Full credit and thanks to The Green Prince for submitting this chart (in the form of a link) to our good friend Springhill Jack.
 |
| For the best view click on the chart |
Tuesday, January 8, 2013
Simple And Elegant
Here's a simple but elegant chart submitted to Springhill Jack's great blog by a participant named The Green Prince. This monthly chart of the $OEX (S&P 100) struck me as being so clear, so definitive that I thought I'd present it here and use it as an excuse to put up another post.
Full credit and thanks to The Green Prince for submitting this chart (in the form of a link) to our good friend Springhill Jack.
Full credit and thanks to The Green Prince for submitting this chart (in the form of a link) to our good friend Springhill Jack.
Subscribe to:
Post Comments (Atom)
I clicked the link thinking this was the opening line of your autobiography .... :-) Good chart,as you say
ReplyDeleteThe question is what is this QE bubble?
ReplyDelete- Home prices are not in bubble terrority (housing in emerging market homes has never corrected)
- Stocks don't appear to be in bubble (there are a few indices at all time highs but the P/E are not bubblish)
- Commodities are well under their 2008 peak (though some segments like lumber are near highs)
The primary beneficiaries all this QE liquidity appears to be
- ultra low VIX (volatility) given the landscape and
- persistent low bond spreads (Europe/Japan and other nations, junk and general rates to borrow).
That is, QE effectively shows up as "mispricing" of market risk, rather then in inflating an asset. But is this really the bubble? Looking at this differently, those derivivative investors insuring CDS (credit default swaps of greece, japan etc) from interest rate rises and those insuring Vix contracts from volalility spikes are not being compensated enough for the inherent risk. This is perhaps a similar situation to the like of AIG, Bear Stearns and Lehman who "insured" the CDS on subprime housing.
But what is needed to pop the bubble in "mispriced" risk premium if this story is true? I think we need to see runaway interest rates that central banks cannot control. But we know that the ECB has managed to control interest rates in the PIIGS since 2008 without the ECB collapsing and Japan has been in command since 1990 with low interest rates. To collapse the low interest rate bubble, investors need to think that central banks have lost control of interest rates. Maybe this shows up as higher inflation which forces the central bank hands but as for now there is little in the way of inflation and sufficient confidence in central bankers.
There is also the possibility of volatility spike that could destroy balance sheet "capital" but like the case for interest rates, something significant needs to occur rather then a simple correction which will be recoverable from those selling calls. That is, a "bear" market and/or recession that shows this QE liquidity is insufficient to produce economic growth.
Haha... and I'm quite sure it was the word "simple" that gave you that impression?
ReplyDeleteI think the QE bubble that Green Prince refers to will only materialize if the central banks lose control and the deflationary outcome emerges. That just might happen too if Bernanke was serious when the other day he insinuated that the Fed was out of bullets. ZH also commented on that but I can't find their article on it now. But in that article they pointed out that the Fed actually lied when they said they were buying the bond market. So the bond market has been rising supposedly as a simple result of the rest of the world buying into that lie and purchasing the bonds themselves. Who knows.?
ReplyDeleteI'd say the primary beneficiaries of QE liquidity are unquestionably "low rates" (low bond prices as you pointed out) and then everything that follows 'as a result of' low rates, like rising stock prices, huge risk taking in the currency markets and rising commodity prices in the earlier stages, although the rising commodity prices seem to no longer be benefiting.
"But what is needed to pop the bubble in "mispriced" risk premium if this
story is true? I think we need to see runaway interest rates that
central banks cannot control."
I agree. So far they have been able to control runaway rates by simply printing more and more and more and more. Eventually though, even at zero interest the debt can never be repayable. In fact the other day I heard a rather funny analysis that said that "If Japan would just get their act together and make the decision to pay off their national debt, if they paid one dollar per second, every second of every hour of every day, they would have their entire national debt paid off in only 33 million years." That came from Kyle Bass.
But I think the question is really only whether or not the central banks will actually be able to 'control it all' for another 4 or 5 years... or whether or not they're going to lose control sooner. Are we there right now? I don't think we're there right now although I still believe Green Princes' chart would support a pretty decent correction 'now'. But I have to admit that I've been amazed at the tricks the central banks keep pulling out of their arses that just keep it going. Who knows how many more they have up their sleeve. Personally, I'm totally convinced that they have the ultimate goal of crashing 'all' currencies and then saving the world with the concept of a one world currency. But before that is likely I think they have a few wars to conduct first... you know... leave the world in a complete shambles before they come swooping in to save us all from destitution by throwing that yoke around our necks permanently and enslaving the entire world into debt for eternity. That's when the world would find out what it's really like to live in a true totalitarian state. Pure hell on earth.
I'm pulling for them to lose control because I simply don't want my grandchildren to live in hell.
Love the chart, Dan. I would check in more often, but I know your posting schedule has been sparse since you spend most of your time at Pretzel's. I haven't been active trading/commenting for a long time, but have been checking into DE's place daily except that it is an incredible cesspool.
ReplyDeleteWelcome to a wonderfully civil pub in cyberspace ... yes, I'm checking out of Hotel California (troll central).
ReplyDeleteAwesome chart! And clearly the QE bubble has no gas left since the market has done nothing since QE3 and QE4 were announced. That's a good sign the end of the bubble is near. The impact of each central bank announcement has had a diminishing impact. Down to NO impact. A great place to short up at that blue resistance line. It's a retest, since the wedge already broke once (day after election), and this is a retest of the bottom of broken support AND that blue line.
ReplyDeleteThanks, GiB. Checked out SJ's Redlinescenario blog, too, but I don't think he allows comments.
ReplyDeleteHello AR !
ReplyDeleteWell, its late, but I just noticed you posted an update.
--
Hmm..interesting chart, it reminds me of my NYSE renko. An old chart, I am only ever reminded of it when I see people talk about the 3 bubbles!
-
It would be truly shocking if 1474 was the high, and we fell short by just 7pts...with the Trans/R2K being a fake out - which interestingly, they DID in late July 2011.
We'll know (probably) if we break <1398, in this down cycle, but honestly, I don't think so.
