Wednesday, December 31, 2014

[RUSL] update

Here is my previous RUSL update.  As you can see when comparing that chart to the model below, my timing was pretty good in terms of expecting resistance at the 2-4 parallel but the chart has not headed down as hard as I had hoped into blue 5 and now since I think USO bottoms very soon I cannot see how RUSL will crater if USO is rising.  Quite the opposite I would expect.

Today's move down could be counted as a 5th wave.  In other words a massively failed 5th.  I bought some at the close in the hopes of at least catching the pop to the level of the prior 4th ($20.50) but also with the understanding that today could have been a failed 5th.  If this is the case then I think it needs to move up from the open tomorrow.  My stops are set tightly and I can only hope this goes back down rapidly over the next few days to the $6-$8 range so that I can load the boat.  I doubt I will get so lucky.

UVXY update

Here is the back link to the previous post/working model chart for TVIX/UVXY. It was mostly bullish while allowing for the possibility of one more small dip lower which we did not end up getting.  I did post this threat model to BOLO for as well but today the chart blew right through all of the potential resistance points.  This smells bullish all the way.  Keep in mind that the chart is up 25% in just the past 4 trading days so we are due for a pullback soon as shown in the blue model but I think it will struggle to put in a 38.2 fib retracement.  I think there is a lot of pent up shorting of the VIX based on the sure and certain knowledge that the federal reserve either "can't" or "won't" let it fall.  Neither of these emotional sentiments make any sense.  If the fed ever had the power to stop crashes then none of the major crashes in history would ever have taken place.  I hope nobody believes that Bernanke or Yellen are any smarter than any other elitist bankers of history.  They aren't.

The market is bigger than the federal reserve despite how the old wizard tries to play his magick to get the herd to believe otherwise.  I've been actively trading TVIX and UVXY for just under a year now and my model view has never been stronger that a major bottom was just put in here.

Buy the dips and of course always use stops near the major turns in order to avoid deep vee seconds or incorrect counts.  For example, we could possibly still be forming a HT with UVXY.  That is not my primary count at this point but neither can it be counted out.

In order to get really bullish we need a break out of $32.  The first resistance between where we are now and $32 is $26.50.  I do like the way the previous high left us with an up-sloping trend line.  Again I see that as trending bullish.

GDXJ and USO update

USO did an intraday reversal today but GDXJ/JNUG still closed red even though well off their lows.  Call me crazy but this doesn't seem like 3rd wave action here.  The jury is still out but I went ahead and bailed as soon as it touch the top rail of that rising wedge marked wc?  If it breaks out to a higher high, especially if done on a gap up, then the blue path is likely in play and I'm back in but right now I need some more evidence that this is not forming some kind of massive falling wedge per the red path.

Again, I think it is just too early to forget about Avi's $105 GLD target and the action looks more corrective than motive.  I'm not emotionally attached here which is why I don't mind trading out if I smell resistance.  But when this bounces it is going to be a major bounce and the level of the prior 4th is $200.  That technical level does not change if JNUG goes lower.  It is fixed in the chart.  That's how oversold the juniors got.  $200 might sound like a lot but its only a 10 bagger from current levels and we are basically dealing with liquid options here.  10x gains are not uncommon with options if you get the timing right.

Bottom line, GDXJ and JNUG need to show me something before I want to get back in.  They need to show me either a throwunder of the lower rail or they need to break out but right now they are in no man's land and its a coin toss which way they go.

Having said that, gold and oil will likely trade fairly in synch near the bottom here and I do not count USO as having completed 5 down yet. Having said that, I've been modeling USO down into the $19.50 range for a few posts now including yesterday's post whose model was followed pretty well today.  I did move red 4 in the model but it is essentially saying that we are 1-2 days from a very solid bottom in oil.   So if the thesis holds that oil and gold will bottom fairly close together then perhaps the miners just do a 38.2 fib pullback from here and then break out the top orange rail of the wedge above with conviction.  That would be a buying signal for the juniors. 

$COMPX update

The DJIA and $COMPX are both green but UVXY is up as well which I take to be bearish divergence for the broader markets given the wave count for $COMPX shown below.  5 clear waves down have given way to a wedge shaped retracement to about the level of the prior 4th as well as just shy of the 50 fib (so far).  A quick move above the top rail followed by a plunge back into the channel is the $COMPX breakdown signal.  Nothing is confirmed until we get the breakdown below the top rail and then second confirmation is breakdown below the bottom rail.

I like UVXY and TVIX here.

USO update

Today's drop was expected by the model of my prior post on USO.  The count below shows a slightly more aggressive version which uses the 1-2-1-2-3-4-5-3-4-5 extended 3rd wave stutter step.  An eventual bottom in the $19.50-$19.60 range is still expected.

