Big Banks needed to unload equities they bought in QE1 and QE2.  Guess this next week is critical now to watch for follow-through.

    Richard on Market Letters thinks this could be a real bull move as the carry-trade heats up again.  So I'm going to be mindful of that possibility.  But the failure of QE3 could be quick, ya never know.  And over at Daneric's it's amazing to see how convinced the those-who-believe-in-the-power-of-the-money-printers are that we are going to the moon.  That the third time will have the same result as the first and second.  Maybe.  But I learned the consensus is often deadly wrong.

    Ooops ... one chart is the one i wanted to highlight.

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  104. Richard on Market Letters thinks this could be a real bull move as the carry-trade heats up again.


    Good chance he's right, simply because the markets spend more time going up than they do going down. Always have. And since 2009, bullish "alternate" counts have been validating, hmm, I guess about 80% of the time. So odds favor anyone making a bull call. (It's easy to be a market guru with a winning track record -- just guess "up" all the time.)

    HOWEVER, this is extremely risky territory. QEs 1 and 2 did not produce economic recovery or anything near it. Running the stock market up didn't create jobs or stimulate growth. It just ran up the stock market. And commodity prices went up too, so the cost of living went up for us peasants. That's not going to fix the economy. No reason to think QE 3 will do any different.

    And this is an incredible bubble. The US markets are set to make a run for their all-time highs with no underlying fundamentals whatsoever. They're going there on wild speculation based on QE, an electronic toy maker, and a Mexican restaurant. The strings holding the bale of hay together will snap at some point. So yeah, could be a real bull move, but one of the riskiest in our lifetimes.

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  105. Junk bonds:Long Term Treasuries break out to the upside. "RIsk On" trade is on. Large Megaphone or Broadening Top formation is in play. Target 1560~1580. Ben Bullnanke must know that Greece will leave the Euro by year's end, or something much worse...

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  106. Look at this chart... there are two very important fiversdown that went completely against the dominant trend.  And yet I've never yet seen a single EW analyst address that fact.


    I actually laughed out loud at that one. Yep, they're really fivers down, and ABC correctives back up to new highs. If there is any clearer proof of the skewing effects of intervention on the markets as social mood scoreboard, I don't know what it is. The waves have the correct form for a down wave, they're just terminating at the "wrong" levels -- higher and higher. The whole wave is not only on its side, its feet are pointing up in the air.

    About the other stuff, my emotional brain capitulated a while back. But my rational brain tells me that there is a Law of Unintended and Uncontrollable Consequences, and Newton's Law of Equal and Opposite Reactions to Every Action. There are limits to intervention. Just as in engineering and physics there are limits to how tall you can build and how far you can extend an unsupported bridge. You can only build a scaffold so high before it is so rickety that it collapses under its own shaky weight.

    And there is the reality of social mood waves. Prechter may have had the wrong supercycle count, or he vastly underestimated the distorting effects of intervention, but his books did convince me that social mood waves are real, and that they are sublte, but overwhelmingly powerful forces of nature.

    This blow-off top, wherever it ends up, is like a cage match -- make that a cage rematch -- between man's hubris and nature's force. A little look in any history book will show the outcome of all previous matches.

    And one more thing -- this is exactly the type of irrationally exuberant finish one would expect with any bubble (including the biggie that finished in 1929). This just happens to be a really, really big bubble, and the aftermath of the "pop" will be huge. And likewise every preceding bubble seemed to be unpoppable, but, like all the others, it WILL pop.

    It's always really ironic to find myself boosting bear morale -- "Cheer up buddy, civilization as we know it will collapse soon enough!" -- but, hey, cheer up, civilization as we know it will collapse soon enough! ;)

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  107. Someone once told me "Cheer up, things could be worse".

    So I cheered up and sure as shit things got worse.  LOL

    ============

    Yeah, I completely understand the realities that you mentioned about engineering.  Also there's a limit to the height of any building due to the spaces taken up by the elevator shafts and the fact that those spaces take up a bigger and bigger percentage of the space as the building grows taller.  Eventually it's "all shaft".

    Just like there's a limit to the size of any rocket that burns fuel.  We're already at the limit because 99.5% of the energy burned in a rocket launch is wasted on lifting the fuel itself.  No room left for cargo or instruments.  So for "scientists" to ever suggest that we'll be journeying through the stars or even visiting Mars or the moon on a regular basis some day are completely insane.  At least not with propulsion systems as we know them.  In fact, those stories are also just fiction generated by the MSM, the propaganda branch of the cabal.

