3rd wave up expected in silver, PDQ

I now count 5 waves up from the recent low and I am modeling this as wave 1 up.  Then we had a rapid shakeout back to the 61.8% fib which shook out the weak hands.  Now I think a massive 3rd wave up is likely.  If I'm right, it will happen with power and gusto and include significant gaps up.  The chart below is ultra silver (USLV) and it really shows the a-b-c retracement clearly.  C was the strongest wave and contained a big gap, as it was expected to.  But since my current wave model indicates silver has bottomed, I think it should find support at the 618% fib and then reverse upward again.

This is a very critical time for the metals.  Either they break out now or they bounce down pretty hard and have to reestablish support from much lower levels.  I think something is going to happen to justify a big break out.  The market seems to already know what it is.  Time will tell if I'm right about this.  The story will be told in days, not weeks IMO.

As expected, the con men are turning on each other.

The end stages of a run of organized crime are marked by the rats turning on each other.  First, one of them scapegoats the other in order to either gather more territory or avoid a legal penalty of some sort.  The one that gets scapegoated then starts telling stories in the jailhouse.  Pretty soon he is the star witness of the RICO trial.  Banks should indeed be brought up on RICO charges for the massive organized fraud that they have been involved with for decades.  The banks are the biggest money launderers for the drug cartels as well. 

Today, Fannie Mae decided to do the legal equivalent of turning state's evidence on 9 of the largest banks as it filed suit against them for their collusion on the LIBOR (London Inter Bank Offer Rate).  This is supposed to be a market driven measure for the cost of money loaned from one bank to the other.  It is used as a benchmark for many things including derivatives, mortgages and other funny money transactions that were tied to LIBOR: "Fannie Mae accused Barclays, UBS, Internal Rabobank Groep, Royal Bank of Scotland, Deutsche Bank, Credit Suisse, Bank of America, Citibank and JPMorgan Chase of colluding to artificially lower the rate from 2007 to 2010."

What's important about this is that you cannot sue anyone without proving your case and you cannot sue 9 of the worlds biggest, most powerful banks without tons of proof.  Also, Fannie Mae is no longer an independent bank.  It was taken over by the US government back in September of 2008.  So this is really the US government suing these banks, many of which are the pets of foreign governments.  So this is really the US government attacking the financial henchmen of foreign governments.

Something tells me they will not be too happy about this.  Something else tells me that they are not as helpless  in this matter as the US con men believe them to be.  Yes, those banks are dirty as Hell but so is the US government.  So it is definitely the pot calling the kettle black.  The banks will be first but before this is over, the Obama socialist government will be attacking large corporations, probably for collection of tax revenues that were never paid because the profits associated with said revenues were never repatriated by the likes of IBM, GE, etc.  

Remember: never get near  a drowning man as he will take you down with him.  The US government is drowning in a sea of corruption of its own creation.  

More gullible idiots figuring out the scam the hard way.

I don't know what everyone was thinking when they gave Obama the go-ahead to frack up the entire health care system.  It just angered me beyond imagination that Obamacare was allowed to pass, especially when I heard Pelosi say "you have to pass the bill before you can read it".  It was like watching a comic book come to life.  I was blown away. 

For a while I thought that the powers behind the socialist movement must be stuffing the ballot boxes.  I mean, who in their right mind could not simply listen to Obama make all of his impossible promises without thinking "yeah, more hot air from yet another politico".  But now I see people stepping forward after figuring out they got lied to and I see real hurt.  I posted on this before and today I want to highlight that the liberal Dems who thought they were actually going to get affordable health care from the affordable care act are now balking at the sticker shock.

Let me say something very clearly: if you lie to "true believers" and they figure it out, they're done with you.  There is something in the DNA of gullible people that ensures they will be extra "hurt" if this happens.  Perhaps they just allow themselves to get to emotionally invested and then the lie becomes an assault not only on their intelligence but also on their basic belief in goodness.  When Obama lies to me, I just assume he is doing what his handlers asked him to do.  Same with Bush, Clinton, etc. all the way back to Ike.  When these guys lie, I don't get emotionally damaged because I know they are lying to some degree each time a word emits from one of their pie holes. 

