From: dcbinkowski@ameritech.net
To: ;@smtp105.sbc.mail.ac4.yahoo.com
Subject: Fw: EW chart of S&P
Date: Thu, 19 Nov 2009 01:44:20 -0600
About 6 months ago I provided the attached chart (and e-mail) with upside targets for the market. The mid-point target (the one I clearly felt at the time was most likely to mark the rally top, S&P 1123) is ALMOST here. Not quite here, but it is JUST around the corner now. Since the time I drew this chart with the upside projection around S&P 1123, I have learned that a 62% retrace is often an even more common retracement than 50%. S&P 1123 being the 50% retrace of the entire decline of the Wave 1 leg down from the 2007 peak (above S&P 1500). S&P 1200+ being the 62%-ish retracement of the decline we had from 2007. These are known as Fibonacci retracements. If you look that up on the internet I'm sure you'll find something that a few investors out there think is no more credible or reliable than astrology ! Yet, Fibonacci retracements are based on patterns that occur in nature, and humans are natural creatures, subject to the weaknesses of their own human psychology. After all, nothing brings money into the market like very high prices, right !? Everyone finally wants a piece of the action, now that the market has risen in price more than 60%, and some sectors over 140% (financials). NOW everyone wants to buy finally, which is the most ass-backwards way to trade that there is.
I put some degree of faith in Elliot Wave analysis and Fibonacci retracements. After all, Fibonacci retracements helped Ellioticians peg the bottom of the market close to Dow 6,000 and kept us out of buying the market until it got relatively close to that level. Now the retrace is playing out perfectly too, and has almost reached the mid-point target where we will begin to continue selling into strength for the next phase of the market selloff - whenever that comes. It almost feels like this market will NEVER stop going up, and thats why I think we're getting closer to the top finally... But I MUST ADMIT, the market certainly COULD reach up another level to S&P 1,200-ish or Dow 11,300 from here. Watch for a big blowoff top in the market where the few last buyers who haven't gotten all his money exposed to risk FINALLY throw in the towel and buy. There will always be those few people who miss the entire rally and then at the last up hour on the last up day, throws his money into the meat grinder because he can't believe he missed the whole rally, and he can't stand one more day of thinking everyone in the world is making money in the market but him. Thats the day you want to get mostly OUT of risk and get to cash if possible. Its a buying panic and its volcanic in nature. It could start with a big nasty gap up in prices (following a long continual rally like the one we're in now). Then comes intra-day, a mountain peak that takes prices even higher, then by early afternoon the market starts selling off and it erases the entire day's gains and more (closing the big gap and runup it had all day). This will hopefully mark a top to this awesome rally we've had, and give you a MOST PROFITABLE exit on the last of your stocks - if you haven't sold them already. After that moment when almost everyone's money is trapped IN the market, and all people are holding all stock (but no cash to buy MORE stock) the prices in the market will do little more than fall, for quite a while.
Not only is mutual fund cash reserves at a virtually non-existent 1%, I found out today that individual investor cash reserves are in the high teens (17% or 19%?), which is the LOWEST cash reserve they have held onto since July 2007, the first all time top of the market indexes. This is indicative to us contrarians of course, as a market rally that is running out of ammunition. Even if people WANT to participate after they run out of money, even if mutual funds WISH they could buy more stock, they've got nothin' left to buy it WITH. No money means all the wishing in the world won't get them more stock on that first 500 point or 1000 point dip. They will be nervous holders of stock amid falling prices, rather than prospective buyers of stock in a rising market. Big difference.
Have fun, be careful...
----- Original Message -----
Sent: Monday, May 25, 2009 10:04 AM
Subject: EW chart of S&P
This is an attempt to present the near term road map for the S&P in one "simple" chart. Yeah sure, thats not cluttered looking ! This is based on EW analysis and basic trending as well. If you see these events unfold, keep your eyes peeled for the next thing to happen, and try to position yourself for gains, or conversely, protect the gains you have already made when we reach market tops. About the time we reach those levels there will be "no bad news", the euphoria will be palpable, and everyone will think the worst is over. Thats when you should be most on guard for market disruptions.
