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Thursday, December 8, 2011

SPX Update: Finally the Breakdown -- What Next?

For a little more than a week, I've been calling a top, and talking about the roughly dozen different indicators which were screaming for this top in the 1250-1270 zone.  On Thursday, the market finally honored my incessant blabbering and broke down.  It was probably just trying to get me to shut up...  well, it won't work, Market, it won't work.  Viva la resistance!

The question now becomes: which of the two counts (which both favored a top forming in that area) is actually unfolding?  In other words: is this a short term top, or something more ominous?  To answer that question this early, I would need a new, functional crystal ball (the kids broke my last one).  So, as is par for this course, all we have to work with are general probabilities.

One thing that bothers me about the decline fitting into the immediately bearish count is that, so far, it reminds me an awful lot of the final decline leading into the October bottom.  That decline was an a-b-c waveform, which would line up with the alternate count.  The alternate count (labeled in black below) would view this decline as part of an even larger A-B-C correction, which would make a new low in the blue target box, then reverse and make a new high above 1292.  (But after that, the market would collapse.)

The blue target box indicates the most likely ending zone for the a-b-c count.  The official zone is 1198-1227 for the S&P 500 -- but if wave c is equal in length to wave a, the "exact target" would be (approximately) 1215, which also lines up nicely with a support zone.  And yes, I just said the "exact target" would be "approximately."  Gimme a break here, I work long hours on this stuff.  ;) 

I would caution bears to be careful here; protect profits, and don't become complacent.  If the market rallies from here, you'll want to have some dry powder to get short at the next major top, because it should be a big one.  To drive home this theme, I am moving my odds on the alternate count up to an even 50%.

Below, I have annotated the SPX chart with both counts.  The anticipated target zone is roughly the same under either count -- it's what happens beyond that which will determine whether bulls or bears win this short-term battle.  Once the market moves significantly into the target zone, from there, bears do not want to see it move back up through 1237.47 (ideally).  This is because the bearish count would have the market form wave (4) next -- and in this type of waveform, wave four is not allowed to cross the same price territory as wave one (red (1) on chart).  Note that this doesn't apply until the target zone is reached.

That said, there are unusual circumstances, such as a nested 1-2 count, where this price overlap would be allowed.  Those counts are less common, but the KO for a nested 1-2 would be 1246.41.  Early on in a wave, the KO's can really only be placed at the top, which in this case is 1267.06.  At this early stage, the number which would indicate the likelihood that bulls had been sighted in the neighborhood is 1247.10 -- but it wouldn't guarantee it at this point, as there are still too many potential short-term structures on the table.

Sometimes, though, you just have to protect profits so you have something left to catch the next move.  One thing we are guaranteed in the market is that it's never going to sit still -- there are always trades to be made tomorrow.  


A few readers have asked about some counts they've seen from other Elliotticians, and whether I think those counts are likely.  One popular count is that the current decline marks the end of wave e of an expanding triangle, in which case a rally is due essentially immediately.  This count is technically possible, but I don't view it as very likely (although an immediate rally isn't out of the question).  Let me explain why I view the triangle count as a major underdog.

My readers have heard me use the phrase, "I don't like to use Elliott Theory in a vacuum."  Times like this are exactly why I feel that way; because, from an Elliott perspective, both counts are completely viable.  So to sort one from the other, I turn to other indicators.

Below is a chart of the SPX, with the TRIN in the first panel below it, and the New York Stock Exchange ratio of declining volume to advancing volume below that.  I have drawn red horizontal signal lines to mark where a signal is triggered for both indicators; and vertical dashed lines which match the days where signals have been generated with the actual market. 

On this chart, you will find only one time these combined signals failed to lead to at least a moderately lower low in the upcoming sessions (it still generated a new low, but barely).  Going back two and a half years, there has been only one true failure of this indicator (not shown, in December 2010).  Those are pretty good odds... which, in my mind, virtually rules out the expanding triangle count I just mentioned, since the triangle needs to bottom more or less immediately.  Of course, this could always be one of those rare long-shot times the signal fails.  As I said earlier, all we have to work with are probabilities.


Do note on the above chart that there are examples of this signal which lead to a "lower-high" bounce, and then new lows a few sessions later (see November for an example) -- so it's not a guarantee of new lows immediately in the next session.  And it's not really a "guarantee" of new lows at all; there's no such thing in this game.  It's just a really good probability.

In conclusion, I remain very bearish long term and medium term.  I am also bearish over the very short term.  However, the market is approaching a critical inflection point.  If it bounces significantly in the coming sessions, it could rally up to new highs before the big leg down.  Conversely, if it doesn't find support in the blue target box, then that's probably all she wrote and our next stop will be in the 1000-1050 zone.  I expect the market to eventually find this zone one way or another, but for the moment the question remains: now or a little bit later?  Trade safe.

The original article, and many more, can be found at http://PretzelCharts.blogspot.com

295 comments:

  1. Morning all!  I'm going to get some sleep at some point tonight.  I'll try to be around for at least part of the session, but I can't guarantee which part.  I'm just glad to have the update finished early.  :)

    Feel free to talk amongst yourselves during the session, but somebody make sure Frank doesn't steal the blog silverware again.

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  2. This is the problem with finishing this early... there's nobody around to talk to.  :D

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  3. Thanks a ton, PL. Hope you get some sleeeeep :) before the 'non-action' begins later.

