Watch for one final market rally on Monday before the real plummeting begins.

Today's intra-day reversal was not a good sign in the short term for bulls.  It's one thing to go few days up and then have a pull back day.  That is expected.  But intra-day reversals show much greater nervousness, much weaker hands (i.e. those late to the game on high debt based leverage) are participating.  Still the technical damage has not been confirmed as a death blow yet.  The topping process is always full of whipsaw in order to keep the market from getting complacent.

I'm not giving it sure thing odds but I'm watching for another reversal on Monday per the blue line.  This version of the model suggests that the formation which just finished turned out to be a horizontal triangle which means it is not the final wave down but rather the penultimate wave down.  It could take TVIX down to the $6.50-$6.70 range. 

That number was not chosen randomly.  It is the distance of the 1st wave down of this series as measured by the horizontal red lines at the upper left.  The model is not mandatory to occur but it does have a valid wave count associated with it, and it would fool as many people as possible which of course is the goal of the markets, especially at turning point where the percentage gains are the highest.

Intraday reversal means the bear is back at least for a time.

Looks like my model correctly warned about the morning pump.  I followed up with a post showing that FAZ was 95% likely in a 5th wave triangle throwunder.  The technical damage done below is very significant.  That top green line is the trend line for the rally whose channel goes all the way back to June 2012.

You can see how the chart pulls back each time that line is hit.  The next likely support is the bottom of the channel.  If that can't hold then the great bull market since 2009 could well be over starting today.

But let's not get ahead of ourselves.  One wave at at time.

FAZ looks so ready for a reversal...

FAZ appears to be working on 5 of 5 of an ending diagonal right now.  Maybe it will take the rest of the trading day to make that final (likely inclining) double bottom down shown in blue below before the reversal begins. 

If so that means markets get the rest of today to finish their topping action.  Odds not certainties!  But the odds of an imminent FAZ reversal (meaning banks and other financials are about to go down) is 95% according to my model an that is about as high a percentage weighting that I ever offer.  If the markets close just as that 2nd dip is made then you can bet on selloff on Monday.  In other words, it would signal to buy FAZ and other reverse market ETFs at the close.  If this model is correct then they should gap up on Monday so you can set tight stops of 1%.

Since this is an ending diagonal, the final wave should be 5-3-5 (A-B-C) where C is more powerful than A.  So here is the zoom in chart of just that final wave down in the triangle.  Of course calling the action minute by minute is the most difficult type of technical analysis meaning highest risk of being wrong.  The market is semi chaos in motion.  But it is not without order or I would not even bother playing at this hobby.

Dow chart literally seconds from break down.

Just trying to see if I can capture the exact peak of the rally here in these page according to EW modeling. That's likely an ending diagonal right there with seconds left in it.

My model says beware the AM break out head fake up.

There is a high probability that a market reversal is imminent.  The safe play under these conditions is to watch very carefully for the sell trigger and then to trust it if it happens.  Maybe the lower support line circled in heavy red below will hold but if it doesn't then a major correction is indicated.  Also, just going to the bottom of the channel again will be painful enough.  That's 330 $COMPX points right there.  That 4th wave triangle is ominous and it signals that the NASDAQ comp (the leading index these days) is now working on its last wave.  If you can't sit and watch it, put tight stops on everything because the throw over is happening both on the weekly chart (shown immediately below) as well as the 30 minute chart below that.  5th wave throwovers are not your friend!! They are a sell signal.

The party is very, very long in the tooth.  Let fear be your main guide right now.

Here's the close up showing a 5th wave expanding triangle's throwover in progress.  The sell signal will be the break back down below the top channel and then the confirmation will be the break below the lower channel.  After breaking back into the channel, a break back above is the negation trigger.

My current model of the $COMPX should be an interesting read for you.

For every situation it pays to make some kind of a model to serve as a yardstick of progress.  Without that, "gut feel", "seat of the pants", and "winging it" are the only strategies available.  OK, there is also hope but I think most people realize that hope is not a strategy.

So whether you agree with my model or not isn't as important as the fact that I have one and it contains trigger points.  If the triggers aren't hit, I was wrong, but at least I know I was wrong and that is useful in and of itself.  So be warned in advance, you probably won't like this model because it is not main stream media, tomorrow is a brighter day, happy happy joy joy.  It is just my wave count without emotions.  Please try to see it for that.  If it is wrong then I will adjust.  But if it's right, I will not be caught by surprise.

Good luck to us all when the $COMPX falls below the lower green rail.  It should be a dramatic collapse.  So dramatic, in fact, that I think some significant world event will have to have triggered it.

Time will indeed tell.

GE - Let's get ready to tumble.....

In this last post on GE I expressed more about the concern I have with GE's future given its share price chart so I will keep today's post very simple.  In short, there are 3 likely next moves as modeled by the red lines.  you can think of them as bad, bad and bad.  GE is clearly rolling over and your pension, annuity and other big funds will take big losses for having invested in these big lumbering shadow bank debt giants.  I think GE will BK or come very close to it (AKA need some kind of bail out).

Now that I look at the way I drew those red lines I wish I had done it differently.  Or perhaps there is a subconscious message in there (not intentional I assure you even if I do think it's on track now that it's staring me in the face).  Would it be pushing the limits of decorum to suggest that GE's future is dangling?  If so, too bad.  Fake political correctness is dying and you didn't pay to read this so I don't have to pander to anyone.  Sorry, Captain's rules when you are on my boat.