Note: these 5 waves down could turn out to be just 1 of 5.  I don't count them like that at present but one should keep it in mind.  The nature of the first big bounce off the bottom should give us a pretty good clue.  If this is just 1 of 5 then during 3, 4 and 5 of 5 we should expect gold to hit Avi's 105 price target which means miners could take another hit.  If that happens, buy big because that will have very strong odds of being not just "a bottom" but "Avi's predicted bottom".  If that is correct then this is a major, major bottom and the next wave up is blue sky for miners.  See the earlier posts where I presented Avi's HUI model for more detail.

PA reaver killed after refusing to surrender for the crime of making online threats against police.

It's just getting more and more ugly in the US IMO and the latest evidence is this story in which a Pennsylvania man made online threats against the police and then reportedly rammed a cop car when cops tried to arrest him for it (making online threats is illegal!).  If what the police have reported is true, and such reports are always a question for me before actual evidence like dash cam video is presented, the guy basically rammed one of the police vehicles with his own thus pretty much begging to be killed on the spot.  Again, show us the dash cam before anyone should believe anything the police have to say because they have, through their own corrupt acts, lost the right to be believed without question by society.  As far as I am concerned the police have lost all trust of the people so they need to justify their actions going forward. 

Having said that, I suspect that this guy was dangerous and that he was likely a reaver based on his (again reported only so far) Facebook rants and threats against police.  If you are still unfamiliar with the concept of a reaver, it is part of the Firefly TV series / Serenity movie lore.  The central authorities tried to calm (AKA control) a whole planet of people using chemical social engineering techniques.   The main culprit was a substance known as G23 Paxilon Hydrochlorate or "Pax" for short which was purposely emitted into the planet's atmosphere by the corrupt central government.  Eventually, 1/10th of 1% had the opposite reaction to the Pax.  They basically went crazy and began killing anything that moved.  Credit is Pax.  This opposite reaction of the reavers is one of the so called "unintended consequences" (a term often used by Austrian school economists) of using Pax (aka credit) to control social mood.

Why did this PA man suddenly begin blindly hating the police to the degree that his own life no longer mattered?  This is not rational!  It would be one thing if they killed his little brother or mom or dad or maybe even his dog (police like to kill people's pet dogs for some reason - its a Google-able epidemic in the USA right now), etc. but we get no indication of this so far in this case.  All we get is that some guy went crazy for no apparent reason. 

Well, since I predicted this day would arrive and since I wrote about the cause many times, none of this surprises me.  There is always a certain percentage of people who just cannot have someone else meddling in their lives to a greater degree each year.  Each time a new edict and order and new restriction is issued against the people, the reavers-to-be let it eat into their brains like some kind of worm and over time it drives them crazy.  Their brains begin "squirming like a toad" in the words of Jim Morrison.  Some people simply will not put up with "the man" symbolically pushing its finger into their chests repeatedly while repeating their mantra of "zero tolerance, zero tolerance" and "if you see something say something" and all the other Nazi propaganda coming from the central government these days.  For people with a certain brain structure, these things are like small cuts or cigarette burns to their psyches.  A few can be brushed off and let go but when it becomes a constant, daily reminder that the individual is shit and the police state is God then you are simply going to get some people who will not worship and they will deeply resent, in an almost religious manner, the intervention of the police state into their lives.  For some people it is a form of psychological torture which eventually drives them insane.

Unfortunately for the police, like in Serenity, reavers might be crazy but they are not stupid.  In the series/movie they even self-organize into gangs.  I suspect that similar things are happening right now which is why I want to educate the police on what they are up against so that they can, very quickly if they have any intelligence at all, reconsider their current iron-fisted militarized policY eNFORCEMENT strategy.  The reavers-to-be just got the obvious message: don't advertize on FB your intentions.  Police should expect such stupid self-outing of reaver status to occur less and less over time while more and more organized police take-downs begin to appear.  I really hope I am wrong about this because the whole thing - on both sides of the equation - is messed up big time.  But unless the police do a concerted, public and obvious toning down of their excesses then domestic terrorism will be on the rise going forward and much of it will be directed at the police.  This will benefit nobody!  What needs to happen in order to de-escalate this situation are things like the following:

  • Stop presenting the public with the militarized zero tolerance game.  It's not working.  People are not cowering in fear from you, at least not the ones that you hoped would cower.  You are creating reavers!!  Also, you are losing support from women who are now starting to believe that you are more of a danger than a benefit.
    • Enough of the Nazi SWAT uniforms for everyone already!  Tone it down 5 notches!  Also, return all police cars to the visible black and white or blue and white standard.  We do not want you to blend into the population.  We want a visible deterrent to crime and we want people to be able to readily detect any police in the area.
    • Enough of the no knock warrants.  Finding a few ounces of drugs is simply not worth the loss of public trust this vile tactic is creating.  Remember: you cannot hide behind the whole "we acted within the law" line.  Man can create endless laws and today pretty much everyone is a felon for one thing or another.  Thus is the current nature of our police state whose mantra is "zero tolerance".
    • Ditch the MRAPs.  Stop the passive-aggressive threat game.  Calling an MRAP a "search and rescue" vehicle fools nobody and only creates more reavers who will not live in your little paramilitary head game paradise.  In the long run it is a game you cannot win.
    • Figure out how to return to the 1950s beat cop image where people actually saw the police as helpful servants.
    • Police that turn their back on the mayor, who is the elected representative of the people,  should be fired on the spot.  We cannot have this kind of rogue element within our police force.  It sends the message that cops don't want to be reined in and that they don't see the mayor as being in their chain of command.  It sends the message that they think they are above the need to care about public sentiment.
  • Have a professional outside review done of each incident involving police violence upon a member of society.  This is not served by having peers or police mgt do the investigating.  It must be an outside, civilian based nonpartisan effort to get to the truth.  Transparency must be 100%.  Trust in the people!  If a bad guy needed killing, they will side with you but only if they feel like they are getting the full truth.  Yes, some crazy bad guys do need killing!
  • There must be some kind of higher authority responsible for looking into police abuses so that the fox cannot be left to guard their own hen house as was initially done in this striking case.  Note: this is a good example of how the G23 pax side effects of empowering the police state actually works to create reavers.  That kind of disturbing video can create negative emotions in even the best of men and the woman victim will be emotionally scarred for life.
  • In general, do the right thing because it is the best path for society, and avoid doing harmful things to the public just because you think you can get away with it under the current law.  In other words, get your minds right.  We the people are collectively your boss.  If you don't like it, get another job.
I want to close with a post on the differences between domestic terrorism, survivalism and patriotism because, while I believe the line is well defined, the police have been attempting to blur it such that every noncompliance with zero tolerance is domestic terrorism.  In general, the people are free and they have rights.  Anyone who is simply exercising their natural and constitutionally defined rights is not a terrorist. 

For example, you have the right not to be killed by police for nonviolent crimes.  You also have the right if not civic duty to stop police from hurting or killing people indiscriminately.  And you always have the right to self defense regardless of whether the bad guy is wearing a badge or not.   If the police roll up into my home without a warrant then they will be fools and idiots not to expect me to defend myself from them.  As can be seen in the disturbing video of the cop and the woman in the court room, the people can no longer reasonably expect any and all police activity to be legal or moral.  Many police are brazen in their corruption.  Good cops need not feel threatened by me.  Just show me the legal warrant, guys, and I will stand down.  Sorry, your word isn't good enough anymore and that fault is on you.

Clearly, the heinous murder by the crazy guy of two beat cops as they sat in their car was not patriotism or survivalism.  It was domestic terrorism; a simple revenge killing by a lost soul who thought he had nothing to lose by doing it.  While understandable in nature and yes, predictable within the context of the state-made reaver, it was inexcusable, reprehensible, unforgivable and cowardly in nature.  This is not patriotism or survivalism.

However, lets go to a grey area.  Lets say that, while NYC police were carelessly murdering Eric Garner on the street, his children arrived on scene to see and hear Eric gasping for breath and begging police to let him breathe.  Let's say the kids had the reasonable expectation that their father would die from this treatment.  Had they produced guns, pointed them at the cops and told them to stand down or face death then I would not call it terrorism even if it resulted in gun play and death of cops.  I would call it survivalism.  What good is it to comply with corrupt zero tolerance laws, allow the police to kill your family so that maybe they can be sorry later on (or maybe not)?  This is not to say that citizen guns should have been used to release Garner from police custody.  The cops had the right to arrest him.  But the citizens had the right to stop them from killing him for it.  Sadly, police would have turned such an incident into a blood bath even if no citizen shots had been fired.  Then they would have claimed that no matter what they were engaged in that nobody ever has a right to point a gun at them.  This is where I will always disagree with cops.  Their police status in no way reduces an individual's right to survival and it it is fucked up of them to think otherwise.  Police are not God after all. 

Everyone who is not hurting someone else has the right to physical safety and no matter who the bad guy is.  In the Garner case the real criminals were the murderous police officers who choked and otherwise asphyxiated Garner to death and then didn't even bother to do CPR once they determined that they had stopped his breathing.  Note to the cops: only a coward or a fool will sit there and watch you murder his family simply because you claim the legal right to do so.  Survivalism extends to ensuring that family members survive too.

Patriotism is generally a nonviolent act and it must not turn violent until after the state disposes of the rule of law and devolves into a criminal free for all for the authorities. For example, patriots will resist, by all means available, the mass collection of constitutionally owned weapons.  Allowing the fox to disarm the chickens is an act of abject stupidity and attempting to do so is a declaration of war against anyone who knows anything about history. 