Long story short, these charts favor a pullback (down) in the indexes from the last high (S&P 930) to approximately S&P 800 - 830. This gives back 38%-50% of the rally (respectively) measured from the last market low of S&P 666. The upside target for Wave 2 (logical 38-50% retracement point) is S&P 1014 - 1121. So you see I'm not actually bearish except in the very large structure we are in, and in the short term pullback. In the mid-term I see plenty of upside until we get back into that downtrending channel that started in 2007 and went to last October 2008. All this pullback (P2) does is get us back in line with a bearish downtrending channel really. In otherwords the larger "pullback" is actually the move UP we're having now. Pullbacks work in both directions, and in a primary bear market, the pullbacks move to the upside. There is no reason not to try to make money using these pullbacks to the upside. Just don't mis-identify upside pullbacks in a declining market, for a true bull market if we aren't in one. Otherwise more pain may await even after making some of this market decline back this year, it can all happen again, and I'm predicting it CAN happen, and to a worse extent than the last decline. With our government furiously trying to re-inflate the economy though I'm not sure who will win this battle, so the outcome has yet to be seen. If you paid 700 for the S&P you'll be really happy when it moves to 1100. If you paid 1550 for the S&P you'll only be marginally comforted when its "back" at 1100, but the formula for deciding where the market goes AFTER THAT isn't decided by what you paid to get in. Never forget that the market doesn't care what you paid to get in. [...deleted some superfluous text about a magic Toyota Corolla... Refer to the original e-mail I send 6 months ago to get the reference...]
The rally does not indicate the bear market has ended or that more downside is not ahead once we get up there. In fact, being at price levels that high with earnings still impaired, just means the structure is even MORE fragile at S&P 1100+, and the market is even more likely to fall back again. S&P 400 here we come (but only after a blistering rally to S&P 1100+). At least this is what Elliot Wave analysis would indicate...
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Subject: So
Hated People Will
Hate You Just For
Liking It
Your issue of
Gains, Pains, &
Capital is online.
Today's essay:
-------------------------------------------------------
So Hated That People
Will
Hate You Just For
Liking It
Dear David,
I hope you're not
angry with me.
Indeed, few essays
I’ve ever written
have drawn as much
ire as the one in
which I
proposed that the US
Dollar might rally.
The US Dollar is
indeed hated, so
hated that people
will hate you just
for
considering
that it might rally.
Virtually every day
I receive emails
from people asking
me about the coming
massive US Dollar
devaluation or when
the Zimbabwe-esque
hyperinflation will
hit. What’s striking
about this is that I
receive more of
these sorts of
emails today (when
the Dollar’s at 76
or so) than I did
last summer when the
Dollar hit a 30-year
low of 72.
In fact, the Dollar
is so hated that it
recently broke a
nine-month downtrend
and virtually NO ONE
noticed. I know you
probably think I’m a
jerk just for
mentioning this. But
you can see it for
yourself:
---------------------------------------------------
I've Just Published a 20-page Special Report
Detailing the Coming Financial Collapse
If the Dollar rallies Stocks will absolutely IMPLODE.
I just issued a 20-page Special Update to my subscribers showing them what's to do if this happens
We've already opened four trades. And we've got four more on deck for when the FIREWORKS begin.
David, are you ready for the Crash?
---------------------------------------------------
Of course, this could simply be a “head fake” as the Dollar continues downward to test its 2008 lows. But I can’t help wondering if this recent move might be the start of something bigger: a potential Dollar rally that would catch 98% of the world off-guard (98% of investors are bearish on the greenback).
If you’ve been reading my essays from this week closely, you know that MOST of the stock market gains generated by the US markets have come from the Dollar losing value. Indeed, the US Dollar and the stock market have been trading at a near perfect inverse correlation for months now. Every day that stocks rise, the Dollar falls and vice-versa... Which is why I’ve noticed that the US Dollar broke its downtrend the EXACT same time that US stocks broke their uptrend.
To see how the Dollar's recent action kicked stocks in the teeth... as well as the frightening similarity between the Dollar's recent move and the one it staged in July '08 which resulted in the stock market entering a free-fall, Please Click Here.
OmniSans Publishing LLC
6531 River Clyde Drive
Highland, MD
20777
US
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From:
dcbinkowski@ameritech.net
Subject: US Steel -
Stuck in the middle
Date: Fri, 30 Oct
2009 21:30:19 -0600
Hmmm, US Steel.
It sounds like a
solid company
one could invest
in, doesn't
it?. In March
it hit price
levels that
resembled the
decline seen
during the Great
Depression.
