Saturday, November 29, 2014

[Peak Credit] update

Here's the back link to my previous peak credit update.  I recently found another credit chart on the Federal Reserve FRED website that might turn out to be easier to read than the ones used in prior Peak Credit posts.  This data set is called "Commercial and Industrial Loans, All Commercial Banks".

Zooming in to the 5th of 5th of 5.  I like the rising wedge action in the blue 3 position of this model.

Societal debt has been on a rapid upward path since the 1970s.  It cannot be paid off and so it will be defaulted upon in some form or fashion (massive inflation is a tried and true soft default mechanism).  A debt based economy is not sustainable and we are very near the end game here.  The "if" part of a collapse is already answered: there is no more question of "if".  There is only when.

[SPWR] update

This was my initial topping call on SPWR after having called the prior low @3.77 to within a few pennies.  Here is the most recent update on the topping call.  Note the right hand model which expected that if the chart could break back into the channel then it would go all the way to  the top of it (and then with perhaps a throwover).  That is in fact what happened.

The original topping call contained a sell off price target in the low 20s which was really intended to mean "to about the level of the prior 4th".  Now that the model is playing out I can refine it and the new price target is between the level of the prior 4th (~$20.50) the 61.8% fib (~$18.28).

What I do not know is whether the pull back will be an a-b-c or 1-2-3-4-5.  In other words, the pause that refreshes or a mania collapse back down to below the $4 level where this massive price run began (or some kind of inclining double bottom to perhaps $4-$6).  In other words do we get a deflationary collapse or some massive selling and then Yellen throws in the towel on QE abstinence.  If the fed ever begins printing money again, the market will finally know that it's either print or crash.  Thus, massive inflation could finally show up at the doorstep of the USA (something which I have always believed would happen AFTER the deflationary crash was complete).

All fiat currency is worthless at the end of the day. It's all un-backed worthless $hit and only a fool trusts his retirement funds to it.

[AAPL] update

In my previous post on AAPL the model predicted a peak in the $110 range.  This did not pan out and so I have to step back and reconsider the whole count at the top level, something I should really have done sooner.  As a result, I have the following top level model for AAPL.

Zooming in a bit we have this model of just the 5th wave:

 And now the zoom in to just the 4th and 5th.

If this model is (finally) correct then we really should see the markets begin to sell off on Monday or Tuesday.  The first sign that a larger breakdown is in progress would be the a break below the top rail at the $115-$116 level.  The sell off in oil should say something about a global recession which is eventually going to be felt by the entire food chain.  Global debt deflation may finally be making itself visible.

Gold update.

In this post I highlighted Avi Gilbert's recent model for gold.  It seemed to imply that HUI's recent rally was a 4th wave bounce to the 38.2% fib.  As you can see from the recent 60 minute HUI chart, no 5th wave seems to have been put in.    So this should be 1 of 5 down.  At the rate this is playing out so far, it should not take long to bottom.

Then again, this model conflicts with the wave count from EWI and today's GLD chart shows that EWI's count cannot be, for lack of better words, counted out.  While nobody more than I would like to see JNUG collapse back into the "low to mid $2 range" since this is where a lot of these leveraged ETFs seem to find major bottoms (including perhaps the recent $2.20 low for TVIX which from this post we cannot say was completely unexpected...), that fate is far from certain given the potential GLD count shown below.  I mean, is that not a horizontal triangle and if it is must it not be the penultimate wave?  We should be getting a bounce in M+M on Monday after this 36% drubbing of JNUG on Friday and the nature of that bounce will be telling.  If the move is small like 5-7% then beware of the short term dead cat bounce but if this thing breaks back up above blue 4 below then the bottom could be in.

I'm going to say this one more time for the cheap seats: most people should starting to buy something golden right now.  Most people should dollar cost average into a position.   The most conservative move is to own physical metals outright but if you want to get more leverage based on "ownership" of paper assets then for most people I like GDXJ.  Another strategy would be to buy the likes of TRX, DRD and then some other juniors along with GDXJ so you have real diversification including diversification from potentially corrupt managers of the GDXJ ETF.  Only the paranoid will survive what is coming IMO.

2015 will be a fantastic year for gold and miners IMO and this should be the case no matter if EWI (we are at or near the end of the A wave) or Avi (we are near the end of the C wave) turns out to have the right model.   Both models predict rapid gains in M+M into at least Q1-Q2 2015.

Chevron chart (CVX)

The XOM count looks like it is in a 3rd wave and so does DUG but the CVX count suggests that it is just a dramatic 5th playing out.  Oil will move pretty much in unison so I always like to take several reading across the spectrum.  So it remains to be seen if XOM bottoms far earlier than one would expect for a 3rd wave down and then heads back up to Thursday's pre-selloff levels.