So the liberal socialist sheeple are now getting their feelings hurt. One resident from Fullerton (liberal) California who was quoted in the above article said, "It doesn’t seem right to make the middle class pay so much more in order to give health insurance to everybody else...This increase is simply not affordable."  Gee, it seems that social programs paid for by the ethereal concept of debt are just fine given that these people never envision having to pay off said debt.  I wonder how many times this woman has scoffed at conservatives for telling people that the only right thing to do was pay for what you consume yourself and to pay as you go.  But when the social programs (yes, Obamacare is a wealth redistribution social program) are paid for by real tax collection, well, these morons start to sound downright conservative.  Gawd, could they be any more ignorant or gullible?
 This new slap in their faces is going to destroy their confidence in the con.  Consumer mood is going to get a lot worse before it gets any better.  Nobody's thinking about it now but as people read how much they are going to have to pay for health care and as they internalize the fact that they will have to do it by force of law, it will certainly affect their buying habits for Christmas and well beyond. Christmas is going to be a huge bust.  Obama and the con men assume people are saving too much money (the Keynesian "paradox of thrift") and these bastards just raised every working person's taxes (hidden behind a bogus healthcare program).  It's just that simple in their minds: with the stroke a pen, bingo!: more money in the economy for government to collect taxes on.  This is what Biden meant when he whispered to Obama "This is a big fucking deal" when Obamacare got signed into law. 

The ass hat in chief could not be more wrong.  The economy is going to shrivel up like nuts hitting ice water.  People are not a bottomless source of income.  Salaries are flat, expenses are up.  Nobody is saving for retirement like they should.  Tuition is sky high.  There is no big excess pool of liquid wealth for government to steal.  Any new taxes will come directly out of consumption.  Obama and the con men are about to figure out that patsy public has been completely fleeced, overfished if you will, and there is nothing left to take. 

Now here's the part that very few see coming: once the government figures out the people have nothing left to steal from their take home wages, they will go after the stored retirement accounts and they will go after social security.  But even those are not going to fill the ravenous maw of big government.  No amount is ever enough.  So at some point government will start cannibalizing itself.  It is going to turn its sights on larger corporations.  It's already started with its good buddy JP Morgan.  Some of the biggest fines in history were just levied on this corrupt bank.  Still the dollar amounts involved here are mere billions and the black hole of government needs trillions. 

Watch and see.  US corporations are going to be under attack from Obama in the last 2 years of his corrupt dictatorship.  Like the liberal dems who are now squealing because they thought they were going to benefit from the corruption, the big corporations will be crying the blues once Obama turns on them.  He needs to destroy property rights in order to push his socialism agenda forward and corporations are private property. 

It's coming.

Scam ridden commissioner of precrime gets laughed off of stage.

I tell you, the mood of the herd is turning.  It used to be easy for the con men to wrap their socialist, fascist, confiscation-state, power-concentration ideas up in fancy new terms and slick personal deliveries (sophistry) and everyone in the herd would either go ga-ga over it or just quietly agree with it in order to avoid being the ostracized outlier of the herd.  Tacit agreement was a form of the fake political correctness that I predicted many times would someday collapse as a result of the decline of the Debt Ponzi.  Edmund Burke wrote," all that is necessary for the triumph of evil is that good men do nothing".   But that is exactly the herding norm.  Most of the herd is good but nobody wants to be the outlier.  With notable exceptions like Ron Paul, nobody wants to yell out that the king has no clothing.  Nobody wants to be the brave intellectual who does nothing but tell truths while fools and morons ridicule him, call him crazy and tell him to be quiet. 