Massive volatility in what should trade like a utilty. [SPWR]

Back in this January post I suggested that it was time to take Ponzi Profits on Sunpower (SPWR).  I used that as a proxy for the entire sector.  In fact, I said it was looking "very peaky".  While the shares are up $2 since that post, it does not change my view at all.  In fact, the recent move provides what I think is an even better wave count.  The tiny ending diagonal may or may not occur (blue lines).  The chart could just as easily break down within the next1-3 days trading days.  The point is that these shares are currently over-loved according to my model and thus the prudent gambler will GTFO right now with fat profits since my original bottom call back in the 44-45 range.

Once out, be careful about jumping back in!  The retracement could be as little as to the prior 4th.  But if the broader markets begin to collapse then so will SPWR shares.  Look for an a-b-c count back down to the prior 4th and look for support there.  If you see it, buy back in BUT USE STOPS in case it decides to go much lower.  There are some wave counts that take this back down to $16 and even $9!  They are not the typical path one would expect but the herd reserves the right to use them in unusual circumstances.  And I believe that circumstances are about to get very, very unusual given all the world turmoil.  The world is full of signs that some kind of massive contagion breakdown could be near.  If the Soviets, for example, try to stop Ukraine from its coup, will the US get involved?  Obama has been called a coward by too many people of late and so he might just have to prove how long his, um, fierce reputation is.

I don't know what it will be but the charts tell me that SOMETHING will give them the excuse they need in order to make the retracements that they appear to want.

First Solar looks the same -scary- to me.  That declining double top with the right edge that falls off rapidly with gaps is a SELL SELL SELL signal if every I modeled one.  It's best case retracement is likely down to around $35 and at the extreme I would see a pullback to the $20 range as being not a bad bet.  The odds of that lower move will be adjusted based on the shape of the chart going into the $35 range.

Don't fall in love with a stock because few of them pay dividends and the rest of them (those that do not pay dividends) have an intrinsic value of zero.

A closer look at TRX: The Owl is likely staring us in the face.

Longer term I LOVE the metals and the miners but this bottoming process can be very volatile with huge percentage swings.  It is a terror to some, a joy to others.  The massive volatility in all shares tells me that the market is very nervous and very reckless.  In other words, very near the end of a major reversal from bull to bear.  But I think the broader bear market will spell a new bull for metals and miners because metals will be treated as money, a safe haven from collapsing stocks.

Having said all that, the metals and miners are not going to make it easy on you to profit from them.  They will be as tricky as they can possibly be.  I was on bottom watch for metals starting at the June lows and the recent lows were only a tad lower.  So what has really happened since then is volatility with no real conviction of movement.  That is why we have to be so careful about the recent bounce in metals.  I suspect it will form a large ending diagonal as a way to trick the most people possible  Those who go strictly by traditional support and resistance levels always get creamed with these kinds of charts because no sooner have the shares confirmed a traditional break out than they are ready to reverse.  That's the beauty of Elliott waves: you have clear trigger metrics to go by.  They will not always be correct but since they err to the side of caution then it just means you get stopped out unnecessarily once in a while.  In fact, the waves are never wrong, it is always the interpretation that was flawed.  It missed the fact that the herd has 5 or 6 possible ways to cross the river and if you blindly just choose one of them you might have chosen a correct POSSIBLE path while missing the path that the herd actually took.

However, there are some signs to look for and one of them is that triangles are always the penultimate wave.  Also, most of the herd travels together.  So what is true for TRX will likely be true for gold, silver and other miners.  That's why it pays to look at several charts that are likely related - some features will stand out better in some charts than in others.

In any case, because of the triangle I have to count the recent rally as an a-b-c move, not 1-2-3.  This has met with first confirmation on the TRX chart because the recent dip in the blue circle at right would have been a 4th wave if this had been a motive 1-2-3-4-5 move.  But 4th waves NEVER go into the region of the first wave up.  That's why I count the left most peak as A, the triangle as B and the peak as C.

The peak also sports a declining double top and the whole thing looks a lot like, you guessed it, The Owl.

A break below the lower green support line is your final warning that the chart is breaking back down, probably all the way to the bottom of the lower channel at a lower low.  For TRX I reckon that will be about $1.20 - $1.30.  If you can get that, buy with both hands because that is a multiyear fire sale and the rewards will be fantastic.

TSLA shares now going nearly straight up:$290 and then freefall expected

The leveraged - fueled animal spirits have demonically posessed TSLA shares even as it needs to acquire funding for expansion of its operations.  The fact that TSLA will likely be a success is not in question and it never was by me.  The fact that trees don't reach the sky is what I want to warn people about.

Whenever anything that is involved with finance goes exponential, expect an eventual collapse.  The shares closed at $252 today while forming what is quite probably a 4th wave triangle.  That means that it was the penultimate wave.  Looking at the shape of the chart, it looks like it wants to form an ending diagonal with a throwover that will likely kiss te 1-3 line as shown below.  If that happens, SELL it and SHORT it.  Do not fall in love with something that is going exponential. Fight the herding instinct, suspend your emotions and trust the chart.  The chart does not lie. Everything else is a lie or a concealment or a trick.  The chart tries to be tricky but if you step back a ways the strategy of its moves is not that difficult to divine.

The next support for these shares is $115, the level of the prior 4th.  If this chart pops to $290 in the next 1-2 days as shown below, I will buy some June $160 puts for probably (at that time) $225 per contract.  What goes up must come down.  Talk about long in the tooth folks.  The whole bull market of all shares is long in the tooth.

Two likely next steps for metals and miners

After the latest move in metals and miners we are now at a significant inflection point.  Will the chart of metals and miners (USLV being today's proxy for these sectors) bounce up once more or break support of the lower trend line and head for the bottom of the channel again.

