Friday, January 25, 2013

The Wild Ravings Of An Elliott Wave Heretic, And Why "P3" Is Still On

Hi again, everyone. Papa Boule here.

Here's my heresy, right up front: I depart from the purists when it comes to "the market never lies" dogma. When intervention is going on at this level -- when they are painting the tape through intervention dollars exceeding half the market cap of the entire Wilshire index -- you're doggone right the ticker lies. (In one way -- but not in another, as I will explain.)

If someone loaned you and me 7 trillion (or more) free dollars to play with against a total Wilshire cap of 15 trillion, I guarantee you we can move the ticker, a lot, no matter what the social mood. We can play havoc with the S&P and other indexes. We can target the bellwethers and the weighted stocks. We can extend our impact by moving futures around in the overnights. And if we compressed it and did it all in a single week, we could probably shock the economic world by skyrocketing a couple of major indexes' levels in a mother of all "blow-off moves."

With that much liquidity injected (far, far more than we knew about at the time), intervention worked. It moved the tickers up, the big crash predicted by Elliott Wave theoreticians didn't happen, and the big P2 and P3 counts were blown. (And those who went against the flow and came up with bullish counts and calls got lucky.) And here we are at around 1500 on the S&P again.

So is Elliott Wave theory totally discredited and useless now? No, not really. Not from where I sit. And neither are other forms of technical analysis.

The market ticker is lying. Social mood is not where the market ticker says it is. But Elliott Wave analysis can still provide a clue as to where it really is, or at least the direction it has really been moving.

The tell is in the wave shapes.

In terms of social mood, the wave shapes are still correct, as are their individual directions. Their relative sizes and where they end up are not.

The wave shapes can be seen as vindicating Elliott Wave theory. Even though intervention has concealed the level of social mood (the levels of the waves), it has not concealed its direction (told by the shape of the waves). Actual social mood has been declining the whole time. It's actually much lower than the metric of the markets indicate.

Impulse (five-leg) waves down have been shortened and compressed as they struggled down against the upward influences of intervention. (Think of helium balloons under them pushing back up.) So impulsive fivers down have been overlapping, sometimes taking the form of diagonals.

Corrective (three-leg) waves up, moving with the current of intervention, have expanded and extended. So they exaggerate and stretch, and wind up finishing above the preceding impulse wave. (Think of helium balloons pulling them up.)

(By the way, helium is a non-renewable resource. Did you know that? It's running out. This is bad news for Geddy Lee. I threw that line in there for AlbertaRocks. ;)

This distortion has led to EW theoreticians putting 5-wave counts on what are actually corrective waves, and ABC 3-wave counts on what are actually impulse waves. Since the correctives were finishing higher than the impulse waves, they presumed they had no other choice. They were handcuffed by "the market ticker doesn't lie" dogma.

I illustrated this ticker distortion theory a few days ago by simply rotating a current chart 17 degrees clockwise. Look at the shapes of the waves, and how easily they count as an impulse down and a corrective up, rather than the opposite.

Click image for larger view


You can do that sort of thing all the way back to April of 2010, at least. Downward moves have been impulsive in shape, upward moves corrective. And yet the correctives end up taking the markets higher and higher.

There's a simple explanation. Each move up is built on all the preceding intervention. Prices are bid up atop already inflated prices. So the levels of distortion increase -- the market keeps getting further and further from where it should be in terms of social mood.

So the market ticker says that social mood has been going up. The shapes of the waves, and Papa Boule's wild theory, say it has been going down. And along comes Gallup with some strong evidence supporting Papa Boule's wild claim:
Americans are as negative about the state of the country and its prospects going forward as they have been in more than three decades. Fewer than four in 10 Americans (39%) rate the current status of the U.S. at the positive end of a zero to 10 scale. This is about the same as in 2010, but it is fewer than have said so at any point since 1979. As they usually are, Americans are more upbeat in their predictions of where the U.S. will be in five years (48% positive), but this is also lower than at any time since 1979.
The lowest it's been in over thirty years -- that's some pretty convincing evidence of a decline in social mood. A big decline. The market ticker is lying.

What about that huge triple top we talked about a couple of weeks ago? If the market ticker is lying, does that big resistance line still mean anything?

I think it does. And this also supports the underlying theories of Elliott Waves and technical analysis.

The faster a car goes, the more resistance there is. You probably have experienced this. Just stick your hand out of an open car window at 30 mph, then again at 70 mph. You notice immediately that it takes much more effort to move your hand forward against the wind at 70 mph than it does at 30 mph. And the faster the car goes, the stronger the resistance becomes. If it keeps going faster, at some point you won't have enough muscle power to move your hand against it.

The same physics apply to race cars. Getting up to 200 mph takes a certain amount of horsepower, but because of resistance increasing, every mph gained above that takes increasingly more and more horsepower.

So as intervention inflates the markets to higher and stronger resistance levels, the amount of intervention required increases exponentially. Eventually a point is reached where the amount of intervention needed to overcome resistance would wreak havoc in the form of unintended consequences.

That big resistance line has already busted two HUGE bubbles. So it is a tremendously powerful resistance level.

Now that the market levels are at that resistance line again, all those people who would have sold some time ago, but are still in the markets because of intervention, will be digging in their heels and, well, resisting.

I think of big resistance lines like that as "reality check" lines, or "credulity lines," the point where people start saying or thinking things like, "If I keep going along with this and acting any more exuberant, the men with the white coats and butterfly nets are going to come after me." It's a line so far from the moving average centerline of social mood that irrational exuberance starts feeling like full-blown delusional mania. It gets uncomfortable, in other words. And increasingly so, the further away from the centerline it's pushed.

So, getting the market ticker up to resistance like that triple top line is one thing. Getting above it and staying above it is another, requiring a level of intervention that would quickly take the wheels off the economy in other ways.

And in spite of the supposed wild abandon of current intervention operations, there still are practical limits. In a relatively civilized country, actually printing money without any limits is like an economic nuclear option. It's an option of last resort, something that won't be exercised until there is literally no other choice. Objectivists might explain the reluctance to use that option as a function of self-interest. Relatively sane powerful and rich people will not resort to something that, in the long run, actually reduces or threatens their power and wealth. It's only in the most desperate times that such things are resorted to. Those times may come eventually (like, say, after a default-causing, debt-destroying, deflationary crash), but they aren't here yet.

So where is social mood actually? Where would the markets be right now without intervention?

Since the level or amount of intervention isn't constant, but fluctuates (and we don't know how much off-the-record intervention is going on), there's no way to apply a constant curve, or to simply rotate the whole five-year chart a fixed degree. Going by nothing but "feel" based on how things look, I'm going to take a wild guess and say the S&P should be in the 800s right now. And ready to move even lower.

That's right. I'm saying Primary degree wave 3 ("P3"), or a similar sized wave, however you choose to label it, is not only still on, we're already in it. The current rally should have been painting the ticker as a lesser degree correction within it.

So my theory (actually, my belief) is that one of the upcoming impulse moves down will be so powerful that it breaks through the "floor" of the forces of intervention (pops those helium balloons holding things up). And when that moment happens, the market tickers will be in a race (or maybe freefall is a better word) to get back down to where they would be without intervention.

The longer intervention succeeds, the lower that point will be. And there's no way intervention can continue (without consequences) at the levels that would be required, and for the decade or more it would take, to meet the rising wave on the other side of this high-cycle-degree social mood trough.

* * * * * *

Now that all that's off my chest, I'd like to give a shout-out to GregInBaltimore for the great comments he's been making about FOREX -- particularly the Yen. I hope he and all the other FOREX traders who pop in here keep us updated regularly. Currencies are going to be a fascinating and turbulent market in the days and years ahead, and a very profitable one for people on the right side of trades.

And I'd like to once again thank our host, AlbertaRocks, for keeping this place so doggone friendly! Trade safe, everyone.

* * * * * *

I'm adding a chart showing the major triple top resistance line location on the S&P500. The previous chart used the S&P100. This is the resistance line that popped both the Dot Com and the Housing bubbles. The question is -- will it make it all the way there?

Click image for larger view
* * * * * *

I'm also adding this point, which I mentioned in comments: This wild theory also explains the "unfinished" counts at tops we've seen several times over the last few years -- the expected fifth wave move higher that never came. It's because the waves up were corrective, not impulsive. And they were over.