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  4. Yeah, now I feel like I could go another hour.  I think I'm just excited to have some free time for once.  :D

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  5. Statistically speaking 1215 support and 1292 new high are both possible and then 1035 could be the stop. Aligned with your vision, then the market will do the job

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  6. Well, the Euro leadership did as expected - um, nothing.  No ECB no IMF, no peanuts, no popcorn.  I could see the Dax rallying as the Germans didn't want any part of any socialist bailout and they got what they want - Italy, Greece etc got bullied.  We'll get the Big leg down - if not here - coming soon - because the US market responds to earnings news etc and the outlooks given by US firms will start to deteriorate because the two largest trading partners in Europe and China are headed into recession.  Profits of US companies have been living off income generated outside the US.  The economic numbers here will also start to turn south as this gets reflected.  GG

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  7. DAX is ralling also as they dupplicated the debt of Hypo and just yesterday Germany took 55.000 billinon profit from wrong accounting in 2008 when they saved Hypo (Fannie and Freddie germany). Correct, according to CITI 60/70% of US companies profit come from outside US and with Europe India Cina and so on econonies cooling we can immagine a drop of US profits in the first part of 2012. Therefore correctly my statistic are looking for 1015 of S&P in 2012. I'm a blind person and my statistics drive me in finance, I like tit

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  8. PL  Great analysis as always.  Much Appreciated.  Hope you enjoy your sleep, the market will wait for you before doing anything crazy :-)

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  9. http://www.youtube.com/watch?v=LiE1VgWdcQM&feature=player_embedded#t=1s

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  10. You DEFINITELY need to sleep.  Go to sleep, your analysis today was utterly meaningless, you are worthless now, even more non-committal than usual, you puked all over the place useless ew drivel, which succintly, can be stated thus (without any charting at all): 

    "the market may go up from here, either largely or small.  Same goes for the downside: it can go down alot, but then again, maybe only a bit down.  Therefore, I am 50/50 on this market, it has too many possibilities---yet, then again, think profoudly on this:  the market never sits still.  So, protect your profits, and don't add to your losses.   This has been your daily horoscope.  But, for intimate personal questions, write ann landers daughter."

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  11. I've grown weary of your act.  Go away.

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  12. Well, futures r up, euro markets are up...

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  13. taking a short at 1245 here...

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  14. Eagerly anticipating the daily edit.

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  15. Probably a good move.  Market will likely drop after the Michigan report at 10 and the relief Europe didn't explode this week wears off

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  16. 'never trade a dull market'?

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  17. You need to manage your stop losses better. Pretzel does a good job.  There are no guarantees.  Ben Bernanke was the loose cannon.  We can't see into this or it would be insider trading.

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  18. Seriously Anon20, you offer nothing.  Best to keep your trap shut when you have nothing to add to the discussion.   Post your 7 day forecast and I will gladly change my opinion.  The spx/vix ratio chart appears to have made a sharp turn up this am.  Perhaps lending credence to a more bouyant spx for at least a few days?

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  19. Wow did I botch trading the futures last.  Yikes.  Anyway we took out 1247.10, and this is a relatively sharp snap-back rally, but I'm kind of in no man's land with what to expect now, because the EU stuff is utter non-sense.  Seems we could collapse again here or keep rallying on hopium until Xmas.  Might pare in some some more shorts for the IT.  Thoughts anyone?

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  20. Given that the banks have led the S&P either lower or higher, is there anything that can be garnered by posting a chart on the BKX?  The health of the banks could be a tell for the overall health of the near term market.

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  21. RE: Soulsurferusa"Isn't Dec 10 a full moon and total lunar eclipse?! and dec 24 a new moon!? Nov had a full moon the 9th and new moon the 25th. Nov 9th area saw a high, 25th a low..."

    Doesn't correlate that cleanly over the long term- have to track other planetary relationships, etc.  However, eclipses tend to bring things forward that are already running in the background - an acceleration of events. We always watch the 14 day interval between the solar eclipse (new moon, starting energy) and the lunar eclipse (full moon, culminating energy). 

    Bigger deal at this time is Uranus direct at this Dec 10 eclipse and Mercury direct Dec 13.  Uranus has been retrograde since July 9.
     
    Add +/- three days around big events 'cause that kind of energy doesn't turn on a dime.

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  22. Looks like a violent ABC correction. I have my short stops at HOD ~1250.

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  23. euro's doing a bouncy thing

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  24. This help to relax, definitely you are a poet. I'm just joking

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  25. To my untrained eye, if yesterday (on 5-minute chart) was a wave-1 down, isn't today a wave-2 retrace. Given everything said so far, I would guess that the retrace would only go 50% and now we're about 1 hour into the day, i.e. the time scale seems about right. So my guess is that where it is now, 1252, is where it will end, then wave-3 down. I think given all the uncertainties on such short time scales, it might be wise to just go back to the main message in today's PL analysis. The indicators say down to the blue box, but it might take a session or two. Stick to your guns, I'd say, if you still own the short trade.

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  26. Actually, if you look at the 15:40 5-minute bar from 12/7 as the high of that leg down, then the last 5-minute bar of yesterday as the low, then 1253.46 would be the 61.8 fib retrace.  I think we will see that.

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  27. And anyway, SPX is back at yesterday's down gap. Fighting up through a gap is pretty hard work, so 1254 should be today's HOD.

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  28. Michael ... You're right on the money at the moment. I should get off my lazy butt and actually use the Fib drawing tool instead of just eye-balling it. My apologies.

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  29. Thanks for the reply.

    I still have a decent short position in TNA, but ditched the futures.  Bought at 1231, got stopped out at 1229 (then the market immediately rallied 18 pts).  Shorted at 1243, stopped at 1247 (then the market came back down, though its up again now).

    Added back just now to the TNA short, some of which I covered at lower levels yesterday.  I seem to have success with this approach, but failed at my first real attempt at futures.  Had I set my stop just 1 single point lower, I would have scored huge this morning (sigh).

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  30. 1253 is 61,8 fibo retracement ,counter rally of the last decline...with euro circus summit a total failure i wouldn't stay long here and go short...

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  31. Pl's last paragrpah says if it bounces significantly in coming sessions, it could rally up to new highs before the big leg down.  Looks like that is what is happening.  They almost got back everything they gave up yesterday. 

    Comments Anyone????????

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  32. Seems like yesterday's gap zone is where the battle is at now. If so, that's good news. Wave-3 coming soon.

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  33. They only got back 62% of yesterday, and that's normal. They haven't yet reverse the trend.

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  34. lol you're hilarious, are you still thinking a 1000+ Dow Jones fall is coming next week? 

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  35. Staying watchful of wave pattern similarities to mid-October.  Possible consolidation as B wave sideways, then C launching wickedly up.

