Saturday, Nov 07, 2009
Stay safe boys.....
CNBC - Airtime 4th November: Prechter's Predictions
ok. So we have the following:
1. Might not be the top [but probably is]
2. Stay safe - stay in "cash"
3. Not at the "V" bottom yet
4. Make sure you are in "safe" institutions.
5. Markets are paradoxical - "sneaky" markets.
6. "Super" bullish on the dollar.
My interpretation of what he says [i would underline what he says if i knew how to do it!]
1. Sell all longs - dont lose a fortune waiting for the last penny of the up move.
2. Only short futures and/or write puts / buy calls if you are willing to take a risk, and understand the riks involved.
3. Possibly buy some greenbacks - or trade the Dollar index or individual crosses.
4. Get out of commodities - oil in particular is toppy.
Posted by techieman @ 10:01 AM (934 views) Add Comment
12 Comments
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1. stillthinking said...
Isn't what he is saying equivalent to, the deflationary grind continues. He suggests getting out of everything bar treasuries.
2. letthemfall said...
If he thinks the dollar is going to rise, then presumably he thinks the dollar carry trade is ending (?) which reminds me of Roubini's forecast that this will precipitate a general fall in all assets.
As an aside, I read Mark Dampier in the Independent this morning claiming confidence in the markets on contrarian grounds, which strikes me as a bit peverse when there are lots of claims for upward and onward. But then I see him as one of the great money-makers in invesment - ie. telling other people how to invest their money through his employers.
3. techieman said...
I think the real issue here in terms of credibility is that yes he did get short near the 2007 top, yes he did advise to cover near the 2009 bottom, and then not long after yes he did have a target of 1000-1100 S&P and 9 to 10k dow.
You could argue say that he has got some calls pretty wrong in the past. He was previous in the end of the bull, although its true he was one of few people at the time that predicted a turning point in 1987 and had predicted a bull move in the early eighties before then.
So to sum up in his early career he did make bad calls - basically because he used the EW alone and gave not much weight to other stuff. He now looks at various other indicators (e.g. Sentiment) which, although still technical allow more of a tweak.
The problem with EW is that it all works in hindsight and can be curved fit. I think he has learned a great deal from having the ability to do this analysis now, with these other indicators, in other words privately i think he now has modified his stance so that now EW is the most important thing in his arsenal but NOT the ONLY thing.
4. will said...
Prechter has called for an 'ABC' correction. We are currently at the top of the B wave. The C wave will be the largest down wave.
David Tice on Bloomberg last week believes we will see 400 on the S&P500 within the next three to nine months.
Neil Woodford also believes at least a test of the March 2009 lows ahead.
I am in cash now having banked gains since the March low.
5. techieman said...
will no thats not right the move off the march lows is wave 2 of 5 of the c wave
6. will said...
Thanks Techie
Please let me know when you think we reach the bottom.
7. letthemfall said...
...or indeed the top
8. crunchy said...
The intrigue of ambiguity.
http://www.youtube.com/watch?v=7CUYvWTd6oA&NR=1
9. techieman said...
Er thanks for that Le Crunch - as relevant as usual eh? - nice song though. Is there a message in her name related to you though "Ga Ga"?
Ok back to the issues. Will @ 6 this might help - i posted that before from my mobile, sorry therefore if i seemed a bit short with you.
This picture is probably worth a few (thousand / hundred / - take your pick ) words.
http://3.bp.blogspot.com/_TwUS3GyHKsQ/SnTfut6OkOI/AAAAAAAABRU/2KTDnL74yic/s1600-h/GSIII.png
for the full explanation see :
http://danericselliottwaves.blogspot.com/2009/08/p2-massive-grand-supercycle-backtest.html
10. techieman said...
right to give a bit more detail look at this chart from the same source up until end of July. http://2.bp.blogspot.com/_TwUS3GyHKsQ/SnTD_5u0mqI/AAAAAAAABQ8/rA7wddEMEHI/s1600-h/SPXdaily.png
and the article that goes with it : http://2.bp.blogspot.com/_TwUS3GyHKsQ/SnTD_5u0mqI/AAAAAAAABQ8/rA7wddEMEHI/s1600-h/SPXdaily.png
The question previously was, was the move down to 666 a wave 3 bottom on march 6th, with a wave 4 to go up from them to about now OR is all this move a wave 2?
A shallow or triangular shape would have indicated the 3/4 wave count rather than the 1/2 which Market action now seems to have confirmed.
The next question is has this wave 2 done enough? As LTF says "...or indeed the top". He is right the problem with this count is wave 2 can be anything from a 38% retracement to a 89% retracement and still be a valid wave 2. Ideally 50% would be the area to look for.
So the S&P top was 1575, the low 666. That gives a move down of 909 points and (so far) we have retraced to 1103. Thats 48%. If that fails to hold, the next target would be 1120 and then if that doesn't hold 61.8% is 1228.
Of course these are targets and the point is we are pretty close to the 50% retracement level (EW is an art) so we could already have the 2nd wave top in.
How will we know and what to do about it? Well we will find out by market action (break of trendline support and then failing to breach that same trendline afterwards to the upside since it will now be resistance). In terms of what to do - well using some other indicators you could short around the levels shown and if it confirms the top is in then sell some more.... or you could just wait for some confirmations, or you could get short and move stops closer to your entry. That way if you are wrong you will be stopped out so the market tells you you are wrong.
The relevance to HP is that FTSE is correlated to the S&P - they move us (not the other way round) AND FTSE is correlated to the HPI.
In summary if we see a new move down next week where the S&P fails to break the 1100 high, and then breaks 1015 to the downside, we have a much higher probability that the top is in. Personally i am happy to take some bites of the cherry because the risk/ reward ratio is starting to be favourable IMO.
11. will said...
Techie
Thanks for the Daneric's link and market advice.
I discovered 'secular bear markets' in about 2005 on the way up to the double top and have since looked into the larger cycles.
Prechter believes we will hit the final low quite quickly whereas others believe it may take a few years. As you rightly say, the market action will show the way.
12. techieman said...
No probs Will - good luck with everything. Its funny ive not seen his site before (and by having a quick read it looks like he is a brit).
Anyway to take things to saturday's analysis of the S&P (which i read after posting the above)
see: http://danericselliottwaves.blogspot.com/2009_11_01_archive.html
Of course i could be wrong but this is really the first time for a while that i thought we should be looking to go some form of short (whether toe dipping) or more full on short. Thats not to say i havent taken on some shorts on the way up, but have reduced the exposure on those - by taking some profits but now i think this may be the real deal. [odd saying that against an upmove on friday against bad numbers but there you go!]
Mr. P was advising shorts a few weeks back, but he is usually a bit previous.