All things considered, the Bernanke Bux are kicking in now, and sp'1500s seem very plausible in February.
Good wishes..and goodnight
Some people are saying there is a Twitter option to communicate at SJ's blog, but I don't know how that works yet.
ReplyDeleteGood evening AR, I hope you don't mind, but I put a plug in for your pub over at Troll Central on my way out. Some nice peeps are over there, and there are 62 people looking for a nice blogopub to frequent. Maybe some will come over here. I don't know. And I don't care at this point, I just want to get out of the Hotel California!
ReplyDeleteHi there Greg. No I don't mind. But that's one thing I've never done myself, to go over there and try to entice people to come here. They know where this place is and since they've spent the last year opting to hang out over in that cesspool then why would I go over there and invite them here? Basically people who made that choice are not my kind of people because they've shown that they don't have their priorities lined up like I have mine lined up. Not much else to say on that matter.
ReplyDeleteBut it's gotten to the point where that site should just be abandoned. There is simply no other choice but to just leave that troll trapped there to marinate in his own feces... the feces he spread all over that place from top to bottom, from one end to the other. I think people are in the mood to just leave it to him since he made that place what it is today. And in that regard, if 2 or 3 or 5 or 65 of those people decide to wander in here that would be just fine. I don't care how many or how few. To be real honest I doubt there will be many but however many there might be, they would only be those who have confidence that they know how to behave here. There's nothing to it, people just have to use common sense and be nice. It's just common sense. Nobody's gonna get in trouble for saying "shit". See, I did it and nothing bad happened, lol.
You're welcome Greg... I feel somewhat bad that it's been a fairly quiet place for ya... almost lonely in here. But it's nice and warm and cozy in here and doesn't smell like shit. I must admit though that every once in a while it might smell like somebody farted. But I'd rather not go into any particular detail about what causes that. Well... beans... beans can cause that but that's all I'm going to say on the topic.
I believe the twitter option is responding to individual tweets not the blog.
ReplyDeleteTwitter is a good way to keep up with what other people are thinking and then throw your two cents in as well, but I'm not sure that it works all that well with substantial concepts. In other words, for something like'this trade here, that trade there' it's perfectly fine.For digging deeper into specific reasons and scenarios it will not suffice.Somebody said once that facebook connects you with the past but twitter connects you with the present. Well, the present doesn't last very long nowadays.
Lol... yeah as far as I know tweets have a character limit. Hardly the greatest platform for discussion.
ReplyDelete"Going for lunch at noon. Back at 3 pm."
"Don't you mean back at 1 pm?"
"No, I meant 4 pm."
"Why so long?"
"Why is what so long?"
"Lunch"
"Sure, meet me at the Golden Grill"
"What time"
"It's 10:30"
"Ok, thanks. What are ya doing for lunch?"
Great chart. I wonder what it would look like without Apple?
ReplyDeleteOr maybe the better question is what will it look like now that Apple is being run by the MBAs and not latter day messiahs
http://cache.gawkerassets.com/assets/images/4/2011/01/1978_steve_jobs_good_jobs.jpg
"I wonder what it would look like without Apple?"
ReplyDeleteGeez, wouldn't that be interesting to see. Overlay one atop the other.
There should be a way to charge anyone who comes from Trollville board, $5 PER POST, on this site :)
ReplyDeleteThat would be BULLISH.
That's right. It's like texting to the world.
ReplyDeleteThere are some good snippets of information if you're following the right people, and there are some great jokes. It's neat when you, for example, read a great book and want to get some more insights from the author. Like you're picking their brain with every tweet. I'm only looking at it as a consumer of information. I suppose creators & distributors of the information see it as an effective medium for their public conversations. And it does give everyday people who normally didn't have the opportunity to reach a mass outlet or who maybe don't have the writing or presentation skills the ability to reach a lot of people (maybe good and bad to that).But oh what a time waster. I thought facebook was bad. And separating the noise from the substance is difficult since its all there on one page.
Great idea PD. Hang on... I'll total up the number of posts you've left here, lol.
ReplyDelete$OEX is S&P 100 (not Nasdaq) http://en.wikipedia.org/wiki/S%26P_100
ReplyDeleteI know David. Forgive me a slip of the tongue.
ReplyDeleteI'll send you a silver block the size of a house brick, if we ever hit the low sp'500s.
ReplyDelete--
The deflationary bears need some patience ;)
AUDUSD
ReplyDeleteMoment of truth tonight. at 2 lines of resistance on weekly and at apex. Never gotten above weekly line in over a year.
This is the upper resistance line ... through tips of the tails. The upper bound.
A Very Good Place To Short IMO.
I bet some come on over. That's what keeps some there is they don't know of an alternative. I have trouble coming here during the day (it's blocked at work). Anyway, that place is dying a slow painful death, but die it must. 12 regulars have left. Seems like a social mood thing too. And I remember you said Geno was odd for liking that environment. I think it's very odd he talks to the evil one. Anyway, I'm glad to be committed to tranquility. Smells nice in here!
ReplyDeleteIt would be worth it.
ReplyDeletePerhaps the bernanke bucks were a lie ... another post here referencing a link to Pains Gains and Capital saying the fed balance sheet actually shrank post qe3 and qe4 announcements.
ReplyDeleteIf you can't define the terms, and read the press releases, - like most, you will come to the wrong conclusions.
ReplyDelete--
There was no QE4.
--
I'm well aware of the Fed balance sheet levels, and they are EXACTLY as they should be.
Can you get intra-day data for that pair in chart form? StockCharts doesn't provide it but if they did I'd use something like a 30 or 60 min. to fine tune when to pull the trigger. But that pair is kind of nuts in the overnight isn't it? Here's a close-up of a daily chart just to show the crazy wild swings it goes through. These would make things very tough on any trader because it triggers the fear response causing them to bail out of a position, then the pair just goes on it's merry way. I couldn't stand that... but here's what the daily gaps look like.
ReplyDeleteYeah for sure, I think it's imperative that you can identify an entry point where you can place a tight stop and just hope that it doesn't tap you out overnight or at the open. But once it gets on a roll and you're on the right side of it, then you could make some nice coin.