You see, when the herd is well fed you can pretty much do whatever you want to it.  You can herd it here and there.  You can pull out a fat calf every week and eat it for dinner.  You can kick any strays into submission that you find.  You can enclose the herd in stalls and leave it to eat and stand it in its own $hit all day long.  You can do all of these things and the herd won't seem to care.  As long as there is enough easy food, and easy (but artificial) prosperity, there is a hope for a better life.  When that facade collapses and all that's left in view is the slaughterhouse then the herd suddenly has a mass awakening.  It ripples through the herd in a visible fashion.  Those who were labeled stupid or sleepy suddenly wake up and they self-organize.  They no longer allow the predators to pick off their children with impunity.  In fact, they get downright mean, aggressive, resourceful and yes, dear elite con men, bold.

Ray Kelly, commissioner of NYPD and huge proponent of 4th amendment violations by his jackbooted thug police force, got the horns recently at a speech at Influential Brown University. He was there to talk about (i.e. indoctrinate the students regarding) the policy that he calls "proactive policing".  The main visible component of it is commonly known as "stop and frisk".  In other words, if a NYPD thug doesn't like the way you look, this unconstitutional policy gives them the swagger (notice I did not call it a "right") to approach you on the street and freaking put their hands on you in a TSA style frisk down.  Of course then they start asking questions, demanding identification cards, asking you what you are doing, where you are going and other intimidating things. If you tell them to bugger off you will certainly end up face down in the dirt with several trumped up charges placed on you, one of which is always "resisting arrest".  They might as well just change the name and call it what it is: resisting tyranny.  Even if you cooperate, the cops might use the occasion to plant drugs on you in order to meet their arrest quotas.

Instead of just listening politely to Kelly and clapping at the end, students who attended his propaganda indoctrination session heckled the SOB off the stage.  He had to close his speech quickly and skitter away like the cockroach of a man that he is.  The school administration which agreed to allow Kelly his shot at corrupting the student's minds could have called in the riot police to stop the kids but they realized that they had already lost control of the situation.  Instead, they just cleared the hall.  One of the hecklers was Jenny Li, a Brown student who helped organize the protest.  She told the New York Post that some students had earlier petitioned the university to cancel Kelly’s lecture, but when the school went ahead with the event she said, “we decided to cancel it for them”.

Of course, the school administration call the whole thing deplorable, blah blah blah.  But the school administration is part of the herd just like the rest of us and what they just saw was a strong challenge to their leadership (AKA control) of the herd.  It is a challenge that they were not prepared for.  They walked right into it by bringing in such an indefensible fascist as Kelly.  They should have brought in less controversial scam artists first.  The administration did not understand how the mood of the herd is changing and that what used to work in the past would not work going forward.


I wish that I had figured out this herd thing on my own but I got it from socioeconomic genius Bob Prechter a number of years ago.  The mood of the herd allowed all the fractional reserve credit bubbles to form but now that the bubbles are proving unsustainable, the con men who are trying to drive the herd in a given direction will find that the herd has a mind of its own.  As the Global Debt Ponzi crumbles we can only expect this trend to grow.  All of their models will stop working and none of the old tricks for driving the herd will work anymore.  They will find out the hard way that the herd either allows them or disallows them.  Once the herd turns against them, no amount of control or force or bribery or coercion works anymore.  The herd gets stubborn and would rather take the pain than comply.

It's unfolding before our very eyes.

After nice 1st wave up, Alcoa ready for a breather [AA]

Here's the back link to the post thread.  Today I think that AA is either finishing 5 of 1 OR 1 of 5 of 1.  If 5 of 1 is now finishing (most likely scenario), it;s time for a pullback to the 38.2 or the 50% fib.  Probably not the 61.8 fib in this case.

If it is only finishing 1 of 5 of 1 then we have 2 of 5 of 1, 3 of 5 of 1, 4 of 5 of 1 and 5 of 5 of 1 still before us before the pullback begins.  While this is possible, I think the large odds support the first scenario. I think the little right pointing tit within the red circle is an ending diagonal forming a failed 5 on 5 of 5 of 5.  It will likely leave us with a declining double top that breaks down into an a-b-c retracement.  This is fully expected after such a nice 3rd wave run which was good for a 22% increase in the price of the stock.