    I'm not saying that civilization won't collapse.  Indeed it will.  All I'm pointing out with that little rant is that unless the bankers are confronted, put on trial and made to pay for their actions they're going to own it all when that day comes.  I just doubt that will ever happen either since they also own the judges and the courts.  It's going to take "law" and not guns to bring them down and until the day comes when the people rise en masse and take it all over, I'm certain it's going to end exactly as I depicted.  Yes, civilization will collapse either way.  I just want 'humanity' to come out the winner when all is said and done, not the Satanic bankers.

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  108. No question about it... it's "risk on".  I can't find any 'measuring device, including the one you included, that shows otherwise.

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  109. All I'm pointing out with that little rant is that unless the bankers are confronted, put on trial and made to pay for their actions they're going to own it all when that day comes.


    When the wheels come off, fury will be ignited. I'm not concerned that bankers won't be prosecuted. The bigger problem is that the fury probably won't stop with bankers (some of whom may flee the country to escape not just prosecution -- but persecution).

    There will be lots of frightened politicians and lots of finger pointing. It will be an atmosphere ripe for demagoguery. I truly believe a really bad wave of antisemitism is going to come out of this.

    I have my reasons for believing this. I hope anyone who stumbles across this and reads it (or any other place I've mentioned it) will have the grace and courage to keep a level head and not get swept up in the anger and hate when that day comes.

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  110. By the way, welcome Tom.  You're a new name here and you don't seem to be a troll.  So you're in like flint.  lol

    Are you at all familiar with my style and that I have zero tolerance for trolls?  Man, I had no option but to start up this little blog as just about the only method I could think of to get away from assholes.  They're everywhere... except here.  I've had to lock the door to very few people, very few, but apparently many of my good friends on other sites just prefer to hang out where they are and that's perfectly fine with me.  This has ended up perfect.  A quiet place.  With no assholes, lol.

    So take your pick and kick your shoes off.

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  111. I did take a shot at 1.06 but you have to admit we are going higher here. Risk is on however you slice it. Question is maybe the Aussie may not benefit as much as say silver because of China slowing. I have my stops at breakeven and will flip to longs if taken out. Please don't fight the trend. if you trade commodities at all maybe you should take a look at that side.

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  112. Thanks AR! Yes, Vancouver to be exact. I live above a bridge, not below one. 
    I spend about a week per month in Calgary. Got in some good hiking in the Kananaskis this summer. You're welcome to join me on a hike anytime! 
    Forget the markets and foolish central bankers for the day. Time to go berry picking in mountains. Hope the bears didn't get to them first...

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  113. I just wanted to throw these charts I Googled out there, since AR mentioned the 80/10 sma upthread. The first one shows the 50/200 in the 1929 crash and the following three-year decline. Notice the moving averages gave absolutely no clue whatsoever what was coming. (They can't, of course, since the market has to actually move before any averaging of market moves is affected). What they can do is provide evidence that might confirm a trend, after it has started. 

    http://www.marketmonograph.com/a/goodman/200812/09derf1929.gif 

    As fast as the crossover occurred, by the time it confirmed the trend, the market had already lost a significant amount of its value. And short entry points would be very hard to come by after that. Besides, it's not likely many people believed there was that much down side still ahead. This second chart, again from the 1929 crash, shows how risky it is to play the bounces or call bottoms when the social mood bottom is dropping out. Compare to the previous chart and you'll see that after that first big bounce the 50/200 seemed to indicate the trend had reversed back up again. When it had not.

    http://static.alsosprachanalyst.com/2011/09/image12.png 

    And this third chart shows how many bounces there were before the bottom was actually in -- only bottoming after the market lost 90% of its value over a three-year span.

    http://3.bp.blogspot.com/_uoQsu0vbWqo/TBCtF06FHNI/AAAAAAAABS8/E5B9bBr-cn8/s400/dow_jones_industrial_average_breadth_1929.gif 

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  114. Bears not friggin dead yet.
    AUDUSD dailyhttp://screencast.com/t/zmXtsd3lB

    60min
    http://screencast.com/t/FzgVRWMgwK

    Bring it on you bulls, it's STILL just a flesh wound
    DK

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  115. Gotcha, AR. I wasn't directing my comment at you, since I know how versed you are in TA. I used to work in the liberal commie gotcha media (a couple of different branches of it), and in between our wars on Christmas and forcing people to gay marry socialists, we had it drummed in our heads to write every story like readers, viewers, or listeners were learning about it for the very first time. 