438 comments:

  1. Opening gaps on the cash indices have had me trying on various styles of tin foil hats.  One recent example, relative to some trendlines/bands from Feb/Mar 2012:
    http://rationalinsolvency.com/2013/01/spx012213nb.png
    http://rationalinsolvency.com/2013/01/spx012213ng.png

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  2. ''The same physics apply to race cars. Getting up to 200 mph takes a certain amount of horsepower, but because of resistance increasing, every mph gained above that takes increasingly more and more horsepower.So as intervention inflates the markets to higher and stronger resistance levels, the amount of intervention required increases exponentially.''

    Not quite.
    Think it as density of air.... or volume (daily, weeklys, doen't matter) on stocks ...I know retailers are reentering the market but since 2007 the volume  deflated. So ... resistence of air against your hand at a certain speed for your car is correlated with ...desity of air/ volume of markets.

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  3. one more thing: i remembered that guy from PIMCO saying that stocks are dead ... i guess he was reffering (also) at volatility and volume.
    one big giant rotten elephant ... the stock market and a lot of bugs and flies wondering along it ...retailers :D ..and some snakes- professional traders - ...just like Zoo ... :D

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  4. Actually Elliott Wave IS telling us what we need to know - there's no way that I can see an impulsive pattern in the entire bull run from the Mar '09 lows - too many overlaps, so it's definitely corrective.  I've been considering it to be an cycle degree "X" wave. 

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  5. Nice analysis Papa Boule.

    Perhaps the disequilibrium between social mood & equities lately isn't a new phenomenon but is just happening now on a massive unprecedented scale.
    Expanded flats, running flats, truncations & failures are patterns that seem like they would result from structural imbalances. And Elliott also had his irregular top which allowed for the market to top on 3 waves (which was btw ruthlessly discredited by Prechter as "typical analyst's weakness").

     Maybe it's time for a new pattern to describe the whacko QE markets. 

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  6. Good way to look at -
    x wave in a complex combination can look like anything and run higher or lower than the other waves

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  7. I'm not sure that volume corresponds to air density. 
    A better analogy would be the economic climate which is pretty shitty
    Volume is corresponding more to the inputs.

    Although I'm not sure an engine is the best model for the markets. Engine is a linear system where inputs generally equal outputs. The markets are non-linear and not directly proportional and highly sensitive to initial conditions. Which when you think about it is all the more scary considering the massive amounts of manipulation with such limited returns.

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  8.  Post from May, 2010 from my blog http://www.willowtreetrading.blogspot.com/2010_05_01_archive.html

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  9. "(By the way, helium is a non-renewable resource. Did you know that? It's running out. This is bad news for Geddy Lee."

    This article must be forwarded to Lazlo Birinyi immediately.  He lives on that stuff, been breathing it steadily since he was 8 years of age.  Were you aware that Mr. Birinyi weighs 17 lb.?

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  10. That was a great write-up PB and I totally agree on how the intervention has caused such a huge distortion. Many of us were in the bear camp a few years ago, getting money-hammered by shorting. We weren't idiots, and many of us are battered bears, we had just never dealt with anything like this before. The market should NOT have kept screaming higher, yet it did so relentlessly. I used to watch ES trade at night and kept telling my daytrader friends who weren't insomniacs what was going on. It was so odd that "jack it up over resistance" every...single....night. I was new to trading then and my daytrader friends dismissed what I was seeing cuz I was a newbie. Well it was true.

    This ain't gonna end well yall. WE know that. Just wish I had kept my little farm on the mountain in Vermont with a lake in my backyard because that was a safe place to be when the SHTF.

    Thanks again PB. Well said, and well written.

    blue

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  11. Helium is amazing stuff. When it runs out, what then? Switch to hydrogen? Hindenburg balloons at kiddie parties. Not a good plan.

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  12. i am long eurusd and may just sit in that trade, think it's gonna go to 145, DK was saying that also. I am daytrading usdjpy and caught 60 pips overnight last night! YAY! lol

    “ LTRO repayments represent a form of monetary tightening by the ECB: the balance sheet is shrinking. At a time when the Federal Reserve, the Bank of Japan, and the Swiss National Bank (the Bank of England soon as well) are all flooding the market with liquidity (expanding their balance sheets), any measures brought forth by the ECB that shrink the balance sheet are inherently Euro positive”.

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  13. Dayum!  Toss me a beer and let's talk this over.  Geez, talk about a guy who has the ability to think outside the box. 

    Surely some of the purists might express their opinion that "you can't just rotate a chart 17° to make it fit your point of view."  But I'd counter that argument with an equally valid fact that Fibonacci relationships are based on a simple mathematical formula, but one which is found in nature .  Under normal circumstances, 2+3 = 5, and 3+5 = 8.  But when some asshole from the Fed steps forth and declares that from now on 2+2 ≠ 4, then we're going to have distortion on an unprecedented scale.  We enter the twilight zone.

    For example, if we were to set up a one square mile secure compound totally free of predators and place one healthy female rabbit in there and then set Bugs Bunny loose to do his thing, the population of rabbits would grow at an exact Fibonacci number.  But if we opened the gates and allowed the Bulls of Pamplona to rampage through that pasture on every POMO day, then nature is not going to take its course and the number of rabbits would fall well short of what should be expected.  Distortion occurs.


    Of course we don't live in a perfect world.  There are natural predators that effect the global rabbit population, which is exactly why under natural conditions they don't multiply at the rate their natural breeding cycle dictates.  That's natural. But to run the bulls of Pamplona through that pasture once a week... c'mon, that's unnatural distortion.  Here's another example of applying "unnatural" forces to the rabbits' rate of growth?  What happens when the local sheriff decrees that there are now too many rabbits in the compound and everybody in America with a gun is welcome to enter the area for a little target practice?  What would happen then?  That would be an extinction event... totally unnatural.  Distortion occurs.

    And although those analogies might be considered as being a bit goofy, the truth in them is more than obvious.  So how could any rational thinker possibly expect normal Fibonacci relationships and patterns to exist in global markets while unprecedented and totally unnatural distortion is occurring?  Everybody agrees, we are not living in a natural monetary world.  The world has never before seen the population of currencies explode unabated like they have been in recent years, growing at ever accelerating rates with each passing month.  And there are no natural predators in existence, nothing out there to quell the explosion in the population of currencies.  Well nothing that is, other than their own natural mother... DEBT.  And that's exactly what the insane are doing, holding the "mother" in chains, doing everything in their power to keep her restrained lest she break loose and go on the attack and devour all her offspring in one mad murderous frenzy.  And all the while they're pumping her ass full of helium, growing her into the biggest, angriest mother of all time.  Some day she's going to break loose.  The end of currencies... an extinction event.  The central banks are in uncharted waters.  They're playing with the fuses leading to sticks of dynamite that are buried so far up their own asses that their own sense of reality is "distorted".  Let the fireworks begin.  We're going to have to face that music sooner or later, and the sooner we do it, the sooner humanity can embark on its next great journey.

    With those realities in mind, while the central banks of the world continue their madness in insisting on playing the roll of the most diabolical rabbit breeders in the history of the universe, I think Papa Boule's method of attempting to demonstrate those distortions is brilliant.  There's a ton of merit to it in my opinion.

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  14. There's a reason I invited Papa to share his views whenever he had a mind to, lol.  I knew that dude had the ability to think outside the box, but geez... what he presented above is more or less 'epic' is it not?

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  15. twas mucho bueno!

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  16. i loike your analogies. right-on.

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  17. Hi Al.  Nice to hear your voice.  You don't drop in here often enough, so feel free to mosey in whenever you have the urge.  Hope your having a stellar year so far.

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  18. Thanks for providing that link Al.  I'm very pleased that you aren't shy to do that.  Some bloggers don't particularly like it when other bloggers post links to their own blogs.  I love it, particularly when they're from good bloggers who have something good to offer.  High Rev is another one... and he promised an uber-bearish post this weekend.  He's going to swing by to post a link here as well.  So be on the look out for that one. :-)

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  19. I have to admit that I didn't have a clue that helium was a limited resource.  And as it turns out, severely limited.  Now that's one I wasn't expecting.  Thanks for the heads up on that.  ✔

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  20. Expanded flats work as well. The RUT for example.

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  21. Awesome compliments, and I agree with blueskies -- great analogies. Thanks, AR!

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  22. Thanks.  By the way, there's that little image we were talking about, that opens up the video.  I don't know why it appeared this time and other times doesn't.  My guess is that it has something to do with the URL itself.  I think we just have to pick up the right one... probably with something in it that Discus recognizes as being a video.