Of course, traders will set trigger points to test the model.   If a trigger is broken it will either confirm or invalidate the model.  The triggers can be tight in this case and the red circle is about correct for these triggers.  If this apparent ending diagonal creates a new high then it might be a wrong call.  If it begins to break down below the red circle then it is likely the right call.  Odds, not guarantees folks.  If everything were 100% then everyone would be billionaires.

NBC News: Obama knowingly lied about being able to keep health care plans

Fools and idiots voted for Obama.  The same people thought they were going to get something for nothing with his socialist health care scam.  Little did these morons understand, Obama was lying to their faces when he discussed the terms of Obamacare.

This is not my opinion.  It is the basis of Newmax's recent story.  Newsmax reports that NBC quoted Obama's big lie to the people:

In a June 2009 speech to the American Medical Association, Obama said that "no matter how we reform healthcare, we will keep this promise to the American people: If you like your doctor, you will be able to keep your doctor, period. If you like your healthcare plan, you'll be able to keep your healthcare plan, period. No one will take it away, no matter what."

"Yet the NBC report said the government knew that wasn't true, saying that buried in regulations from the July 2010 law was an estimate that because of normal turnover in the individual insurance market, “40 to 67 percent” of customers will not be able to keep their policy."








By the way, Newsmax pointed to the original story at the NBC News Investigation web site.  I have every reason to believe that there once was such a story at NBC News but the government propaganda machine is now engaged in pulling bad reports like this down.  As you can see, the story is no longer at the NBC link.

I personally am not surprised by the story.  I've known for a long time that Obama is a lying traitor to the US.  He sold us out to the global money interests just like GW did.  What I am surprised to see is all of the stories and links that are now being repressed in near real time.  For example, go on Youtube and try to find the embarrassing interview between Jon Stewart and Sebelious.  All of the videos have been "removed by owner".  That is very, very strange.  The propaganda department of the federal government is now fully activated IMO and we will see increasing blatant propaganda coming out of this administration.

Obamacare isn't the end of the disaster, it's the start of it.  Obama acts like everyone can afford to pay $1000, $1200 per month for "affordable care".  They certainly cannot.  I tell you right now that no patriot will sign up for this crap.  Let them penalize you, it will still be a lot cheaper.  But if you pay into their scam you are effectively financing the coup of the USA which is being driven by the banking elite.  Deprive them of your money to the degree possible.  Make them take it from you by force.  Do not give your consent, even if bullied.  I tell you, this is the Patriotic American thing to do.

[IBM]: ready for short term bounce (OR ELSE)

Here's the backlink to the full IBM series but the bottom line is that my IBM EW model is holding true.  The shares have now hit the bottom rail as expected and this happened as an ending diagonal formed with a throw under that was just powerful enough to hit the support line.

As you can see from the snapshot below, the shares are now upward-testing the bottom resistance line of the ending diagonal from below.  This is a critical short term direction test.  If the chart can break back up into the channel of the diagonal then chances are it will run all the way back up to the $205-$215 range before it really rolls over.  That would be the 5th wave up of this big move which began all the way back in 2002.  I think that 5th will be a failed 5th and will form a declining double top as show in the EW model I provided in this post.

However, if the chart cannot hold this lower support then I see bad things for IBM shares happening real soon.  It must hold the support within the blue oblong in order to have enough confidence for one more final run, like a fish paying out line as the market begins to reel it back in.  Again, the charts are telling me that it will get one last hurrah to above $200 before rolling over and eventually finding my target price of $70 within 24 months. Nobody would say this is very likely now because people look at BS short term metrics like PB, PE, etc.  These are just sales tools for Wall St stock peddlers.  The value of shares is mainly controlled by the confidence of the herd.