It's the shape of the 15 minute chart which leaves me with questions.  It has decided to end the day with just 3 clear waves down.  This could turn out to be a-b-c which would mean another trip to the top of the channel before turning around and breaking back down or the rally could enter confirmed pullback mod simply by breaking down below $56.  In either case I think we end up seeing a bottom channel throw under so be careful about buying the next put up to $70, especially if it gaps up a big part of that distance leaving you buying into the teeth of the reversal.  I believe the reversal will be sudden in order to trap as many people as possible who are trying to buy the breakout (panic buying).

Metals and miners - play it smart and make a bundle.

First off, I think we are trying to put in a multi year bottom for metals and miners.  I have been looking for a major peak in the stock markets and that might take until May to play out (walk away in May because of the negative January Effect that nobody has forgotten even if not mentioned in polite conversation).  So again, the broader markets may require some more time to finish their topping process but in the mean time, metals and miners are CLEARLY nearer a bottom than a top.  Buy low, sell high and all that.  Unless of course you think that gold and silver are barbarous relics and you believe that fake paper money is the new gold.  Just like Bitcon, err Bitcoin was the new gold, right? 

Wake up folks: THERE IS NO SUCH THING AS THE NEW GOLD and there never will be.  There will just be new marketing stories about how gold is dead, blah blah blah and in every case you will find some kind of mania behind it.  People will claim that something is gold-like or a gold standard but these always just turn out to be gold plated con jobs.  ALWAYS.  There is only 1 real gold.  It is the old gold, the elemental gold.  Good old number 79.  Or if you prefer, E175 of the Codex Alimentarius.

JP Morgan did not stutter, he did not hesitate and he did not lie when he said that gold is money and everything else is not.  You can literally take that to the bank.  It's dollar price can fluctuate over time but its buying power will remain about the same within a reasonable swing.  The same amount of gold bought the same amount of goods in Egyptian times as it does today.  That means that what is fluctuating is the value of the dollar, not the value of gold.  The universe does not revolve around the Earth and its green paper.  The Earth revolves around large stars which are the source of gold.  The Earth revolves around gold whether or not it is apparent to most people.  Fake, un-backed paper money comes and goes.  Always has, always will.  It does a Bitcoin flash in the pan but then always evaporates back into the ether from whence it came.  But gold is forever.  It is literally forged only in the explosions of stars that have at least 8 solar masses (8 times the mass of our sun) AKA supernovae.  It is physical and it does not corrode or evaporate and it cannot be devalued by bureaucrats with pens and malintent.

As the dollar gets nearer and nearer its eventual, inescapable, inevitable demise, it gets more and more volatile.  It is very much like the final days of a star.  That volatility plays out as its price against gold.  Gold is not volatile like most people have been taught to believe.  It is the paper that is volatile.  Failure to understand this basic point is complete and utter economic failure.  It means your brain has been overcome by the propaganda of the dollar system.  It is a very dangerous place to be, especially with your long term retirement savings.

But for day to day gambling it cannot be ignored and so back to the charts.  In this Feb 19th post, I correctly warned about resistance in the metals rally using the TRX chart as a proxy for all metals and miners.  That model so far has played out well but it is by no means confirmation.  However, the odds for this model went up considerably today since the TRX chart broke to a lower low coming off of a declining double top that occurred right on the downsloping 2-4 line.

So now, the most likely plays are as follows.  They are given not in order of likelihood but in order of confirm-ability:

1. What I labeled black 4 is really wave 1 up of the new metals bull.  So far we have only seen 1-2-3 of a new bull market.  It is just doing an a-b-c to the prior 4th and it will bounce here at the black line and then break out at the top blue circle.
2. Same scenario as 1 except that it considers the bottom of the triangle to be its prior 4th and so it will go down to the horizontal blue line and then  bounce to a higher high.
3. Wave 4 of an ending diagonal just finished, metals and miners are headed for a lower low that will touch the bottom of the channel before bouncing up and out.
4. Same as 3 except that it goes below the bottom of the channel and likely includes a high volume capitulation throw under.  #4 would be by far the most bullish setup.  Buy low, sell high.  You would at that point just buy a package of these Jr Miners and treat them as non-expiring call options that you bought for pennies on the dollar.  When gold swings up again, these things will skyrocket.  Don't worry about volatility if you buy below the lower green line. You got good value as long as you got some diversification where fraud at 1 company can't Mt. Gox you.  That is now a technical term in my parlance.  To be Mt. Goxed is to have bought into a fraudulent situation or a mania that collapsed on you, resulting in 100% loss.  It's just another way of saying that you got caught in the role of Patsy in the scam.  Hey, it happens!  These scammers are GOOOOOOOD liars!

Regardless of anything else, once that top channel line is broken you have a clear buy signal and then you set your stops just below it.  You cannot lose badly with this strategy!  But you must set those stops and be willing to walk away if you get a false breakout and then a break back down through into the channel.

Metals ending diagonal theory gets a big shot in the arm.

In this post it struck me that the best wave count would be had by an ending diagonal in the metals.  Today we saw a big break down in silver that happened right at the expected chart location.  In USLV of course it was more dramatic - 9% at one point.  This might be just the beginning.  You will know this model is bust if at any time the chart goes back up above the top green line. If it can do that then buy with both hands because a 3rd wave is breaking out and a new metals bull is upon us.

