Monday, June 30, 2014

Intel update.

Here is my prior Intel post.  Instead of finishing with a 3 wave a-b-c as expected, Intel turned into an ending diagonal with 5 rail bumps.  Not only that, but the throw over has been a doozy.  The stock is now going nearly straight up.    I think we all know this is not going to last for very long.  I think we are within a couple of days of the peak (just in time to roll over and crash after the holiday break).

Choppy action is always difficult to put a good count on but we are now getting some really good hints on where this is going and it looks like an ending diagonal to me.  One hint is that a of 5 came close to the top rail during the A wave but then took a step back into the B wave in order to get a running start at it with the C wave.  Another hint is that there is a huge gap in the count, obviously the work of 3 of C.  I suspect that the triangle I bracketed near the very top is 4 of 5 of C.  20-30 cents more and it should be complete.  That's when I expect a rapid turn around as all of these new hands who bought in at nosebleed prices will get caught leveraged and long.  Remember - these prices are not coming from earned money but rather from borrowed money chasing them up.


 The volume chart tells the real story on Intel shares.  Since 2008, volume has been on a downward skid and the recent rally since late 2012 has done nothing to change that.  There is clearly declining interest in this stock.  When it rolls over next week I expect to see volume begin to spike again as the recent weak hands fight each other to get out of the shares without taking a loss on their recent purchase of this "kant miss" stock.


Some of these big techs are rallying for no good reason.  I guess some people believe that hyper inflation is going to accompany the rising interest rates and they want to be buying up the commodity stocks (hey, computer chips are certainly a commodity these days...) before chip prices go to the moon.

Sorry folks, I don't buy that logic.  Poor people do not buy high end chips and Intel's bleeding edge fabs cost many billions of dollars.  Besides, if business was all that good, then why did Intel stop construction on a new $5 billion factory back in January?  The last time I saw this was, umm, oh yeah, that's right. It was back in 2001, just after the trap door opened on the economy and on the stock markets.  They stopped building a huge Austin development center which then sat idle until it was demolished several years later.  How much do you want to bet that Fab 42 in Arizona never opens?  Maybe they should never have gotten "Obama's blessing" on it back in 2011.  Everything that con man touches turns to $hit.  Not necessarily because he is actually any worse than the crap con man presidents before him but rather because he took the job as the con grew long in the tooth.  Like Yellen will be remembered as the disposable fed, Obama will go down as the disposable president. 

Obama's corrupt IRS is about to crumble.

I predicted some time ago that the end times for this debt Ponzi would be marked by the collapse of significant aspects of government in the same way that organized crime always ends up being taken down: by internal members rolling over on each other.  When Congress caught the lying scum Lois Lerner and tried to get her to testify, she took the fifth but only after professing her own innocence.  It was obvious at the time that, if forced to come clean, Lerner would just say "I was following orders from above" which is exactly what the hounds want to hear.  In any case, taking the 5th did not put the hounds off the scent, it only made them know that there was fire behind the Lerner smoke.

Next we saw, in rapid order of occurrence, Congress floating an amnesty deal to Lerner for rolling over but before she could even cop to it, the IRS stepped in and said she had nothing to give them because all of her hard disks with emails had been destroyed "by accident".  Never mind that the government uses outlook connected to Microsoft Exchange servers and that all emails are stored on the central server with full tracking available.  Never mind that with this system no emails are lost if someone takes a sledge hammer to her hard drive by accident.

So, here we are in the process: Congress has asked nicely, and then not so nicely, and then tried to use legal means to force the production of damning evidence.  All of these were side stepped by a morally corrupt Obama administration which is now running for dear life from the hounds.  So what's the next usual step in taking down the organized crime ring?  Oh, yeah, that's right.  Offer a fat, retirement-assuring wide open, no questions asked reward for anyone to anonymously produce the requested evidence.   This generally works given that such a reward would also offer immunity to anyone who complied and provided the missing emails.

And so, I see that Bill Flores (TX GOP rep) has introduced a bill to fund a bribe to any complicit whistle blower who will roll.  What's more, Flores wants to cut IRS salaries by 20% until he gets the info he is demanding.  Sorry, Obama, you are running out of time when the hounds begin to offer this kind of cash to anyone who will tell the truth and produce the goods.  All those IRS folks who thought it was funny that Lerner could just defy Congress can laugh out of the other side of their mouth if this bill gets passed and 20% pay cuts kick in.  Will it go that far?  Who knows.  But it does show a certain level of determination that we have not seen in Congress for a long, long time.  Below is what he wrote in a constituent email today:


Finding IRS Emails
The House continues to investigate the IRS political targeting scandal. The latest turn in this nightmare is that the IRS says it is unable to recover former director Lois Lerner’s emails because her hard drive crashed and was recycled without backups being made. I find this hard to believe and very convenient that the IRS is unable to turn over any of the communications from the central figure responsible for the inappropriate targeting of conservative groups.

It is time to hold the IRS’ feet to the fire and for them to come clean about Lois Lerner’s involvement. To do this, I introduced the Identify and Recover Sent (IRS) E-mails Act. This bill would award any individual or group who can recover Lois Lerner’s lost emails $1,000,000 and award $500,000 for information regarding the destruction of the emails that can be used for prosecution of the individuals involved. These rewards would come from amounts appropriated in the IRS fiscal year 2014 budget. Additionally, until the emails are recovered and turned over to Congress, this legislation would cut salaries at the IRS by 20%. I remain committed to uncovering the truth and ensuring that all federal agencies are working to serve the American public with integrity, fairness, and transparency.


Hey, Obama, if you have nothing to hide then you have nothing to fear, right?  Isn't that what you like to tell we the people all the time, you two faced POS con man?  First we real conservatives will bring your corrupt organization crumbling down and then we are going after the Bush administration.  And to top it off, the federal reserve is going to be disbanded before we are done with you bastards.

Another blow to nanny state liberalism: Hobby Lobby kicks Obama's ass.