Geno is an ok guy. Not my kind of guy exactly but he and I didn't have much interaction over at Michael Eckert's site either. He's the same age as my son and as such he knows everything there is to know... know what I mean? He, just like my beloved son, are independent and think older folks have nothing to teach them. I'll tell you what... I sure as hell wish I knew a guy like myself 30 years ago.
ReplyDeleteBut I'll tell you what really sent me over the top with Geno. He comes flying in to Daneric's site after all of us had been there 3 years and the fight with Wagner was already in full progress. Geno comes waltzing in and plays the roll of the "reasonable guy" who didn't particularly see any reason why everybody was "picking on" Wagner. Jesus Christ, if he only knew and appreciated the madness and animosity that asshole had created before he shot his mouth off he'd have been a lot better off, at least in my books. At least 10 or more traders who are at least as good as Geno had already left that joint thanks to Wagner. And Geno's going to feed right into Wagner's ego by pretending to be his lawyer? Exactly what the doctor ordered for Wagner... and Geno delivered. I can't tell you how much that pissed me off and it dropped Geno about 42 notches down my respect scale. It's a scale from 0-100.
LMAO... that's a pretty big brick of silver my friend, but I patiently await its arrival.
ReplyDeleteUS Bonds 30-year.
ReplyDeleteAlready broke a multi-year support from a ending diagonal on the weekly.
As Pains Gains and Capital says ... this is while the FED is buying the bonds!
That's how weakly they are supported at these bubble levels.
It all seems to be lining up right now.
SP 500 retesting broken wedge.
AUDUSD at resistance on the weekly.
Bonds already breaking down -- could be getting ready to collapse WITH stocks.
Seems the calm before the storm.
Yep, the AUDUSD has been called the beast by the Darkestknight. So these lines that it obeys are very rare indeed. The currency market only has dislocations on the weekend, but it moves around stealing people's stops in the middle of the night. And yes, getting on the right side is a better way to do it than pick the top, but then it can be hard to get an entry point then too. www.finviz.com has a few choices of time frames down to 5 minutes. I'll see if it behaves while I sleep tonight ... shorted at 1.055 with a stop of 1.057.
ReplyDeleteOh, the age explains his attitude. And I do remember that exchange a year ago. He still acts like people are baiting Wagner and have thin skin for letting Wagner get to them, and he's been there for a year, so he knows the real story. He doesn't mind that Wagner is filling up the blog with worthless posts. He makes it worse by supporting the evil one. An enabler. Yep, I'm sick of the whole scene. I had some respect for geno too before that. oh well ... no need for any of that.
ReplyDeleteI guess we could sum it up kind of like this: "Any friend of Wagner's is no friend of ours." Talk about being blind to the truth.
ReplyDeleteI have to admit that I hadn't really appreciated quite enough, that on a weekly basis the bond markets look like they're in for a bit of trouble. And as you point out... that's even with the Fed itself being pretty much the only buyer left for 'new issuance'. So if current bond holders start dumping their current holdings, driving rates higher, the Fed itself is screwed. And so would the national debt be screwed. We can't even pay the debts at zero interest rates. Which reminds me, I got a kick out of Kyle Bass saying that if the Japanese would only make the decision to pay off their national debt by dedicating one dollar per second, every second of every day, 24/7/52, they could have their national debt paid off in only 33 million years. But he had included the interest portion. I did the same calculation for the US debt, but since I don't know the average rate they're paying on the sum total of the debt, I just did the calculation based on ZERO interest. It came out to 587,000 years. But that's at only one dollar per second. Why... if those payments could be jacked up a bit, say to 587,000 per second it would only take one year to pay the debt off completely. Just one year! So what's stopping the American people from doing that? Oh yeah... they can't come up with $587,000 per second. Instead, the US is still spending $4 billion per day. On war machinery, bailing out bankers and other important stuff like that. Absolute madmen at the helm I tell ya.
ReplyDeleteI don't mind reminding too, that even as far back as two years ago I predicted that rather than see money flow either from the bond markets into the stock markets... or vice versa... that this time around, due to the diminishing amounts of capital that would be the result if the deflationary forces are truly at work, we'd see the bond markets and equity markets collapse at the same time. Perhaps we're about to see the beginning of that?
Yes, that is truly a shocker ... 33 million years puts it in perspective. As Kyle Bass says, Japan is simply NOT going to pay it back. I think he estimates a restructuring event in 2 years for Japan.
ReplyDeleteAnd the US bonds I guess took a whack with the hints that QE3 or QE4 would likely end in 2013. The greater fool theory got a surprise ... the greater fool (Fed) won't be coming around forever to buy bonds from the banks buying them now. Ooops.
The funny part of all this is that Japan is printing like mad, and now Japan somehow is one of the countries buying bonds from the US (picking up where China left off)?! Just what the h _ _ _ is going on here?!
And yes, I think you are correct ... that is a key sign to watch for ... debt and equities selling off together like in 1929 as risk of default gets repriced from 0% to something higher than that. LOL. And I think it was you or Richard (marketletters) who said that rising yields would be what causes the whole house of cards including equities to collapse. All this debt is the next bubble to (continue to) pop (maybe Japan's first then US).
Hey, Darkestknight has another plausible looking count on audusd which is in the end of a very big WXY (double zigzag), which implies it can go higher than that resistance line. It's over at troll central last night's thread.
ReplyDeleteHey, I forgot this is the week of options expirations AND first week of earnings season.
ReplyDeleteScottick had a chart that shows this week has been up something like 20 out of 22 quarters.
So, we'll see what next week brings for AUDUSD.
We seemed to have a bit of a spike and retrace this morning/overnight. I really thought the mid-December highs would hold but raised my stops so this is a bit of an inflection point. If we motor on to 1.06+ all bets are off for me.
ReplyDeleteThat's Daneric's LT projection as well I believe (as distinct from Prechter's, who at least initially expects USBs/USTs to act as a safe haven). Regarding the discussion below about Daneric's site, do you think he'd be persuaded to post here? I think he's a very smart big-picture guy but like many on here I can't be arsed to wade through reams of puerile abuse to see if he makes any intra-day comments or responses.