DUG update.

My Thursday post on DUG seems rather well timed in retrospect.  It goes to show that even a blind squirrel finds a nut every now and then. 

The left chart below was the model provided in that post.  The right chart is actual as of Friday's close.   The blue count is my primary count but this could also count as 1-2-3-4 and now working on 5.  IF this turns out to be the case, the chart will form a higher high than the Oct high and then come back down to the $44 level because that will be the level of the prior 4th.  If that happens then it is a very, very easy setup to go short on oil using DUG because it will be the clearest indication you will ever get that a 3rd wave up is likely to explode in oil shorts.

What will be interesting is what happens to gold at that time because Avi's model as I currently understand it does not allow for gold to continue trading in locked step with commodities downward very much longer.  According to his model, GLD will hit ~105, HUI will hit ~119 and then that will be the bottom of a massive 2nd wave in a broader bull market that will propel gold and silver to incredible new heights in a new 3rd wave up over the coming decade or more.

Either the waves down in oil right now are corrective 5-3-5 in nature and when they finish we will enter into a period of massive inflation OR there will have to be a decoupling of gold from oil.  It will not surprise me to see that happen because it has long been one of my views that during the end stages of this debt Ponzi, gold will decouple from commodities and be treated as money (which is what it really is and always was even if the herd chose to forget that fact for many decades under the hypnotizing influence of paper currency).  Keep in mind what the dollar really is: the petro debt dollar.  Gold of course is completely unassociated with anything else.  It is simply money even if the herd doesn't understand that fact today.  In 10 or more years, people will wonder how gold could ever have been treated as anything except money.  While the con is running you can fool all of the people some of the time and some of the people all of the time but when the con is exposed you suddenly can't fool anyone ever.

Peak Exxon update and global implications of it.

Check the model from my previous post and you will see that it modeled wave 1 down to the $87-$89 range.  The updated snapshot below shows that was not far off.

When that model was being created, wave 4 of 4 was being printed still.  I modeled that as a bounce to $95 which is in fact what happened.  Then 5 of 1 was to take it down to the 87-89 range and that also happened.  Then of course, although I did not show it in the last model, we should expect an a-b-c to the prior 4th in order to print wave 2.  Well, wave 4 of 1 was $95 and wave C of 2 peaked at $97.  Again not perfect but this predicting the market short term future thing is by no means an exact science.

So the real test was what was going to happen after wave 2 was printed and the model expected it to be a 3rd wave down.  While it is not confirmed yet by a lower low, anyone who follows charting would sell this gap down and even flip short.  Wave 3 (or big C) is very, very likely coming to XOM.

So far the broader markets are just watching on like nothing is wrong.  Trust me folks, something is wrong!  When you see the bay get sucked dry only a fool goes down to pick up shells or explore the newly exposed rocks!  Those signs typically warn you that a tsunami is coming. 

Warren Buffett once famously said that when the tide goes out we will know who has been skinny dipping.  But the tides go in and out every day and we see nothing.  And so it makes me wonder which tide Buffett is actually referring to here.  Perhaps his outgoing tide is really a tsunami sucking the water out of the bay.  And perhaps the fluid in his metaphor wasn't water but oil.

Something big is happening in oil right now.  There are two main possibilities:
  1. The Saudis don't like the US rise on the oil scene and they know that fracking based oil cannot live below $70 per bbl.  So they are not cutting their output despite the new supply added by the US.
  2. The US is not hurting Russia as quickly as desired or as much as desired.  Therefore we conspire with the Saudis not to reduce output.  Who does this hurt more than anyone?  Russia.  Frackers just have to take one for the gipper here.  Besides, we own the world's reserve currency.  We can just print it up from thin air.  Have you noticed a dearth of complaints from the frackers?  They should be screaming bloody Hell but they are quiet.  Almost as if they got tipped to some kind of plan and promised some kind of reward for playing along.
With every war there are always casualties.  Venezuela is going to be one of them.  The plunging oil price means they will certainly default on their sovereign debt.  Who knows what derivatives and other unintended consequences might be linked to that.

Remember what I have said about this global debt Ponzi economy: it is a total house of cards.  An illusion of soundness.  Termites ate the wood right up to the paint leaving the superstructure badly weakened and just waiting for the right shockwaves to bring it all tumbling down on the corrupt heads of the bastards that did it as well as the rest of us who sat there like cow eyed fools and allowed them to do it.  We should have risen up and hauled them off by their hair at gun point.  But we got hypnotized by the false money God and so now we all get front row seats to the largest market, economic and likely social crash in history.

Like I said, we ain't seen bad yet.  But it's coming.

Friday, November 28, 2014

Market update.