    So a lot of times I'm instinctively teaching for the benefit of those who haven't read anything about this stuff before. I need to be  more clear about that kind of thing, lest I inadvertently insult your intelligence and well-proven expertise.

    My only point -- and I should have made this very clear -- was to alert people to not get too cozy over this rally and take risks without stops or hedges, or stay in too long waiting for a crossover signal. That would be a good way to get burned since we could very well be fast approaching a historic top, on the precipice of a historic move down.

    And I do respect the 80/10 -- that pair backtests beautifully. And I respect the Zweig Bread Truck too, now that I've been run over by it a couple of times. Might be a good idea to watch for that truck (among other things) when we all start trying to call the bottom.

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  116. Thanks Papa.  I 'did' slightly misinterpret your earlier comment.  But by all means, please feel absolutely free to express your opinions whether or not they might challenge my own TA beliefs.  I'm certainly not above making mistakes that's for damned sure.  I'm not easily offended by good folks like you because I know what you're like... there would be no malice intended even if I did feel a bit of a needle.  No worries.

    Lol... yeah the last time the Bread Truck drove through town I put up a comment about why we should expect the thrust not only at bottoms but also at the first reaction off a nasty, nasty initial down leg.  IOW, the initial reaction after a true market top.  The last time the thrust happened I thought it was in reaction to the first true breakdown in months.  I was wrong.  But I'll stick to that theory though because breadth can react with such violence to the initial real strong pullback, that once it bounces off that initial low it can produce what appears to be another official Zweig Bread Truck signal.  Very similar to how the stochastic reacts immediately upon the first bounce after the first real pullback in mumfs.  I was kind of ridiculed for sharing that observation a few months ago when I wrote about it, but I just took that with a grain of salt because the critique didn't know Jack Shitt about TA.  If I recall his name was Wagmer or something like that. 

    By the way, did you ever see my little piece about how the phrase "you don't know Jack Shit" got started?  I told that story too and was viciously attacked by the same asshole Wagmer for it.  So now that I'm reminded about that attack, I've just posted the story on Jack Shit on a page that you can now find on the tabs at the top of the post.  Just for fun.

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  117. Very nice conut monsieur DK!
    And a bearish count while the bullish pom pom squads are doing cart wheels.

    I do think it would be quite a trick for the big banks to use this QE3 as an exit plan from all the stocks they bought with QE1 and QE2.  Might be their only way to get out.

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  118. Hey Greggo
    & looks like even Richard at Marketletters is now more cautious, after becoming wildly bullish last week.
    worth keeping an eye on GBPUSD- the 1.63 level is still holding, despite aud & eur going ballistic. could be a good marker for other USD pairs if that truly holds & GBP starts to tank.
    In fact,it' a very  low risk short right here with the 1.63 stop

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  119. btw Richard now says AUD will be "Crushed' in coming days- his words, not mine, lol

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  120. this might help explain the strength of the dollar in spite of QE:
    the Fed has actually been more restrained than other central banks
    http://1.bp.blogspot.com/-AnzNimGRS0Q/UFd5z7gwWPI/AAAAAAAARvA/lO6L1UhoCp4/s1600/Central%2BBank%2BBalance%2BSheets%2B2.png
    http://globaleconomicanalysis.blogspot.com/2012/09/infinite-qe-central-bank-balance-sheet.html

    how long will the USD appear to be "the cleanest dirty shirt"? http://video.cnbc.com/gallery/?video=3000099730

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  121. Really?!  I didn't see that yet, only his cautious turn of a few days ago.  I think that third wave can't be smallest led him to a count that looks like yours.  And his bullishness was a factor in my hesitation in shorting at 1.06 ... another lesson to trust my own inner voice.  Well that, and a meeting caused me to miss the top.  But there were some nice resistance lines up that way it couldn't reclaim, so I think it does look week until it reclaims them.  I'm thinking if it falls below that 1.044 where it was pre announcement, that would be confirmation that the bears are taking over.

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  122. Ah ... I see that now ... his plan is to short any rallies.  I am on liking that plan, I only fear we may not get a rally, but if we do, that looks like an excellent low risk short entry with some good resistance lines to use as stops.