The supreme court ruled today in favor of conservative Hobby Lobby whose Christian owners were opposed to being forced to provide contraception as part of the Obamacare mandate.  This is another blow to the nanny state liberals who are trying to micromanage all of our lives and to force corporations to follow ridiculously invasive and detailed laws in the management of their workforces.  Of course, if left unchallenged, the myriad rules will eventually lead to punitive court action and fines and political targeting of corporations who do not agree with whatever government is running the con.

I expect Obamacare, which is an unfunded wealth transfer from the working class to the poor, sick and elderly (with appropriate taxation and fines taken in by the government on every transaction), to eventually be repealed.  Obamacare was the liberal shark jump of the decade and Dear Leader will forever be hated for screwing up the country so badly with his signature program.  First we need to kick Obama's ass out of the white house and undo all the damage that he did.  But, to show that I am fair and balanced in my views, we then we need to go after GW "911" Bush and Dickh#&d Cheney for being traitorous war criminals.  If it makes him feel any better, Rumsfeld can pull the lever on the gallows for Bush and Cheney before slipping his own noose on.   See?  I show equal disgust for both sides of the con.

Philip Morris "debt addiction"

A new article in the Financial Times praises Philip Morris for an "admirable" financial model that resulted in a "Nice model, smooth results and a stock that has outperformed over time."  However, the article also goes on to say that "Since the end of 2008, the company has spent $56bn on its own shares and dividends, and generated $43bn of free cash flow. The gap shows up as a $14bn increase in net debt."

OK, so Philip Morris basically saw the debt world begin to implode in 2008.  So what did it do, hunker down and go conservative?  Naw.  It leveraged up!  It began borrowing money in order to reward shareholders (cough cough top management) with unearned buybacks and dividends.  So now look at its debt to cash position:

Balance Sheet
Total Cash (mrq):1.82B
Total Cash Per Share (mrq):1.16
Total Debt (mrq):29.68B

Does this look like a good idea?  Borrowing money so that your business is leverage debt:cash 15:1 not in order to expand operations but rather to buy back stock and pay dividends?  Folks, this is what CEOs do when they are winding a company down!  They gut the sucker and leave nothing but a shell company with no forward prospects and tons of debt.  The article says that all earnings increases over the past several years have been due to price increases in the face of flat sales.  In other words, the younger generation is not smoking at the rate that the boomers did.  Philip Morris sees this tidal change happening.  They were not allowed to market to young minds sufficiently during the formative years and so they lost a whole generation of addicts.

Philip Morris is screwed and management knows it.  They are going to have to stop using debt to pump up their stock just when the market is entering a down turn.  I sense that a trap door is about to open for PM shares.

Sunday, June 29, 2014

CMG update

In my prior post on CMG I recommended to go short at $550.  That was obviously too early.  Still, I do not think it was the wrong call and if you are short this then consider doubling down at these nosebleed prices.  If it goes above $600 then I would cover and that is only a few bucks from the current price of 596.18.  But look at how the chart is respecting that resistance line as clearly seen on the right hand zoom in chart. 

This was a second wave vee bounce which should proved to be easy money for a new short.  IF it can go higher than the old high then the count is all wrong but I would not even stand for a move above the trend line.  The loss would be measured in fractions of a percent whereas the gain will be huge in shorting this.  It will go to the level of the prior 4th best case which is $240.  You do the math.

[PCLN] update

Here is my previous post on Priceline.  Below is the current count.  It looks like a breakdown of the support line that has been in place since 2013 as followed by an obvious, vee shaped back test from below.  I think wave 3 down has begun and that we should be seeing a nice gap in the chart most riki-tik.


Amazon update

Here is my previous post on AMZN.  As you can see from the lower chart in that post, I modeled that AMZN would break down below the top rail and then re-test it from below.  It took the power of a 3rd wave to break down the top rail and then it was back-tested from below both by black 4 and more importantly by blue 2 (an a-b-c to the level of the prior 4th).

At 20,000 feet, the chart looks like 5 wave up but when I zoom in I can see a 5-3-5 pattern.  That coupled with a kiss of the new resistance from below and having peaked at the level of the prior 4th makes me wonder if AMZN is not trying to pose as an impulsive wave up when in fact it was corrective.  Time will tell but the call on this one is easy: cover shorts above $340 and let it play out.  Personally I think it is done.  I think retail sales is the first thing to go in a recession (which we are no doubt already in) and AMZN is not immune to this. 

This is a good short entry point for new money because the distance to the bail trigger is so short:  1% would be $34 and that would take you well above the recommended bail point.  Short it now and if it gains $17 from here, cover.  What could be simpler?  It might not work out and if not then you lose almost nothing.  But if my count is right, AMZN is ready to collapse into a 3rd wave down.  So this is an asymmetrical bet of the smartest kind even if it doesn't eventually work out.  It's about odds, not certainties and that's why they call it gambling and not winning.


So, how about that sunspot indicator, anyhow?? More mind blowing stuff....

In this post I probably turned a lot of readers off by exposing them to the concept that cycles might just be some kind of built in feature in the universe and that our cycles here on Earth as connected members of the universe might somehow be related to something much larger.

The main predictive chart model from that post is reproduced below.  Note how I unabashedly stated that it was an ending diagonal in the 5th wave throw over according to my Elliott wave count (as if that should have any damned thing to do with the workings of a star for Heaven's sake....):


Still, having seen the Elliott wave principle in action so many times in so many places already, I felt confident enough to post such nonsensical drivel for all my friends, family and strangers to read.  One thing I have learned is that one man's drivel is another man's vision.  This time it looks like the chart is siding with me.  Immediately following that ending diagonal call, the ending diagonal broke down suddenly and the chart squirted significantly lower.  This break down confirms that the ending diagonal was the peak of this cycle.  According to decades of correlation, the stock markets will soon follow suit.