ReplyDeleteI thought that resistance line would hold, and got stopped out last night at 1.057. Darkest knight has proposed a new count on the messy aussie. Last night at Daneric's. I hope he doesn't mind if I share it here -- he often shares his counts here also. A possible expanding wedge for the end of WXY of 2 could imply a higher high to 1.06+. Thanks DK!
ReplyDeleteIf it finishes the day at 1.055 or below, this spike could just be a tail sticking above both lines for a brief time.
ReplyDeleteDoubtful. He very rarely posts on his own blog. Like a couple times a year.
ReplyDeleteDanno post here? He'd have no reason to to that Tom. He could control the situation over there with the click of his mousie but elects not to do so. What has happened on his blog is literally by his choice insofar as that he as elected to allow it to happen. I have no respect whatsoever for any person who would allow his readers to be subjected to that. How irresponsible can a person get?
ReplyDeleteI love Scottick. Now there's one guy who I dearly wish would come over here. He's just a stud with the TA stuff and he and I get along superbly. I'm at a bit of a loss as to why he won't join us here other than pure speculation that he might feel that he needs some sort of audience in order to justify submitting the great stuff he puts out. And of course that would make sense. But that audience?
ReplyDeleteI still see the occasional ultra deflationary doomer poster out there.
ReplyDeleteI'm as bullish as any of the gold bug maniacs, but.. if the market somehow broke new nominal lows..whether its 2014, 15..or whenever.. whats that gonna mean for the precious metals?
Peter Schiff always touted Gold/Dow ratio of 1-1. Which, since 2005, I've always held as the ultimate prediction of the current financial phase.
so which is dow 20k, gold 20k...or gold 4k dow, 4k?
Yeah he 'used to' share his counts here but we haven't seen him for a while. His appearances were spotty but always welcome of course. He's a good guy :-)
ReplyDeleteHeads up folks... it looks like its getting ready to tank across the board IMO.
ReplyDeleteDo you see anything in the internals to say it will tank? Seems like a non stop train now especially on the FX side. Massive moves overnight.
ReplyDeleteHappy New Year everyone!
ReplyDeleteLooks like fibonacci and golden mean proportions/ratios are not only relevant to stock market analysis but to medicine and the science of anesthesia and consciousness.
After scaring the beejesus out of you, the article gets better, so keep reading...
Just as long as they knock me out during any surgery, Im fine with whatever...
http://www.theatlantic.com/magazine/archive/2013/01/awakening/309188/2/
What do you make of the breadth measures NYAD. To me it looks bullish with perhaps some short term weakness. I don't really see a large move down. Am I missing something?
ReplyDeleteSpiked to within a hair's breadth of 1.06 on my chart. Then back down to 1.0575 and currently 1.058x in after-hours.
ReplyDeletehttp://www.bloomberg.com/news/2013-01-11/japan-current-account-slides-into-deficit-ahead-of-stimulus.html
ReplyDeleteHe'll be back ... he was just on vacation for 3 weeks over the holidays to Europe, and seems to vanish for weeks here and there with his job. Didn't show up much at troll central either.
ReplyDeleteScottick has been missing in action for many months ... another victim of the troll I suspect. Can't remember exactly if he was attacked ... but it was truly nearly everyone who was a good contributor, and most who left that was the reason. Weird how most people don't seem to enjoy getting verbally abused. Odd. But he had some good TA, eh? Right up your alley!
ReplyDeleteWow, thanks! That is huge.
ReplyDeleteA negative account balance happened much sooner than people were predicting. Their exports are falling off a cliff with China boycotting. And that means they will not be able to self-fund soon. And that means we're that much closer to a Japanese debt default/restructuring. Or at least the market revaluing the yen after strengthening for 40 years. The next Greece event.
Japans endgame is near. However the yen is extremely oversold. I would wait for saner levels to reshort.
ReplyDeleteNope, I don't think you're missing much. I do see a series of neg. divergences in NYAD though that 'do' suggest the pullback you seem to be sensing. I'd call it short term weakness as well. But the action today with an hour and a half to go looked very, very dicey to me. I thought it could crater at any moment. There's no question it's overbought. Negative divergences abound, like in the RSI, StochRSI and a few others. The MACD 'is not' in divergence though, but it's histogram 'is'. Again, that doesn't really mean much when there's this much momentum behind a move. I'm also seeing the "Bullish Percent" on every index starting to show signs of a top too. We'll see, but I think a pullback is imminent. But I'm sure in no position to even consider that this market doesn't have a hell of a lot more to run if Bernanke gets his way. And when doesn't he? When he loses control and not a minute sooner. That day might be years off.
ReplyDeleteSorry newb, I just always get real busy right after the markets close. If you don't mind, I'll just refer you to my reply to ocx, just above. Yeah for sure, the Aussie Yen pair looks like it just wants to hit the moon. Mostly due to the crash in the Yen. It probably has about 30% more to fall too although it's definitely oversold at the moment. No sign of a bottom in it though. No sign at all.
ReplyDeleteYup, Scottie's TA skills were excellent. And no, he was never attacked that I'm aware of. He was just one of those guys who didn't care to waste time nor energy in a room full of that type of negativity. Same reason I left that place a year ago or more. I live in a positive world brother Greggor and by golly I'm gonna get rich, lol.
ReplyDeleteBy the way, I was given the supreme pleasure over Christmas of finding out that my great big handsome son got engaged to be married on Christmas Eve.
Agreed, Japan's endgame is near. And you betcha, the Yen is extremely oversold. But I think it continues to tank for quite a while longer before showing signs of even bouncing a little bit. The weekly chart is just horrid. And of course the mumfly chart is even horrider. Look at what happened the last time the Yen put in a decline on the monthly basis that was this swift (1995). This is why I say it probably has a hell of a lot further to fall before we're going to even see the slightest sign of a bottom. I think it could drop to 100 with ease. Ultimately probably a lot further. Japan has gotten to the point where they literally have to destroy their own currency or default. Well... destroying one's currency is a form of default. The most common one known to man.