GDX Update - where gold goes so goes GDX

I'm still looking for evidence on whether the next, all important gold breakout is going to happen right now or not and I still don't have a perfect case either way.  On the way home from work today (yes, Sunday...), I noted Shell regular gas at $2.93.  Gas prices have been dropping faster than Miley Cyrus's clothing at a media shoot.  This is not inflationary.  This should not be good for gold or gold miners.

Of course, perhaps it is temporary.  And in fact the new chart I just found on the web site of my new BFF (FRED) indicates that this might just be a 4th wave pullback.  It would explain the rapidity of the move.  If this model plays out as shown below then in another few weeks gas should bottom at perhaps $2.60/gallon in Texas (higher in other places):   Perhaps the rapid oscillation of this 4th wave is what is causing such a weak read in my normal indicators.  If so then clarity should return pretty soon as this wave either confirms it is a 4th wave or it breaks down into something else.

Like gold itself, the gold miners ETF (GDX) is very near having to either break out or break down.  This chart is decidedly more bullish than the gold chart.  As long as that declining double bottom holds, GDX is golden.  And if that top resistance line cannot hold then look out above.

One more thing to keep in mind: the market is especially tricky when it is near reversal points.  I think the result is that something unexpected happens and instead of simply understanding that a breakout or break down occurs, the market just sits there in shock and awe and watches as the train leave the station.  By the time they realize what happened, they think it is too late to get in and so they watch the train get smaller and smaller down the tracks.

If GDX breaks out and gold breaks out then they will self-confirm the breakouts (as opposed to needing to look for a back test, kiss goodbye, etc.).  Having multiple confirmation points (gold, silver, GDX, gas) all going up at the same time will be a confidence builder for the owners (or future owners) of these assets.

I'll be keeping a close eye on these assets over the coming weeks.

Interesting public mood chart - how does the herd feel?

The base chart below was taken from Bob Prechter's web site (free info).  I added the blue lines as well as the pointers to the motive waves (i.e. the ones that show the true long term market direction).  Motive waves tend to be large strides.  Corrective waves (those things which test the current mentality to see how much conviction the herd has in its current direction) are short and choppy by nature.  This is written about extensively by Prechter in all of his works on Elliott Waves.

What this chart is showing is a downward sloping expanding triangle or "wizard's sleeve".  We appear to be bumping up against the "d" wave (penultimate wave in the series).  That means that the herd will likely follow the course of the blue e wave toward the bottom of the channel.

This last shot of confidence was driven by Bernanke's statements back in 2009 that he could restart the economy with helicopter drops of money AND THEN pull it all back out once he'd gotten the animal spirits rekindled.  Of course that assumes that the patsies (us) have unlimited ability and desire to take on more debt.  But trees don't grow to the sky, not even debt based ones.  People are starting to push back from debt based over consumption.  They are choosing to live more simply.  Besides, the more of a home you own, the more you have to pay government each year for having been prosperous. 

To digress for a second, home ownership is the government's best friend because of the scam of property tax.  It's an annual payment that occurs no matter if the homeowner is working or laid off, sick or healthy,  eating or starving, etc.  It's a ridiculous slavery payment that increasingly goes toward things like incentivizing new businesses to put their HQ in your city, etc.  It's all done in the name of a better tomorrow for the people but in fact the real goal is to enable bigger, more intrusive government.  Property tax is an empire building tax.

And now back to the main subject....
The reason the confidence is so important to monitor is that every con game relies on it.  When confidence is lost, the con collapses.  People are looking at the fed's inability to taper per plan and they are losing confidence.  People are looking at all of Obama's lies about being able to keep their current doctor, heath plan and program rates and they are losing confidence.  And what is taking over?  An organization which can't even build a working web site?  Boom, more confidence lost.  The EBT system recently went on the blink and the shook confidence of all the wards of the state who have foolishly let themselves become dependent upon it.  The list of confidence busters is high and growing.