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  36. "There is no 'moderator', turkeys.  It is only Pretzelcraphead himself, always erasing what I wrote, and mocking ME by parodying ME, in logging in himself, as ANON20."
     
    Really?  Ya don't say.
     
    "So, cubbie boobies, you want ME to tell you something ROCKHARD right now, MARKETWISE, at a time when ZEROballs PL cannot erase it, you gobble gobbles.   Then beg ME, you ever whining shhtt wannabe-bears. "
     
    No thanks, you'll say the exact same thing you parrot every day "grand super cycle 5, world coming to an end, etc."  Not saying you're right or wrong, just saying we know where you stand and unless something material has changed in your thinking, we don't need to hear it again.

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  37. lol literally the same stuff different day...

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  38. FWIW:  Mercury retrograde cycles are notorious for "fake-outs" and trend reversals lasting only 1 to 4 days. 
    Bears be nimble, bears be quick, bears snuff out the candlestick?

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  39. Anon20 - in Amerika we have many phrases that concisely express an opinion - to save time and get on to more productive enterprises.  One that comes to mind at the moment is..."put up or shut up".  Let me be the first to beg for your 7 day forecast.  Please offer specifics unlike PL.  Merry Christmas.

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  40. GasC

    What is your line in the sand price point of S&P for a reversal?? Thanks.

    Daniel B

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  41. Gas C

    What is your line in the sand price point of S&P for a reversal?? Thanks.

    Daniel B

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  42. bears are out of the office today, it seems

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  43. I agree they are taking a coffe break

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  44. Although with banks, they do have yesterday's loss almost completely erased. The last three sessions, including today, shows lower highs. Surprising strength but also signs of growing weakness?

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  45. Just my opinion...  1257. Because while in theory, a wave-2 can almost totally retrace wave-1, it shouldn't under these circumstances, i.e. all the topping indicators. So if it looks like it can annihilate yesterday's gap down, then it's a change in character, and so warning lights.

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  46. 20-20 hindsight: I look at the 5-minute chart and see the clear positive divergence on the MACD. Should be a sign to close the short and go long for today's retracement. Would have been a nice 20 points on the SPX for profit, times 2. I *really* need to learn to be more nimble. It's SO textbook!

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  47. algos are running it up one penny at a time.

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  48. Heretical to mention, perhaps.  But I went long this morning with a minor positions once we crossed 1,245. Just closed out after the rejection off of 1,255.  

    I also added more Jan SPY at 120 strike puts at that rejection.  They're selling for around 2.45.  They closed yesterday above 3.50.  And the lowest they've traded throughout this entire rally is 2.26, when we visited 1,266.

    This is an IT position.  There is no part of me that believes we'll be staying this level through the beginning of next year.

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  49. Good calls.  I tried to go long overnight and got stopped out by <1 point else I would have been with you.  I was also looking at spy puts or selling 132 calls for Jan as well.  Since I already added back to my TNA short which I partially covered yesterday, I was thinking about holding off on more short positions and seeing what Monday and the Fed bring next week.

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  50. China executes rogue trader, millions still missing

    http://www.reuters.com/article/2009/12/08/us-china-execution-idUSTRE5B71VC20091208

    yikes.

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  51. best on today's close?  whoosh up or flat or whose down?  My guess is flat, so one seems to be doing anything except the computers....

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  52. millions of rogue traders.....oh my!

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  53. Hello, lab rats.  So, PL did give access to 1 'moderator,' while he slept, to truncate MY TRUTH.

    THAT is to degree he fears ME.   Most excellent.   After all, you are just all, MY pavlovian dogs.

    Listen up, fahgs all, listen up.  I will tell truth, that your most 50/50 wavering leader, won't tell.

    ---------------

    There are infinite technicals---spx h&s neckline, 200day ma, 2008 similitude, etc., WON´T break.

    Disregard even ew analysis, since sad pretentious preening PL, is so LIMP in analysing, it's worthless.

    There are n0 yearend comebacks, there is no new high, this is it.  How many days, til it comes to an end?


    --------------------

    YOU figure it out.  GROW some balls.

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  54. This market is really silly!

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  55. Fred, the market colsed at 1.258 one year ago and they want to go a bit up otherwise they loose customers

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  56. Considering we're up big, and the equity market has convinced everyone that the Europe news is bullish somehow (even though bond market disagrees), I say the end of day on the last day of the week will see inflows, so we go slightly higher.  Not breaking the 200 day, but might break 1260.  I think we dump next week, but the bullish alt count is looming so could go either way.

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  57. a lot of folks looking for the double zig-zag abc to 1293 or more. seems like too many looking for that - longs hoping for the santa rally and shorts who covered after y'days fall. Not sure what EW analysis (truncated C off the zig-zag move?) allows for the retrace to the 200sma and then we give way to the move lower. This market action will suck bears into covering, thinking that the C wave will have to get to at least 1292 while the bulls will be buying because we made a higher low and gotta be higher still for santa. just my opinion. still short small caps.

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  58. The bulls are trying to tame the market, until they can. The bulls hope to tame the market for Christams and Year End

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  59. LOL - no need to apologize for going long,  I done that when we ran up off the bottom rather than trying to short the fury, I'd be way ahead of where I am now.  The 200 day has been holding solid as a rock.  Beyond that it may jump to the October high and form a double top.  Once we get out of this quarter and into next the economic numbers will start heading south and people will start warning on earnings - that'll suck the froth out

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  60. This market is like watching paint dry. I am still waiting to jump back in after being stopped out. Usually, "politician meeting" rallies usually last about a day or two, in which case, this would be a corrective ABC wave up. However, the KO for this count is all the way up at 1267 like PL said. So have to wait till 1267 to go long or witness some sort of impulse wave down to go short again. Hmm, what to do...Grab a beer and start the weekend?

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  61. I was reading the article in the link below explaing how the intrinsic risks in the entire global financial system is simply unphantomable a la MF Global type of infinite leverage which is not limited to MF alone/thanks to the UK lax banking non-regulation and yet the equity markets are inching up to make the year even. I just thew my hands up-wtf how stupid the equity markets and we their custumers are? Be waching your accounts, there are much bigger risks out there about to be unleashed!!
    http://www.zerohedge.com/news/why-uk-trail-mf-global-collapse-may-have-apocalyptic-consequences-eurozone-canadian-banks-jeffe

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  62. I'm seeing a 5-wave structure emerging here. I'm changing my mind about dropping out at 1257. Thinking the retrace might hit 786 fib but really, there's no way to tell.