In another bit of related EW fun, I posted the chart of my monthly blog hits when it hit 50k total hits back in this post.  In that post I decided to try a wave count on my hit rate.  The chart model from that post is reproduced below.   It clearly modeled that I was working on 5 of 3 after which, by EW rules, it should see an a-b-c decline.



Fast forward to today.   There are two interpretations.  The first is shown below: my hit rate is now working on 5 of 1.  If this is in fact the correct model, I should see the monthly hit rate easily surpass 6k and then take a big, vee style a-b-c breather into wave 2



The second is that what I labeled as red 5/black 3 is really only 1 of 3 that is of the same degree of the first peak back in 2008.  If this is the case then expect a massive jump in my hit rate over the coming months going into Q3 with no big pullback (yet) like that one modeled above.

The herd tends to tune into media sources that reinforce what is it thinking about.  What liberal likes to go listen to conservative talk radio or vice-versa?  Herd-think becomes self reinforcing to the point that it doesn't even want to consider anything that does not align with the current world view.  This has been true all throughout history which is why Galileo's support for the heliocentric theory got him into trouble with the Roman Catholic Church. In 1633 the Inquisition convicted him of heresy and forced him to recant (publicly withdraw) his support of Copernicus. They sentenced him to life imprisonment, but because of his advanced age allowed him serve his term under house arrest at his villa in Arcetri outside of Florence.  

Politicians know this which is why they pander to the whims of the polls.  My message has clearly been cautionary toward the long side up until about 8 months ago when it turned into more like a general warning and then more recently a clear and focused warning about the economic and market turn which I now think is upon us.  Since hit rates have clearly been increasing during this time I can only conclude that an increasing number of the herd are thinking the same things they read in my blog.  These turns tend to be exponential in nature and so this second model could prove to be the correct one.  If the market begins to collapse my hit rate should skyrocket into a 3rd of 3rd.

Personally I don't care much about hit rates because I don't have any ads on this site to make money off of (despite a significant time investment) and I never will.  Fuck the establishment and their click view counters.  I don't need them.  But it will be interesting to see if the EW principle holds true over my hit rates because it will provide yet another bit of evidence that says there is something intrinsically true about the principle even if we do not have the eyes to see it yet.  Some day, I think, we will.

Adding perspective to recent EWI marketing tease video.

I suggest you watch this short youtube video from Elliot Wave International.  Before you do, I will apologize in advance for the smarmy narrator, Bob Stokes.  The guy sounds like he is telling a bed time story to children.  I guess they think everyone out in the public is an idiot.  Or perhaps they are just playing the odds and in that case they would probably be right.

In any case, the video tells some truths which I want to make sure everyone understands fully.
  1. There is an unprecedented "wealth gap" between the very rich and the rest of us.
  2. Most of this "wealth" is paper wealth: accounting entries.  Yes some of these wealthy do trade their overpriced paper wealth in for hard assets like big houses, etc. but most of them keep their wealth in the system because they believe in the system.  Many of them make the mistake of chasing after art, much of it too new to even be notable, without understanding that when the money supply contracts art and diamonds will be the first things whose inflated values collapse.
  3. Similar circumstances were in place in 1929 and the crash through '32 "redistributed" the wealth again. 
In truth, the wealth back then wasn't really redistributed as Stokes suggests.  That wealth was simply the bloated valuation of assets whose prices had been chased up by a rapidly expanding money supply.  The monetary base was not the big culprit back then just like it is not the big culprit today.  It was and is the credit portion of the money supply that created all of the asset value bubbles.  When the credit disappears so will the fake valuations of their stocks, their bonds, their mansions and everything else that is not a hard economic asset.

Since the rich were the main beneficiaries of the credit expansion (having gotten first and most access to credit early in the game through their corrupt connections with lawmakers and others in cahoots with the federal reserve), they will be the most affected when the credit collapses.  You think the humble work-a-day Mexican laborer is going to give a shit when the stock market collapses?  NOOOOOO!  They do real work for a living.  They build real things, hard assets.  Their needs are few and they live within their humble means.  They did not trade off the old social security net of a large family for the new, fraudulent, un-keepable promise of retirement age security guaranteed by government and paper assets.  The meek shall indeed inherit the Earth after the collapse.  The pump has benefited the rich and hurt the working classes.  The dump will dump for everyone but the workers will recover very rapidly and then the used-to-be-paper-rich can mow their own fucking lawns and fix their own fucking cars.  

Bottom line: fiat currency and especially fractional reserve credit are indeed, as I have written many, many times in these pages, essentially a naked shorting of human labor.  The collapse of the fraudulent money supply will be a short squeeze on the money elite who have been shorting us.  They need us a lot more than we need them.  This whole idea that working people will not be able to work without some monied elite overlord class to guide and direct us is fucking hogwash.  We don't need them at all!  We do all the work, they get all the benefit.  And then in order to quiet the workers, they increase inflation and raise minimum wages as if that fixes everything.  NO!  It just makes gas and milk $8 a gallon and a trip to burger king for lunch starts to be $18 out the door.

We need to get rid of the fake money supply in order to actually receive the buying power in our wages that we worked to earn.  This is the message that they really do not want us to understand.  How many people in the world do you think understand this?  One in 10000?   Precious few to be sure but this will not be the case much longer.  I'm watching for signs that the truth is spreading across the herd.  When it begins to do so, it will move literally like wild fire.  The people will not be happy about it when they finally wake from the slumber induced by the credit drug.  They will blame everyone else except themselves: Mark and Patsy, USA.

Con men at BIS getting nervous, now sounding the warning bell...

As proof that the con men watch their models carefully and then do press releases to show everyone their concern after of course the damage is already done, the BIS just released their view that low interest rates "could" destabilize the global economy "permanently".  Of course, they are just trying to save face.  If you have been reading my blog for any period of time at all, you will recognize this as another con.  They know what is coming and they always knew how it would eventually have to turn out.  This is why they have been concentrating power, building militarized police forces that thing nothing about killing 80 year old innocent citizens in their beds and then telling us it was within department policy to do so.  This is even after they were caught in the bold faced lie that he approached them with a gun.  They now simply make it up as they go along.