The chart model prediction of herd sentiment above is telling us that Christmas will be a bust, jobs will continue to be lost, purchasing power will continue to be lost and that public unrest will go on the rise.  It looks like the rest of Barry Obama's time as self appointed dictator in chief is going to be something of a nightmare.

As for stock markets, they are now up against significant resistance as well.  The NASDAQ composite is looking at 3 different resistance factors right now which I think will be very difficult to overcome:

• E wave throwover of ending diagonal in progress right now
• Testing support-resistance line that goes back to 2009 from below
• Psych resistance at big round numbers (4000)

Another very important factor is Yellen.  A long time ago I wrote that the way these things work is that the cowboys try to herd the cattle best as they can.  They will get in there on horses and take every action imaginable and sometimes at risk to themselves.  But at some point they realize that the herd has pent up anxiety that cannot be relieved by hearing soothing cooing sounds from the riders.  Maybe the cattle smell the blood from the slaughterhouse that they are being led to.  Nobody knows what causes it.  But when the cowboys sense that they cannot do anything more to prevent it, they suddenly stop even trying and get out of the way.  Alternatively, they might even try to trigger the stampede if doing so at a time of their choosing will net some benefit to the cowboys.  For example, if you can stampede them into a box canyon they might run themselves out and then be easier to re-herd later. The government thinks that the people are livestock so this analogy applies very closely.

Janet Yellen is being brought in as a dovish figure for the fed - more money printing, more easing, more accommodation.  While that is expected to send soothing signals to the stock and bond and debt markets of the US, sometimes these things don't work out as planned.  Maybe Yellen will be given orders to be the bad guy who says that the central bank will itself BK unless it stops buying worthless treasuries.  OR perhaps her dovish actions might piss off the rest of the world as our actions affect them greatly.  Perhaps the world begins to use NSA indiscretions about spying on global leaders as leverage behind the scenes to control Yellen's policies in a way that they could never have done if the stronger Bernanke were still in charge.  In other words, it might turn out that the market misjudged Yellen.  All of these things are now unknowns and the market hates unknowns just like a con game requires confidence.

None of these things have unfolded yet but the chart is predicting a sudden turnaround in confidence and that is something to care about IMO.

Gold at really, really, REALLY critical technical checkpoint.

   For the long term holder (years) it is a no brainer: gold will be a lot higher simply because the dollar will eventually go a lot lower.  But in the short to mid term term nobody really knows what will happen.  This is where the challenge lies in trying to call the short term moves with wave models.

   The current short term gold chart does not inspire confidence.  I was expecting the chart to kiss the upper resistance line and then pull back and then take another run at it as  a 3rd wave which would break through and confirm the new bull market.  Instead what we got was 5 waves up, which is good, but it touched the resistance line with an ending diagonal (looks like it but not quite confirmed yet).  That is generally a reversal pattern.

If the ending diagonal is not confirmed, that will be very bullish.  In other words, if it breaks out instead of falling back down then it will take many by surprise and they will make massive purchases to cover their short term shorts.  But by far the more likely thing would be a pull back to the the 50% fib at about 128.  At that point the herd has to decide: will there be one more trip to the bottom of the larger down sloping diagonal channel (gold $1000) before the real reversal begins or will the reversal be confirmed with an explosive escape caused by a 3rd wave.  There are just so many conflicting indicators right now that I think a butterfly flapping its wings in Japan could make the difference one way or the other.

On the deflationary side (which many, including Prechter, do believe means falling gold prices), gasoline broke below $3 per gallon and the UGA chart looks to be breaking down.  That is not inflationary.  At the same time, dry bulk shipping seems to have bottomed and is now looking stronger.  It really is hard to call at this point so I think I need to wait for more data before making further model predictions.  We should know in the next 2 trading days if the ending diagonal is a head fake or if it is confirmed.  I give it 80% chance of being a real ending diagonal if for no other reason than that the chart is up against major resistance and you normally don't break through something like that with a head fake.  It normally takes a big gap within a 3rd wave.  Time will tell.