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  63. honestly, I don't see what drives us above the 200dma now if the DEAL couldn't do it....QE3 is all I can think of now.

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  64. Gas - flag on the play (chart).  Your blue circle 2 is below your blue circle 1 on the last count - no can do in EW rules.

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  65. The market sould gain a bit also on Monday then???

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  66. Is your charting software eSignal?  Does it do the EW labeling automatically?  I agree about the 786 retracement.  Added ES[H2] shorts @ 1251.5

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  67. The drawing tool labels this run-up as a wave 3. I'm thinking it's a wave 2. But in either case, the internal 5-wave structure is coming to a close, and a decline is expected soon, perhaps small in magnitude, but a decline nevertheless. So if I were to exit my short position, I would do it then, probably on Monday, depending on how it looks then.

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  68. Specifically, a 2 wave cannot exceed the start of the 1 wave. Start your count at the 2 position, that should be the 1 or the A.

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  69. Yes, eSignal. The the labeling is automatic.

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  70. I have that last thrust topping at 1258.25, right on theat number.  Lets see how this final hour plays out....

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  71. *the

    BTW - nice level, looks like we're pulling back

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  72. I'm also liking the macd negative divergence. Good enough for at least one more day, I guess.

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  73. "Grab a beer and start the weekend? "

    Good idea.  Don't mind if I do.

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  74. No, my mental "2" is from my mental "1" at 12/07/11 top at 1264.79 SPX.

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  75. Sorry, I jumbled my wording. I meant, my mental 1 is the low close of yesterday. And my mental 0 is the high close of 12/07/11. So that makes today's retrace a wave 3.

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  76. I'm seeing C pulling back nicely from today's high. It's really looking like 3 days of lower body tops on the candlesticks.

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  77. "C" refers to Citigroup, not wave label.

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  78. Pretty weirld. You post a chart and it sticks with you on every post.

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  79. hmm...you have yesterday's close as a 2?....from what I understand about EWT, 2 can't retrace further than the beginning of 1.

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  80. The auto-drawing tool labels yesterday's close as 2 because he thinks we're on an uptrend. I disagree (since I'm PL's disciple ... and he has his proprietary indicators ;-) and I think the opposite to the tool. So mentally, I think Wednesday's close is zero, yesterday's is 1, and today's run-up is 2.

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  81. I see what you mean. See! The tools is stupid. He thinks 2 can drop below the beginning of 1.

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  82. Cudos! So far this had been a great call!

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  83. Way to go! Well done, it shows you are truly objective and those traders are the best!

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  84. How many bears are going to be showing some balls if we make a new high here now???

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  85. Hmm.  Stopped out this morning apparently.  Added a small short into the close.  1257 is an important level.

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  86. I'm thinking about going to a private board which requires registration.  What do you guys think?

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  87. OK here.  Couldn't block A**20 huh?

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  88. It would cost me more to run it that way, but I think we could create more of a collegial atmosphere.

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  89. I'm in.  If you can find one that is iPhone/mobile friendly, that would be even better.  Would love to get real-time posts in the comments forum.

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  90. I think that's a good idea.

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  91. I'm in. Like the idea of iphone compatible.

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  92. Why is the 1257 important PL? Do you think we will still see an excursion into the blue box (1198-1227)?

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  93. lol - my trade wasn't random, 1257 is a key level.  And I was up for more than 10 seconds before posting.  ;)

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  94. Brian-

    Don't be afraid to post long positions!  This isn't a "shorts only" community.  I counter-trend trade as well -- just couldn't get a good read on today (at least, not last night), and wasn't up to babysit the trade.  But I will go long again at some points along the way.  :)

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  95. Joined you with a small position in the AM @ 1258.25 - hoping not to get gored Sunday evening.  Still trying to get a hang of futures.

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  96. PL  Having been watching for a couple of months now, I don't have history on your long term analysis and calls.  Did you call for the rise of the market after the crash in '08 or are you always on the bear side?

    I will support a private board, just say when :-)

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  97. Flat on year and the 61.8% Fib retrace of yearly high and low.

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  98. Support/resistance/pivot level.  1257 is one of those battleground areas.  I'm willing to take the short side into the weekend, due to my work last night.  The indicators on the second chart are pretty powerful, so I like my odds.  If I'm wrong, it's worth risking a few points here. 

    I take a lot of low-risk stabs, where I can get out with minimal damage if I'm wrong, but can make quite a few points if right.

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  99. PL, I support the private board - even willing to pay subscription.

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  100. PL,

    You said in your last paragraph of today's post that if market bounces significanly in coming sessions, it could rally up to new highs before big leg down.   Does today's move qualify for a significant bounce or do we have to see more upside for bullish count to come into play?  Regards,


    Daniel B

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  101. Might lower the distractions. Humor is a welcome distraction, Some of the other immature blather is not. No problem here.

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  102. I see it is still avaialable at 1257 in the A/h market... Where would a good theoretical stop be?
    ?

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  103. PL, have been reading the blog since the first of November. I have really got a lot out of it. Keep up the good work! You really saved my ass on Nov 25. Thanks!

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  104. Hello PL,
    I've been following you for a few months now and have to say I am addicted to your board.  I havn't posted yet but I would love to continue if you go private.  Quick question, do you use the EW counts for day trading as well? If so, do you prefer 1,3,5,15 minute intervals and why?  Thanks for all you do, it's really great.

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  105. The answer's right here, also posted on the side-standing pages.  Some of my current readers remember it, too.  ;)

    http://pretzelcharts.blogspot.com/p/historic-real-time-bottom-call-3-6-2009.html

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  106. Sounds like a good idea. However, I personally think the registration process might hamper the growth of this community. Plus ANON20 will get bolder that his efforts to ruin a free community from his diplomat parents basement worked and he will wiggle his way into the new board somehow as well. He truly is learning from the very best. Unfortunately, a$$holes like ANON20 are always going to be around in a free community and the best way to deal with them is to fade them out through moderating or ignoring when they are no value add. Just my two cents.