But the chart below is even better still.  If you missed the recent run in metals then sit patiently for the chart to fall below the lower rail in what should be an a-b-c, 5-3-5 pattern.  When it does, then pounce.   The recent move up for USLV was 50%.  It should give it all back and then some in order to complete the metals bear.  When it takes off again, an easy 5-6 bagger will be in store for those who patiently wait and see it coming.

Again, this is not confirmed yet.  The chart has to continue down and at least touch the bottom rail and better still, break through it.  The when it comes back up into the channel you buy and then you set tight stops just below the channel.  Then just go about your life.  If the model is wrong you will get stopped out quickly and cheaply and I will post another entry point.

It can't go down forever and the more it goes down, the richer those will be who catch the bottom.  This is why they can't let it go down too far.  They can't let you make 40x on the next metals bull.  The have to allow a rally.

Please keep in mind that today's dramatic reversal was designed to screw as many people as possible.  There is no way I would have known to look for this top if not for Elliott waves.  Again, keep an eye on that top line.  If it cannot hold the chart inside then odds are very high that the next bull has started.

Important FAZ update

The broader market rally is clearly showing signs of weakening.  But is it a head fake or are the bulls really getting winded?

The latter, I suspect, given the shape of the triple reverse financial ETF with ticker symbol FAZ.  I model the January low as a 3rd wave, the 3 wave movement into early February as a 4th wave and now we are very near the finish of the 5th wave down.  The blue ending diagonal needs to just hit the bottom of the channel and hopefully throw under it and then reverse upwards somewhere within the red circle.  That would be a text book Elliott finish.

If this happens, the next real resistance is the level of the prior 4th at around $25.50.  If this chart moves up in 3 waves to just below that level and then begins to reverse back downward then I will have to suspect that a larger triangle is forming which will go back down to the 20s for FAZ.  The play is not difficult: hope for the throw under and instead of being afraid of it, embrace it with tight stops as a crocodile embraces the small herding animal that is trying to cross the river.  If it should poke you in the eye by exceeding your stop limits of at least 3%, let it go and get stopped out quickly.  There will be other crossings, other small game to make a meal of.  You risk 3% in order to gain 20+%.  Do that enough times with success and your results will speak for themselves.

Why do we need welfare? Why do we need minimum wage? The answer might surprise you.

Money makes the world go 'round.  When real money, honest money is used then everything works properly.   The reason for this is that money is essentially a token for stored labor.  If you work harder than is required to feed and clothe yourself then, like a worker bee, you make enough honey to live off during the autumn and winter of life (retirement).  This is the natural order of things.

It used to be that you invested in a large family and the family would be your social security.  You would work extra hard during your youth in order to create and grow a family and they in turn would care for you in your old age when you could no longer work.  The family was in effect a means of storing your youthful labor to be recovered in your old age from those who are younger than you (and thus able to work when you cannot) that hopefully care about you. You would essentially trade (pay) some of your youth so that when you were old you could rely on the youth of others that you traded your youth for.  That was an unwritten but widespread social contract.  Under this system, the larger the family, the better because it left more candidates who would be young in your old age and also if momma stayed home to care for children she already lost the ability to make a salary outside the home.  So load her up with multiple children so that she did not have a life of relative leisure with only 1-2 children while the man had to go face the world.  Feeding another mouth is a small incremental expense once that outside the home salary was given up.

But the government succeeded in convincing the people that government would be a trusted source of help in retirement and the large family was no longer needed.  Instead, you would store your retirement savings not in the goodwill and youth of your children but instead in government - controlled currency.  "Trust me" they said, and the sheeple trusted.   After all, sometimes your children die after you spent years of labor raising them.  And sometimes they were simply unappreciative.  The government controlled retirement scheme would fix all of that.   Cough cough.  The people no longer care about family as much as they care about money.  The overarching negative effects of this on society are mind boggling.

While this new social contract, this new world order deal, sounded like it had benefits, it also centralized the risk thus creating a single point of failure in the contract.  Yes, under the old system some people's children would die and some people's children might be unappreciative but they would not all die at once or all hate you in your old age.  Under the new system, if the government goes down then everyone loses everything.

With an honest money system, a man's labor for a day is honestly valued, even unskilled labor.  Why?  Because unskilled labor still consumes a man's whole day and a working man's time needs to convert into enough buying power (as opposed to simply large numbers on paper bills) lest it only pay the operational bills of today leaving nothing in the kitty at retirement.  In an honest money supply economy, if you need someone to do unskilled labor such as mowing your lawn, the worker either receives fair compensation for the work such that he can feed and clothe and shelter his family on the wage as well as save for retirement or you get your own fat a$$ out there and do it yourself.  In an economy that uses honest money there is no need for minimum wage laws.  If the proposed work has no market value to a prospective worker then it just doesn't get done by a 3rd party.  You are then left to either raise the price until it is high enough to draw labor interest in doing the work OR you do it yourself OR it doesn't get done.  This is the so called free market feedback mechanism and it works with awesome efficiency and complete fairness.

Same with doing dirty work such as digging ditches or cleaning cesspools.  In an economy with honest money, instead of these jobs paying like dirt they are recognized as hard work that takes a strong man to complete in a timely fashion.  The recognition for this is to pay a fair wage or again, get your own fat, lazy a$$ out there and do it yourself.  With a fair and honest money supply, bankers and moneymen are run of the mill, just as most of them were in in the 1930's 40's and 50s.  Very few had the equivalent of super yachts, super wives, super lives.  They were not looked up to by society as being the best and brightest.  They were viewed as plodding accountants because that is, in fact, all that they ever were.