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  123. Thanks for the other pair's lines in the sand.  Helps with reading the tea leaves.  If you have more tea leaves.  A discipline I've not incorporated yet, but see how it's been helpful to they masters.If one is near a boundary line, it should exert a force on a related pair even if that one is not obviously near any lines itself.  Will keeping watching that 'un.
    Good day, mate.

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  124. and in his tweet he says "crushed"

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  125. DAX
    Island top?

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  126. "Incredibly important morning going forward for our indices." - Dave Halsey from this morning's video.

    Big day shaping up. Shakeout, or trend reversal in progress? I've posted a couple of primers starting here (http://highrevsopenhouse.blogspot.com/2012/09/a-very-disturbing-price-pattern.html#comment-653510639 ), with the link to Halsey's morning video.

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  127. Boy I've criticized ZH pretty hard from time to time, but I've got to give credit where credit's due: they've been hitting it on the head  over there these last 24 hours. 

    My hat's off.

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  128. Not much of a chart, but it shows a possible big four-year triple lutz head shoulder ellipse fractal canary coal mine formation on the Aussie/Yen. 

    http://i.imgur.com/76k2b.jpg

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  129. Whaddaya mean "Not much of a chart"?  That's a great chart.  Hear me out Papa.  Pretend for a second that I hadn't glanced to see what your chart was about.  Pretend I don't know if it's a stock, an index or the price of beer in Ireland.  The second I opened that one up I thought to myself "holy shitt does that thing have bullish overtones!  The poor Irish are gonna have to pay through the nose for a good pisser next year."  You know me Papa... that's not the way my mind usually works.  Normally I'd have said, "Yup, there's a triple top abrewin' there."

    What's gone wrong with me?  Only last week I submitted the same chart and thought it rather cute how it resembled a house.  A house FOR SALE (in the picture).  But tonight when I opened your chart, I immediately interpreted it as being one of these, or something very similar.  I'd normally look at that last chart and because of a bearish bias, would call it a "double top".  Of course it was no such thing.  It was simply a consolidation before yet another explosion higher thanks to Chairman Numbnuts.  And of course, here's how that thing evolved.

    You see?  You see how sick in the head I've become?  That's what Bernanke does.  That's their specialty, turning formerl perfectly good minds insane by gradually converting them into nothing but buckets of grey slush to be forever sloshing around in what-used-to-be perfectly good normal human beings' heads.  They're destructive whores on so many fronts.  I look at your chart tonight and I think "Jesus, what a nice consolidation after a run-up.  When that thing breaks out it's going to be a barnstormer of a good rally.  With measurable implications no less.

    Is there any doubt now how badly a bias can affect a person?  It has been the anvil around my neck for a long time now.  Perhaps I should just keep it hanging there so I can continue to see clearly.  Or perhaps it's time I cast it off, admitted that to "fight the Fed" is probably not the best idea, and to admit that those fuckers dirty motherfuc cocksu bastards have one shitload more power than any of us could even imagine.  After all, they are minions of Satan himself aren't they?  Yes.  They are.

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  130. Whaddaya mean "Not much of a chart"?  That's a great chart.  Bear with me here Papa for a second.  Pretend for a second that I hadn't glanced to see what your chart was about.  Pretend I don't know if it's a stock, an index or the price of beer in Ireland.  The second I opened that one up I thought to myself "holy shitt does that thing have bullish overtones!  The poor Irish are gonna have to pay through the nose for a good pisser next year."  You know me Papa... that's not the way my mind usually works.  Normally I'd have said, "Yup, there's a triple top abrewin' there."

    What's gone wrong with me?  Only last week I submitted the same chart and thought it rather cute how it resembled a house.  A house FOR SALE (in the picture).  But tonight when I opened your chart, I immediately interpreted it as being one of these, or something very similar.  I'd normally look at that last chart and because of a bearish bias, would call it a "double top".  Of course it was no such thing.  It was simply a consolidation before yet another explosion higher thanks to Chairman Numbnuts.  And of course, here's how that thing evolved.

    You see?  You see how sick in the head I've become?  That's what Bernanke does.  That's their specialty, turning formerl perfectly good minds insane by gradually converting them into nothing but buckets of grey slush to be forever sloshing around in what-used-to-be perfectly good normal human beings' heads.  They're destructive whores on so many fronts.  I look at your chart tonight and I think "Jesus, what a nice consolidation after a run-up.  When that thing breaks out it's going to be a barnstormer of a good rally.  With measurable implications no less.