ReplyDeleteAgreed, Japan's endgame is near. And you betcha, the Yen is extremely oversold. But I think it continues to tank for quite a while longer before showing signs of even bouncing a little bit. The weekly chart is just horrid. And of course the mumfly chart is even horrider. Look at what happened the last time the Yen put in a decline on the monthly basis that was this swift (1995). This is why I say it probably has a hell of a lot further to fall before we're going to even see the slightest sign of a bottom. I think it could drop to 100 with ease. Ultimately probably a lot further. Japan has gotten to the point where they literally have to destroy their own currency or default. Well... destroying one's currency is a form of default. The most common one known to man.
ReplyDeleteUSDJPY:
ReplyDeleteI have been rejiggering my count, and I like this one best.
See what you think. Greenface, it's similar to yours, but I moved minor 1 within this Big 3. Now minor 1 is about 5 dollars of a move and minor 3 is about 8. so 1.6 greater. Minor 1 has an extended fifth. And your count helped me realize that minor 1 doesn't need to go past 84,17. Anyway, I like this count, and still a wave 5 up of this big 3, and then the big 4 you mentioned.
Elliott waves seem to be working here!
Hey Greenface,
ReplyDeleteI rejiggered my count based partly on yours, but it has a few differences (described above). See what you think ... minor 3 = 1.6 x Minor 1 so that's beautific. Curious to hear your thoughts. Thanks again for your input.
Cheers,
Greg
Chart above (won't attach in a reply apparently).
I like it. Nice fib relationships.
ReplyDeleteAlthough there's really no telling when this third wave will end for sure. Position ratios that I look at are neutral. It's like it's on autopilot
Well hello there stranger. (In my best imitation of a New Jersey accent) How you doin'?
ReplyDeletePlease accept with no obligation, implied or implicit, my best wishes for an environmentally conscious, socially responsible, low stress, non-addictive, gender neutral, celebration of the winter solstice holiday, practiced within the most enjoyable traditions of the religious persuasion of your choice, or secular practices of your choice, with respect for the religious/secular persuasions and/or traditions of others, or their choice not to practice religious or secular traditions at all . . . and a fiscally successful, personally fulfilling, and medically uncomplicated recognition of the onset of the generally accepted calendar year 2013, but not without due respect for the calendars of choice of other cultures whose contributions to society have helped make America great, (not to imply that America is necessarily greater than any other country or is the only "America" in the western hemisphere), and without regard to the race, creed, color, age, physical ability, religious faith, choice of computer platform, or sexual preference of the wishee.
(By accepting this greeting, you are accepting these terms. This greeting is subject to clarification or withdrawal. It is freely transferable with no alteration to the original greeting. It implies no promise by the wisher to actually implement any of the wishes for her/himself or others, is void where prohibited by law, and is revocable at the sole discretion of the wisher. This wish is warranted to perform as expected within the usual application of good tidings for a period of one year, or until the issuance of a subsequent holiday greeting, whichever comes first, and warranty is limited to replacement of this wish or issuance of a new wish at the sole discretion of the wisher.)
In other words, Happy New Year right back at ya! In the most politically correct verbiage I could conjure up :-)
Been too long since I popped in here. AlbertaRocks you still rock. Love that chart in the OP!
ReplyDeleteNice ... I've only seen that type of chart from you, thanks. How do you use that information? Surprising the % longs hasn't changed much.
ReplyDeleteGlad it looks good to you.
By the way, it was a comment you mentioned about length of time being related to bigger degrees of waves that helped me finally call that (2) a two. I'd been stuck thinking it was a (iv) of an extended fifth for (1). Caused me to miss half of this third wave. But lessons learned! Had a feeling for a month that count (extended 5th to get beyond minor 1) didn't look right.
I'm curious, do you take positions on corrective waves -- like the (4) coming up or the big 4 coming up after that?
And it did finish the week below that key 1.055 (two lines of resistance there). I shorted again today. Nicely done staying in for that spike up to 1.0599ish. A very good place to be shorting it based on the lines. The count I have no idea, although DK's count has another high possible. But I'm going with resistance lines here and see what happens.
ReplyDeleteVery good work. Non-confirming advancements, when combined with the plethora of all-time negative divergences between realities and market levels, are a bear for bulls.
ReplyDeleteThanks to Scottick and also you AR for familiarizing me with the StochRSI with the 3 &5 ma's. It got me interested enough to dig deeper and get acquainted with the higher order derivative indicators. Learned a lot from you guys over the years.
ReplyDeleteI believe Scottick changed jobs and that was the reason behind his absence.
Wave 4's are usually good for about a one third drop. At this degree that's a lot of pips. Why not go for it.
ReplyDeleteOnly problem is picking the top. The silly thing could just keep running
P.S. I looked back over the past 2-3 weeks, and the DMI would have done perfectly keeping me in it at 84ish on the 4 hourly and not selling. Mighty handy indicator, that one.
ReplyDeleteGood to hear from you again Papa_Boule!
ReplyDeletePlease give Aunt Pitty Pat my kindest regards.
How might risk-on end?
ReplyDeleteIf the Fed's source of money (buying bonds and banks having more cash) is likely ending this year, then where will the buying power come from?
There are still companies buying back shares with DEBT. But companies are buying stocks back, and not the AUDUSD carry trade. And AUDUSD looks weaker than SP500. And if interest rates rise, then they won't be able to get low cost funds by selling bonds.
So this equity mirage also ends if interest rates rise. Maybe the Japanese would want to buy our stock market before their currency loses 50% more value in a few years.
Very good stuff.
ReplyDeleteI read something else about Japan I'd not had on their long worry list:
If their currency continues to weaken, as we know that's good because it helps their exports which helps their account balance which helps them fund their debt. And maybe they'll get back to their old ways of being self-funding. That's the hope. They are hoping to GROW their way out of this debt problem.