However, very top end few percent of these guys (the Illuminati elite) were smart enough to know how to kilter things in their favor.  By removing all the real money from the money supply (gold and silver coins as well as paper notes that were arguably backed by gold and silver bullion) and replacing it with government controlled, completely un-backed (AKA intrinsically worthless) paper money and then by giving the right to create temporary money out of thin air (it's called credit and debt in a fractionally reserved monetary system, AKA SCAM), we essentially gave useless, weak, pencil necked accountants complete control over the labor of our society.  Why???  BECAUSE MONEY AND LABOR ARE FUNGIBLE in an economy.  Got money?  You can trade it for labor because it is supposed to represent your previously stored labor.  But if you can just conjure money or money equivalent (credit/debt) up from thin air then you can spend it into the economy AS IF you had worked honestly for it and very few of the market participants will ever detect this fraud.  All they will sense is that their own labor does not seem to be paying the bills and generating enough excess for retirement savings.  They don't know enough about how these things work and their ignorance is used like a blunt force weapon to steal their labor during their whole working lives.

You might think that the same rules apply as in an honest money supply in that the market will determine the value of labor. And in effect it still does.  The problem is that the amount of money in the economy is supposed to reflect the amount of productivity (AKA labor) in the economy.  But when some people can create it from thin air and then spend it into the economy, the result is more money than labor (AKA productivity or production).  That excess money in effect bids up the price of goods and services.  It effectively reduces purchasing power of wages.  We call it inflation and it is government policy, not some unhappy accident.

But not all goods and services get hit the same by this.  The marginal players are those who were not born with the minds to be engineers and doctors or even scheming, useless con men politicians and lawyers.  These are your low level workers in WalMart, fast food, construction and day labor.  This group is hit the first and the worst which is why government tries to patch the problem over using minimum wage laws and welfare.  By giving these pittances out, government masks the theft of the low level labor.  All of the stolen value that these hundreds of millions of people produce goes to those who do the least to really grow the economy - elitist moneymen.  It's a racket that preys upon the economic ignorance of the common man.

Amschel Rothschild said "give me control of a nation's money supply and I care not who makes its laws.".  He said that because he knew that kings make laws and that control of a fraudulent money supply was effectively a king maker.  Got the ability to print money from thin air (either to add to the monetary base or to the credit based portion of the money supply)?  Then you are a king because it means you can effectively conjure up free labor (in the form of currency or in the form of debt) at any time.  The fake money itself is not labor but rather a fraudulent token for labor that can be traded for real labor to ignorant and desperate royal subjects at the drop of a hat because most people, perhaps even you, dear incredulous reader, do not really understand what is going on.  It means that the entire population has effectively been at least partially enslaved.

When a crafty king looks out over his kingdom, he takes note of where there is discontent and restlessness on the rise and he tries to stem it if possible and always as cheaply as possible.  After all, the king requires his subjects to go to work every day, like the slaves they are, to produce enough for themselves and enough for the king, his cronies and his jackbooted centurion enforcers.  The king knows that his position is always tenuous.  If the people would just wake the flock up and realize how badly their lives are being abused and how much harder they have to work in order to keep the king in venison, women, wine and under control of an offensive military (AKA policy enforcers, shortened to "police") then they would defenestrate the SOB and party on his grave.  So the king gives bread to the poor (minimum wage laws and welfare) when he can afford to bribe them and when he cannot afford that he sends in his policy enforcers to convince people to stay within the boundaries of the little shackled lives that he has defined for them.  You think what is going on is a new game??  There is nothing new under the sun except the history you don't know (Google that quote if you are not familiar with its source).

It is no different than a rancher and his flock.  He cares for his flock to the degree that it provides meat, milk and wool.  But if the flock ever was deemed non-useful to him then it is just culled without mercy.  The rancher does this because he believes he owns these animals.  And in fact, in our world he does.  The king does what he does because he believes that he owns his subjects.  And in fact, when people bow willingly to a king then they have given themselves into his service.  So royal subjects can also said to be property.  The money elite do it as well because they know that as long as they can keep our own wool pulled over our eyes that they effectively own us as well.  We have made bankers and moneymen our kings by accepting the fraudulent concept of fiat currency and fractional reserve banking as our currency instead of honest money likely gold and silver coins or gold and silver backed currency.

And so this is why the government uses minimum wage laws.  As their money scam begins to steal too much of the buying power of the lower classes, the affected people wail.  Then they protest.  Then they riot.  Then they storm the castle.  The the king either is made to flee in disgrace or he is killed in the streets.  So the king has to throw them a bone now and again so that the sheeple calm down and don't wake up from  the mind control trance.  Social security, welfare and minimum wage laws are nothing more than government control mechanisms which are put in place in order to keep the rabble from waking up and figuring out just how badly they are getting fvcked out of the rightful buying power and retirement security that their youthful labor should be bringing them.  Fiat currency and fractional reserve lending are fraudulent scams whose goal is to steal the labor of everyone who lives under the system using it.  When you steal someone's labor, it's called slavery folks.  When government does it, history calls it treachery and treason.

Wake the flock up (a slogan that I borrowed from www.thedailysheeple.com).

Bitcoin or Bitcon : question answered. My model was very good.

This was my first post on bit coin.  In it I wondered if it was money or a con game.

In it I wrote,"
I need to find out where to buy 2016 $200 puts on bitcoins!  Maybe these con men and others who are calling it "the new gold" will get their ETF in place in time for the final thrust so I can short it back down to reality. Seriously folks, I don't know where Bitcoins will end up and neither does anyone else.  The 5 waves that make up what I model as red 5 above might just be a massive 1st wave.  Perhaps it will only retrace 38.2% and then skyrocket into a seriously wild 3rd wave like some on the web are saying. 