It is nothing but blatant intimidation.  It is an old tactic and has been used many times before in the past on populations during the collapse phase of the con.  It is all they have left now that the people have lost faith in the government.  Anyone who thinks a soft landing is possible is smoking crack.  It cannot happen at this point.  They have distorted economic reality so far that a simple reversion to the mean (never minding the likely probability of an undershoot) is going to put millions of people in the position of "have nothing left to lose". 

As a result, there will be vastly increased crime, civil unrest, and possibly even civil, international or global war before this is over.  This is the real problem with the pump and dump money supply: the con men have to cover their tracks with "creative destruction" and it costs many, many lives to do so.  This is why their actions are not just criminal but rather rise to the level of crimes against humanity and outright treason.  This is why the death penalty should be considered for each of these banking elites after the shit hits the fan.  Jail is not good enough to send the message decades forward like it needs to be.  Regardless of what I think, something drastic will happen along these lines because the seeds have already been planted. Once the sheeple wake up there will be little place for the con men to run to.

So please, after the damage becomes apparent to people, tell them to forget all the reasons that the establishment will blame it on.  Tell them that yes, many people did see it coming and that no, it was not an act of God or random chance.  It was in fact an act of man, by man, against mankind and the silent weapon used to perpetrate it was nothing other than a fraudulent money supply consisting of fiat currency and fractional reserve banking.  Everything else is noise designed to overload our brains and confuse us.  Be not confused in the coming years.

Saturday, June 28, 2014

Boeing update

As modeled in my previous post, Boeing Aerospace is now in virtual free fall.  Right now it could be counted as an a-b-c and in fact I think a lot of traders are buying this dip since it has worked so many times over the past 5+ years.  But that ending diagonal strongly suggest that both engines have flamed out.  One more wave down will cinch the diagnosis.  A trip down to $126 or lower from here will mean that 5 waves down have occurred and that will be a motive, not a corrective move.  In other words, confirmation of a new bear market in Boeing.

TNX update: rates are ready to rocket.

Check out the TNX model from this previous post and compare them to the current chart.  Rates have now bottomed into C of 2.  Following that, 1 of 3 and 2 of 3 have also played out.  Wave 2 of 3 was the typical ending diagonal 2nd wave which results in a vee style retracement.  The ending diagonal has now broken out the top rail in time to begin rallying next week.

Do you think trading computers are not watching this in real time??  Do you think that they will not lighten up their leverage as they see interest rates go up?  Such an idea would make no sense based on what we know about record margin debt being employed in order to buy stocks on the NYSE.

Tell your family and friends that The Cap'n says the debt Ponzi is about to begin the big roll over.  Tell them to look for the first 300-500 point down day on the DJIA and to use that as their sell signal.  Tell them that the target price for the DJIA is sub 4k.  When they finish laughing at you you will know that the collapse is upon us because their pride will mos def go before their fall.


Friday, June 27, 2014

DJIA - the big picture

It's good to regularly step back and look at the big picture.  The DJIA chart below is now sporting a very solid looking throw over of that huge expanding triangle.  Forgetting the detailed wave count for a minute, this throw over has the right look to it that supports the idea that it has peaked. 

Could it go higher?  Of course.  If I thought it was impossible to go higher then I would not be in skittery mode on TVIX.  I would buy and hold without using stops.  Models are just models.  Mine have gone bust on many occasions.  But they still have value because at least they tell you when you counted incorrectly.

Even the sophisticated models used by LTCM were wrong and those in use at the federal reserve have margins of error.  In fact, what do you think they are referring to when top dogs in the government (especially the military) talk about they "danger of miscalculation" by the other side?  Gut-feel style judgment calls do not use any calculations.  War games, political gaming theory, and other statistical games use models which are nothing except calculations.  They run on computers, not in the flawed minds of humans.  Don't kid yourself about this.  Despite appearances, the world around us is growing less and less random as our technology increases.

When that upper rail breaks down, look out below.

TVIX fish tail.

The DJIA continued its retracement today and so TVIX meandered down instead of breaking out.  Soon enough folks.  Likely late Monday or early Tues we should begin to get some movement up and it bothers me to say that because we generally do not see the start of a sell off begin right before a holiday.  Time will tell but I think we are 1-2 trading days away from seeing some early market fireworks begin to go off.


DJIA update - will they be able to maintain normalcy until the holiday break??

In this post I modeled DJIA action that matched today's Dow chart pretty well.  Per the standard EW model, we should expect some kind of 3 wave move back to the level of the prior 4th and that is about what we got.  From the count of the current wave, I think it is probably only 3 of C so it should take take the red path, meaning a sidewaves move for most of the AM with a small 5th wave move up into the close.  My secondary count is to take the blue path as shown.  Either way, anything above 16900 should put us on the alert and above 16980 we should cover our shorts without a moment's discussion or any further thought.

Thursday, June 26, 2014

DJIA update

Now that we are getting more data, I think what has played out is as shown below: a giant ending diagonal on the DJIA covering the past 90 days.  As I have noted multiple times in these pages, sometimes these "ending diagonals" have a failed 5th wave that ends mid channel. 

Since then, it looks like 5 waves down into red 1 followed by some part of 2 which is hard to discern at this high level.


Zooming way in, the C wave is likely over or nearly so (within 10-15 DJIA points).  I would have preferred a perfect kiss of the 38.2 from below but I think a move back to the 61.8, while possible, is lower odds at this point.   We will know a good deal more tomorrow. 

 
The herd really doesn't want to plunge into the river that it has to cross in order to go south.  It senses danger in that path and it knows the water is full of crocs.  But at some point the herd does have to head south for the winter that is coming and the early wildebeests at the banks are being pushed into the waters by the mass of bodies piling in behind.  Each time the herd has wanted to cross, there were just too many crocs out  in the water.  As the herd moved up the river to try another spot, the crocs have moved as well.  Again, this is a king and a rook vs. a king.  The game can be stalled a bit but only through mistake of the K+R side can the game become anything but a win.  