It was an amazing day for the M+M (Amazingly bad that is).  JNUG dropped the most in terms of percentage that I have ever seen in a single day.   After 10 days of gains and 5 days of sideways crap, today's massive dump of $1.90 per share brought JNUG back down to within 55 cents of its prior low.  It looks like I might turn out to have been correct regarding my review of the shape of the GLD chart bounce as being corrective and I was certainly right in not holding it over night because of these concerns.

I sure hope Avi is right about M+M hitting a lower low than the Nov 6th low.  I cannot stress how important this would be to M+M longs.   Why?  Because it would corroborate his views about the current wave being the C wave retracement of the bull market that was put on hold back in 2008.  It really is worth your time to look at Avi's model of the HUI again and think about it.  He wrote that article when HUI was ~$150.   After the M+M bottom, HUI should be at ~$120 according to his model.  Notice that his model uses the log scale for price.  After that bottom occurs, the mode says the next wave up is a massive 3rd:

By Jan 2017 his model expects HUI to be ~$430 for wave 1 of 3
By Jan 2025 he expects it to be over $2000 for 3 of 3
By Jan 2033 he expects it to be $5500 for 5 of 3.

Keep in mind, HUI is unleveraged and is about the same as GDX in terms of percentage moves.  He expects a 350% gain by Jan 2017, an 18x increase by Jan 2025 and then you can do the math after that.  Like I said, most people should just begin buying golden things such as gold miners, silver and gold bullion, etc.  GDXJ of course would do far, far better than HUI or GDX and again has no time based options leverage.    GDXJ is what I would recommend to most people if it was my business to make such recommendations.

It also pays to think about what might cause this model to play out like that.  We see the price of oil in freefall right now.  The reason is deflation.  Since the stock market is now at or near the current model's peak, what would happen if the stock markets began to follow oil off a cliff?  What would happen if the coming sell off made the 2008 one look like a walk in the park?  Would the bat faced Yellen fed really stay away from QE or would she cave to the market's taper tantrum.  Well, the gold model seems to suggest that she caves and starts up QE again.  Of course, once she does that then forget about it.  The markets will know that there is no plan B and that money printing is all that is left.  It would also debase our currency such that all those big pensions of public "servants" would get  the value kicked out of them.  Something has to happen because we cannot afford to pay for their retirements AND our retirement.  So, something will happen.  Either an outright default or, as Avi's chart suggests, massive debasement of the currency.

In any case I think JNUG should get a pop at the open on Monday in the form of a relief rally/sucker's bounce at the very least before finishing out Avi's model.  Much less likely IMO is that it could also be that today's bottom forms an inclining double bottom in M+M which takes off on Monday.

As for the broader markets, the DJIA put in a peak and then actually went red right into the close via 5 waves down.  Someone then came in and painted the tape back up to around the 38.2% fib of the sell off.   In other words, they set us up for a gap down on the DJIA at the open on Monday.  I'm holding a full position of TVIX over the weekend in anticipation of that but what I really want is for gold to hit that $105 target so I can get long M+M.  As I have written before, I would rather be long stuff than short stuff any day of the week.  I'm only shorting the market because everything (except M+M) is so overbought it is ridiculous.  When M+M put in a solid model bottom I will probably be much less interested in trading TVIX.

Stopped out @3.63, back in 3.37

It's now sitting at the 84.1 %fib.  Tight stops of just 2 cents in place.

Stops moved up to my buy price of $3.64.

Might not win anything but I won't lose.

Into JNUG @ $3.64

Stops @ 3.59.  What a drubbing!  Down 31%.  Even if it plans to go lower later on, it deserves a significant relief rally from here.

GLD inflection point seems to be resolving downward

Gold still seems to be trading like a commodity because the news that OPEC will not curtail production in order to prop prices up seems to have kicked gold over night.  GLD is down 1.75% in Friday's pre-trade which seems to resolve the question I was having about JNUG in this post.  Now you know why I preferred to hold TVIX overnight than JNUG.  Of course, I expressed reservations about the gld chart here even though it was still going up.   We should wait for Friday's close before passing judgement but it is starting to look like Avi's count is better than EWIs this time.

Note: I stand by what I said before that most people should not try to trade this volatility.  They should just dollar cost average into something golden.   People should not delude themselves that they will catch the absolute bottom or top on anything.  It is very rare even for the best wave counters to be able to do so because the markets are semi chaotic, just like the herds roaming the plains of Africa.  I have caught the exact tops and bottoms a few times but also missed enough times to make me second guess my count until there is a strong confirmation in place.  Of course if you wait for that to buy then most of the profits are already had by someone else willing to take more risk than you.  Nobody said it would be either assured or easy.  In fact, quite the contrary (Genesis 3:19).