But it's also bad. They will soon need foreigners to buy their debt (or just print massively). But foreigners will demand HIGHER INTEREST RATES to compensate for currency risk (a whopping 14% move in a few months). IF interest rates start spiking, it's all over for them -- debt default is the only mathematical end game -- right now it's a low interest cost massive debt. If they go from 1% to 2% that doubles their service cost. As Kyle Bass says, they don't know what they are asking for. Japanese citizens bought those 1% bonds assuming the central bank was guaranateeing deflation forever, and now they are trying to get inflation.
So, this helps illustrate that there is actually no escape out of the deflation end game that they are in.
And your historical graph is a good illustration of where we might be headed. However, it's following well-behaved waves for now ... maybe it gets to panic stage at some point.
Haha... every time I see her I ask her "What happened to your hair?". I don't know whether she's caught on or not that it's the same guy who asks that question every time.
ReplyDeleteThat's the very crux of the entire conundrum these days isn't it Greg? It has literally come to the point where the Fed, the ECB and even the IMF (all the same people as far as I'm concerned... the criminal ruling elite) are truly the buyers of last resort. They are definitely buying up almost 'all' the new issuance of US debt. They're definitely indirectly buying up the stock markets in Europe as well as the US markets as well. So they literally "have to" keep it going because there's nobody left to buy any of it. The American corporations are apparently sitting on more cash than they've ever had before, but that's more a sign that their confidence level is at an all time low. And those people running big corporations in the private sector are far too sharp to waste any of that money buying up US government debt when the bond market is just about the shakiest bubble on the planet. So this equity mirage will indeed end if rates start to rise. So rise they won't... not until the Fed loses control completely or even attempts some sort of orderly reduction in their balance sheet. I think I worded that correctly... what I mean is that the day could theoretically come when they might try to sell some of the bonds back into the market and thereby attempt to lift rates in an orderly fashion. I think that the very minute the market sniffs that out the game will be over for equities. So perhaps they have no intention of 'ever' allowing rates to rise even the slightest. The government can't afford to pay their debt at current levels near zero, let along at 0.5% higher. What a pickle. I wonder if it's realistic to consider that the Fed is actually, and fatally, trapped?
ReplyDeleteActually I want to give Scottie full credit for that one. He showed us his chart and immediately I saw what he'd done... the trick of making the StochRSI invisible which allowed us to look at its moving averages only. That was Scotties baby all the way and I learned it from him... and I use to this day. I had done something very similar with other indicators but not with that one. It hadn't even crossed my mind.
ReplyDeleteI've even gone so far as to create an entire series of invisible charts on the S&P so that all I can see is various moving averages. I've even experimented with the question of whether or not it would be possible to (and maybe even make sense to) trade based on an invisible index and making judgements bases on the MAs only. The conclusion: Yes you could, but you just might take a downdraft bigger than even JPM could afford before it works out in your favor, lol. We'd need a lot of cash and a lot of time to make it work. However not all was lost because I gained a whole new respect for the notion of eliminating the noise by giving far more credence to moving averages. They really are the bomb.
Superb question. I'd also firmly believed that gold and the Dow would someday converge. But I thought it would be at 4,000. To consider that it 'might' actually happen at 20,000 is no longer out of the question I don't think.
ReplyDeleteNice to see you anytime Papa.
ReplyDeleteYeah I really liked that chart too. Of course it wasn't created by yours truly so I asked The Green Prince if I could use it. He didn't get back to me for a day so I used it anyway. Then he showed up at Springhill Jack's site and said "Sure, go ahead. But I don't need recognition." Sure he does... that's a great chart.
It is a great question. The conventional way "bull markets" end is on the highest of high notes. That's why no amount of TA or EWT can pick a top. Bears give up, even shut down their blogs, everyone's bullish. The benchmarks point to more up side, and a lot of it. There's often a blow-off move and the news and outlooks are great, exuberance abounds. And every major top over the last few years has come with an "unfinished" EWT count -- an expected next move up that never comes.
ReplyDeleteBut this isn't a conventional bull market. I often wonder where the markets would be without intervention. This is what blows holes in the theory that the market is an accurate reflection of social mood. The reason they are intervening in the first place is to prevent the markets from organically moving downward with social mood, and to levitate them upward in opposition to it. Because of the incomprehensible amount of money they were loaned (interest free) to play with, they have succeeded. The investing going on isn't "organic." And retail investing -- where you would think most of the actual social mood is -- is still mostly on the sidelines.
Algos bid the market up on every bit of good news (or bad news spun positively) in the expectation or hope that retail will respond to the news (and the move itself) and come back into the market. But retail stays on the sidelines, and all it is is algos bidding the market up against each other using the free money.
It's an unsustainable game for several reasons. One of which is : What is the second part of the plan once retail re-enters the market -- if it ever does? What then? Do all the big boys sell to retail and get out? That's not good, because that just means crash. Or do they then magically get the will to reverse NAFTA and restore Glass-Steagall and start real reform and break up TBTF banks? Is there an actual plan to end outsourcing and bring jobs and manufacturing back? Is wealth going to be "un-concentrated" now that it has been concentrated? Is there any will to do any of this?
Of course none of this is going to happen, not the way things are. And a lot of people sense there's no sunshiny outcome at the end of this.
So this one could end on some sort of "bad" news -- something forced by the consequences of intervention, perhaps -- that pops the illusion or shakes the confidence and brings more reality into awareness.
Papa that is just an incredibly astute and outstanding comment. If I wasn't the owner of this blog, if I were instead a follower or reader, I'd check in here every day just to see what you might have to say next. That's just a remarkable comment and we can't thank you enough for your views. In fact, although you didn't write that comment as an article, it has "article" quality written all over it. Would you please shoot me a quick email to totalgarbage@shaw.ca. That's a totally safe email address that I'm comfortable publishing publicly since it just eliminates any potential trolls on the spot. I have to head out now but I'd reply to it from a different email address as soon as I return (assuming you're willing to send me one, lol). Thanks :-)
ReplyDeleteEmail sent. And thanks for the compliments! Awesome. :)
ReplyDeleteExcellent comment Papa_Boule!