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  107. Not afraid to post counter trades. Strong showing by bulls today who are apparently are feeling the pressure to close out the year strong.  And milking the European summit feel good news for all it's worth.

    I added a few more January puts while we're up here at these levels.

    Will be curious to hear your read on the strong move up today. I wasn't expecting it, and it certainly reaffirms why I do not like to hold shorts overnight.  This makes no sense, but little does these days.

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  108. Interesting... A whole session without PL. I believe I have just been double whipsawed. First on Oct 3rd (ouch)... and then now (double ouch). This rally is unexplainable with the result of EU basically being all in agreement that EU is in big doo-doo and that they will spend all 2012 putting band-aids to it. Then 3 major Earnings call-downs, our politicians fumbling the ball on the tax cut extension, MACD divergences, etc, etc. Any way, i went all in with shorts since early in the session and kept them through the weekend. I guess I'm joining Anon20 in his rampage.

    So private board? Yes PL you've showed us that we need you at our wings through the sessions.

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  109. Daniel,

    Either is possible right here -- sorry I don't have a more direct answer for you at the moment.  I'm just a mortal (unlike certain posters) and there are often limitations to what's "knowable" ahead of time in this market.  ;) 

    I put my best guesses out there today with the indicators and wave counts.  The bounce today is not out of line with the bear count, FWIW.

    I have to dig into the charts more this weekend and hopefully by Sunday I'll have a little bit more info.

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  110. I'd be in.  I might even create a legitimate profile.

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  111. I'm new here, and just learning... But like the idea.  I'd be willing to donate an averaged amount say across 20-30 members to cover your additional monthly cost, if you could give us a ballpark.  Just offering.  The entertainment value around here alone is worth it ; ) 

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  112. I agree with HT....ignore the distractions., unless you think you can really control the gate.

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  113. Hi Paul, and welcome!

    Yes, along with a combination of other things.  I prefer one-minute intervals because it allows the greatest detail (occasionally, tick charts, but not often).  When I do my nightly analysis, I also break everything down to reconcile at one-minute levels.  Takes a long time, 'cause you end up having to look at 5 different charts of the same index or what have you, but it's critical to proper analysis, IMO.

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  114. Recent highs are a good start. 

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  115. I am a long time lurker and would be willing to pay reasonable subscription for private board.

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  116. If your pain tolerance is low maybe just a few points - but you could get stopped out and then miss the move like what happened to me (see below).  If you want to play looser, you could do a stop right above this weeks high, which would be a few points above the 200 day sma also, so like 1267-1268.  Just hypotheticals, not advice.  :)

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  117. Agree in some respects with HT about enabling certain folks, but it's your board and I can't blame you for trying to eliminate the headache.  I would be willing to sign up.  As a side note, I have suggested your board to several people in recent weeks and with one exception, the first thing they ask is: "is it free/do I have to register?".  I think the atmosphere here is very good, and don't consider this board a "permabear" board.  People are here to learn, make money (up or down), and for the usually entertaining banter.  As to the sour grapes posts.....I don't remember them!!!   :)

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  118. lol- welcome to my personal hell.  This would be another advantage to a real board.  We could post charts and better replies to each other in an easier-to-follow format.

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  119. Thanks PL and BOB. My biggest problem is trraditionally that my pain tolerance is way too high :)

    As you would be beware, you get old traders and you get bold traders..... but you do not get bold old traders, so I'm working on that aspect of my game  ;-)

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  120. People are afraid of boards that require registration?  Weird.

    The sour grapes don't particularly bother me that much -- it takes more than someone hiding behind internet anonymity to get under my skin for more than a split second -- but I've heard from several other members who are bothered by them and are hesitant to post now... so THAT bothers me. 

    For the newer traders, fighting the market is hard enough.  I don't need them feeling like they're fighting each other, too.

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  121. Great.  Thank you.

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  122. PL,

    Thank you very much for your response.   Like I said before, this is a tough business.  If you go private, count me in.

    Regards,

    Daniel B

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  123. lol- was your name "paul" a minute ago, or did I just read it horribly wrong?  Sorry.  :D

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  124. Hi, David, welcome, and ty for responding.  :)

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  125. Hi PL--I've been following you on Minyanville for over a month now, and recently begun to join your site.   Your technical analysis is impeccable--one of the best out there.  So thank you for sharing your work.

    A private board is a good idea, and I'm willing to pay a small monthly fee for it.  To make it work, I think you'd need to charge a fee; registration alone wouldn't work because it's too easy to create an email address and register.   (This is what I learned from a subscription site that I worked on.)  At least, this fee can help you recover your operational costs and your time responding to comments.  Those who don't want to pay can use the public board, which you don't always need to respond to.

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  126. Thierry - wow, haven't seen you in a long time, unless you've been posting under a different name.  Welcome back.  :)

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  127. This bothers me too, potus.  Seems like too many technicians on the same page again...

    I may have to look for some radical new possibility again.  :)

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  128. Hi, t_winn, thanks!  and welcome.  :)

    Appreciate the suggestions -- still in the early phases with this idea, so not quite sure how to make it work yet.

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  129. I am in for a private board and would be willing to pay a subscription too PL.

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  130. PL,

    If you gonna try to run a public and private board, you better get to work on that army of clones, or did you master that space/time continuum dohicky!?!?    :)

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  131. Expat - Could  be the Rocky Horror Pretzel Show?

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  132. lol- off to a good start, anyway!  So far, I've been able to enlist the help of the neighborhood cat.  She's sitting here on my back porch next to me, and has agreed to do what she can in exchange for table scraps.  She claims she's proficient in MS word, but I'm not buying it. 

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  133. I hear ya.  Take it private.  You've got the support as long as the script is no too much.  I think your community has "come to the rescue" of anyone assaulted by grumble bunnies (kudos to you for attracting that sort!....not the grumble bunnies....the defenders), but I understand you are trying to build a board where ideas are welcome and debate can be enlighting and fun!  Keep up the good work!