For the record, this could just be the C of 2 wave.  It would really throw the gold shorts to see it go down like this in sympathy with oil only to reverse and go to a new high.  Out of respect for this potential, I will probably pick up some JNUG today and then hold it with pretty tight stops.

The curious case of [IBM]

There can be little doubt that my EW count nailed a top for IBM back in this post.  You have to admit, that was a pretty nice (or maybe just lucky) call.  But the recent chart action makes me wonder if I caught the top or just a top.  Why doubt myself now?  Clearly it must have to do with the waves that have transpired since then.  And so it does.  As you can see from the waves below, the action has looked very a-b-c from the peak, not motive at all.  So far the C wave has been fast and furious but that is what we should expect from either a 3 or a C.

Bottom line: this either goes sideways into a 4th and then breaks down to either fill the gap or to the 50 fib but then we are going to have to be watchful because this smells more corrective than motive right now.

Thursday, November 27, 2014

DUG update: drillers about to collapse.

Here is the link to my initial post on DUG.  As you can read there, I modeled that the drillers would soon begin a collapse.   Since DUG is an inverse ETF, the collapse can be played to the short side using it.

Since my original post at $43.54, DUG flew up to 58.50.  It has since come back down to as low as $45 but by my count that was just wave 2.  So we should expect to see rapid movement up now to a much higher high than 58.  In fact my 18 month price target is at least $150 and possible as high as $300 based on my current read of the wave count.

If you like news that confirms the wave count, look no further than this.

Fade "defense". [NOC]

For the last 60 years, the US military industrial complex has been on a hyper growth path.  The great enabler for spending so much societal resource on "defense" is of course debt.  The US has never been at any real threat of being invaded.  Our massive "defense" efforts are, as Smedley Butler so eloquently stated, "a racket" designed to protect the interests of the monied elite, US corporations and US banks.

The major defense contractors have gotten fat on the spoils of debt based spending but those day are rapidly ending as deflation destroys the larger than global average US middle class.  Many people who were living middle class lifestyles in the US were actually just labor class people who had no special skills or insight or productivity or vision or innovation or anything.  They were just nice people who had been taught over time that they were somehow worth a great lifestyle even though their counterparts in other countries did not enjoy anything even close.

While the defense contractors don't sell anything to the middle class, their fates are closely linked nonetheless because whereas a content middle class would not care what ridiculous debt was taken on in its name in order to pour into the pie hole of a greedy and mostly unnecessary defense industry, ex-middle classers do.  Nobody in the herd wants to go off a cliff alone.  And so the middle class is not going down quietly.  It will take the elitists with it.

We are seeing the beginning of it in things like the ousting of defense contractor UTX's CEO.  Lockheed is in trouble with the massively expensive F-35.  Not just because it "can't turn, can't climb, can't run" but also because the US has to begin worrying about deficits lest the interest rates begin to climb.  IF rates climb (and they will) then housing prices will fall and banks will have to admit that they are insolvent.  Who needs pricey planes when the real economy is stagnating with record numbers of unemployed sucking from the national teat?

Because of these things, I am now predicting that we have reached "peak defense".   We will be able to measure the accuracy of this model view using charts like that of defense contractor Northrup Grumman below.   The wave model shown below suggests that the shares are in the latter stages of an expanding wedge which is a topping formation.  The 5th wave or e wave is made up of a 3 wave sub wave (a-b-c).  The shares currently trade at $141.45.  I think they have peaked or will peak in the $150 range before beginning a rapid fall back to a lower low as defense spending is hacked by the new, more conservative (i.e. more a representative of the people than paid shills for big corporations) congress.  Again, the thinking here is that politicians are politicians because they tend to read the tea leaves well and they pander to it.  The people are not happy and they are suddenly showing up at the polls and it is sending shock waves through the good old boy system.  Too much of the wealth stolen from the world via the control of the global money supply has gotten stuck in the upper echelons; it has not "trickled down".

In any case, a break below the top rail in the $110-$115 range will be the first confirmation that this model is correct.

Visa might have peaked

I think this is my first post on shares of Visa (ticker:V).  I model a major top as being at hand or very close.

Big picture chart:  I think the count is clear enough not to need annotation.  That 5th wave scooted up there with record speed, almost as if compelled to do so by some kind of unwritten rule.

Just the 4th and 5th waves.  There is a chance that this is just 1 of 5 and not the whole 5th wave:

JNUG major inflection point

In this post I noted that JNUG breaking out of the indicated trend lines.  But instead of continuing on that path, it sold off mildly right from the opening bell.  So at this point, a clear 4th wave candidate has emerged as shown in the model below.  It will be interesting to see how this plays out.