ReplyDeleteAnd your three related bubbles is also an interesting observation. I wanted to add on to your thought -- that all three were bubbles built on easy credit and expanding loans (stocks on margin, then houses with easy credit, and now QE money provided by Fed). So all the bubbles were fueled by debt which is the definition of unsustainable. And government fed the last one -- last one to the party, so three peaks makes sense too that it would be the end. No 4th peak -- that is a very big development
As for possible triggers, increasing interest rates could do the job, but I think another candidate could be a major debt crisis in Japan -- maybe when THEIR interest rates start spiking. The 3rd largest economy dwarfs Greece. Surely that's not priced in, and no way anyone could bail them out.
Thanks GF. Hey, by the way, do you have a book you'd recommend with all the details surrounding fib relationships, and if (2) is a zig zag then (4) has to be this or that? I have EW principles, but it doesn't seem very meaty and somewhat disorganized.
ReplyDeleteGreg, I only use fibs to gauge where a third or fifth wave might end and only in conjunction with indicators. I look for retracements for areas of potential support and resistance, but wouldn't bet money on them exclusively.
ReplyDeleteTo me fibonacci, like other natural phenomenon, need to be looked at on a probability spectrum. It would be better to assign odds like a weather forecast. Better yet, odds like if wave 2 retraces 50% then wave 4 will retrace x%, if wave 2 retraces 62% then wave 4 will retrace y%. Unfortunately, price relationships between 2's & 4's don't hold up to well probably because 4's are so chaotic and have a much different "character" then 2's in the social mood sense. They do, however, seem to have some temporal characteristics in common.
The rules of thumb I learned were wave 4 will retrace between roughly 30% to 50% the majority of the time. Never less than 20% or more than 62% or it's something else. So id it's between 20% - 30% or 50% - 62% then wave 4 will be some time ratio of wave 2. The time ratio will either be fibonacci or it could be some related to the Pell Sequence. The definitive work anywhere on this temporal phenomenon is from our very own Zim/ZimZeb/RationalInsolvency:
http://www.rationalinsolvency.com/ESR201112.pdf
Hey, thanks a heap for the info, I'll check out that link for some study material.
ReplyDeleteThat will be very useful in the big wave 4 coming up. Of course this USDJPY has been channeling so well on the way up, another target area will likely be the channel line we can draw once wave 3 is complete. Sort of like a hurricane path forecast .. somewhere on that line would likely be the end of big 4. Do you think it'll make it down there?
Hey good sir, I awoke today with a question about that squirrely yen carry trade. Never had that one figured out, but I'm thinking it the currency is tanking and has 0% interest rates, it would be a great source of funding via carry trade. Like the dollar was in 2009 when it was falling and had 0% interest.
ReplyDeleteCould this be the source of yet another bubble in assets funded by borrowing yens happily to pay them back at weaker levels? Not sure how the carry trade affects currencies.
Good point
ReplyDeleteTBONE had a guideline that works pretty well.
The third wave tends to bust out of the channel that has the bottom line set by waves 2 & 4 and the top line touching wave 1.
When I get back to my computer I'll see what the channelling looks like
Ahh, right, forgot about that. I remember DK saying 3's can stick up out of that track, but didn't apply it to this. Very tricky because that means you'd have to expect it to go below the line that is easy to draw (since 4 isn't in yet). So there are various lines that would allow 3 to stick up out of the parallel line through 1. Thanks!
ReplyDeleteWe can put channel on the lower degree wave that started late Nov / early Dec. Where your extended fifth starts and my wave three starts. No matter where I reasonably position the ones and twos, price is still running out like a third wave. There is some possible momentum divergence, but it
ReplyDeleteHey AR, I've bee blog-less since I abandoned the Daneric ship a few months ago. Is it okay if I hang out here?
ReplyDeleteBlue
Thanks again for the article, I just finished reading it, very nice. I haven't done much with time ratios analysis, so this is a helpful tool for the tool box. Never heard of pell ratios either. I just checked out the JPY time ratios, and it's very enlightening ... ii's and iv's of the same degree have similar time length.
ReplyDeleteThanks again for sharing.
Welcome Blueskies!
ReplyDeleteTo the troll-free blog -- AR has welcomed many former members of troll central!
I think you'll find it a rather refreshing and positive environment.
And our host very good at blocking said trolls.
Ain't the beer cold!
Still hanging below 1.056 this evening. But it's bed time, so we'll see if resistance holds near here.
ReplyDeletehey Greg! yeah, the cold beer IS a nice touch! :) very homey.
ReplyDeleteWelcome blueskies. Of course you can hang out here. It's a pretty quiet place most of the time but at least the discussions that go on here are intelligent ones. But that's what we're after anyway, yes? lol
ReplyDeleteHere, the first few dozen are on the house. After that the drinks are courtesy of Baltimore Greg and Greener. They're the ones with the fat wallets.
thanks for the welcome AR, i've been so distressed without a "home" blog. LOL.
ReplyDeleteSi, senor, that is what we are after! and I don't have to weed through nastiness and rudeness to find something intelligent.
nice! the first few DOZEN on the house! that ought to hold me til, oh i dunno, thursday?. then i'll hit GIB and GF up. thanks for the tip!
I understand about why some people feel distressed. It has become a distressing experience at the other place and to see friends just disappearing is also really a tough one to choke down. In fact it's downright angering. But this place has been here for a year now and people know where it is. They're all big boys and girls and they make their own decisions. So as I more or less explained to Greg a full year ago, this blog came into being... the beer is always cold...the door is open 24/7 and it's a troll-free environment. If that kind of spot works for some people great. It it's not their cup of tea, that's great as well. We wish them well wherever they end up. So kick back and relax, we're not goin' anywhere. It will probably be quieter than you like but the company is classy. A good trade-off in my books.
ReplyDeleteit can't possibly be any quieter here than hanging out trading by myself for the past few months! i missed talking to others and reading what they were thinking. some good charts put up too. plus some good natured kidding around was always fun. it's the downright ugliness that just got to me, bad vibes and too much "noise".
ReplyDeletethe cast of characters at the "addiction" blog (and it WAS kind of addicting) were pretty entertaining at first, but it got old. met some good folks there though, and they all seem to come by here so that is great!