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  134. you sure it's a cat????     ;)

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  135. Pretz - Got my support whatever you decide. I know you gotta feel some pressure to protect the Board from hecklers, even though it's quite entertaining at times, but if some feel uncomfortable, it could ultimately lead to them leaving and that would/could be bad for $ support of the blawg.

    "from his diplomat parents basement" - Great stuff HT

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  136. Dear PL:

    Relatively new as the obsessive follower of the board since beginning of Nov, during my painful phase of learning by losing "carelessly". I have found your work rather valuable for both educational and practical  sense, with great admiration for your dedication and honesty.

    Will support a private board with subscription fee.

    Thanks again

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  137. 3-Month Lurker here. I found your board after seeing one of your posts on Minyanville. I immediately saw the top quality of your work, but more importantly your sharp vision of the big picture, attention to the full scale from minutes to centuries, and great acidic sense of humor.

    While I would now sign up in a heartbeat if this list goes private, I think you are going to lose 80 percent of your page views and 90 percent of new folks discovering you. There is just too much noise and crap out there to bother filling in a registration just to take a peek, even if it's completely free.

    It's the great community discussion that makes this blog so attractive beyond the M-ville content, but remember that this part is completely invisible to the outside.
    Just sayin...

    Tdawg1929

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  138. I'm still looking at going the clone route. I think Number 4 could really help out with the moderation aspects.

    He'd just change every worthless post to: "i like pizza."

    http://www.youtube.com/watch?v=pRtVMLwh6mY

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  139. I doubt that anyone's really bothered by hecklers. My impression, anyway.

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  140. PS- Just don't feed the Trolls. They live on attention. If EVERYONE just completely ignores them, no response, no comments, and you consistently just delete their posts with no comment or modification, they will starve quickly.

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  141. ty for the feedback Tdawg. 

    btw, that would make a great sign: "Please Don't Feed the Trolls." 

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  142. I've received a few messages from folks who are, actually.  That's a big part of the reason I'm considering this -- as well as I think it'd be nice to have a better format for posting charts and such.

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  143. going private? sure, sign me up. as long as it's reasonably priced. 

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  144. Thanks again for your insights and I would support a subscription based blog. There really is no place for that attitude towards this blog.

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  145. To avoid missing out on new viewers, you can either:

    Allow viewing posts w/o registration, but control posting permission.
    or-
    Keep the active post registration protected, and provide free viewing of all posts after the current day.

    I don't know what tools give you these options; they are ideas for  you to look or.

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  146. WTF? How can last night's futures be so spicky??? Bernanke manipulating the market with is E*Trade account???

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  147. Many thanks to a donor who wishes to remain anonymous for his 2nd and 3rd (lol- private joke between he and I) donation(s) today!  ;)

    Very much appreciated, thanks for supporting this community!  :)

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  148. ty Spiker, was kind of considering this type of option.

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  149. Late to the party but I in for a sub

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  150. Hi Pretzel, general question:  Can wave C travel as far as 2.618 of wave A?  Thanks.

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  151. Yes, or even farther.

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  152. How far can Wave B exceed Wave A? 

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  153. lmao -- I knew exactly what you were going for just off your wave C question, and checked the math immediately.  You're wondering if today's rally is C of an expanded flat, right?  The B wave is too long -- it shouldn't exceed A by more than 138.2%. 

    Is that what you were looking at?  :)

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  154. Oh.. actually I wasn't thinking about today's rally.  I was just looking at a bunch of other charts :-)

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  155. Darn!  Thought I had your whole day figured out from that one question.  :D

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  156. By the way, what do you think of today's rally?

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  157. I'm suspicious of it, but haven't really done much work yet.  Trying to get away from charts for a little while. 

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  158. In the Alt count, couldn't (b) not have come yesterday afternoon, but rather it was today's action, thus we still have (c) down to come to bring us firmly into the target box?  Or does that violate any EW rules?

    If so, both of your counts point toward lower prices almost immediately - not too much room to run on the upside, correct?  That would make sense with a big sell-off Monday following some sovereign downgrades and general EU disappointment we've all come to love so much, then a large snap back rally on Tuesday or Wednesday after Ben gets everyone all juiced up for QE3 (along with more holiday-skewed or otherwise manipulated bullish US data).

    The third alternate has us completed an expanded flat (b) and starting the (c) up this morning and leading to higher prices immediately, however you are not favoring this count due to cross studies etc.

    So a drop below 1230 and its time to cover shorts and reassess.  A solid break above 1265ish and its time to cover and look to short at higher levels or play the long side a bit.

    Sorry, thinking out loud and trying to summarize things for myself.

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  159. It is suspicious in many aspects :-)

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  160. 1st question: possibly

    The expanded flat doesn't work due to violating the length of B relative to A of that flat.

    I really haven't done much work yet, though, so I'm hesitant to give too much of an opinion at this exact second.  I'm looking at board options, etc. right now.

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  161. Scratch the expanded flat comment, misread what you were asking.

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  162. Pretz-up for private board and would pay a fee. Well worth it imo. Quick ? - can the Cwave of zig-zag truncate at less than 61.8% of A?

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  163. Eurozone banking system on the verge of collapse:

    http://www.telegraph.co.uk/finance/financialcrisis/8947470/Eurozone-banking-system-on-the-edge-of-collapse.html

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  164. Hi PL, Long time reader, first time poster.

    Love the intelligent, witty and honest commentary, would certainly be willing to subscribe.

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  165. Wow. Will be curious if this very well-placed weekend story starts another round of panic. Today's run up made NO sense. The problems in Europe are no different than before. And the hoped for solution from the big summit wasn't delivered.

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  166. It made perfect sense... wave 2 :-) And also, I opine that the hope of Xmas rally is not something that people can let go of that easily. Just think of the 5 stages of grief (or something akin to that) .

    I'm not expert on this astro-cycle stuff, but I have observed that new-moons and full-moons amplify the response that is to take place, whatever that is, either up or down. So I'm thinking, wave 3 next, amplified. All it takes it for it to reach the critical instability level, and flip it goes.