Avi's model says that he expects a lower low in HUI (and thus in GDX,GDXJ, and JNUG) than the early November low.  If the triangle breaks out to the top then it's not clear to me how that is going to occur so the way I see it right now, a higher high in 5 waves than blue 3 means the low is likely in.  If you miss this run to wave 5 (should it even occur) then don't chase it up without setting stops because odds are that it will come back down to to around today's level in the 2nd wave down.

[UUP] seems to have peaked

Here is the back link to my previous UUP post which suggested that the peak would come within a day or two.  Turns out it started falling the next day and has now been down 4 days in a row.  So now we should get an a-b-c back up to ~23.36 to form wave 2 before it begins down quickly into a 3rd wave.

There are two aspects of this that I am interested in:
  1. what happens to gold when the dollar pulls back?  If gold is a commodity then it should take off on a weaker dollar.  But if the herd has finally reawakened to the fact that gold is money then we are in territory that has not been traveled for over 100 years now and so nobody can really say what will happen to gold under these circumstances.  One thing is for sure: if a weaker dollar pushes gold up then we should see a higher high in M+M and that will be 5 waves up which should do a good deal of damage to Avi's model for HUI and GLD which expected a lower low in both of these.
  2. is the dollar really going to get stronger after it pulls back to the level of the prior 4th (red model above)?  What if this was 5 of C as I suggested in this post instead of the conventional wisdom count that we just finished wave 1 of a new dollar bull market (blue model)?
Because the global monetary system is now so inherently unstable I think that the outcome of these issues is going to take a lot of people by surprise.  What defines the end of a con game is that the con stops working.  Stuff that used to work before, including supposedly iron clad, time tested economic relationships simply don't work anymore.  Does the prevailing wind in a city still work the same way when a hurricane rolls through?  Of course not.  The new system rolls in and over powers the one everyone knows about and is prepared for.  I expect a similar outcome in this matter.  The only thing I know for sure is that it will all collapse at some point because the whole thing is based on un-payable levels of debt which is to say inherently unkeepable promises.  It's like going to a major war and promising your significant other that you will return.  Sure, it might make the other person feel better but it is just an illusion.

There are only two questions at this point that people should be thinking about:
  1. who is going to get screwed when it collapses
  2. when will it happen
Both are difficult questions so the only thing most people can do is to do what they can to make some preparations.  IMO the global currency war that has already begun and which is picking up speed will eventually turn into another kind of war.  Our task is to make the new leaders aware that will are not falling for it and we would rather do away with politicians than fight Russians or Chinese.

Wednesday, November 26, 2014

Uber shark jumping...

Uber is now being valued at $40 billion.  All I can say is HA HA HA HA!  What a JOKE!  This is going to end Uber Badly.

VIX stands a very good chance of bottoming here.

I finally found out how to chart the VIX (as opposed to options based variations or ETF representations of it) using TDAmeritrade.  The symbol is $XVO.X.  Below is the chart of the latest wave down.  I can count 5 waves down but will concede that it could still have a bit more to go down in black 5.

That blue line running across the bottom is the 6 month support line.  Maybe it will have to kiss that in order to finish out black 5 but maybe too many people are waiting for that to happen.  We should know in just a few minutes which way this is going to go but a mid day reversal would be a positive sign for shorts.

Recent article on M+M from Avi Gilbert - Must read M+M insight.

I just found this Marketwatch article by Avi on M+M.  Seems Avi thinks a very long term bottom is near and that a massive 3rd wave up begins once that bottom is put in.  He seems to think we still have a bit lower to make it down to the bottom of his C wave (I can only guess he is sticking with his 105 target on GLD).  He noted recent "gold is dead" themed articles being floated by the clueless media (like the type I have been posting links to of late with the same commentary that they are contrarian indicators) and he recognizes these as being signs of the bottom.   In other words, the main stream media is like the naive shoe shine boy in the old Joe Kennedy story which warned him about the coming collapse of '29-32 and led to the saying that you know a change is near when the shoeshine boy expects more of the same direction of the current trend and begins to give you tips on it.

Here is Avi's link to the HUI miner index (AKA gold bug index) model which was provided in that article.  This is the first HUI chart I have seen from him and what it basically says is that miners are in a long term bull market which began in Y2K ("coincidentally" when the fed saved dot bomb from collapsing by printing money).  His model counted 5 waves up on the HUI into early 2008 which meant we should get some kind of a 3 wave pullback from the 2008 highs.  That wave is an a-b-c affair which took the form of an expanded flat according to Avi's model.  In other words, the B wave of the correction was higher than the 5th wave of the first motive wave up from the start of the bull (circle 1 in his model). 