And if you're
not going to buy
a stock at those
kinds of prices,
when WOULD you
buy stock? But
do you know US
Steel in 2003
got to a low of
about TWELVE
dollars? Not to
pick on any one
company, but a
materials sector
play like US
Steel or Alcoa,
I would not
expect to see
halfway back to
the March lows
if we were truly
in a
"recovery". I
wouldn't expect
to see a bearish
cross on the
20/50 day moving
averages 10 days
ago either. So,
in just 24
trading days US
Steel has
dropped by about
$16, shedding
1/3 of its
price. At THIS
point I'm more
inclined to
think its
becoming a
better value the
lower it goes,
but if the
dollar keeps
strengthening,
this can go even
lower.. Last
year's high for
US Steel during
the commodities
mania (which I
shorted) was
over $175 per
share, so I DO
believe we're
closer to the
lows here than
we are to the
highs of LAST
year. I don't
know where we
are relative to
the FUTURE highs
though, which is
the only
important thing
when you buy
stock. The
future.. I
believe US Steel
is one of those
companies that
will do well
down the road
(as should all
commodity and
agriculture
stocks that do
well when world
population is
showing a
bacterial rate
of growth. But
the only entries
I'd take on
investing in it
begin here
and lower than
here (when
people really
begin chucking
it out the
window).
However, I
wonder what
bullish shills
and analysts
tell their
people after
something like
this. After
they pumped the
market
shamelessly as
a wonderful buy
in the past
couple months.
What "stories"
do they trot out
now to explain
and excuse their
bad advice over
the last month,
which just lured
fresh money into
the shredder
(again) ? I
don't
know. This
price and LOWER
is where value
might start to
present itself,
but with the
dollar just now
poised for a
possible rally,
I wouldn't touch
materials or
commodities
here, unless
they grant lower
entries. And
even there I'd
just nibble
selectively if
the market keeps
falling, because
it COULD be a
long way
down.. I just
know I was
buying the
market in March
and February,
and I've been
selling the hell
out of it lately
(while it was
still GOING up
and appeared to
be topping).
The probability
we break down
here is
increasing it
would seem.
Many markets
have already
broken their
uptrend
(including
Transports -
conclusively
broken
uptrend). But
I'd like to see
more chart
development because
I don't really
trust this
market to act
right in EITHER
direction right
now. I'd love
to see more
downside in this
market though,
to really wash
out the weak
hands. Thats
the only way any
market can truly
bottom.
US Steel is just
supported now
at the 200-day
moving average
(not shown
here), so by all
means it could
bounce. It
COULD go up, but
I certainly
wouldn't have
wanted to hold
onto it beyond
September for a
$16+ loss on it
while waiting to
see what would
happen next.
The March to
September trade
on this was the
juicy part, the
rest is just the
market playing
games with
hangers on...
And anyone who
bought a lot of
this stock near
the September
highs when all
the analysts
were spouting
nonsense about a
recovery. They
are being
annihilated
right now.
Will the market
go up or down
next week? The
only honest
answer I can
give to that is
... Yes...
Another look at the
dollar
==================
Yes, its different
than 97% of everyone
in the world is
seeing it (to be
exact) - doesn't
mean I'm right
though.
Unfortunately, its
possible they can be
right for longer,
and they can drag it
on and on until they
break me (or I lose
patience) but there
are so few people
remaining to be
sucked into the
short dollar trade
(about 3% are left
to be convinced that
the dollar can ONLY
go down from here) -
so how much more
money can they bring
against the dollar
really when so much
concensus has
already been found
(and thats what
broke the downtrend
last year, excessive
bearishness left it
nowhere to go but
up).
The "carry trade" is
whats at play here I
believe. Its where
people borrow
currency (it used to
be the Yen, but now
its American
dollars) because
they sense weakness
in that currency.
They know the rate
will be
exceptionally low
and it will stay low
so they borrow tons
of it to buy risk
assets with. Not
only is interest on
it basically 0%
(costing them
nothing to borrow)
but they also
anticipate when they
exit their trades,
effectively when
they "pay back" the
borrowed money, it
will have also
declined in value
since the time they
borrowed it - so
they come out ahead
there too.. Its a
clever thing, but it
seems like it would
have been much
better to do this
more from 2003 to
2008 when it had a
long drop ahead of
it. Now we bottomed
in 2008 possibly and
even broke the
downtrend once
already (a serious
red flag for
continuing a bearish
attitude). Doing
it here seems like
the worst time (to
me) to do a carry
trade, but, people
figure they must
know what they're
all doing, right?
Other people follow
the example, and
before you know it
the whole world (or
97% of it) is short
the US dollar, and
hoping against hope
it will do nothing
but fall so they can
all profit from it.