But for all of its benefits, Bitcoins are not tangible.  If the government is threatened by it, the government could shut it all down literally overnight with the stroke of a pen.  Don't think they are above doing this because they are not.  This is why I love physical gold and silver so much.  Government cannot shut it down even if they wanted to.  Gold and silver are not some new, trendy, barely understood thing that government liars and thieves can easily vilify.  They cannot easily claim that drug runners and other crooks are using it to their benefit.  Why?  Because gold and silver have too much history as free man's money.

If the government made Bitcoins against the law tomorrow, lots of sheeple would be upset but they would just take the hit because government would do a great job of calling it "terrorist money" and blaming it on the ills of our "chillllllldren".  Government-believing sheeple who don't understand the significant technology behind Bitcoins would be glad to see them go because, let's face it, they are not benefiting from the existence of them.

Since the largest exchange, Mt Gox, has apparently been shut down and abandoned, I do not expect it to open up again.  Other bitcoin exchanges are still running though and apparently the bitcoin still trades for over $500 USD each.  So the fate of the system is unclear but the Mt Gox exchange was, itself, a mania.  It was brought down with the stroke of a government pen, just like I feared it could be.  And that's why bitcoin is not gold.  Government cannot just cancel gold for the good of our children.  The people would cancel the government who tries to do it.  We are going back towards gold, not further away from it. 

The reason is simple: people are realizing what foolish asses they have been to accept dollars as money and to treat it as retirement savings when government, with the stroke of a fat faced bureaucrat's pen, can render it worthless. 

"Gold is money, and everything else is credit."
--J. Pierpont Morgan, famous moneyman.

Elliott waves vs traditional technical analysis.

Every once in awhile I find it entertaining to look at someone who is making a living off of trading, selling investor advice, etc. and see if I agree with their analyses.

Enter Sam Collins and AXP.  I get his free emails which I just quickly scan.  But when his headline said AXP (American Express) was poised for a 20% gain I just had to look.  Here's his explanation about that.

The following chart is just the rally since the 2009 lows.  Note how AXP was trading at $8-$9 back then, just a stone's throw from having to admit that it is a leveraged mess that would have gone under without massive government bailouts.  Since then we have my "Ying Yang" formation.  I'm sorry Sam, but anyone buying this thing at these levels needs to get a stiff beating by the Ponzi Police for the crime of cluelessness.

Folk, this is a bank.  A money changer.  It does not add any economic value.  It just filters money through its networks.  When the credit dries up again suddenly (and it will at some point), this thing is going to collapse and perhaps even BK.  But under no circumstances should anyone be throwing money at shares that are going exponential like this.  The easy money has been made and now they are just looking for patsies to unload these worthless shares on.  That's just my opinion, I don't know that for a fact.  But it's what I would do if I were them.

OK, now let's have a look at this chart without all the noise.  First off, these Ying Yangs are 3 wave moves.  I'll count this one as a-b-c in very large letters.  They should be made up of 5-3-5.  This one is a textbook example of that.  Wave C is quite a bit stronger than wave A which is good.

Now, Sam wrote something about a bullish gap up that just happened.  I see it completely differently.  I see a massive ending diagonal that already provided initial breakdown confirmation by first breaking out of the top channel and then failing to be able to hold it and subsequently breaking back down into it. 

Second confirmation also seems to be just finishing up: the back test from below; Prechter's kiss good bye.  Imagine a pilot in an underpowered airplane trying to get over the mountains.  He's giving it full throttle but not gaining altitude.  The face of the mountain is getting closer and closer.  As he gets within 1000 yards, he panics and pulls the yoke all the way back.  The plane goes up suddenly but then stalls and falls right back down.  Still panicking, the pilot pulls the yoke back hard again but now he has bled off airspeed by his foolish move and the plane only goes up a little more than half as high as before and again, you can see the chart beginning to roll off to the right.  He's stalled it again and now he has literally no airspeed.  There is only one way to go and it's not a 20% gain.  Sorry, Sam, no offense meant.
 
Unfortunately Sam's email came out at the worst possible time.  He probably should have waited until that which I'm labeling a failed 5th (red 5) broke out before pressing the send key.  Unless this thing breaks out dramatically it will be left with a very ugly declining double top and, let's face it, The Owl.  But Sam's attitude shows the sentiment out there: oblivious to any danger, and charging like a bull into a meat packing plant.

The next stop for this will be about $70 and then we shall see what we shall see.  If another so call Asian Contagion shows up, right now, it could be the end of AXP as a going concern.  How can I possibly say that?  Well, the shape of the chart is evidence.  If you are a bank you are not inventing something new.  Your "profession" has been around as long as hookers.  There is nothing new under the sun and so no surprise outcome.  Under these circumstances you can't go exponential without leverage and this one has gone exponential.

One more thing, and it is important folks.  a 3 wave move up is not motive even if it resulted in a higher high.  It means that some much larger triangle of some sort is likely playing out and that these shares could whipsaw between $9 and $90 a couple times.  I also want to point out that manias often stop at the 10x level.  $90 is almost exactly 10x of the 2009 low.   Coincidence?  Maybe.  But this thing is too riddled with them to give it a second look for anything more that buying puts against.

Again, apologies to Sam, there are many TA people out there doing the same shoot from the hip analysis.  They look like geniuses until the trend changes because they are all trend followers not trend predictors.

My new master $COMPX model counts very well.