One detail of his chart is that it seems to predict a bottom for HUI in range of 119-158.  Of course, HUI already dipped down to $146 which is within but at the top of this range.  If I read it correctly, Avi's C wave is expected to bottom at about $119.  In fact his article was released on 11-20-2014 and the title is that it is "almost" time to buy gold.  So that implies that he thinks the bottom is not in yet even though his bottoming window was entered.   In fact, when referring to GLD he says in his article, "I still do believe lower lows will be seen in the metals, yet it will likely be a buying opportunity and not a selling opportunity".  So, yes, he still thinks that the 5th of C is not done yet.  I still stand by my view that most people who don't want to trade should just buy something golden (or at least begin cost averaging into something golden) and hang on for the volatile ride in the sure and certain knowledge that gold will never go worthless.  The leverage hierarchy in this is:
  • physical gold (no leverage)
  • gld/slv (paper metals - they do have risk and leverage)
  • GDX/HUI - unleveraged mid-senior miners
  • GDXJ - unleveraged junior miners
  • JNUG - crazy leverage on the juniors - Because they are based on options you cannot hold this over long periods of time unless the GDXJ shares continue to move up.  If held during sideways markets, you will lose time value on this.  In this case, if you want more leverage you are better off holding GDXJ on margin as long as margin rates are low.

Interestingly (at least to me) Avi's model believes that since 2011 we have been tracing out the C wave.  This is in stark contrast to the current EWI model which I have been vocally and increasingly suspicious of which says that the recent thrust down was just the A wave of the correction (which should bounce to ~1400 and then plummet to $750).  Avi's model makes more sense to me.  I just don't see how gold goes to $750 for more than about a 2 months without killing half or more of the junior miners.  And just 4 months down there could suffocate 80% of them.  They cannot pay more to mine and refine than the market is paying them to do it.  They just don't have the cash like some of the bigger operations do in order to survive long without income. 

So clearly Avi thinks that the HUI C wave should fall lower than the A wave before it is complete.  While we could end up with a short stroke C (which could mean we will never see Avi's HUI 119 target), if the broader indices went into a tail spin starting very, very soon and it pulled M+M down with stocks (they have been trading in sympathy of late), a very rapid move over time could be enough to cause the fed to step back in with QE (this time even bigger than before would be needed) in order to stabilize things.  Once the market would see that move then it would be clear that QE is now a part of the economy; the patient will die without it.  Once that becomes clear, low inflation will be replaced by expectations of rising inflation which would catapult M+M into a 3rd wave. 

So what I see is that the HUI Daily OHLC chart chart has put in 3 waves up to about the level of the prior 4th (that 4th wave triangle from October is pretty easy to spot).  Additionally, the center wave of the recent bounce looks quite triangular suggesting that it could be a B wave (penultimate in a 3 wave correction).  Also, the fib retracement calculator tells us that HUI is right at the 38.2 fib right now.  HUI will need to break out of this with some gusto in order to avoid falling back per the red or blue models below.  Note: I used 129 instead of 119 for the low in the red model below.

Of course, HUI cannot be still down trending if it creates 5 waves up so it's important to have a count that allows us to track this.  By everything that Avi recently wrote, I think this could be the low level model he is thinking about:

SLV could count as 5 waves up.

SLV could count as 5 waves up or as a giant C wave still (like gold still resembles).  Beware any rapid moves up from here which stalls at the gap fill and then pulls back.  Any fall back below the lower rail of the rising wedge is a sell indicator for all things M+M.

Another important data point is shown below.  That down sloping line has been important to the chart for some time now.  Now it appears to be breaking out.

JNUG breaking out.

The GLD chart still hasn't broken out but it likely will given the recent breakout of JNUG.  As you can see from my previous JNUG post, this breakout was a trigger I was looking for.  Buy a dip which is part of some EW count that you have in mind and then set stops just below it.  Chances are with a breakout like this that we should see the action begin to accelerate toward the top rail which is where it likely wants to go before encountering a sizable pullback.  Note: the 38.2% fib line might be where you see a small, buy-able pullback.

TVIX is not moving as I expected it to so I will just go to the sidelines tomorrow on it until it proves something to me.  The holiday season tends to have a positive bias.  It's not a law or anything but it works out like that more often than not.

Tuesday, November 25, 2014

GLD needs to break out real soon now, or else.

I have to say, I am completely unimpressed by the movement of GLD off of the recent bottom.  While nothing is confirmed yet, and while I understand the concept of a slow start that builds up steam over time, I really would have expected a different vibe to the chart at this point.  If someone showed me that choppy crap within the blue oblong with no other context I would not hesitate to say that it's much more likely to be  corrective than motive.  That could all change if we got a gap up and then some follow through that would kiss the top rail of that falling wedge and then fall back in a clean a-b-c.  So that could still happen.  But if this chart falls out out the channel here (which unfortunately is still a wedge) then we have to mentally prepare ourselves for a trip to Avi's original bottom target of $105.