We crocs that are still alive and still following the herd; 
We crocs that haven't thrown in the towel like Dennis Gartman and Hugh Hendry and many other of their exalted ilk, 
We sun-hardened crocs who slip under the water and move off, but never far off, each time someone on the banks throws a rock in our direction; 
Yes, we crocs will have our day and soon.  
And when we do such a feast it will be as few have ever been before.
 

TVIX update

Here is a link to a recent post on TVIX.  Bottom line is that the jury is still out but the 5th wave ending diagonal model is losing steam $3.00 is looking more and more like the bottom.  They better leave it as the bottom if they are smart because I think many are playing it skittish like me and will quickly sell out if $3 is broken.  Then we will snap it back up after the wave count ends much lower.  In other words, we are just laying in wait for lower prices HOPING they will come.  And so most likely they will not come. 
 
I am traveling on business right now with no time during the day to look at stocks.  So I set my stop on TVIX yesterday night at $2.99 and they could not take me out today.  Now that I look at the chart, they tried like heck to do it in the morning but they could not reach down that far.  Most people would be surprised by that but I am not. 

Why?  Because I was modeling this ending diagonal as a 2nd wave and in order for that to be true, the chart could not go, even for a second or even by 1 penny, below the Tuesday low of $3 which would have been required to take out my stop.  This is not to say that I KNEW it would not go below.  If that were true, why bother with stops at all?  No I did not know for sure.  But my leading model suspected it and so I am not surprised it held and the fact that it did, by only 1 penny, suggests that that ending diagonal was indeed a 2nd wave. 

Please consider this: if they had taken me out they would have had to commit to another sizable (percentage wise) wave down.  For example, it would have been something like the ending diagonal model I pitched here. It just wasn't worth it to the market to put me on the sidelines for.  Trust me, there are computers out there that are running game scenarios 24/7 on the stock markets.  They know exactly where "max pain" for the little guy lies.  They know how the emotions of the herd work better than the herd does.  This is how they make so much money for doing so little.  The reason that the concept of stock markets will eventually fade into nothingness (which is where they came from in the first place) was explained clearly by the WOPR computer in the old movie "War Games": "the only winning move [for the herd, not the bankers] is not to play."  The coming collapse will screw so many people so badly that the whole concept of "stock market" will cause good men and women to spit upon hearing the term.  Warren Buffet's legacy will be as "that con man of con men who convinced us to put our money into the grand Ponzi scheme". 

In any case, here is my updated TVIX model. I am keeping my $2.99 stop in place and I double dog dare them to take me out so that I can buy back in even lower.  Instead I think we are more likely to see a gap up tomorrow:





A bit early to look so far ahead but it pays to be forward looking.  Red 2 below is most likely to be a viscious vee type 2nd wave.  The market will be a bit worried but not all out panic by then.  It will be hoping like Hell that "buy the dip" mentality is in place even though the hope of the Bernanke Put is rapidly fading.  After that dip, TVIX will skyrocket to $7 or $8 in the 3rd wave and that will really wake some people up.  Stock insurance will become more and more popular as TVIX rises.

As the old saying goes, they hated it @ $3 but they will love it @ $60.

Another possible short-crushing TVIX finish

I will not be complacent here in the end game.   So far I have done a pretty good job of sidestepping big drops in TVIX as I have been following it down.  As I have mentioned before, they like to close these leveraged ETFs in the low to mid $2 range for some reason.  The chart below would get us there. 

It would require a market rally into the holiday weekend which is a very typical thing to do.  Only after the market participants come back does the reality of the bubble start to show up in rapidly falling prices.  That's just an observation, not a model.  Below is a model.   If we get a little a-b-c move back up to $3.10 without showing any real breakout strength then I will probably sell TVIX because it will likely mean that this recent thrust down was just A of C of 5.  If it goes below $3.00 SELL!!!  Why take a 15-20% hit in order to save a $10 trade?  My stops are in at $2.99 but I will just sell outright if the chart doesn't show some real strength tomorrow.  I am not going to sit through an ending diagonal with this.  No way no how.  If it happens I will just load up on more shares with the same cash in a few days due to the lower price.


We have our trigger conditions folks, now is the time to show discipline.  I do not recall markets selling off into a holiday.  It's the 2nd day after traders return that they generally throw in the towel.  The day IS coming.  Look at today's Tech Ticker video of Robert Shiller.  He was right there calling the top back in 2007 as well, very good timing.  I have not heard him talking like this until now.  He has been far more reserved in his opinions until this interview.  His word carries serious weight with the herd.  The herd might not show it until after the holiday weekend, but the sell off is coming.  Another thing: since government is worried about killing off the little guy, it is now attacking its own banks.  It is starting in the marginal countries like UK but it will come to the states as well.  Banks make easy money creating credit from thin air and loaning it out.  Cutting back on that revenue stream is going to crush the banks not just in the UK but all over.

Wednesday, June 25, 2014

TVIX update

In my previous post on TVIX I modeled that the chart could go below the bottom of the expanding triangle.  While TVIX did that today, the ending diagonal it put in looks more like a 2nd wave pullback than anything else.





Because of this I now see two possibilities at this point:
  1. The downward wave today was A of C of 5 of 4.  In other words, the model from the prior post is intact but it will take a few days to play out.  This could have just been A and that means tomorrow a rally in TVIX but not a new high.  Perhaps something in the $3.09-$3.13 range.  If it stops there, expect it to sell off to a lower low the next day.  I would guess a low of about 2.85 in that case.  That will take out all of the stops between here and there and set the ETF for a rapid climb.
  2. Today's downward move wasn't A because the prior peak wasn't part of a 4th wave triangle.  Instead, it was a 1st wave of an internal stutter step that will result in an extended 3rd.  By that I mean that June 23rd was 1 of 5, 24th was 2 if 5, 25th was 1 of 3, today was 2 of 3.  If this is the case then tomorrow will break out with gusto and form a higher high.  It should be something like a 15+% gain if this is the model that is being followed.
Either way I model tomorrow closing green for TVIX and then traders can figure out if they want to sell off and let it go sub $3 or just hang on for a couple more trading days of volatility.

