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:
- 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.
- 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:
- who is going to get screwed when it collapses
- 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.
3 comments:
Mornin' Cap'n and Happy Thanksgiving!
Here's a link to a Tyler post on ZH I'd like you to comment on...
"As the S&P 500 has now closed above it 5-day moving-average for 28 days (today will be 29)...
http://www.zerohedge.com/news/2014-11-26/madness
This has never - ever - happened before in US equity markets."
Are we seeing massive equity buying from the fed? What will stop and reverse this juggernaut?
I've been playing the TVIX and JNUG trades along with you, as well as the GE, AMZN, puts and a couple of others. October 16th, when you called that back bite had finally killed the bull, the Dow has risen significantly. What is the cause? Being a natural contrarian and have been shorting these markets, a comment on the ZH post caught my attention... "Bond vigilantes got wiped out in the 80s. There are no more bond shorts and haven't been for decades. They're now in the process of wiping out stock shorts. This is why we see H.H et al capitulate. Soon the stock market will be marketed as a private retirement account and privatizing SS will be linked to it, allowing perpetual inflows (emphasis mine).
Now, that comment may be ridiculous, but perhaps not? It's looking and feeling like there may be no end to this very soon. The markets seem to be ignoring the technicals and EW analysis. I look forward to your take on this.
Best regards,
Steven B.
Other central banks are indeed buying equities - they simply admit it outright - but ours has not admitted to this. I suspect that it is and that they know it is wrong. Look at the thin volume on the major indices. This looks like low numbers of players now playing. They are not attracting the people. They are, if you will, playing with themselves. What good is a con that doesn't include patsies? What good is a Ponzi scheme which doesn't include an ever increasing number of them?
As a student of economics, the markets and history I know that, despite appearances, the central banks are not omnipotent. IF they are buying worthless stocks at too high of prices, the market will gladly sell to them. At some point the central bank has to make a decision: save the markets or save the middle class.
Because the US middle class is getting screwed, it is finally waking up and it is voting. The liberal congress got creamed during the mid terms and the new conservatives will soon be demanding to audit the fed. When it is made public that the fed was buying stocks with public debt that the middle and lower classes are on the hook for even though most of them don't own stocks, the whole thing will stop and quite suddenly IMO.
Ponzi schemes always look like they will go on forever while they are running (at least to those who are emotionally caught up in them). While nobody knows when they will stop, they always do. Fortunately for me, the vee 4th wave of TVIX completely recharged my batteries and then some and since I use stops I have not eaten all of the pullback. Also, my recent bottom calls on JNUG have proven nicely rewarding. So I still have a full arsenal and continue to add to my put position over time.
Another more powerful market swoon is coming soon. All the indicators point to it. Everyone is all in. All the shorts are in a panic and throwing in the towel. As Hugh Henry (HH) once said, "my rose blooms in winter". Well, so does mine but I'm counting on my EW skills to help me discern the seasons better than Hendry can. He knows nothing of waves, he only goes by fundamentals, many of which are unknowable when price discovery is distorted using debt. But the charts account for use of debt.
GL with your trades.
By the way and for the record, the ZH statement that "Soon the stock market will be marketed as a private retirement account and privatizing SS will be linked to it, allowing perpetual inflows" contains the "p" word.
As in "perpetual".
As in ZH now thinks the current trend will continue forever, that trees will grow to reach the sky and that cycles in this particular case do not exist.
This is what happens when people let their emotions and herding instinct take the place of a model based approach. But funny as it sounds, my model says that when ZH throws in the towel like that and begins crying "foul", that is a sign of the peak.
If you want a very sure thing my friend, go buy DUG. The central banks want lower oil prices because it leaves more disposable income for making house payments and thus supports the real estate Ponzi which all banks need to keep running in order to survive. So the drillers have deflation and the central bank manipulators and the Saudis working against them. Talk about an unholy trinity! Today DUG is at $48.25. Again, GL.
BTW I obviously meant Hendry, not Henry for HH... Even I can't edit my own comments on this blog ; )
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