I have a model for how I think the $COMPX is going to play out leading into my suspected "walk away in May" market given the negative January effect.  I have to say, the count works out perfectly and I have not seen anyone else's work that looks like this.  Of course, I try not to look at other sites too often for fear of getting contaminated with someone else's bad count.  It will be quite something if the $COMPX plays out like this.  Note, the length of that last red move up was not selected at random.  It is the same vertical length as [1] is in the diagram.  That which is shown below is just the C wave of the 2009 rally.

One significant hint that this is the right model is that expanding triangle leading up into red [1].  That tells me the move was a 3 wave affair up from blue 4.  That dramatic wave 2 pullback that had an a-b-c shape to it gave way to a dramatic impulsive move that hardly had any wiggle at all to it. That wave is now losing steam very rapidly right as it reaches upper resistance.   I now expect the next down wave to be upon us very soon and it should be a doozy.  It should go down and touch, but not throw under that lower green support line.  Then, the final wave up should take the markets up rapidly BUT more than anything, I expect the miners and the metals to skyrocket on that 5th wave move.  Some of the smaller players will simply double during that time.

After this, I expect a very significant break down in the markets.   As in lower lows than the bottom in 2009.  Perhaps a much, much, Prechter-loving low.  Don't know what I'm talking about?  Read Conquer The Crash by Robert Prechter if you want to know.

I'm hoping metals will show strength during this time as a way of showing the world re-monification but that is just a completely untested theory.

AAPL shares are ready to collapse.

Check out the model from my last post on AAPL.  Despite the NASDAQ having recovered to new highs, AAPL shares are simply retesting the outer ending diagonal in the chart below (shown by blue lines outside of the original ones which I redrew in red in order to make them stand out better).

LOWER HIGHS and LOWER LOWS spells big trouble for Apple.  The company is screwed and has no new innovation now that Jobs is gone.   The soul-less bureaucrats running the place are just coasting, at least from a consumer perspective IMHO. 

These shares are at great risk of a mighty gap down in the coming months (one that will make the last one look tiny).

And so I will repeat one more time for those in the cheap seats: stocks have big value only if they pay a big, stable dividend.  That would be a very, very small part of the stock market.  The rest of it is a massive, margin leveraged DEBT PONZI.

Alcoa update [AA]

My last few posts have been bearish on Alcoa and indeed it has not behaved well since it put in its 5th wave up.  The shares are signaling significant short term distress is right ahead after having gone up too far too fast.  What we see below is the initial declining double top that spelled trouble followed by a break back into the channel (1st confirmation that the expected A-B-C retracement is under way) and then a back test of the upper channel line from below to create, at least so far, an even larger declining double top.  This is looking very much like Owl Ears getting ready to drop off the right hand side of the chart.  Because that 5th wave was so extended, the pullback should be pretty dramatic as shown.  While it is nice to side step this sort of action if you can see it coming, it is part of the normal expected way of things for a new bull market in commodities (AKA inflation).  Nothing goes straight up or straight down.  Alcoa will still reach $18 within 18 months of my original call IMO.

A break back through the top of the upper channel negates this model completely.  But I give that pretty low odds.  Also, I don't think AA will be falling all by itself.  I think the broader markets will pull back as well and that includes gold and silver and miners.  Time will tell.

Pan American Silver (PAAS): Knocking on Heaven's door (but wait for the dip to buy!)

Here is my first post ever on Pan American Silver (PAAS).  It's not that I didn't know about the shares that I didn't write sooner.  It's that I didn't like the chart until just recently.  In that post I correctly identified a major bottom.  I continued to watch the shares and then recommended it as a buy in this post.  I knew the shares were going up so I posted the price right in the post title: $11.62.

Since then the shares have skyrocketed.  Here's the monthly chart.  It really doesn't look like "skyrocketing" if you just eyeball it, but folks that is a 50% move from the exact bottom and 33% from where I unequivocally called it a buy last month.  That's quite a move IMO.

I believe that PAAS is in a new bull market.  I believe that, because it is a profitable, dividend paying company, that it is being appreciated more than other metals plays.  That is almost panic buying you are looking at right there.  Also, this move, if it can hold and not make a lower low, would form a powerful multi year inclining double bottom.

Of course nothing goes straight up or straight down.  At least not for very long.  These shares are volatile and so when you get such massive profits so quickly you have to be expecting a pull back.  That light green ascending line near the bottom of the chart is the same lower green line in the monthly chart above.  It should serve as major resistance.  I do not expect the shares to break through on this first wave up!!  I expect them to kiss the line and then fall back and then come running at it in a screaming, gapping up, full on rebel yell that smashes the shorts and sends them screaming to cover their bets.

By comparing a higher quality outfit to the more speculative ones I think we can also make another statement about the state of the silver bull market in general.  I expect that the low or no dividend miners could be headed for a lower low right now.   I think they could be playing out an ending diagonal.  While PAAS is ready for a significant pull back, it does NOT look like an ending diagonal.  That means the next PAAS pullback would be a wave 2 while all the other silver plays I have mentioned in this blog are really just finishing their 5th waves.  In other words, because it is higher quality, PAAS is likely a good leading indicator of the new metals bull.

So if PAAS pulls back only per the blue model (less likely but hyper bullish) while the other miners auger into their 5th wave throw under ending diagonals, then you can be quite confident that the metals and miners bear market is over.  This is called bullish non-confirmation and it is a major, major signal.  Alternatively, PASS could pull back to the 61.8 fib on the low side @$12.  IF you are so lucky to see that and IF the wave pattern is an a-b-c pullback, buy-buy-BUY with both hands because the next thing will likely happen is a 3rd wave explosion upward.  