Note on the 3rd of 3rd model: The big trading houses don't often begin a new selling program right before a major holiday.  Of course, it could be different this time.  We are at the very peak of a monster debt Ponzi.  Let me say this: if selling begins with great force before the 4th of July break it was not because they wanted to do it.  Something will have happened and it will have pulled forward their sell off plans. 

I would view any large pre-holiday sell off as being extremely bearish. Think about it: if you were a trader with such complacent, easy, fed-supported markets for the past 5 years, would you want to fuck up your holiday weekend with a sell off that would require your strict attention nearly 24/7 for several weeks straight?  The big money is made at the turns so you can't just go about your business and get to it when you get to it.  This is how the other traders will eat your lunch.  It's just something to look for over the coming days.  A sell off of any significance before the break would be bearish.

ISSA dangles immunity to Lerner for rolling over on the bigger fish.

Just like I wrote many times in these pages that it was going to happen, the government organized criminals will begin to roll over on each other now.  Lerner's career is already history so she now has to look out for #1.  The wolves are circling and the American people are screaming for blood.  Someone's head must roll and Lerner has nothing to gain and everything to lose -including stiff jail time- if she doesn't play ball.  She would be an idiot... strike that... her lawyer should be disbarred and then SHOT if she doesn't jump on an immunity deal in exchange for testimony that nets the next bigger set of fish which will eventually lead us right to Obama.


How did I see this in advance??  Simply because I see the big picture as it really is.  Government is now chock full of pockets of organized crime and it goes all the way to the top.  This is where those that would have been in the mafia of old are now skulking about.  There are traitorous criminals running our country.  The reason they are there is because the liberal credit drug lulled us all into complacency, ignorance and apathy.  We let them wear us down because we were getting something in the deal.  Now that the deal is exposing itself to be not-so-good for the herd, things will change.

This is the message of the nascent shift back towards 1950s style conservatism.  The herd doesn't want to change because the credit drug feels so good.  But the side effects of the addiction are  starting to hurt more than the good feeling of the high.  This article from The Daily Reckoning does a great job of explaining it.

Bottom line: I expect Lerner to take an immunity deal and then to begin to spill her useless, complicit, conspiratorial, traitorous, bureaucratic guts.  She sold us down the river at the request of her superiors.  She did it in order to curry favor and to attain high public office.  She deserves a public execution for treason but she will get an immunity deal and the herd can wait for a bigger fish to fry.

Tuesday, June 24, 2014

TVIX update: beware the likely whipsaw.

After a few days on the sidelines playing JNUG/JDST, I bought into TVIX again today after the $COMPX kissed 4400 and then fell over like someone shot it.  The VIX is at historic lows and TVIX has gotten creamed because of it.  Now that we are very likely near a major turn, the goal will be to shake anyone out that will be shaken.  The best way to do this will be with scary whipsaw and so the chart COULD be setting itself up to do just that using the potential count below.

First off, this is not my primary count yet which is why I'm holding TVIX overnight.  That little bundle near the top rail at blue 4 could be a 4th wave which will break upwards and out tomorrow.  But it could also be telling us that the next wave to come is the last wave of the current formation and if that is the case then we can expect this to end up as an expanding triangle.  Ending diagonals generally occur at the end of a run.  If a triangle is going to appear at the start of a run it is often an expanding triangle as opposed to a contracting one.  This results in whipsaw (and thus market participant fear) right at the turns.  If the chart heads down tomorrow you might want to hold on a bit lower than $3 because this 5th wave looks custom designed to take out the stops below $3.  Once done, it should quickly break back up int the channel, causing those who just sold to re-buy. Then after another fake break out attempt, one more wave down to see if more sellers can be found.

By the way, all the internal waves should be a-b-c including the straight line I drew down to blue 5.

If you see this end of wave whipsaw, be not dismayed!  It is a sign that TVIX is most likely ready to turn up and that they need to shake and weak hands possible before changing direction.  The initial move off the bottom should be fairly quick in order to leave as many stragglers behind as possible. 


Jim Shepherd's latest free newletter is worth a read.

Backlink.
Shepherd has been in top watching mode for many years but his logic is sound.  History will find him to have been often early but seldom wrong.  Enjoy his latest free newsletter.

One thing I have to correct Shepherd about: the Federal Reserve was not an "experiment" and its eventual failure will not be happenstance.  This was  preplanned scam, plain and simple, a con game from day one perpetrated by evil traitors upon the people of not just the USA but of the world.  In the coming economic carnage, desperation of the unprepared will soar.  Desperate people do desperate things.  The coming economic collapse will certainly bring with it some degree of societal collapse.  The degree of severity is semi chaotic and thus very difficult to gauge in advance.  It thus has a wide range of possible outcomes which range from a Greater Depression to the the flying apart of the EU to 1990s-Russia-type collapse of the US to, yes, global thermonuclear war.  This is just what people do during times like this when they have lost everything and thus feel they have nothing to lose: they "lose it".

So I want to completely dispel in advance any future (post crash) thoughts that we just got unlucky or that the powers that be did a misstep or that it was all accidental.  They knew it was in play and they warned those in the population who had the eyes to see using things like the Georgia Guidestones.  That was a very expensive project and someone did not set upon it lightly.  Yet it was paid for in full and completed.  The globalist message of the guidestones is perfectly clear.  They call for one world government. The warning that people should understand is that population should be kept to 500 million at a time when it was already several billion people.  Was this just a miscalculation?  The federal reserve was set up from the start as a way to have the American people do themselves in.  It was designed to drive fractional reserve credit into the economy in an upward spiral (like any other kind of pyramid scheme of which a debt Ponzi is one form) until its eventual collapse.  Perhaps they hope that most of us will do each other in so that we can get the numbers back down to the 500 million target.