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  23.  I'd like to be a lot more active in the blogosphere but my apple processing business has been accelerating and that has to take priority.  I'm turning 65 this year and had planned to turn the business over to someone but haven't got anyone I'm fully comfortable with yet, if I can get that to happen I plan to return to my real passion: markets & trading.
    On the markets, went flat over the holidays, re-entered long ES Jan 9, been holding long since.

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  24. Thanks.  Didn't think you'd mind since you have a link to my blog over to the right, otherwise I wouldn't presume.

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  25. I understand.  You have my deepest respect for having grown that business into the success it is.  At this stage of the game though, I can sympathize totally with your concern about find the right person to take it over.  Totally!  That would be like handing your baby over to someone else to raise it.  Best of luck with that end of things.

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  26. yall are GREAT, a nice 'hood to hang out in.

    just wanted to say that :)

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  27. You bet.... it's a great crowd and I'm just as pleased about it as you are.  Your own recent activity here has turned out to be a big contributing factor too I might add.  The number of comments has shot up markedly recently because it's kind of evolving into actual 'discussion' as opposed to participants just dropping off comments.  Your own presence here is a good thing.

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  28. so you see a bull market in tin foil?

    seriously though. gaps can be initiation gaps, continuation gaps, or exhaustion gaps. they do not change the longer term trend. http://mediacdn.disqus.com/uploads/mediaembed/images/421/9858/original.jpg

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  29. Here's a perfect example of a 'positive' divergence, which provides a measurable target zone.  The target zone has been hit exactly and I think we head lower from here.
    SPX 15 Min.

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  30. There's a ton of great study goin' on on that chart David.  Thanks for submitting it.

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  31. here's the source

    The 10 and 20 year cycle in Stocks 

    and many other cycle charts
    http://astrocycle.net/prime-numbers-and-the-markets/

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  32. Gosh, that's a great resource.  Thanks again.  Here's what he sees for the USD:
    http://stockcharts.com/h-sc/ui?s=$SPX&p=15&b=3&g=0&id=p23563467252&a=272097093&r=1359143922233&cmd=print

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  33. Good trading Blue.
     I'm probably going to regret this, but I think the Euro has got some significant resistance at last Feb's peak and 1.35 will be tough to get over. Plus it's the 50% retracement from the May 2011 top. 
    I still like the England's prospects so I'm looking for some reversal in the EUR/GBP soon.

    And it looks like Greg was right about the Yen. It's a runaway train. 
    In Elliott wave terms, what we may have seen with the recent overlapping price action is a skewed triangle
    this could imply strong price momentum and possibly some blow off top scenario

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  34. Ya know, I was thinkin', and in nominal, inflation adjusted terms, I'd say P3's lookin' sweet, even without tiltin' the chart. ;-) 

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  35.  oh. well i am glad. that's cool. the energy / vibe here is good, so it attracts more of that and kinda snowballs. the opposite, of course, is true with negative energy, and we all know how that turns out.

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  36. okay, it's friday and i'm out of work early, so hit me up with a corona. lol...it's 5 o'clock somewhere.

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  37. let's hope it doesn't run out because there will be no more kids learning how to make their voice sound funny when they inhale it from a balloon.

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  38.  did you ever read "Stock Market Cycles?" by Clif Droke? Truly fascinating and in the same vein as you are talking about. I re-read it every now and again to remind me of the much bigger picture.

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  39. No worries, a bong can have the same effect.

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  40.  GL! my owner often gives me the apple cores and peels if she is making a pie or applesauce...heehee

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  41.  thanks GF. a small run of luck, no doubt will have the rug pulled out from under me shortly!

    euro keeps me nervous, but the chart is screaming at me to be long. haha, see above regarding rug.

    i haven't been following eur/gbp but will put it on my radar. and yeahh, the yen, they'll keep pummeling that. 120 on usdjpy...i reallly thing so.

    the thing about trading usdjpy on the way up is that you know it will go UP. so it's a great daytrading vehicle to buy support and sell resistance if one can stay nimble.

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  42. lime! imma in Tejas!

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  43. lol. it's fun to do both as i recall !
     

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  44. Oh be quiet and drink 'em both, lol.

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  45. Oh be quiet and drink 'em both, lol.

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  46. As of today, Jan 25th 2013,
    the gold price is currently falling.
    So, it is good to remember
    the long term future price movement of gold
    may be forecast.

    --The gold price correlates with the US National Debt.

    http://britefire.wordpress.com/2013/01/25/418/national-debt-vs-gold-price-1/

    And the Fed plans to continue to print:

    Dec 13, 2012
    "The Federal Reserve officially announced QE4+2 yesterday.
    The FOMC statement said it would consider raising the federal funds rate above 0%-0.25%
    if the unemployment rate fell to 6.5% or the inflation rate hit 2.5%."

    and *must* continue to print.
    http://britefire.wordpress.com/2012/07/02/313/

    Jan 24, 2013
    "The Federal Reserve pushed its balance sheet beyond $3 trillion
    for the first time this week
    while undertaking open-ended purchases
    of Treasuries and mortgage-backed securities"

    http://britefire.wordpress.com/2013/01/25/418/fed-balance-sht-2/

    and major international Central Banks
    will continue to spend

    http://britefire.wordpress.com/2013/01/25/418/central-bank-balance-sheets-3/


    --The gold price correlates with the Debt Limit.

    http://britefire.wordpress.com/2013/01/25/418/debt-limit-vs-gold-price-4-2/

    "The Treasury Department’s own projections
    have US debt at $23 trillion by 2015
    a 64 percent increase to the current debt limit.
    As the Fed continues to print
    the Monetary Base increases."

    --The gold price also correlates with the Monetary Base.

    http://britefire.wordpress.com/2013/01/25/418/mzm-money-stock-vs-gold-price-5/

    And, the Monetary Base is increasing.

    http://britefire.wordpress.com/2013/01/25/418/mzm-money-stock-6/
     

    Trend Channel

    http://britefire.wordpress.com/2013/01/25/418/gold-trend-channel-logscale-7/

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  47.  don't know if anyone reads john mauldin but i like him

    http://www.mauldineconomics.com/frontlinethoughts/?utm_source=newsletter&utm_medium=email&utm_campaign=frontline

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  48.  darn, didn't know you had to subscribe to finish the article, but anywhoo it's free.

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  49.  p.s. yeah but i got skunked on audusd long. not terribly but i didn't like the price action at 10450 area and bailed. glad i did.

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  50. Yet another "wow" -- the plunge in AAPL in the last moments at the end of day.

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  51.  lol. pathetic i tell ya. spending friday night reading stuff...but intellestin'

    http://blogs.barrons.com/techtraderdaily/2013/01/25/aapl-flash-dump-closes-stock-at-439-88-says-zerohedge/

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  52.  Hey, thanks ALOT for sharing your insights!  It is an elegant way to describe the impact of the distorting forces on the market, and a brilliant way to correct for them.  And I like the way you say the line is going to exert a powerful force and already popped two bubbles.  Gives it much more credibility in my mind -- it's easy to start thinking nothing can stop these central banks and their pumping.

    And thanks for the thanks on the Japanese debt implosion scenario stuff.  My pleasure!  By all means, if you or Albertarocks would like to make an article post about that stuff, feel free ... I think it would make an excellent topic.  Feel free.  I don't know if I'll get around to writing it up myself very soon, although I did promise one of my friends to as a birthday present, so maybe you all will inspire me to do that.  But maybe there was enough there already.

    By the way, I'm not sure people understand the wealth creation possibility with currencies if you know where they are headed with elliott waves, and you have a big move in store.  Many don't seem very excited by them. I live in a spreadsheet world as an actuary, so I put an example together to illustrate how it works.  Einstein said compounding was the most powerful force in the universe.  If we get this move to 107 from 88, and using 30:1 leverage only for when the move is about to occur, it could equate to 9,200%.  A 92-bagger!  Truly mind-boggling. 

    Cheers!

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  53. USDJPY -- The answer to why many are so excited to short the yen.

    Q.  So, just how much could a person make if the USDJPY does go form 88 to 107 in an extended fifth wave.  Using 30:1 leverage when elliott waves determine to get in and out.  And say you get the whole move, which should be nearly possible if it continues to move to predictable waves. Especially if you manage to avoid the pull-backs.  The friction is it's difficult to add currencies on the way up, and you don't want to near the top of moves.