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  167. Hi PL,
    Willing to subscribe , but am still a newbie (started 3 months back). Also am not from a developed nation (I am from India), so please and please take this into consideration that you now have a global audience and subscription fee can factor in exchange rates.  The forum' participants and YOU are highly addictive. The insights provided by you and  some of the patrons are brilliant ( well, ANON20 has great insights too sometimes, but he should seriously consider hollywood, he is wasting some brilliant script writing talent here). I cannot contribute much by way of technicals (newbie) but keep following just for the humor of this board. Thanks a lot again for this forum. PL ROCKS!!

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  168. Hey PL, Just saw your post on the banking issues over in Europe, great :/.

    I've spent the night researching the info that Fred posted earlier on Re-Hyothication and then reading through my account agreements and was shocked.
     
    I would encourage all to read the article and read your account agreements. I trade with Schwab and have large holdings with JPM. Both engage in this practice to some degree and apparently I gave them authority to do it. Both have UK affiliates. The implications of this practice is huge!

    I started moving funds from my brokerage account to my FDIC insured Schwab Bank account on weekends simply because of my faith in the system (or lack there of !), and then back again during trading hours several months ago. Seeing that JPM is one of the larger players of this game, will move those funds.

    I feel like it's one of those paranoid little things I do to be able to sleep at night and I am NOT one of those types of people... no... really... I'm not!

    Now that I've read the article Fred posted, and thanks Fred for confirming my fears about the stability of the system (in the words of Bill the Cat - aCk!), I'm glad I have been following my gut feeling... which is - things are on the edge of...? Abyss comes to mind.

    Here's the original Thompson Reuters article that the Zerohedge  article refers to... I found it easier to read.

    http://newsandinsight.thomsonreuters.com/Securities/Insight/2011/12_-_December/MF_Global_and_the_great_Wall_St_re-hypothecation_scandal/

    By the way... who the hell comes up with this stuff and thinks it's OK????

    PL - mahalo brudda for the blog!

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  169. Dave-

    Yeah, MF Global has created an interesting crisis of confidence.  One of the things I mentioned a while back is that their actions are one of the contributing factors that makes a new bull market much less likely.  My buddy Lee Adler (whom I've mentioned before) tracks money flow of all types (Wall Street Examiner link under "Pretzel's Friends") and prior to MF Global, much of the money fleeing Europe was going into stocks.  Since MF Global, that money is mainly going into the perceived safety of US "Trash-uries" now.
     
    If this is the Grand Supercycle top of my big picture's alternate count (instead of just the Supercycle top of the preferred count), there could very well be counter-party crisis near the bottom.  Keep in mind, though, that these same fears were floating around in '08 -- and the issue never became a real issue.
     
    In any case, as I said last time I referenced this situation -- it is quite interesting how the "stars align" with the Elliott counts sometimes.  I've been anticipating the C-wave crash since the 2007 top, and always wondered what type of news events would come to the fore to "cause" it.  But that's where it becomes a bit of the chicken and the egg... which comes first?  If this was in the charts all the way back then... wtf?  Predestined?  I don't know the answer there.  Hard to get one's head around.

    Of course, to be fair, the crash hasn't happened yet... but it seems increasingly likely that it's just a ticking time bomb at this point.

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  170. Hi, DR, great discussion post, and I'll come back to this over the next day.  :)

    Everybody else welcome to chime in in the meantime!

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  171. There's a chance I may have just nailed the count.  :)

    Gotta cross reference it, but this looks very promising so far...

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  172. Morning Pretz, 

    I'm certainly looking forward to seeing it.  I just increased my IT short position on the run up yesterday, which is only about fifteen percent of my purchasing power.  Puts with a January expiration, so I have five trading weeks to see those perform. 

    If you think we're about to get a spike above and holds the 200 dma for a bit just in time for Chrismas, I may have to consider bailing on them for now and buying back in later.

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  173. OK. I will tell you now why, I have disagreed with you ever more vehemently over last 10 days, since The Central Banker Consortium created the 500 dji point -BEAR-TRAP -N E W S-,  two wednesdays ago---N E W S  SAYING, in essence (without them having to actually DO anything, except SAY) that 'THEY' (The Fiat Uberlords) will do 'whatever it takes', IF Eurozone's huge debt gets 'out of hand' (HAHAHA, yeah right).  

    Because, those -N E W S- did not affect MY MEGABEAR opinion, ONE IOTA.  I STILL consider ANY bull case as nearly NIL (and YOU AGREED with ME on this, back 3 weeks ago, if you recall, back when you were CONFIDENT).  I STILL feel certain the bull case to have NO MORE than a FIVE PERCENT chance---and NOT your ever escalating percentages YOU have been escalating to it lately, first at 15%, then 35%, and now, near final capitulation, at 50%.

    It's more than the 200day ma major resistance (spx1260's area right now), more than the major resistance of the neckline of the h&s (around 1295spx now), it's more than the resistance Oct. 28 closing high of 1285 (from which this new, slowly evolving downtrend started), it's more than the strong resistance of the POWERFUL DOWN trendline, touching FIVE CLOSING peaks fn the spx LINEAR 1-yr chart (july 7, 1353---july 22, 1345---oct 27, 1285---nov 8, 1276---dec 7, 1261---olden TA used closing prices and linear charts).  No, it is more than ALL of these; though all these TOGETHER, already FORM a FORMIDABLE resisiting force.

    No, it is the COMBINATION of all of the 4 MAJOR resistances above, with the PREVIOUS, near IDENTICAL (and EVEN timewise), linear spx closing price chart, of 2007/2008 (a chart of highly, directly relevant importance, to what is STILL happening now, which is massive QUADRILLION of worlddebt, with central bankers trying to not let it exploded, into WORLWIDE BANK RUNS; for the RATIO of that ELECTRONIC quadrillion of worlddebt, to the REAL, TANGIBLE, ACTUAL PHYSICALLY EXISTING fiats, is only roughly 300debt/1fiat, believe it or not, despite all the blahblah ballyhoo cb blather, about 24/7 running printing presses, ever hinting of hyperinflation (HAHAHA, yeah right).