Another thing that Shepherd probably overlooked was the fact that the velocity of money chart has nearly traced out 5 downward waves.  For the curious, here is a past post of mine in which I modeled the wave count of the velocity of money chart.  I clipped the 5th wave model from that post and put it beside the current VOM chart below to show the correlation is still intact.  I think we have another 6-8 months of VOM reduction before it begins to turn up strongly.  And with it will come price inflation in commodities as the hoarding begins.  I could be wrong about this timing in that so far the waves are all equal size.  Generally there is one of the 3 motive waves in a 5 wave sequence which is extended.  Given that it was not 1 or 3 then perhaps it will be 5.  Time will tell.



DJIA update

Today the DJIA was weak all day while the $COMPX surged upward, as if pushed by a magical hand all the way up to almost exactly 4400.  $3999.875 is what my ticker shows.  Close enough to be spooky.  I half expected this could be the case as you can read in this prior post.  That mention of 4400 was not random as you can read in this other post.  My admittedly cryptic accompanying comment to that 4400 / 4440 call was:
  • It skyrockets all the way above the top resistance line to form one final short-busting throwover that could end a 4440 or even 4444.
    • If it does either of the last 2 bullets you might want to consider moving out of the USA...  I hear Belize is kinda nice.
Sorry, if you do not already know the significance of this number then I cannot tell you where I got it from because you would not believe me anyhow.  But I think it marks the peak for the NASDAQ and likely the DJIA as well.  As soon as it stretched to hit that "magick" number, the sell off began in all markets.  When it kissed 4400 and then began to fall I went back into TVIX in a big way.  Looks like $3 may turn out to be the bottom for it after all.  Time will tell on that.  Just set stops below $3 and walk away.


Having said that, most EW modelers are likely falling back to the possibility of the larger ending diagonal shown below with the count black 1-5.  If this is the correct model then expect a bounce off the lower rail and then one more thrust as shown in red.  But because of the 4400 move by the $COMPX, I think there is a very good chance that the lower support line will appear to hold, begin a bump up as if it is going to do the red path and then break down with a gap below the lower rail.  The blue path shows this possibility.

Folks, if that blue path is taken then I will go all in on this being the end of the 2009 bull market.  If this is really the case, expect a 300-500 point down day on the DJIA real soon now.  The break down should come with gusto: high volume and preferably a gap down.  We have to start seeing some real panic before this whole thing is really confirmed.


If you see this you will do well to exit all long positions IMVHO and short the weakest players out there.  Once they collapse, go after the middle strength players.  Finally, move to the big boys with the rest of the shorts who will be using their profits from the weaker players to take down even the biggest wildebeests in the herd.  Either that or just join me in TVIX which represents the lowest readings in 30 years.  Keep in mind that both Goldman and JP Morgan have publicly stated that "volatility is too low".  There is right now a great depression in volatility, one that cannot last forever.

Volatility, turbulence, market carnage, call it what you will.  It's coming.  It has to come because all these boomers are no longer buying stocks but rather trying to draw down from a system that the people bought into (and here is the scam part of it that so few understand) at valuations that were pumped up by the use of leverage by the con men running the show.  Who in their right mind thinks that Facebook is actually worth the $65 billion market cap which its bloated share price represents?   Even a market cap of $650 million is questionable for it IMO.  The fake market cap numbers will evaporate quickly as the leverage gets unwound.  Credit deflation demands it.  Revolving credit is already in a new downward trend that is going to last many years.



Total consumer credit is now reaching the end of the 5th wave of this mania.  And I do think it will be a mania as opposed to just an a-b-c retracement to the prior 4th before off to the races again.  Why?  Because defaulting on debt in the US is no longer a moral decision but rather a simply business decision for businesses and individuals.  If it is so easy to leverage up and then walk away in bankruptcy without any real repercussions (such as debtor's jail or even lifetime indebtedness) then lending will have to revert to 1950's style "glassy eyed bankers" who actually know the people they are lending to and do not loan to those they don't know and trust.


By the way, if it seems I just make some of this stuff up as a go along, please consider past posts where I quoted the same charts as shown upper left such as this one.  I did not call for an immediate down turn in the credit back then because the wave structure was wrong.  Today wave 5 on the left picture is much closer to the size of wave 1 while the internal structure of wave 5 now counts as 5 waves (or very close to it).  There is always the chance that more waves will unfold in wave purple 5 that will require me to modify the count but this credit cycle will certainly peak by the end of 2014 and the stock market is forward looking.

As usual, time will tell.

Monday, June 23, 2014

Watch the NASDAQ 100 chart

This is one of the very few charts that I have seen today that looks like it has any play left in it whatsoever.  But it is a very important one so it has to be respected. I think it is more than a little possible that they dip into wave 4 of an ending diagonal, hold the lower rail and then come out strong into the 4th of July weekend.  After all, what trader wants to begin a major sell program just before a holiday? 

Again, the lower rail is likely important here.


Twitter update

In my last post on TWTR I wrote: "I hate to throw out price targets like this but if pressed I would call it $26 for 5 of C. The subsequent short covering rally should bounce back to perhaps $45."  While not perfect, I did have the direction correct as you can see from the current chart below.  Instead of bottoming at 26, the ending diagonal bottomed at 28.75.   It then broke out both rails and is not approaching the 23.6 fib.  This is weak, weak, weak.  I was expecting a 38.2 fib dead cat bounce but this one has rigor setting in already so it's not bouncing very well. 