    A.  92-fold.

    Q.  WHAT?!  Surely you jest!  No way!  Get out! 
     
    A.  Way.  Check out this spreadsheet -- I posted this to Papa_Boule below.

    Q.  So that's why people are so excited about currencies, eh?

    A.  Mind-boggling, eh?  If you didn't add to it on the way up, you'd still get 30 x 17% = 510%.  That would be less stressful.

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  54.  TGIF ... thanks for the beer!

    And by the way, if the yen does go to 107 and I catch a good part of it, one of the first things I'd like to do is fly to Canada and have some real beers with you good sir.  And celebrate with one of my favorite blog-mates.  Take two days off and fly up -- it'd be nice to meet you in real life since I feel like I know you from the blog-world.  And if enough people catch some of these big waves surely coming our way in other things also, I think we should most definitely have that party in Australia with Darkest Knight and this cast of characters that he so vividly described a year ago.

    Your friendship and discussions over the past two and a half years have helped sustain me thoughout all the valleys of doubt on this marathon journey.  A sense of community in a crazy world, and having the outlet to discuss things at this crazy but momentuous time in history.  It's kept me sane to have a place to congregate (as you know most people can't talk about this stuff). And you've created an oasis here that's a good service to mankind.  Seriously.  I think this blog you created can be a mastermind -- because you've kept out the negative forces that want to destroy such things, and have networked and shared your discoveries unselfishly, and so people have congregated here. 

    And for what's headed our way we each NEED to amass a small fortune for the time when jobs are even more scarcer, and you're promoting that goal for others.  And there is that potential also to make a fortune in these markets in these unstable times.  Cheers to you, good sir.

    Thanks,
    Greg

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  55. Either Greenback or EURUSD Rally Must Surrender

    http://www.dailyfx.com/forex/fundamental/forecast/weekly/usd/2013/01/26/Forex_Dollar_Either_Greenback_or_EURUSD_Rally_Must_Surrender.html

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  56. http://www.investorsinsight.com/blogs/thoughts_from_the_frontline/archive/2013/01/25/prisoner-of-the-bureaucracy.aspx

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  57. My weekend
    post is up and ready for everyone’s perusal. Hope you like it and looking forward to your comments, observations, insights, questions and the like.

    Distribution or Accumulation?

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  58. Just to be clear, if this wave from the November low is corrective, it looks ripe (already has an ABC structure) and could end anytime. If it's impulsive, a correction is due, then a final fifth-wave move higher. Which could very likely truncate, being this close to such a major resistance line. Although there's the possibility of a wild blow-off extension move that punches through that big resistance line temporarily. I consider that unlikely (if it is an impulse wave).

    Of course my wild theory favors the ABC corrective idea. And that explains all the "unfinished" counts over the last few years -- tops that came with expected fifth moves higher that never came. It's because the waves were corrective, not impulsive. And they were over.Here's the thing to be aware of: In EITHER case, this move from the November low is quite likely a terminal wave, the final move before a huge correction. So if you're trading it, it's prudent to stay on your toes.

    My game plan is just scaling in more SH at intervals. My next buy will be at 1520, if it gets there. I may just make buys at every 20-point gain thereafter, as long as the rally lasts.

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  59. REALLY enjoyed reading that HiRev. Lots of thought in the writing and also much work put into those great charts. To me, the final chart says it all....we are backtesting a long term trendline. Maybe that is simplistic and basic, but I'm a KISS kind of person when it comes to the market. I have no idea if "they" are accumulating or distributing, but my feeling is that they are trying to keep one foot in the door and the other ready at the exit because they also know that this is a CB created time bomb that can unravel at a moments notice, yet they need to perform of course and stay in the market. It's a tightrope.

    When i look at a 10 year chart on the DOW or SPX it looks to me that we are at (or getting to) the top of a the fifth wave and SHOULD be getting a correction here, but could be days, weeks, or months. I am not a waver, i just don't have the patience or inclination to count them all, but love reading the people who do and i gain much insight from them. But from what i do know, that's how I interpret the 10 year chart.

    Thanks again, good read.

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  60.  thanks Newb. I actually DO subscribe to Mauldin's newsletter, but then realized that when other's click on his link they want you to do the free sign-up.

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  61. LOL. hate to be a cut and paste-er BUT this is a good article on currencies outlook:

    http://www.zerohedge.com/contributed/2013-01-26/currency-positioning-and-technical-outlook-interesting-contrarian-opportuniti

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  62. I'm just wondering if u heard about  Forex striker which I`m currently using right now! The first Forex Striker robot in history registered with the United States Patent and Trademark Office that destroys brokers and makes cash everyday. Pls visit my FOREX STRIKER REVIEW and discover how i earned almost $18,000 in less than a month.

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  63. let's see, it would take me 80 days on horseback to get to Canada, at a relatively slow pace, so give me a three month head's up okay? LOL. Of course if I ride one horse and pack my gear on the other it might slow me down a little more. Then the problem becomes the trip back without hitting bad weather. : -0

    Australia would pose a bit more of a problem via horseback.

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  64. On USDJPY the waves rule.  Was in at 88.5 and out at 91.0 after 5 waves up, after a pull back we should get an iii of some degree.  Target for that would be 1.6 times this move of 3 ... or 4.8.  Happy New Year to us!

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  65.  I appreciate you sharing, without ego, all you have worked on. Fortune other than monetary will come back to you a hundred-fold.

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  66. Blue, the whole concept of a person being a "copy and paster" is nothing more than a construct from the twisted, mean spirited mind of that asshole Wagner who used that term as if there is something wrong with copy and paste.  WTF does he think a link is anyway?  Does he think a person is going to go to the trouble to actually type that URL out?  No worries, if you have a link or a quotation or a snippet, you 'have to' copy and paste it.  So fill your boots if you have something you'd like to offer and don't worry about criticism.  Wagner ain't here.

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  67. I think i have PostTraumaticBlogDisorder

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  68. Well here... just take one or two of your favorite meds and know you're among friends, lol.

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  69.  Thank God for the fact that Wagner ain't here!  Three cheers!

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  70. Would a collapse in Japan help delay the US collapse?

    I think Japan could be getting very close to it's own mass recognition moment when everyone understands they won't be paying their debt back -- it's mathematically impossible.  And whatever happened to those bond vigilantes?  Maybe just maybe they became currency traders and are bent on shorting the yen into oblivion like investor-vultures did to Lehman in 2008.

    If in fact Japan does in fact implode first, which looks likely, that could extend the proppage going on in the US, as money will flee the yen and seek a safe haven currency, say the USD for now, and also assets denominated in USD.  Massive capital flows out of Japan and into the US.  In fact, this is already happening, as Japan is now tied with China as the biggest foreign investor in US treasury bonds.  So, this could be a force toward delaying the imminent collapse of the US stock and bond market.

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  71.  think anti-venom is in order

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  72.  eurusd...

    ya know, if it breaks that 135 neckline on the that huge weekly IHS, we're looking at 15 handles to the upside....

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  73. If I were already into FOREX trading, I'd tread with caution, because both might happen at the same time. And I have no idea how that might affect the dollar/yen pair.

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  74. You seem too bearish on the US. I hope you watched that Kyle Bass video. He doesnt seem bearish at all on the US. I am pretty sure if Japan can get to >200% debt to GDP we can do the same. Why not? That would give us several years before we hit 32 trillion of debt. Not saying we will get there but just a possibility. 

    Japan doesnt have much time left. I think your assumption of bond vigilantes becoming currency traders has to be true. This is going to end badly for the yen. Yes it will have sharp rallies but its going to hell.
    http://finance.yahoo.com/blogs/daily-ticker/yen-doomed-japan-time-really-different-merk-says-154750780.html

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  75. That's a good point ... and I should watch the long term US bond yields more closely to maket sure they aren't spiking at the same time.  And they have actually been rising ever since they announced QEwhatever would be ending in 2013. 

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  76. Nice clip -- thanks!  He does mention similar things as Kyle Bass (negative account balance, etc) but he added that now with all these government officials about to be on the same page (after election, and appointments), they really will print and stimulate (all bad for the yen) -- before it was all talk.

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  77. I read a great book once, called 'The Miracle of Helium' - I couldn't put it down!

    Interesting theory Papa. 