    Is there any doubt now how badly a bias can affect a person?  It has been the anvil around my neck for a long time now.  Perhaps I should just keep it hanging there so I can continue to see clearly.  Or perhaps it's time I cast it off, admitted that to "fight the Fed" is probably not the best idea, and to admit that those fuckers dirty motherfuc cocksu bastards have one shitload more power than any of us could even imagine.  After all, they are minions of Satan himself aren't they?  Yes.  They are.

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  131. Yeah, I've gone on there and criticized them for sensationalism as well, using the most gentlemanly and politically correct wordage I'm capable of.  Not very often, but I've gotten away with it... and got quite a few "likes" in the process.  But I've also admitted that even though they have a one-track mind, they certainly do bring us stories that very, very few of us would have otherwise ever heard about.  Like the Nanex pictures, etc.  I've seen Pretzel refer to them as ZeroCred, which I thought was funnier than hell.  Mind you, he's careful about where he says things like that.  Still, it's funny.  Speaking of funny, here's a video he posted today just for me.  I'm still wiping the tears outta my eyes.  Wanna know how to get across town?  Here's how to get there.

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  132. I loved that house chart. I also like ellipses. :)

    Hang in there. It's been a long corrective rally. Bears had to be worn out and defeated before a real top to it could finally form.

    There may be one more run to new highs to complete the job. Or it may already be done. We'll see.

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  133. Well here's one more look at the AUD/JPY showing it as a potential Moby Dick formation.

    http://i.imgur.com/4ICOi.jpg

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  134. Haha.  Love it Papa.  I also saw that you posted it at PL's place and I was certainly glad to see it there.  Glad to see 'you' there.

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  135.  Beautiful,
    I've had Melville on my mind lately too. Seems whenever the BOJ steps into hte muck I start to get notions about catching that white whale.

    Swerve me? The path to my fixed purpose is laid with iron rails,
    whereon my soul is grooved to run. Over unsounded gorges, through
    the rifled hearts of mountains, under torrents’ beds, unerringly
    I rush! Naught’s an obstacle, naught’s an angle to the iron way!

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  136. Good mood indicators ... I know when I've reached an I don't even care anymore what the hell the AUDUSD does, because I'm sick to death of being disappointed that it's not turning down.  Then it will probably be ready to turn down.  Because there are not enough shorts to squeeze to make it go up anymore.

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  137. The Fed certainly does mess with our heads matey.  Argh!
    It's pirate day.
    And me thought two years ago they were out of bullets ... er swords.
    All they needed was a critical mass of muppets who thought there wooden sticks were actually swords.
    Varmin, the lot of em.

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  138. Could that be a little impulsive move off the top in GBPUSD today?

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  139. That's funny!

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  140. Uncle. Pass the Kool-Aid.

    (I'm still letting my WAY underwater unleveraged position ride it out anyway. Because I'm ornery and stubborn.)

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  141.  Mondays trading could set the tone for the next 2 weeks ?  http://chartramblings.blogspot.co.uk/2012/09/blog-post_23.html

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  142. Hard to find TA evidence of a good reason why we should see higher prices here and now, except when looking at the slower, trend based, indicators, especially longer term - that's about the only way one can read strength into current pricing . . . IMO. Everything else is negative in my view. Overbought short and intermediate term, out of stream (volume and the faster momentum indicators), at the top of the range and/or resistance, pattern targets getting hit, and with sentiment extremes.

    But I'd love to see a huge move higher on Monday and Tuesday before we reverse lower. (Don't know whether I should put a wink or a LOL after that - getting used to thinking "low probability" - now it has to have a LOL.)

    Maybe in Europe though, a big up day Monday that is, at least until the open on Wall Street. ;-)

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  143. Richard at Market Letters has become very bearish on a longer term view.  (taking off his trading hat).
    "This could be the ultimate trading moment ... fade the Fed's hubris of thinking they control the markets."
    He sees many USD pairs topping against the dollar.

    AUDUSD is now below 1.0440 ... the point it was at before the big QE3 announcement.

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  144. Here's what I think is going on with the Australian dollar.  No guarantees this is right of course but if it is I'd expect equities to react accordingly.  The disconcerting aspect is that it would suggest the Aussie (and equities) would be dropping into the election.  I just don't think that's an option.  Soooo... from a common sense angle only, nothing to do with EWT, I'd expect equities to perform more along the lines as shown in the second chart.