    Therefore, due to ALL this (and a MYRIAD more tech, sentiment, and mostly, FUNDAMENTAL factors, studied over thousands of hours) I PREDICT, yet AGAIN, that there will be one CRATER fall day, and very soon, due to the convergence of ALL the 5 tech points made above, which make TIME NOW a factor also, since for all these resistances to remain in efect, the fall must occur VERY soon. 

    And MY minimum drop expectation for this CRATER fall day, is AT LEAST DOUBLE, bernanke's WANKER-wednesday rise, of 500 dji points.  So, once again, I say:  I see an OVER 1,000 dji point drop, within the next few days.  So get on the train, leaving the station, heading south, it's an express, and it usually travels at night, so it's too late, if you waited to board it, by the light of day.

    By the way, the last 6 days of market action, have created a nearly perfect rounded top.  Any further rise above yesterdays close, would damage the look of that perfect rounded top.  Therefore, Monday looks like a good day for a crash, to ME.  This would also coincide, with the 'sell the news' syndrome from Friday.

    One last thing, almost forgot to write, that I know will give further depth, to the importance of the 2007/2008 chart to todays' 2011 unfoding events, and especially to cb 'ready to act' message, 10 days ago.  Believe it or not, the nearly identical same consortium of world bankers, came out public and said nearly exactly the same thing, on Dec. 12, 2007.  If you do not believe me, go look it up.  So, did it work?  It did.  For a few days, anyway, long enough for those that run the world, to get their last dollars out, before---

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  174. Great post.  This is very much along the lines of my own assumptions / concerns.  Seems the big waterfall is more likely after Ben has fired his last shot.  And so there is simply NOTHING LEFT that *anyone* can do.

    Which begs the question: when would he fire it?I suspect it would be when Europe has a true credit crisis and 'Lehman-type event' like what we saw in the U.S. in 2008, there is a major bank or two that can no longer function, and nearly all banks have simply stopped lending to eachother period (which may already  be the case).Once that hits the wires, this would translate to an SPX decline to 1,110 (at minimum). And I would suspect that's the level at which Ben pulls out his printing press.He'd still have a tough time getting the political support for it, so he'll have to find an under the radar way of lending all those trillions.  As you rightly point out.

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  175. Good morning PL, looking forward to seeing your latest count and update.

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  176. I just changed my profile name so you're not losing it!

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  177. Great, looking forward to seeing your next post.

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  178. ECRI recession update.

    http://www.businesscycle.com/#

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  179. I agree with you both for the most part, but think that rather than firing his last shot now, he'd wait for some major pain.  I agree he may covertly loan money to EU banks at any point to stave off a major bank collapse, but am not sure that's necessarily enough to prop up the equity and particularly the bond markets much longer.

     While most world markets are down 10-20% this year, the Dow is up 5% and the S&P is flat.  Food and fuel inflation is still with us even though core inflation is tame (oil over $100 barrel in this environment is insanity).  No matter how much Ben may want to just drop money out of the sky, crushing unsuspecting short-sellers, he is going to have to see more evidence of us being sucked into Europe's deflationary vortex.  So a QE3 program, where the Fed takes possession of MBS or other packaged securities wouldn't happen until after we see S&P 1020 in Q1 2012 IMHO.  That would equate to the subwave 2 of primary 3 in my estimation and the bounce off the H&S neckline dating back to late '09.

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  180. Added some of those Jan puts at $2.38 Friday.  Will cash out if we break 1230 to the downside in the next few sessions and reassess, or bail above 1268ish.

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  181. Yeah, in mid-Sept 2008 didn't they do the exact same dollar swap liquidity measure, only to have Lehman collapse like 8 trading sessions later?

    Good post - more gloom and doom is just fine, though sometimes a lot of us here aren't too fond of your demeaning of others, and particularly when you demean PL.  Remember, he's currently sharing his knowledge and EW insight with us for FREE.  Uh oh, I'm asking for it, aren't I?

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  182. Good post, thanks for sharing and doing so in a friendly manner.

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  183. Nice discussion DR and Brian. I can add a few additional points. 1st, the exposure of US banks to EU banks is at least 10 times more in hypothecation and re-hypothecation( see my post yesterday: thttp://www.zerohedge.com/news/why-uk-trail-mf-global-collapse-may-have-apocalyptic-consequences-eurozone-canadian-banks-jeffe) than in sovergn debt. So if a major European Bank falls all major banks in EU and US will falleurope and EU will fall from this carnage. In fact knowledgeable believe that the coordinated central bank announcements last week to prevent the fall ofa EU bank was fear of this domino which is huge!!
    Second, EU zone is in recession now and pockets are in depression and with all the talk of austerity it will get much worse before it gets better. US has most likely already entered recession or will shortly. Japan has been in perpetual resession for 20 years, China is showing clear signs of recession, and possibly a hard landing. I'm sure the FED is totally aware of all this and is waiting to have the reality hit the public and  more importantly the Congress before he has the cover to unleash printing, in the meantime he uses the covert techniques, but I beleive large printing, even if unannounced, can be imputed from one or more money supply figures.
    I can't predict when it all will hit the fan, but it can't be far off, certainly the printing will be timed to have max favorable effect on "re-election" next Nov...probably by June 2012 if other triggers don't force it earlier.
    What I want to emphasize to PL's readers is the importance of checking your accounts to make sure your funds are not subject to hypothecation, so you are less likely to become the victom of a perfectly legal scam, as it appears happenend to sgregated funds of MF Global clients.
    This is an excellent forum, thanks to PL who give so much of himself.

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  184. I am EVIL, and will BE, until I cease to exist, so do not expect better from ME.
    PL is an excellent ew analyst, if not I would not waste MY time, with children herein.
    However, I will state worst, about any man:  I'd rather be in a trench alone, than with PL.
    Gloom and Doom?  You have no idea.  What is coming to humans, is worse than I've expressed.

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  185. You are welcome, Fred.

    Here is a recent commentary article about ECRI recession call and update.

    http://www.financialsense.com/contributors/doug-short/2011/12/09/ecri-u-s-recession-in-next-3-quarters

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