This chart is just heavy, slogging through the mud, not in any kind of short covering situation at all.  Perhaps it just needs to fall back into a 2nd wave in order to gather new buyers for a 3rd wave breakout.  I don't know but I will say that it still seems to be trading in sympathy with the broader markets which have to be much closer to a top than to a bottom. Stocks have been going nearly straight up for the past 6 weeks and I know that is not sustainable.  TVIX currently seems the better bet to me than JNUG even though JNUG was up 8.8% at the close today.  I'll keep an eye on JNUG in case this begins to turn into the old climb the wall of worry trade where it just keeps creeping up endlessly until you wake up one day and realize that it was cheap at one point but now its expensive or has more risk than you want to take on.

JNUG update

The last couple days of sideways chop could have been printing a 4th wave.  A break out of the down sloping orange line would be a buy signal up to perhaps $6.50.  But if my count is correct, that will then pull back to the level of the prior 4th, kiss the top of the rising line and then, if that test holds, take off with gaps and gusto into a 3rd wave up.  If this count is right, rapid gains could be made very quickly for those who are able to put up with the volatility.  At least we have some pretty clear buy and stop triggers using this model.

Boeing update

In my previous update on Boeing, it looked like an expanding wedge was going to be put in.  Instead we got a horizontal triangle as seen below.  Such are the risks of trying to predict the future.  In any case, the horizontal triangle is a pretty reliable indicator.  It is the only wave which RN Elliott said "must" appear at a specific location in the sequence: it must be the penultimate wave.  Thus, the count shown below falls into place.

After the 4th wave throw under, we should expect a motive wave up consisting of 5 waves.  Pink 1 broke back into the channel and tested the top rail before falling back mid channel.  Then we see a series of waves unfold which I have applied a count to.  The compelling thing about this count is that it again tested the top rail from below and could only break out and stay above during a 3rd of 3rd and the breakout was accompanied by a significant gap.  This is what we would expect out of a 3rd of 3rd at this small degree.

If this model is correct then pink 3 is done now or it will need 2 more small waves up to complete green 5 (if that will will be a 1-2-1-2-3-4-5-3-4-5) and thus pink 3.  I think it should begin to pull back tomorrow because green 5 is now about the same size as green 1.

If this is the case then we should get a small 3 wave move back down into the end of the wee, and then a small 5th wave rally into the first week of Dec before the real top is put in.  BA is unlikely to be going up by itself if the broader indices are stating to sell off.

Bottom line, if we get a 2-3 day sell off in the markets which does not appear to have much strength and which shows up as a-b-c on the BA chart then I will expect one more final wave upward.

There is a chance that I the space between orange 2 and orange 3 is actually 2 wave which would change the count so that yesterday was the peak but I like the count below better.  I will bail on TVIX if we get the pullback into pink 4 and then be looking to see if JNUG falls back as well during that time in synch with the broader markets.  If so then pink 5 below should be a nice run for JNUG.

Monday, November 24, 2014

Desperate government will now go after the big corporations.

Governments and corporations have, for the past 60 years, had "fusion" in the form of the military industrial complex which Ike warned us about decades ago.  But this solidarity was based on screwing the common man out of his labor by giving unfair advantage in all things to corporations.  The scam culminated with the shark jump known now as "corporations are people".  Even the nanny state loving liberals saw that as an overstep.  That news item, IMO, spells "peak corporations" for the USA and perhaps for the world.  Instead of giving no-growth corporations all the breaks, government is now going to give small business a better shake and they are going to give large corporations a different kind of shake: a shake-down.

The reason?  Because it is very difficult to raise taxes in a never ending recession (or a depression as we will find in 2015, 2016 and 2017).  But greedy government will not slim down until all avenues of revenue collection have been exhausted and that means going after large corporations.  It will be no different than the gold confiscation that happened decades ago.  Corporations will be targeted not because they really did anything wrong but simply because they have the ability to pay.  The disenfranchised people will all go along with it since all corporations will be painted as evil and greedy (whether or not it is in fact true).

The latest volley in this unfolding saga is Microsoft vs. the IRS.  After all these years of letting Mr. Softy warp the laws to its own benefit simply because the government did not want to mess with growth as long as it was happening, the IRS is now suddenly interested in how MSFT does its accounting.  What's at stake is big money which has not been paid on sales revenues because it was all kept offshore.  In the case of MSFT, that could be up to $29.6 billion in unpaid taxes if government can find legal basis for repatriation of that money.