The whole world is
playing the lottery,
and they're all
playing the exact
same number. Now
who will pay if they
all win?
A hint of rising
interest rates could
bring all that
"certainty" to an
abrupt and violent
end but as I've said
before Japan kept
their zero interest
rate policy for 16
years - still, did
THEIR market no good
so I'm expecting
about the same here
either way. Did I
send you that
fractal analysis of
the Japanese Yen?
It showed the same
thing I'm expecting
actually, a
contrarian RISE in
the yen even with
everyone
anticipating
weakness here...
Its encouraging
because I know the
past and the future
do tend to rhyme,
even if they aren't
identical always...
If the bond market
starts to raise due
to external concerns
(like Japan's
runaway yen) I think
that will also jam
up the dollar too.
I think a bit of
actual fear over
what the fed CAN do
to rates is what is
needed here.
Raising rates is
the "right" thinkg
to do to protect the
currency.
----------------------------
This is no guarantee
I'm right this time,
but check this out
... It seems I have
not been on the
wrong side of the
dollar really the
whole time I've been
at this (even before
I knew much about
what I was really
doing - 2007 and
prior). Being
contrarian worked
each time so far
even though the
first two times I
didn't even realize
consciously thats
what I was doing (I
didn't yet
understand the idea
of Elliot waves and
full effect of
contrarian sentiment
yet).
* Dollar falling
enormously - I was
long stocks heavily
from 2003 on to the
end of 2007 in my
401K (unarguably
2007 marked "the
TOP") I was invested
about 80-90% long
the whole time
before considering
getting out at what
I thought could be a
top. I got out half
at 13,500 and most
of the other half at
12,800. Noone told
me this was the top,
noone rings a bell
and declares it, I
just knew. This is
before I knew 1% of
what I know now
about technical
analysis.
* Dollar RISING in
2008 sharply and
unexpectedly - I was
SHORT OIL right
before the decline
in oil started (due
to the dollar about
to explode upward).
I called for a
commodity bubble
collapse in mid
2008. It hapenned
to enormous effect
(oil lost 75% of its
price in months) and
Potash, Monsanto,
and all the big
agriculture /
commodity complexes
fell completely
apart, bursting all
those bubbles.
Right again, even
though everyone was
SO certain oil was
going to $200 and
beyond, and the
dollar was finished.
If the dollar is
finished why did it
rally enormously
(more than in the
prior 6 years) and
even break the
bearish downtrend
conclusively. That
kind of rise doesn't
seem like the price
action of something
thats "finished",
and it brought down
the whole commodity
bubble in a matter
of months,
completely tore it
to pieces...
* Dollar falling in
2008 then 2009 -
both times I was
long the market
before the dollar
declined, which
drove the market up,
and I had oil,
silver, and gold +
gold miners, from
their absolute LOWS
($700 gold), and
several times oil
went up into the
dollar decline. I
did NOT chase the
long dollar trade
into its top (though
95% of everyone then
had BECOME bullish,
I turned bearish
again). I used that
dollar strength to
get LONG things that
would go up as the
dollar fell
(contrarian), even
though the dollar
"was going up".
* Dollar starting to
rise now (possibly)
- 97% short interest
(even more people
short now than in
2008), this is when
I'm seeing the most
risk to the upside
in the dollar
because its 100%
against what 97% of
everyone out there
expects. We'll see
if I am right, and
if I am, can I
manage to profit
sufficiently from it
!!! It seems that
being right and
making a profit off
being right are
often two different
sets of skills.
I've had no problem
being in general,
"right", but I have
had a problem
TRADING these moves
to their full
profitability. I
need to be able to
HOLD WINNING MOVES
for longer times,
and CUT LOSING moves
faster. If I could
master those skills
also, I'd make
better money.
Lets hope we can
hold the next
primary wave to its
full effect. The
next move could be
the biggest move the
market has seen (but
didn't believe could
happen).
Wave 2 as he's
presenting it on his
chart would be the
first counter-trend
move against the
newly formed (but as
yet unconfirmed)
uptrend in the
dollar. Wave 2 has
an important
characteristic,
I think its the
prime
characteristic. Its
very memorable for
me...
That is, the bottom
of Wave 2 (the move
I believe we're in
now to the downside
starting this year),
is that people are
even more
bearish at the
bottom of Wave 2,
than they were at
the bottom of the
move that started
Wave 1 (i.e. the
lowest low on the
chart from 2008).