    I would agree that  the US & European equity markets may no longer be suitable vehicles for EW analysis. 
    The fundamental  tenet of EW, which we sometimes forget, is that the observed patterns conform to simple mathematical patterns found in the natural world, viz the Logarithmic spiral & the Fibonacci sequence. The correlation works when the vehicle under analysis is itself a force of nature ie the end result of thousands of independent decisions converging at one point in time, culminating in an organic process that moves the market at that moment. The change in mood of this collective psyche over time becomes the waves and patterns we study like the entrails of a freshly killed beast.

    But as every EW student and statistician knows, this phenomenon breaks down once the number of participants in the collective psyche is greatly reduced. Hence EW is a poor tool for thinly-traded stocks where the mood and decisions of only a handful of players can skew the results into an 'unnatural' non-organic process. p becomes >0.05. 

    Maybe a bit like cloning versus the natural process of evolution over millions of years. Just ain't natural any more.

    So this is where your theory becomes reality: the market now has one phenomenally large player and is no longer a true reflection of the organic beast that is the collective consciousness of the many. 

    Ben & Mario have become financial geneticists, engineering a new tortured beast that is merely a reflection of their own twisted egos and, like many genetic experiments, the monstrous creation is more vulnerable to the destructive forces of nature and ultimately doomed.

    It didn't end well for Dr Moreau either.

    DK

    ps maybe Prechter knows this too in his heart, but damned-well sure he ain't even gonna whisper it.

    pps that's one big-assed reason why FX rules.

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  78. latest column by Clif Droke: Misinterpreting the Dow Theory

    "Many analysts utilize Dow Theory in an attempt to forecast the economy. Although one of Dow Theory's six major tenets states that the averages discount the business outlook, the theory isn't always the crystal ball that many of its adherents believe it to be. For instance, an extended rally in the Dow Transports doesn't always forecast a rosy economy. There are times when movements in the Transports can be quite deceptive.
    One of those times occurred in 2007 just prior to the credit crisis. The Transports made a new all-time high in July 2007, prompting many analysts to proclaim that the economic outlook was stronger than it appeared at the time. That prediction failed, of course, as the U.S. economy went into recession just five months later."
    http://www.safehaven.com/article/28517/misinterpreting-the-dow-theory

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  79. I def agree with what he is saying. Dow Theory fanatics seem very inflexible and the market is organic and moving and non linear so you can't look at just one chart and forecast the future. The market is a best guess, using different types of input, as to where it might be going. And even then...you just don't truly know, you are making an educated guess of probabilities.

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  80. I bought a book about a year ago, called "Improve Your Memory by Eating Healthier" - I'm looking forward to reading it... as soon as I find it.

    "The change in mood of this collective psyche over time becomes the waves
    and patterns we study like the entrails of a freshly killed beast.
    "

    It's been several months since I last studied the entrails of a freshly killed beast, but one thing I'm fairly convinced of is that if we were studying the entrails of a freshly drawn and quartered banker the EW patterns in equities markets would surely begin to behave much more normally, as they once did.  Kind of a hypothetical about what would happen when the global banking communities' sense of 'greed' is replaced with 'fear'.  That day is come at some point and when it does I'm convinced that the EW patterns will work much more 'classically' and 'properly', in a bear market.

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  81. Absolutely great video from Greg Schnell (another top notch Canadian technical analyst):

    http://media.mta.org/videos/2013/educational-web-series/greg-schnell/greg-schnell.html

    It's long, but power packed, and he covers both bull and bear angles.

    When I grow up I want to be like this guy. ;-)

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  82. Looks like a distribution day to me, with more decliners than advancers and down-volume outstripping up-volume all day long.
    http://stockcharts.com/h-sc/ui?s=$NYADV:$NYDEC&p=5&yr=0&mn=0&dy=4&id=t00621183487&a=270354054&r=1359400495608&cmd=print

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  83. i'm bored.
    but they did send a memo around work today that we can sign up for CHL training at a reduced rate. think i'm going to do that.

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  84. Right on Blue.  I knew you were my kinda girl.  Here's the MB>fastest way in.

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  85. LOL. I once went to a fight and a hockey game broke out! I used to love to play hockey growing up. I was always the only girl, but it was fun.

    I have a Sig Sauer, but no CHL. Umm, and a shotgun. lol.

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  86. "Moody’s Investors Service has downgraded the long-term ratings of six Canadian financial institutions, citing concerns over high levels of consumer debt and the risks of a drop in housing prices." http://www.theglobeandmail.com/globe-investor/moodys-downgrades-six-canadian-financial-institutions/article7910438/

    in our global debt-based economy, bank downgrades are bearish for the economy and asset markets

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  87.  i forgot to ask AR....the fastest way into Where??? Canada, season tickets?

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  88.  Nicely stated DK ... yes the waves in currency market are sights for sore eyes.  Some are textbook waves!
    Nothing like it in equity markets, that's for sure.

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  89. Germany is repatriating their gold from France and the US (300 tons) according to Gains, Pains, and Capital.
    Seems like they must know something we don't.  They are saying that since the central banks are holding this whole ponzi scheme together, the fact that there is some distrust being shown does not bode well.

     

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  90. LQD took a peek below a year-long channel. Since it's a fund that tracks liquidity, or, as they put it, "the index behind the indexes," it's a tad interesting.

    http://i.imgur.com/yze6Jgy.jpg

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  91. My Spidey sense is tingling. The reason history repeats is because people, when faced with similar circumstances, usually respond the same way. Countries get edgy and start calling in their gold reserves, banks or countries holding it have to call in leased gold (maybe that's why it will take the US seven years to comply with Germany's request), and if demand can't be met, then maybe here comes Gold Reserve Act 2 -- private ownership outlawed, gold called in, price set by government.

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  92. Hmmm.  I had a sense it was a social mood thing -- central banks not trusting each other.  And calling in leased gold sounds like it would make the Germans even moodier (what do you mean you leased it out?!).  And seven years ... geesh!  Let me see, 300 tons would be ... worth $16B.  Leading to Gold Reserve Act 2 would be a big wow.

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  93. Hey, what do you think about bonds ... will those follow elliott waves when the panic hits each country's bonds?

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  94. USDJPY may be making rumpling noises.

    It came out of a channel line that looked like a tripple combo -- flat x zigzag x zigzag.
    That would be (ii) completed of i of an extended fifth.
    So the target for the next iii would be 1.6 x 3 or 4.8 up from 90.4 (also the 4th wave of the prior wave and 23.6% retrace) or 95.2.
    All aboard for the next stop on the extended fifth wave.  Hopefully.

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  95. Here is the count of this correction wave. 
    The next one would be a 3 of some degree, and just based on the first wave of 88 to 91, the target should be 95.2 or so.

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  96. USDJPY 30m

    Count of ii wave -- chart of tripple combo.  Got stripped off my earlier attempt -- replies don't seem to hold attachments.
    Voila!

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  97. I didn't really have anything in mind.  That was poorly worded because I was laughing when I wrote it and was trying to get out the door at the same time.

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  98. I wouldn't know one end of a bond from the other.
    DK

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  99. Normally I'd think they would Greg.  But these days the Fed is the major player and as long as they're in the game we play by Fed rules.  It's like playing baseball with 7 bases and either "3 or 5 or 9 strikes, you're out"... depending on who's batting.  Also, other than the Fed the largest players are other countries like China.  So I'd think there will be a certain amount of stability even if the bond markets begin to slide.  So in that regard, if the poop really hits the fan and the bond markets were to collapse I'd imagine it would 'still' be relatively spectacular although it would likely take longer than the overnight catastrophe we seem to think is inevitable.  Overall though, since they're so big that the Fed can't really goose them every night like they do the equities markets I'd say "yeah, the bond markets would be more likely to exhibit more classic and readable types of patterns".  That's really just a guess though buddy.

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  100. that was really random. LOL.

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  101. eurusd broke out of it's triangle, so let's see if it can crack that 135 with some alacrity!

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  102. i had a buy order in at 90.25 and it just missed me. mornings are hard for me to watch anything when I have to get out the door by 7:00 at the latest.

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  103. so what's the USD gonna do here?

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  104. wow. just saw the saddest thing. Was outside and watching two squirrels having so much fun chasing each other around, across the grass and up and down trees. One ran out in the road and a car came by and ran it over. I jumped up and started running into the street, but then realized that it was beyond saving. The other squirrel started running over, then just sat there with a WTF? expression. damn.