If this pulls back and breaks out as modeled above then the next major resistance would be the level of the prior 4th which is the heavy green line at the top of the chart.  If you buy at $12, that's a double before mid year folks.  It does not get any sweeter than that.

More thoughts about stocks and gold: when and how might they diverge.

Right now, gold is up with stocks and gold is down with stocks.  I want to have at least this short post in place to mark this single thought: what could be the cause of the coming divergence that the charts suggest to me is coming?  In other words, why would stocks go down while gold (and miners) go up?  This is related to my long standing thesis that gold and the dollar will at some point an for a time reverse their long standing relationship of dollar up gold down and gold down, dollar up.

We all look at all the printing that the fed is doing and all the debt based government that we have been running and it makes some people worry about immediate hyperinflation. I do not see that happening.  I think that low interest rates in the dollar and easy lending policies aided by government corruption have enabled others to borrow dollars cheaply and go invest in 3rd world nations.  That borrowing was effectively a naked short of the dollar and as those bad investments collapse, including many in Euroland and Japan and in China, the dollar will have a period of strengthening.

A stronger dollar means that less of them should buy the same amount of stocks.  In other words, much lower share prices.  But it is also supposed to lead to lower gold prices.  Right now the gold and silver charts do not support that outcome.  That could change but for now, it is what it is.  So something geopolitically important would have to occur in order to get people to care more about gold and to effectively remonify gold.  And this would happen while the dollar is gaining strength against the likes of the Euro, the Yen, the Ruble and the Aussie dollar.

The one geopolitical event that will boost gold under these circumstances is war.  I hope the jerks who makes these decisions all die in their sleep before they decide to go to war, but we will likely not be so lucky.  Bankers always push politicians into war when their debt Ponzi is collapsing because the destruction of economic productivity done by bullets and bombs means that lots of bank loans will have to be taken out after the war to rebuild. It is the elitist concept of Creative Destruction and the sheeple, who have no idea what is really going on in the world or why, always seem so ready to go die for the bankers.

If this sounds like hyperbole, forget not the famous words of Maj. Gen. Smedley Butler who warned us repeatedly, clearly and in the writings of a first hand participant that war is a racket.  Who runs a racket?  ORGANIZED CRIME.  War is just another criminal operation of the organized crime cartel known as BIG GOVERNMENT.

If a major war breaks out, buy gold and the miners, period.  Oh, and hide your children. They will be coming for your children.  Don't let them get their hooks into your children because we are warned far in advance that WW3 will be a doozy.

"I do not know how the Third World War will be fought, but I can tell you what they will use in the Fourth — rocks!"
---Albert Einstein, in an interview with Alfred Werner, Liberal Judaism 16 (April-May 1949), 12. Einstein Archive 30-1104, as sourced in The New Quotable Einstein by Alice Calaprice (2005), p. 173. 

Very interesting divergence forming.

This is still in the very preliminary stages but I think I see a classical divergence forming between stocks and the VIX.  The relationship is normally, stocks up, VIX down, stocks down VIX up.  That's what makes the following two charts so interesting.

TVIX is the triple daily VIX.  It is a short seller's dream in a bear market.  Look at how the small bear dip of January doubled the price of these.  It is also a short seller's worst night mare when the chart goes against them because almost all of the gains were given back up in short order.

But therein lies the interesting part.  The key word is ALMOST.  When you connect the lows it is starting to look like higher lows.  That is very, very interesting!  It is interesting all by itself but even more so when you look at the S+P 500 chart below it for the same time frame.

Unlike the NASDAQ, the S+P 500 has not made a higher high than the January high.  In fact, it currently sports a lower high.  In fact, if something doesn't change rapidly next week, it will also be sporting a declining double top.  I would have expected at this time for TVIX to have a lower low even though S+P did not have a higher high.  Why?  Because TVIX bleed value quickly with time.  They are based on short term options and options bleed value with time.  So in the last month's round trip, TVIX should have put in a lower low. Not only have they not done that (yet), the inclining double bottom that they currently show is of a higher angle than the declining double top of the S+P.   So the shares of TVIX have effectively gained ground in that time frame, not lost it.

This suggests that a bearish undertone is still present and ready to expose itself, perhaps with rapid onset.  All bets are off if TVIX puts in a lower low that is not part of an ending diagonal as shown above.

TRX Update: short term reversal very possible.

In this post I saw the bottom for TRX being put in.  Since then I've watched the shares climb like wild fire.  But my broader view is that metals and miners are most likely in the 4th wave of an ending diagonal which means 1 more wave down to a lower low, probably on high volume, probably with a throw under of all the metals and miners charts.  If it plays out like that it will be a major buy signal, especially for the junior miners.  If significant global conflict breaks out, the metals and miners will likely be viewed as safe havens given the beatings they have received over the past several years.

So, while I think miners are close to the bottom, a hand grenade will still kill you if its just close when it goes off.  I suspect that the C wave is close to playing out.  It is already about 130% of the A wave.  Also the last a-b-c dip went into the region of the prior wave which is never a good sign.

We should know very soon.  I suspect we will see a small pop on Monday to around $2.60 and then have a very tough time staying above the green down sloping resistance line.  The wave formation we were left with at the end of last week could also just be a declining double top that collapses on Monday.  Either way, be aware of this short term bearish potential because, while it will indeed be short term, it could also be a huge loss in terms of percentage.  If it happens, however, all it will do is make the next moves up that much sweeter because the next move down should in fact be the 5th of a 5th.