MSFT is going to have a hard time with this one because citizens think that MSFT overcharges for its products and citizens think that they do not have the opportunity to offshore their income to avoid taxes so why should corporations.  After all, corporations are people, riiiiiiggghhhhtttt?  Bottom line: MSFT has a cash pile and that makes it an easy target and someone with "the ability to pay".  The old Charlie Daniels song says "when you shake hands with the Devil you get burned".  Well, banks and corporations have done more than just shake hands.  They are in bed with the government and now they all better watch their backs because government doesn't care who it parasitically steals from as long as it gets a big share of the pie.

Sadly, anything that the government takes, no matter who it got taken from, ultimately comes out of the pockets of the people even if indirectly.  Example: if government steals MSFT cash pile in order to pay back taxes that were suddenly ruled to be due, think of what that would do to the share price.  Pension funds own that "safe" stock as do insurance companies and individuals own it in their 401ks.  Lots of individuals own it.  So when government steals from anyone, it is always stolen from the people at the end of the day.

Expect the war on drugs to collapse in the coming years.

The liberal police state ramped up wars on everything, wars to nowhere.  The modus operandi was to make up a fake enemy and then take on debt in order to "combat" it.  Everything became a "zero tolerance"  felony and many people were branded felons for doing nothing that hurt any other citizen (which in a truly conservative environment should be the main determinant of whether something is a serious felony or not).

Well, I'm seeing signs from all over that the new conservative wave is reversing all of this at a much faster rate than most people would have thought possible.  In today's news we find the kid who was selling weed brownies in Round Rock, TX. and who the liberal police state trumped up charges that treated him as harshly as if he were a mass murdering drug lord.  But instead of the kid going away for life as was the original threat, the kid won't see any jail time at all.  The state can never just admit that they overreacted so the kid still got 7 years probation and that is no joke.  But compared with the possible punishment for the trumped up charges, it is a relative hand slap.

Expect to see more decriminalization of nonviolent drug crimes.  Whether or not someone does drugs is not a matter for the state to concern itself with.  If someone does harm to another person, whether it be physical or economic, then we need laws to penalize the perps.  But nonviolent drug use and sales is not criminal in nature and all it does is create a violent black market for same.  The state does not own us.  It does not own me.  As long as I am not hurting someone else I have the inherent and unalienable right (something that is given to me by God as opposed to something I am allowed to do at the pleasure of the state) to live my life however I want.  This freedom is fundamental to the pursuit of happiness as discussed in the preamble to the constitution.  Without this freedom, I will never be happy.  The state does not have the right to limit my happiness and I will not accept the usurping of my rights by an overstepping, corrupt liberal political police state.

M+M update

GLD has stalled up against an invisible line that would exist if drawn parallel to the clearly established lower rail of the channel.  It calls into question as to whether the recent bottom in the 109s was "the" bottom for this wave.  What we need to see to confirm the bullish model is for a gap up above that top rail to occur, and very soon.  As in this week.  Failing to do this will call the already corrective looking bounce into serious question IMO.  It could be that the October bottom was 3 but that the subsequent rise to $120 was a of 4 instead of all of 4, then the next move down b of 4 and now finishing c of 4 at 115.  This is not my primary count but GLD should not be stalling here.  It just does not have that motive vibe to the wave.  I would change my mind if it could gap up from here but until it does so I fear that Avi Gilbert's $105 price target could still materialize and I know what that would do to JNUG over the short term.

I don't get into a trade when there is this much ambiguity.  My caution could lead to me missing a nice AM gap up but that would be a longer term buy signal for me even if I have to chase it a little bit.

Made man at [UTX] is ousted

The CEOs of our little liberal military industrial complex are like made men in the Mafia.  It is a long standing theme of mine that as part of the coming economic and stock market collapse we will see lots of these organizations turn on each other and infighting will take down many of the mob bosses.  Today Louis Chenevert got his walking papers from military contractor UTX.  These guys never leave because they want to.  They leave because they are forced out and this is often done when they know a very bad quarter is coming up and they want to get ahead of the damage by firing the offending capo.  Of course, when the entire tide is sinking that means a lot of capos will get double taps in the coming 2 years.

So lets go to the charts and see what they have to say.  Well, the UTX chart is screaming "SHORT ME NOW!!".  I see 5 clear waves down and then an a-b-c retracement back up to exactly the 61.8% fib.  That last little spidery move is likely going to reverse just as quickly as it was created and we should expect gaps downward as wave 3 plays out.  Pick your favorite Jan 2016 puts on this one even though the chart implies that the May 2015 $90 puts will likely be in the money.  Prices below are last, bid, ask from Yahoo but I know they are old because I just paid .90 for 10 contracts in order to get my toe wet here.


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