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  105. Sorry to hear that ... and I was listening to my daughters bicker at 8 am and missed it coming out of that leg down ... not sure where that fits on the chart above either.  Maybe we just had a i-ii, but ii is lower than the supposed end of 2 by a few pips. I'd like to see it get above the ochimoku cloud on the 30m chart and have some good DMI's also -- above 25 with a cross-over.

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  106. i'm not too sad. there will be more opportunities on that.

    i am long eurusd and that is up so happy with that right now. no tellin' though. needs to take out that 135.

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  107.  Thanks AR!  That helps me look at that market ... just wondering if that might be a market we could short in the future.  So, the big central bank players pose a similar problem but smaller problem.  Maybe Junk bonds would be slightly better, while not as big a market, they don't have the really big players like central banks distorting things.  Merci!

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  108.  Today's email from Gains Pains and Capital is that now in addition to Germany's central bank distrusting the US Fed and asking for their gold back, EU and China publicly said US should stop printing as it's damaging the dollar and making their currencies too strong for their exports.  If central banks start fighting each other like this, it is not good for the financial system.  Everyone trying to save themselves and the whole system would become unstable (instead of everyone also trying to save the system).  How long will other CB's tolerate the fed printing 85B a month (5 x Germany's gold stash) before we see (more) currency wars?

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  109.  what is the story with eurusd?  why is it going up ... something to do with not printing, or returning money to LTRO, or UK helping out ... just curious, I don't follow that one.

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  110.  Some chatter that the GDP number will look good tomorrow because companies moved things up to 4Q instead of 2013 for tax purposes, so if so, that could be fuel for a dollar spike tomorrow.

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  111. 'Twas indeed a sad event, yet mayhap useful as an allegory, a plump one, rife with portent. Squirrel A is the economy. Squirrel B is the public. Car C is social mood.

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  112. LTRO gave it a pop last week, but how much more upside is somewhat hazy.

    http://seekingalpha.com/article/1139301-eur-usd-calm-before-next-bullish-storm?source=google_news

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  113. ZH linked an article that pointed out a big currency war erupted in the 1930s, which played a big role in the Great Depression.

    This, to me, is more evidence that what is going on now is related to declining social mood.

    http://www.timeslive.co.za/business/2010/10/23/currency-wars-echo-the-1930s

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  114. I envision that sad squirrel 'event' as an everyday occurrence that has been happening for 46 months now.  Squirrel A thinks he's a bear.  Squirrel B is thinking about maybe becoming a bear.  Car C is from the police department, the 'Thought Police' that is.  And of course it's being driven by Bernanke the Benevolent.

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  115. my social mood declined in 2008 and has flatlined.

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  116. i would think it would be the other way around. but WTH do i know?

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  117. they're kind of the only ones not printing. LOL

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  118. FED policy meeting too...hmmmm.....

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  119.  Oh, right, that would explain the sentiment lifting that one.  Thanks!

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  120.  That is definitely a wow.  So we've done this currency war thing before?!  And it didn't work out very well, eh?
    That is scary.  You can see why we're going to go down that road too ... it is the only lever the central bankers think they have left it seems in Japan (given the pile of debt), and elsewhere I suppose.  So if Japan thinks that's the only lever they have, and their only chance, even tho it probably won't work, it is easy to predict they will decide to devalue.

    Thanks for the link.  1934 US devalued by 40%?!  Amazing all of this history has been forgotten by most.  But as you say below, destined to be repeated.

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  121.  Someone has the JNK junk bond ETF in an ending diagonal on the weekly.  A warning.  Similar to the technical set-up to the SP500.

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  122. It's surreal...plunging consumer confidence is bullish. The new reality. Crazy.

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  123. I guess the bottom line truly is that nothing matters.  As long as the central banks of the world are going to print, print and print some more, the natural thing that we would expect to happen... is happening.  The value of all currencies falls relative to real stuff and in some cases 'relative to each other' although that aspect is a total distraction and of absolutely no importance...  and the price of real stuff goes to the moon.  In this case, equities markets are part of that group.  So it looks to me like a person has one of two choices: do I just say screw it and jump on board the bull train now or b) do investors wait in hopes of a pullback and maybe catch the S&P 5 points lower.  Of course by waiting for the much overdue and completely reasonable correction of 5 points in the S&P, one risks the very real likelihood of missing the next 200 S&P points before that 5 handle correction is "allowed".  It's freaking insanity but it is what it is... this kind of market melt-up (at the rate of over 300% per year) is not one bit out of line with the actions of the central banks of the world.

    As my last piece pointed out, if this keeps up, and there's no reason why we should expect anything else now that the central bankers have officially gone insane, we will literally see  the Dow at 20,000 by October.  Literally.

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  124.  you are absolutely right. i just wish i had caught on to that concept four years ago. silly me, thinking fundamentals matter.

    it's funny you mention selfish....i have noticed over the past decade plus that the whole world has become more selfish. people in general. at least it seems to me. it's the new way. very few people want to help one another, it's like if you are having a hard time, call me when you get rid of your personal black cloud. kinda weird.

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  125. That indeed appears to be what is happening, and in Japan it was real clear this month ... trash the currency, and the stock market had a heck of a rally!  Good call on this insanity.

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  126. What would a rogue Elliott waver think of these these charts?

    And any update on the HO front?

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  127. Come October, maybe we can toast around here with one (or both) these:
    http://www.ratebeer.com/beer/de-molen-v-years--20k/148735/
    http://www.ratebeer.com/beer/deschutes-20k-imperial-bourbon-porter/73411/

    Perhaps it is merely semantic tomfoolery, and even though others have made the point as well, it was in reading Martin Armstrong that I finally developed a reactionary cringe whenever I read "print" and "central bank" in the same sentence (another reactionary cringe that is--in addition to the reasons most obvious to those of us gathered here).  My own biased opinion is that it is not semantic tomfoolery:  the fact that the borrowing entails worse eventual side-effects than literal helicoptering would is good reason to acknowledge the distinction.
    One example, among the variety freely available (not to be a shill, but to give credit where its due):http://armstrongeconomics.files.wordpress.com/2011/07/armstrongeconomics-we-print-bonds-not-money-072211.pdf

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  128. Don't worry about "shilling" Zimmer.  Martin Armstrong is always worth reading.  Thanks for that link.  We wouldn't have seen it otherwise :-)

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  129. Thanks for those charts 105.  I have to admit I haven't investigated that ratio in years.  I tried to superimpose your charts over one of these historical charts of the S&P (in the image below) but I couldn't get it.  Maybe Zimmer could do that for us?  What I wanted to do was to stretch your longer chart out and match up the dates to see what the ratio was doing at the time the equities markets were doing their own thing.  Personally I don't think I'd be applying EW theory to the DOW:GOLD ratio itself, but I 'do' like the idea of investigating that relationship over decades like your charts show.  I'd just like to see the equities markets superimposed over it if we can get that done somehow.

    As for the Hindenburg Omen, it's taking a smoke break, not even the slightest bit concerned right now.  The NYSE produced 303 new 52 week highs today and only 10 lows.  Those are numbers we only see in a very strong bull market.  What the HO is scanning for is times when we're seeing a very strong rally like we've seen since November but at the same time very few new highs are being registered.  That's not at all the case right now, so the HO is nowhere near issuing a signal at all.  That doesn't mean we couldn't see a hefty downdraft tomorrow or the next day, but from the HO's perspective the market "is not" particularly polarized.  This is a strong and legitimate rally with very strong market internals.  Unnatural as hell for sure... but it's still strong.

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  130. "I have noticed over the past decade plus that the whole world has become
    more selfish. people in general. at least it seems to me. it's the new
    way. very few people want to help one another, it's like if you are
    having a hard time, call me when you get rid of your personal black
    cloud. kinda weird. i still go out of my way to help people, even though
    good deeds surely don't go unpunished sometimes.
    "

    So have I.  And I can tell you that for a guy who has lived in Canada his whole life, this is very disturbing.  I've come to realize that I've been spoiled by the culture in this country.  Generally speaking, this is an extremely friendly nation, from one coast the other where people have helped each other out without batting an eyelash.  This has been the way basically ever since Canada was invented.  Like, if you're on the highway with a flat tire or the hood up on your car because of a mechanical breakdown for example, if you flag the next car down for a little help, he's gonna stop and help you out.  That's just the way it has always been up here.  Complete strangers will help anybody out... especially if the situation seems serious or dangerous.  The more dangerous, the more likely someone's going to help you out of it, and fast.  This has been an awesome culture to live in.  And it's still more or less that way.