    Even though I think a correction is way overdue now, I have to admit that I'm starting to see parabolic features showing up in the daily, weekly and mumfly charts.  Other than EW arguments, I'm sure not seeing anything even remotely bearish on the longer term charts anymore.  For example, with each consecutive leg higher, each leg is getting steeper than the previous, not shallower.  Those are the hallmarks of either an index about to go parabolic, or a blow-off top.  As far as I'm concerned, both are totally possible now.  I'm no longer convinced that we, the mere mortals, are privy to the darker dealings of the global banking mafia.  For all we know, the money to jack the markets until 2012 is coming from the Vatican.  I believe it's entirely possible that that's really where the marching orders are actually coming from.  True home of the Illuminati.

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  145. Those fivers on your SPX chart can only be counted as ending wave C for flats. That would give us 2 running flats. That's one of my key assumptions for my long term GDOW count. Of course, those 2 fivers could be a nested 1-2, 1-2 down on the GDOW (unlike on the SPX). In any event, I think those big Elliott Wave markersare very important when trying to develop a long term count, that is unless we resign ourselves to calling them triple zigzags.

    How about a sell-off into mid-Oct with a rebound into
    elections? Something along the lines of an ascending wedge breakout
    failure and subsequent break of the lower boundary, and then a kiss
    back reaction hugging the bottom of the lower wedge boundary into the
    elections? 11,750 ST target on the DOW with 13,000 + being the snapback
    reaction?

    (btw, you've posted the same XAD chart twice)

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  146. viseos with Dalio,Rickards,Mauldin and Stockman   http://slopeofhope.com/2012/09/the-four-macro-horsemen-of-the-apocalypse-evil-plan-850by-bdi.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+typepad%2Ftradeblogs%2Fthe_slope_of_hope_with_ti+%28Slope+of+Hope+with+Tim+Knight%29

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  147. Hey there HighRev.  Thanks for the heads up about posting the same chart twice.  The second link is fixed.

    Yeah I think some sort of sell-off is due immediately but I imagine it will be shallow because of the election, just as you suggest.  Beyond that my friend, I'm gonna have to see the Fed's policy completely fail and the stock markets of the world take a gigantic dump (down to S&P 1280, and the faster the better) before I'll be convinced enough to admit that I was temporarily insane when I wrote the comment above.  Call it frustration if you will.  Call it playing the devil's advocate.  Call it utter disbelief at the sheer level of criminality of it all.  Or perhaps we could even call it recognition of the fact that maybe, just "maybe", the central banks of the world have indeed embarked on a race to the bottom with their respective currencies and it's balls to the wall from here on.  Gold sure thinks so.  So do the commodities markets... other than oil of course, but that's only because the price of oil got slapped down immediately upon the announcement of QEternity just to give the impression that unlimited printing of money doesn't cause inflation.  They think we, the useless eaters, are nothing but a bunch of dopes in 3rd grade.  In my humble opinion, we're going to see $180 oil before we'll see $80 oil.  If nothing else a strike on Iran literally guarantees that notion.  And the odds of a strike on Iran?  100% because they don't yet have a central bank controlled by the cabal.  That's a situation that they of course need to correct.  So... war it will be.  That's just how those evil bastards work, but you knew that already.

    I appreciate your input about what possible path the market might take over the next month and of course you could be absolutely correct... something totally different than what I've envisioned in the longer comment above.  I don't pretend to know for sure.  Just throwing my current thoughts out there.  In reality none of us will get a half-assed picture of what the markets really want to do until at least an hour after the polls have closed.due to the fact that they're absolutely going to be manipulated until then.  By the way, thanks for not mentioning the fact that you think I've lost my mind.  I appreciate your compassion, generosity and friendship in biting your tongue on that matter, lol.

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  148. Thanks for that link CR.  I had already seen it on Slope and should have posted it here because I've watched the first two and plan on watching the second two.  They were good enough that I should have provided that link for the people who read here.  Much appreciated.

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  149. What's that about losing your mind? That's funny. Perhaps that's what I should have said about myself. LOL Can you imagine the volatility necessary for the scenario I laid out? But since I'm in low probability mode . . . on the other hand, you know how the market likes to screw the most people in the shortest period of time? Maybe that "left field" possibility has better chances than I think.