Oh my goodness! This is too funny!! AR, I know you speak your mind and do so eloquently, but this hogwash is absolutely brilliant.! Bravo!
ReplyDeleteAnd Happy New Year to you too, dear!
Haha, that's funny! Someday we're gonna have that beer, and it'd be a sooner day if I hadn't inexplicably missed most of the the third of the third in usdjpy -- like maybe next month I could've hopped on a flight. The count was perfectly following along until I got my degrees mixed up and didn't know it. Thought we were still working on (v) of i and turns out we were done with ii (my (iv) of v) and ready for the big iii. Was waiting for a pull back when it took off. Caught flat-footed and stunned. Staulked that beast's every every movement for 7 months. Was so so close to 300% in 8 days. Greener got me straightened out with degrees and days for next time.
ReplyDeleteHad I been where I thought I was I'd plan a trip to Canada in a month to come have a drink with you buddy! At least I now know what's possible, eh? 4 pages of lessons to learn. Took the day off to grieve a third of a third partially missed. In shock I missed it. That fish was a real whale! But minor 5 will be here in a few months, and wait until we see the size of the intermediate 3 fishie in a year or so!
By the way, congratulations on your son's engagement! He is a handsome lad, and sounds like a very good-hearted one too.
An observation...I hadn't been to the other blog for quit awhile, not even to read it. So the past few days I have been reading it and posted a couple of times. I don't know if it's me or what but it seems so totally different than it used to be. There was a
ReplyDeletecamaraderie for awhile, sharing info and also some kidding around. Then it started devolving into hateful comments, then it got better, but NOW it is even worse. Even more hateful. It's not even entertaining anymore.
anyway, thanks for a place to hang one's market hat AR. I am using my twitter account again too. I was using it for awhile up (until last spring when i detoured into the anti-blog) and it's chock full of good info from lots of traders, pro and semi pro and amateur, that you can filter. Had totally forgotten how it had helped my trading instead of hindering it.
So yeah between Twitter and this all is good : )
Thanks again for hosting AR!
oh now i know what it is....the other place seems so much sleazier now......except for the usual good few.
ReplyDeleteYou're welcome blueskies. I find it to be a total waste of good energy to even click a link to that page let alone read any of it. Like the time I discovered that when I stopped breaking my fingers on purpose with a hammer, it wasn't long after that my hands stopped hurting. I couldn't see the sense in causing unnecessary agony to myself any further. To stop breaking ones own fingers is something everybody should try.
ReplyDeleteJust in case you ever get tempted though, please don't invite that hoard over here. I'd say its gotten to the point that 80% of them are people I wouldn't want here. If they were to read that sentence, they would know who they are. The others are welcome of course, but the few good remaining people who participate there know where this blog is. They are "there" for a reason. It's a reason I can't understand but they're asking for what they get over there. I'm certain that whatever it is, they will not find it here.
Have a great weedend weekend.
Pretty much everyone I liked over there is over here according to your members list, though some don't post much... if at all, so have no fear of unexpected house guests!
ReplyDeleteI like Darkest Knight a lot for his charts and counts and he's really cool, I like Chart Rambler too, so maybe they'll come by here too. Crop Circles is really good but he isn't over there much any more, as is Zenizen (I think that's how he spells it), but he's not there much either anymore. The good ones have been staying away from there for longer and longer periods.
just saw this. awesome info. thanks!
ReplyDeleteoh, also i think SJ is a really good trader, though I think he is persona non grata here. he's doing his own thing now and that works for him very well it seems.
ReplyDeleteand Scottick!!!! he was great also.
ReplyDeleteYou should check Zim out
ReplyDeleterationalinsolvency.blogspot.com
He has a lot of fun with graphics and imagery. He's very insightful and clever with the way he has the charts tell the story
I really liked Scottick... and Max Cherry. There are so many others that I'm even starting to forget their names. I got along with all of them so well and they got along with each other. Chartrambler is a great friend of mine. He drops in occasionally. Doc posted here a few times but he wasn't getting much dialogue in the way of wave counts, so he strayed back. He's a great guy too. Anyway, I'm just fine the way things are right now. If a few more of the good folks wander in and find that they 'really can' work better in a friendly environment the good on them. They'd be welcomed with open arms.
ReplyDeleteSJ... that cat sunk his own fate when he went on that drunken 40 comment rampage against yours truly. I didn't respond to a single one of his taunts, name calling, asking me to meet him for a fight, etc. Truth be known I'm still so pissed off at that guy that the fight idea still sounds just fine with me. What an incredible tirade he went on, against me. And all for the sole purpose of trying to make a name for "himself"... at my expense and at the destruction of my own good name. I don't need fickle friends like that. Nobody does.
thanks GF. Will do that this evening.
ReplyDeleteyeah, Max Cherry. and Yikes. Moe Gamble, Doc....I forget a bunch too, they come to me randomly.
ReplyDeleteJust heard a few things here and there about your and SJ's falling out. He's a very unique individual. We always got along, but I'm a girl so that might have somethin' to do wit it.
I thought you might like it being a graphic designer.
ReplyDeleteOne of these days you'll have to give us all a Photoshop lesson.
very cool! i enjoyed that link.
ReplyDeletelove photoshop, much more fun than boring old InDesign! lessons are free, anytime!
this makes me so furious i could spit....
ReplyDeletehttp://www.zerohedge.com/news/2013-01-19/presenting-50-point-sp-500-move-courtesy-illegal-geithner-leak
Things must be getting bad in Britain?
ReplyDeleteThey're now paying to get out instead of in
http://www.dailymail.co.uk/news/article-2265646/Illegal-immigrants-pay-1-500-smuggled-OUT-Britain-Fears-gangs-helping-foreign-criminals-flee-country.html
no kidding. reading around the net so many people were in the correct position but got hammered in the big swing. and none of these peeple go to jail. Corzine is another one that infuriates me.
ReplyDeletethanks for the great chart...will keep an eye on that for sure!!!!!!
ReplyDeleteMolon Labe
ReplyDeletehttp://www.youtube.com/watch?v=BTdhVxva5KU