    But that attitude seems to be waning a little bit now.  It's still pretty good, but not what it used to be.  I'm even seeing families abandoning other family members in some cases.  Children not listening to their parents anymore.  Selfishness is definitely on the upswing.  Even the premier of this province, the first woman premier ever, has thrown Alberta back into debt after we've spent many (slightly) painful years of self imposed austerity in order to pay it all off.  I'm infuriated about that.  Anyway, yeah, I agree with you.  If you have a personal black cloud to deal with, you get abandoned by your friends these days... even up here.  It's just not right.  From my perspective, to abandon those in need is "unnatural".  To help them out is "natural".  It's "natural" because it just feels good... for both parties.   I think that 20 years from now the entire world might be far more "nice".  We're going to have to go through hell though and come out the other side first.  And I'm gonna be nice the whole time, lol.

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  131. Here's a sloppily eye-balled overlay on dshort's long term S&P chart:
    http://rationalinsolvency.com/2013/01/dg013013ds.png

    As newscasters were focused on fiscal cliffs, I think the headlines should have highlighted what was going on in precisely this ratio:
    http://rationalinsolvency.blogspot.com/2012/12/22-dec-indugold.html

    Decade long trendline break and, since, retest (and downright trampoline-like bounce).  Granted, the same could have been said about a shorter-lived trendline in early 2004.  Notice the 2007 fakeout to 21.06?  Mean...but subsequently a lovely canary to anyone sniffing for a top there...

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  132. If this is a C wave (as I'm suggesting), the max target is about 1568. (1.618 X the A leg.)

    C waves of corrective moves in bull markets convince everyone "that a bear market is fully entrenched." It's logical that this distorted wave (in what is really a bearish social mood environment) would be interpreted in the opposite way -- convincing everyone that a bull market is fully entrenched, that there's no end to how high it can be taken, and so forth.

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  133. "...convincing everyone that a bull market is fully entrenched, that there's no end to how high it can be taken, and so forth."

    No kidding!  They sure as hell 'do' have that effect alright.  The most antagonizing aspect of it is that while the 'C' leg appears to be nearing it's peak, nobody "knows with any certainty" whether or not it's really a 'C' wave or a 3rd wave within a fiver, or even possibly a nested 1-2, 1-2 developing.  We don't know until the peak of wave 'A' is breached.  So in that regard they 'do indeed' look like a bull market is fully entrenched.  Because it literally "could be" a genuine bull market and we don't know for quite some time yet.  If we only knew with certainty we could all benefit mightily by knowing whether to load up on bearish positions or not.  Otherwise we could get trapped on the wrong side yet again.  It's a frustrating business to be sure.

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  134. USDJPY:

    Last night it did the deed ... got above prior high of (i), so (ii) is done at 90.4.
    Target 95.2

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  135. "Ben CAN'T PRINT OIL."

    Great comment by trav777 on most recent ZH post. Read the rest here: http://www.zerohedge.com/news/2013-01-30/chart-quarter-312-billion-debt-adds-negative-5-billion-gdp#comment-3198616

    .

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  136. It's pretty bizarre isn't it?  Here at 1:30 p.m.on Wednesday the S&P is down by 0.43% and one gets the feeling that the whole equities world is unraveling.  Such is the effect of being conditioned by watching the futures rise for 11 freakin' days straight.

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  137.  that's so funny you said that because i was thinking today "oh dear, we're red, whatever SHALL we do?"!
    LOL

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  138. sold my eurusd. kind of inadvertently but it worked out. i moved my stop way up to protect my 100+ pips and i got stopped out. just as well because it didn't go much further except for that spike on the FOMC then sold right back down.

    now long gbpusd, which is kind of the same thing as they tend to move in the same direction. but once i take a good profit from a trade i never do well trying to get back into the same trade. so it's my superstition not to do that, at least not immediately. LOL. kind of like breaking up with someone and getting back together right away. just doesn't work. loife is like trading.

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  139.  i used to trade ES with a lot of frustratin, then I got happy with beans, corn, and currencies.

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  140.  Vermont was like that. like it is in Canada, good people. Its a small state so kind of amazing how many people you can get to know, or who knows someone you know. And it's cold and somewhat isolated so that brings out helping thy neighbor/friend. But elsewhere....not so much.

    You might be right about 20 years from now and I am going to do just as you...not change.

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  141. If you don't mind me asking, how are you trading currencies?  Are you in the futures markets or are you using currency ETFs.  I'm not trading currencies right now and can't do it with the current broker I'm using either.

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  142. thanks Greg. Do you think it might trade in this 90-91 range for a bit? Seems to me that it is consolidating here. I almost bought it at 91 then thought i'd wait. i will no doubt miss the train again....

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  143. I'm trading forex...currency pairs. It's loads of fun. I think currencies and commodities are the best things to trade, screw equities.

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  144.  there are tons of forex brokers out there

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  145. An[other] epic rant...

    http://www.zerohedge.com/news/2013-01-30/santelli-blasts-bernanke-whatever-youre-doing-it-isnt-working

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  146. Colonel Mr. TBONE over at Dismal's Elliott Swamp posted a chart identifying a barrier triangle and a thrust. The textbook says a triangle always precedes the final move in a wave, the thrust being the final move. In other words, dearies, Colonel Mr. TBONE's count is suggesting a top. I'd link the chart so that you interested folk don't have to go wade in the muck to look for it, but I don't feel it would be right without Colonel Mr. TBONE's permission.

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  147. They give you a paper account to start off. See if you like it.

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  148.  I use www.forex.com, but I'm sure there are others that are better capitalized (the market cap of the parent, ticker GCAP, scares me so I plan to switch at some point).

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  149.  Hey Blueskies, I think the correction of wave (ii) ended at 90.40 (not sure what the correction count was ... had an extra 2 waves after that nice tripple combo flat x zigzag x zigzag which bamboozled me), and this wave to 91.40 was wave [i] of (iii) -- at least it had 5 waves and was nice and tight.  Hanging around lots of ichimoku averages on diff time frames.  So I think this could be wave [ii] down to 91.00 -- not a clear abc, but oh well.  So I am leveraged 30:1 now because I think it goes up from here, and this support at 91 might be fairly solid.  Wave (iii) target is 1.6 x wave (i) which gets to 95.2.

    Or we could have another leg down ... not sure we have a completed [ii].  Going with support being old resistance, new support.  Not going to see 90.40 again, me thinks.

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  150.  Yep, it surely is convincing people.  I can't even imagine trying to tell the same people I told in 2010 that we're about to plunge to below the 2009 lows.  Or I can imagine the smug laughter they would respond with! 

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  151.  i don't know why i am hesitant here. maybe because the YEN has been so hammered and oversold that it might be due for some sort of small bounce. not saying the YEN is gonna make a comeback anytime soon, but it sure has been pummeled and technically i would think that it needs to come up for some air. i'll just watch for a bit!

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  152. think i am going to hook up with eurusd again...i know, but it's just so hard to stay away considering the potential upside. i'll see if asia sells it at all tonight. it's kind of overbought right now.

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  153.  geno said the thrust on the triangle in eurusd was terminal a few days ago and it gained about 100 pips after that.  so, not sure about that triangle theory.

    i think we get a pull back, on spx, but not a crash by any means.

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  154. i'm going counter trend here. short at 9090.

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  155. out. took a two pip loss on that. not real confident yen will have a bounce. ever.

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  156. http://rationalinsolvency.com/2013/01/q4uni013013.png

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  157. Thanks for the heads up.  I'll be honest though, your signing in as a "Guest" makes me a bit nervous but that's only because nobody else has done that here before.  Don't be shy... make up a new name if don't want us to recognize you from the other site.  On the other hand, your concern for not wanting to post a link without TBONE's permission shows a touch of class, and of course that resonates well here. 

    When TBONE made his first appearance at that site I was under the impression that he was going to be nothing but a trouble maker.  It didn't take me long to find out that wasn't the case at all.  He's got an interesting and entertaining schtick alright,  but most of all I liked his visions and especially his confidence.  He knows where this site is and he can post here any time he likes.  But he has elected not to so far.  He's a bit colorful so he'd probably attract a few people here who like to attack him as well.  I'll bet that they wouldn't try that here though.  The very few bans I've had to impose are permanent and people know it.  So TBONE would be safe here.  Everybody is safe here as long as they don't start attacking others or just behaving like assholes.  I got no time nor patience for assholes.