As I've pointed out
before when the
dollar bottomed in
2008 and rallied
strongly into 2009,
almost noone
recognizes Wave 1,
because by the time
it breaks the
downtrend few could
have caught it and
the move is almost
over once its above
the downtrend line.
Then as it whipsaws
back and starts to
re-approach the
former lows, people
get even MORE
bearish than they
were at the former
low. They are now
comforted that the
dollar is again
going in the
direction it had
been for 6 years
before it broke the
trend line (red
flag!) and so they
get even more short,
ignoring that
annoying little
fact.. They do this
in spite of the fact
that (#1) the price
action broke the
downtrend, meaning
its a clear
opportunity for a
trend reversal and
further correction
(#2) the new low is
still higher than
the previous low
from 2008, meaning
possibly a new
uptrend. Only
breaking the lowest
low and closing
below there can
disqualify this as
being Wave 2. We
haven't been able to
do that so far even
with the might of
the majority (97%)
pushing on the short
side trying to get
it to resume doing
what it did for 6
years prior to 2008
when it bounced.
Even at the bottom
of Wave 1 (the all
time low) only 93%
of everyone was
bearish.
Also, the stories
about the dollar
going to zero,
losing our currency
reserve status, the
government going
isolvent, have
saturated everyone's
thinking lately and
its being yelled
from the rooftops by
all the Johnny come
latelies to the
dollar short trade
who just now noticed
that the dollar has
been falling for 6
years. So dollar
fear is peaking.
And this is all we
can manage after
that? A 6 year
downtrend line that
got busted to the
upside, and a
possible higher low
forming right now
(forming possibly
the beginnings of a
new uptrend). This
is what bottoms look
like in any market.
This is much like
the March lows were
for the market, but
in this case iit
should be the
dollar's turn to
melt up and the
market's to retire
lower in the face of
the rising dollar.
This is only
confirmed for most
people at the Wave 3
of 3 (point of
recognition), that
takes the yet
unrealized trend to
a HIGHER high than
the first bounce
(the first bounce is
seen by all to be a
dead cat bounce
UNTIL we bounce
again even higher.
Now the new trend
is confirmed and
people panic into
the trade, starting
Wave 3 up.
------------------------------
His only question,
is it a
benevolent
dollar rise or a
malevolent
rise ? I want the
malevolent of
course. Muaahahaaa....
http://seekingalpha.com/article/163641-how-will-markets-react-to-a-dollar-rise?source=article_sb_popular
I fleshed out his
chart, showing
visually what a Wave
3 would do to the
dollar from here, it
would go up beyond
last year's highs,
conceiveably
dragging equities
below the March lows
- less than Dow
6,500.
"Sadly, we can
find more malevolent
reasons the dollar
could strengthen
than benevolent."
BROKEN TRENDS:
Look familiar?
Kenny's
commentary on
the broken
trend-line on
the logarithmic
chart. This is
technically
a back-test of
the broken trend
line from
underneath
(which we have a
higher
probability of
bouncing DOWN
from, than of
breaking to the
upside. Once
you flip sides
on a trend line
it is loathe to
give up its new
boudaries to
just go right
back to the
other side.
Instead, the
market, most
times, end
up fully
exploring that
side of the
trend-line.
That looks
painful if you
ask me, because
there is a lot
of open
territory (risk)
below this
market
level. Sufficient
strength "could'
be coaxed out of
people to buy
their way
through the
reistance level
with increased
volume (volume
is the battering
ram of the
bulls, if it
isn't there, it
can't really
break
resistance). So
if that level of
continued exhuberance
can't be coaxed
out of people
here, the market
will naturally
retreat back
downward, in the
direction of
least
resistance,
seeking a different outlet,
a more bearish
one, until the
market exhausts
all of the
sellers. So
far, the market
has done a great
job of
alleviating much
of the
overly-bearish
sentiment that
persisted at the
recent lows.
Maybe now the
market can get
on with its
orderly
destruction of
wealth and keep
trending lower
from here...
Its not
conclusive that
the market
cannot
go higher, but
I'm increaingly
betting in the
other direction
now with each
"up" week that
gets stacked
onto this
rally. Rallies
don't last
forever, even
though some
sparks of
hope have
carried us this
far, I'm
expecting it to
not carry us to
new market highs
... ever. But
if it does, I
guess I'll start
being a believer
when I see the trendline
we are under,
being
broken conclusively
to the upside.
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