The A and B waves are long over and C might be done as well.  Twitter is now too pooped to tweet.  I will be zero surprised if this useless left wing social media company ends up in receivership within 18 months.  The coming return to conservatism will have people stop living their lives out on their twitter and FB sleeves.  The social media craze is headed for a massive contraction not because those working there want it to but because these companies would never have gotten funded without wild amounts of debt creation and when that debt collapses so will all their future funding.  Besides, conservative people simply do not tweet and so it will just go out of style as if it were a pet rock or some other useless mania of the past.

Peak Exxon?

My current XOM chart model is shown below. Most people think XOM is deflation proof because of the money printing at the fed but the share price is pumped up by margin fueled gamblers who are all waiting for the music to stop so they can stop dancing and find a chair.  Anyone not quick enough will get left holding an empty bag.


GE Update

In my last update on General Electric I provided a model that is looking pretty good at this point.  See for yourself here.

No need to change anything on that model IMO.  The chart broke down the lower rail today in what was obviously a 3rd wave impulse.  The DJIA was down just a few points but GE was down a full percent.  The rats are exiting their leveraged positions.  Soon, I think, the whisper of little church mice scampering toward the door will turn into the scream of millions of rats trying to get off the sinking ship at the same time.  Even Willard would not be able to stop them once that process begins.  The selling will feed upon itself.


DJIA update

After the recent ending diagonal model went bust I see a lot of people on the web wringing their hands wondering when this ridiculous fed-induced bull market will finally end.  Personally, I think it would have been over last week had it not been quadruple witching options expiration.  The 120 Minute candle chart of the DJIA is in trouble as soon as that lower orange rail is broken down.  It could bounce there and then do a 5th wave throwover as shown but I'm suspicious of that.  I think there is as much chance that it will fall through the lower rail within the area of the blue circle.  If it does that, especially with a gap down, then it's game over for the Ponzi Pump IMO.  I just don't see how the bad earnings we are seeing can be pockets of problems.  The whole economy is in trouble, not just a few areas of it.

Waiting patiently for the downward revision of Q1 to -2% growth that I am pretty sure is coming.


FAZ looking very good for re-entry here.

The FAZ chart is really looking like a bottom here.  I can see the possibility where the wave that just finished is not really 5 but rather part of an large ending diagonal but if that is the case then the crash will be put off until darned near Q3 and with major companies taking hits following earnings, I just don't think we have that much more time.  I think Q2 will show negative growth and it will blow away all the excuses about bad weather causing -1% growth in Q1.  2 Qs in a row=recession.  The market participants will scamper for the exits if that becomes the official word.

This is an easy, easy trade.  Buy at the open and set your stop for just 10 cents lower than today's low.  Do keep in mind that this could just be 3 of 5 of 5.  But something tells me this could be numero cinco.  Time will tell.



Double bottom for TVIX looks like a nice entry point.

If interest rates do begin to head up tomorrow as modeled here, the stock market should begin to show weakness.  TVIX should respond to any weakness in the markets.  Perhaps all that last week's quad witching really did was to delay the start of the new bear market by a couple of days.  This would, in fact, confuse a lot of people both short and long.

Below are my current models for TVIX.  What I had been calling 5 was likely just 3.  You can see that the bounce to red 4 was clearly a corrective a-b-c.  And today we saw 5 waves down into the close.  In all fairness, this could just be 1 of 5.  If so, a very tiny a-b-c to perhaps $3.07-$3.09 could happen before a 3rd wave down to $2.85 and then finally a small sideways 4th and then the final 5th down to $2.65.  But if we go higher than 3.20, the bottom for this wave since April 15 is most likely in.  $3 is a nice round number.  If this gaps up above 3.20 then I will be buying into that strength and I will be holding with significantly more conviction that I have been doing for the past several months. 

Like all models, this one could be wrong.  If so, it will peak out before going above red 4 in the left picture below and then break to a lower low.  In that case, my target will be $2.65.  I don't see that happening but we will most likely know tomorrow.

We are getting into the very final days here IMO before the official start of the bear market.  Too many companies are gapping down on earnings now and not just small ones either.  Couple that with the declining margin being used and it's a recipe for lower stock indices along with skyrocketing renewed interest in buying collapse insurance.

TNX update: interest rates should begin to take off starting tomorrow.

TNX is the ETF that tracks the 10 year treasury.  Yellen has told us that she will both taper AND expects interest rates to stay low.  I call bullshit.  The fed doesn't control interest rates by decree.  They want people to think that they do but they don't.  Interest rates are set by buyers of government debt.  If, all things told, the interest rates are too low, savings will be invested elsewhere.  While price inflation was low and while the US government's "full faith and credibility" held any water, the US treasury seemed like a good place for people to park their money in turbulent times even if the interest rates were low.  But as the government loses credibility, the national debt, which requires the buyer to trust the government to repay, becomes less desirable to hold.  the result?  Buyers demand higher interest rates in order to convince them that it is a good deal.

By the magic of QE, the federal reserve became the largest buyer of US treasuries for several years running (and still are).  As QE tapers, where is the money going to come from to buy all of the debt that government generates not to do special projects or anything like that, but simply to maintain the level of national consumption (including a healthy dose of corruption) that we have become accustomed to?  With the fed backing off of treasury purchases, rates have nowhere to go but up.  Higher rates = lower stock market valuation for two reasons:
  1. main reason: it increases the service on margin debt.
  2. historical reason which is secondary right now: higher returns on less risky assets mean people do not have to wade into the stock market in order to generate the returns needed to fund retirements.

I believe that wave 2 is in the books right now and that wave 3 is already in progress. People who don't know how to count Elliott waves will think the recent chart action is "rolling over".  They will change their minds about that when the rapid 3rd wave action unfolds.  The 3rd of 3rd should see some nasty gaps up that should really put some fear into the stock markets.

Facebook update

When Facebook turns down it will be in the company of the $COMPX.

Here is my last post on FB.  The model there incorrectly read wave 1 of 5 as being the entire 5th wave.  The updated model is below.  A break below $63 will confirm that wave 3 is in progress.  A move above the red horizontal line means the model is bust.

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