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  158. They're not getting their money's worth in my opinion, lol.

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  159. My buddy "a href="http://seekingalpha.com/author/john-lounsbury?source=search_general&s=john-lounsbury">John Lounsbury is from Vermont too.  Do you know him? lol

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  160. no. wonder if he lives near burlington in the north. i was in the south. his website econintercept is chock full of info.

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  161.  he got the Dismals Elliott Swamp part down. LOL. must be okay!

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  162. Ya, I got a bit of a chuckle out of that.

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  163. OMG. Things are really getting bad.

    lol

    Good one ZZ!

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  164. Nice video and very interesting limited time (36 hours) subscription offer. http://www.gannglobal.com/webinar/2013/01/13-01-30-Video-8.php

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  165. It was me, dearie. I felt so icky after visiting Dismal's Elliott Swamp I decided to delete the comment. I didn't know it would leave the comment and just delete me.

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  166. Oh youuuuuuuu!  LOL, you're cool as can be Auntie P.  Thanks for letting me know. 

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  167. TBONE is on my 'follow' list. Whether his calls hit or miss, he's a fun read.

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  168. Thanks HR.  Man, that dude certainly isn't buying into any deflationary arguments is he?  He's talking about exploding prices just as one would expect when the central bankers flood the world with liquidity.  So maybe the long overdue pullback in equities might last all of a week or less.  BTFD time all over again?  Could be!

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  169. Yes he is.  I can tell you he has cracked me right up more than once.  Definitely a fun read and I get the sense that in real life he'd be a fun person as well.  He hasn't displayed any harmful behavior at all either.

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  170. I have re-entered the eurusd bubble trade. LOL. I am getting schmarter, if THEY are blowing bubbles I will float along. Stops in place of course and ASTM certified helmet on at all times.

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  171. haha. glad I didn't stay short usdjpy. looks like it wants to break to the upside here.

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  172. And that's about all I need to see on the S&P today. Looks like it needs to take a stab at 1520 first.

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  173. This morning's high has surpassed the low of yesterday at this time.  So it looks like the correction has already proven to be just that... an 'abc'.  So unless we're looking at a stacked 1-2 lower, we're headed to new highs yet again.  Mind you, if by chance this is a nested 1-2, 1-2 lower, we'd be headed into a wave 3 of 3 of 1 perhaps.  And that would be a 'big' move lower.  I'm not banking on that of course, but it's possible.  I'd say that as long as price remains below yesterday's afternoon peak at 1508 we 'could' still be headed lower. 

    On the Russell, the move down off the peak at the close on Monday could be counted as a fiver I guess.  But the bounce of this morning's open is absolutely a fiver as well.  So I just say to hell with EWT and defer to my other indicators, like simple old moving averages.  And 'they' suggest that a bigger move down might be just getting underway.  Overall though I'd have to think it would just be another BTFD thing... yet again.  BTW, if you take a look at the video HR provided, it's very, very bullish on metals and some of the commodities, and very bearish on bonds.  And you know what that would mean if he's correct.  I dunno Papa... but if there's a bull train leaving the station, you and I definitely want to be on it.  Open minds at all times... that's my new mantra, lol.

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  174. SPX sticking around 1500 like gorilla glue

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  175. On Jan. 28th, the US military conducted a brazen military drill right in the city of Houston.  Residents thought a war was breaking out.  Neither the police nor the military warned the citizens that this drill was about to happen.  It also happened in Miami on Jan. 24th.  If you don't think they're planning for martial law, you're dreaming.
     http://www.youtube.com/watch?v=w6spvItMBbU&feature=em-subs_digest&list=TLmnFkNnKW_fM

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  176. i DO think. and not to mention those 7,000 assault rifles ordered by homeland security and all that ammo they have stockpiled. we, the citizens, can now be considered terrorists. 

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  177. Christian at Perfect Stock Alerts, aka the worst mumbler in the history of speech, calls the NASDAQ a "ticking time bomb".  Good luck trying to understand what he's saying.  His mumbling is the reason I generally don't watch his videos, but this one appeared in my inbox so I watched it.  Good luck, lol.
     http://www.youtube.com/watch?v=fHuAFizezEA&feature=em-subs_digest&list=TLjjbXkWYxt6I

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  178. God bless ya Blue... you're paying attention.  It's just godawful what they're preparing for.  Let's just hope and pray that the Oatkeepers are serious.  Jesus, can you believe it's gotten to the point where I feel that I even have to misspell that word on purpose?

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  179. Deja vu, man. He's one of the bears that got crushed by the wave formerly known as P2 and shut down his blog for a while, if I recall. I remember how he repeatedly pointed out over a dozen unfilled gaps in P2 and was so convinced (as many of us were) that it HAD to roll over. And, like the rest of us, he had no idea that "off the record" free loans amounting to trillions of dollars were being poured into equities (far above the trillions we DID know about), keeping the thing going and going.

    And "dumb money" analysts -- who basically were charting wrong, and had no idea either about the trillions being injected -- made bull calls and got lucky and got it right. And got credited for it.

    Strange times. Oh yeah, the deja vu part: Ten seconds into this video and up pops a chart pointing out unfilled gaps again. Will they mean anything this time? Who knows...

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  180. we definitely think along the same lines AR and we both pay attention. this could be along conversation.
    oh don't worry, all this stuff is archived and looked at by the NSA. we're all on a list somewhere no doubt. prolly just have to frequent ZH to make the list. or mention guns, gold, ammo, ya know....

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  181. What the hell happened to fivers?  This chart should be considered as pure lunacy for those who believe in EW these days.  The momentum indicators suggest this latest bounce should fail but who knows what the hell EWT suggests.  I sure as hell don't.
    RUT 15 min.

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  182. haha. i can't count BUT I count that as a three legger down from jan 30 and now we're doing a five legger up. It's not EW, it's just Blue Waves.

    that top formation looks like and abcde, or as i like to say a sawtooth pattern. lol. there's a tyrannasaurus rex pattern i like to trade too!

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  183. I remember those days exactly as you describe.  And yes, I was just floored by how suddenly he started to completely ignore any talk of gaps any further and treated them as if they never existed.  It was almost as if somebody came barging through his door with a gun and a script and said "from now on you're gonna see it 'this way'... got it?".  I don't mean to bash the guy because no doubt he's a good dude and he 'is' pretty confident.  I like that.  It's just that I can't understand him half the time but at least he doesn't use EWT, and that I find to be important and refreshing.  The same reason I like Chris Vermuelen's videos.

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  184. "this could be a very long conversation."

    Yes I believe it could indeed.  Don't even get me started on Monsanto or big pharma.  They both make my blood boil.

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  185.  Hey Blueskies, I tried responding this morning via my phone, but it didn't take.
    My count has us getting ready for an EXTENDED FIFTH.  1.6 x the size of the whole move so far (76 to 90), so that would be (88 to 107).  We shall see.

    But regardless, we have a clear i up from 88 to 91, and a clear ii rest down to 4th wave of that i at 90.40.  Then we had a five waver up to 91.4 and a 3-waver down to 90.76.

    We are ready for launch now to a iii of 1 of Extended Five.  Target is 1.6 x i = 4.8 + 90.40 = 95.20.

    And in an extended fifth wave I would expect it to look over sold the whole way up.

    Prepare the launching pad.
    10-9-8-7-6-5-4 ....

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  186. USDJPY:

    Prepare the launching pad!
    It's done a nice big i-ii.  (88 to 91 and 91 back to 90.4).
    Then it did a nice (i) - (ii) (90.4 to 91.4 and 91.4 to 90.75)  -- 5-waver and 3-waver.
    So, the next wave (iii) of iii of 1 of an Extended Fifth should target 95.2. 
    Which is 90.4 + 1.6 x 3.

    Happy New Year to us all if this is an extended fifth wave (target 107).

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  187. Monsatan they are evil.

    don't get me started on those things either!

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  188. she's a gonna go here. SJ was shorting nzdjpy, which is why i tried a short on usdjpy. duh. i should never second guess you (or even me for that matter).

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  189. And some pretty big pullbacks can happen before entering into the "runaway market" phase - not a slam dunk by any means - and I'm still looking for a sizeable pullback short to intermediate term first. More on the pullback issue [again] on my next post this weekend (and after that I'm going to start a historical runaway market study in search of common characteristics).

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