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  150. welcome AR. I always read BDI's Evil Plans.He is a good writer and very funny .A self confessed "idiot savant" and permabear Frenchman living in NY

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  151.  so far I am liking the gap down action in AAPL,Ndx,GLD etc....Really want to see Thursdays lows taken out though

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  152. Familiar looking fractal on the NDX weekly?

    http://mediacdn.disqus.com/uploads/mediaembed/images/351/1154/original.jpg

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  153. Action looks old-school pennant-y on a few indexes.Looks like there's at least one more continuation/breakout move upward left in this thing.

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  154. Since last the tsunami last year (not related but that's when I made a personal decision) I've been leaning towards commodity inflation jobless depression. Im on the west coast and that's how I sees it.

    I enjoy the vatican connection AR.. fyi, last year (during the summer panic) there was an article that was online for a few hours, then disappeared. I gleaned from some faint chatter, it was a cardinal that suggested we should perhaps fund and work with a global central bank (think of the ESM banking frankenstein formula and mix it with the BIS/IMF). That article was removed very quickly, reuters I believe.
    Anyways, I follow a certain phyzz-oriented PM blog daily because it lays down the PM futures deliveries and open interest levels. I tell you, in case you haven't seen, December OI levels are at multi year highs for both silver and gold.. aka, if there isn't a large enough selloff in pm contracts, the game is over as soon as this december. 

    IMO, this big game of juggling dollars, interest rate swaps, bonds, currencies, stocks, etc. is a hall of mirrors to prevent discovery of a tangible product of wealth (gold).

    You're right we cannot know what happens when, but if the gold/silver case is to be made, it would give a timeline of just about 3 months, and an event to drive money away from PMs and into stable currencies... maybe they've been delaying it because they don't want Euro/Europe to implode if people dump euros for USD in this hypothetical panic and maybe, additionally, there should be a war to divert eyes away from the markets.

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  155. "Amazing
    series of events given the fact that QE3 has started and the market has not
    respected a long setup or pullback since that reactionary trade that we had on
    Thursday and Friday from the FOMC announcement. Measured moves short are valid
    until they fail." - David Halsey 09/26/2012


     


    Lots of
    short targets on the first moves lower have been hit, and now we're working on
    the next short entry - either an extension, or a measured short, or both setups
    fail.


     


    Good video
    to watch. http://eminiaddict.com/?p=5900


     

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  156. Thanks for the comment.  I promise, I didn't mention the Vatican just tongue in cheek.

    Let me tell you why I think you might be a mind reader.  Yesterday I nearly finished another article on the $CRX.  It will be the 3rd installment in what is apparently turning into a 'series' of pieces on that topic. I'll put the finishing touches on it today, probably tweak it for an hour or two and then publish it tonight.  The reason I'm writing this one is because the $CRX:$SPX ratio is suggesting another explosion in the commodities markets.  Part of that will be due to genuine shortages, especially in the foods sector, and part of it is due to the sheer quantities of money being printed (nothing but old fashioned inflation).  This flies in the face of the "de"flationary scenario that I've been a proponent of for a long time now.  The issue is not yet settled though, so I'm not sure which way the ratio is going to decide upon.  But we're definitely at an inflection point... it's gonna show it's hand over the next few short weeks.

    Anyway, IF the ratio bursts higher from here and once again rises above the 13 year old rising trend line, that's what we're going to be faced with, another few years of inflation, especially in the commodities only related stocks.

    The conclusion I'm drawing from that scenario is that we're going to be facing an inflationary depression with the majority of the inflation coming in the commodities sectors.  Pretty much your vision exactly.  How ironic that you should drop off that comment today!  :-) 

    If you don't mind, feel free to drop off a link to the PM oriented site you like to visit.  Or at least maybe fill me in a bit more about the open interest issue.  Can you help me understand "why" such high OI dictates that there had better be a big selloff in the number of contracts?  Would that be because maybe, just "maybe" a lot of those contracts will demand delivery?  Because if that's the case, too many contracts would be undeliverable and the price of PMs would go through the roof, right?

    I can see "why" there would be a hammer job on the PMs, (if that happens).  To give the impression that inflation isn't happening.  And according to the $CRX, ever since it rolled lower early in 2011, inflation hasn't really been happening.  But like I say, it's threatening to roll higher now which would imply that some sort of game changer is in progress.  Ben's recent QEternity perhaps?  It sure looks like that's the culprit.

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  157. Thanks for the link HR.  I've seen a couple of vids by that gentleman before but for some reason I find him very difficult to listen to.  Not sure what the reason is.  But he offers interesting calls.  Thanks.

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