Prior to state-dissolution of natural and constitutional rights, Patriots will do every nonviolent thing within their means to prevent the situation from going past the point of no return so that things don't have to get violent.  I consider these blog posts such an effort.  Martin Luther King was a patriot and was completely right: "Nonviolence, nonviolence".  Patriots must work within the system as long as the system stands but they must also prepare for the possibility that the state will dissolve the social contract and collapse into tyranny. 

We are still a long, long way from that!  In fact, recent public swings back toward conservatism have been very uplifting and should be sending a positive message to the many people who already incorrectly believe that we are beyond the turning point.  I'm not saying that rampant tyranny won't eventually happen but I see a lot of positive moves happening across the board which tell me that the state has not concluded yet that it doesn't need the consent of the people in order to govern.  This is in fact the beginning of tyranny: when the state thinks it has the right to govern without popular consent. In fact, just the opposite seems to be playing out: the state is beginning to show fear that it will get kicked out.  When the government is fearful the people should rest easier.

Tuesday, December 30, 2014

Vermont figures out that social medicine scam is bust.

In another major sign of renewed conservatism, the liberal democrat Vermont Governor, Peter Shumlin, abandoned his plan for a single payer health care system for the state.  You can read more details over at Mish GEA but the bottom line is simple: Governor Shumlin had to admit that the whole idea was a piece of shit given that, in Mish's summary:
  • The plan would cost far more than estimated
  • The plan would quickly become insolvent
  • Massive tax increases would be required
  • Coverage would decline for many

  • So did Governor Shumlin just now figure out that the math didn't work on his little scam or is the truth more like he woke up to the fact that people are now looking with a new conservative eye at what politicians do?  I suggest the following:
    • Shumlin is a smart man who can do math and he knew the truth a long time ago.
    • All liberal spenders know the truth!  But they plan to use debt (deferred admission of the mathematical truths involved) or transfer payments (rob from the middle class to give to poor voters) to ram their scams through.
    • They know that one or two dissenters is normal but when they see people wake up in droves and vote against them they know they have reached the point of diminishing returns in their vote garnering scam.  Shumlin is only coming clean about his scam and flushing it down the toilet because it now has negative consequences on his political career.  He is not doing it because of the math.  He is doing it because of the public awakening.
    • Expect more and more of this kind of thing to unfold into 2015 and for years beyond.  Expect government to stop propping up their corporate buddies as they did when the people were not paying attention.  In fact, expect them to go claw a lot of that money back in some form or fashion including lawsuits and jail time that again send the message to US corporations that government is now siding with the people and against big business.  
    The democrats are screwed in 2016 but not all of the new conservatism will be a good thing.  People always have to swing too far to the left or to the right it seems.  Wait until the US stock markets, which have clearly been bouyed by direct government action are left to fend for themselves.  Stock market participants have not figured it out yet buy Yellen does not have their back.  When things begin to tank she will not prop them up like the fed did before.  Her income inequality speech was fair warning to anyone with an understanding of the cyclic nature of social mood.

    Conservative hits just keep on rolling in.

    Today's story of renewed conservatism surrounds the so called "nut rage" story.  In short,the daughter of the Korean Air magnate had been given titles and power far beyond her maturity.  This is of course a typical liberal act (nepotism...).  During a recent flight she was served some nuts in a manner that was not up to specs for first class passengers.  The nuts are supposed to be served in a dish, not in a bag.  So the woman had a hissy fit about this and demanded a return to the gate in order to kick off the offending stewardess.  After all, rules are rules and bureaucrats fiercely demand zero tolerance to the letter of the laws they create.

    Too bad the offending spoiled brat, one Cho Hyun-ah (AKA "Heather"), has not been reading my blog.  Otherwise she would have realized that liberal outbursts like that only work when the liberal wave (credit buildup that increases the money supply)  is flowing.  Now that liberal bullshit is being back-burnered because of the stagnating credit that is leading to a failing global economy, all of that zero tolerance bullshit mindset has to go.   According to Reuters, the first response by Korean Air was "a half-hearted apology that appeared to rationalize Cho's conduct in the face of what it said was inadequate performance by the cabin crew".  

    But this was only after "A probe by South Korea's Transport Ministry concluded that Cho abused flight attendants in the incident, and that airline officials may have tried to cover up the episode.
    The ministry came under fire after revelations that some of its officials leaked information to the company and committed other misconduct during the investigation. The ministry said on Monday it would penalize eight officials involved in the case".

    In other words, Cho tried to hide behind the power of the corporate entity as well as probably more than a few well placed calls by daddy to government officials to sweep all of this under the carpet quietly.  After all, why not go this way?  It's worked so many times before after all...  But for some strange reason, Cho is also up on charges for the incident.  She did not just skate out.  The article in fact said that they took her to jail (at least for a short time....), "On her way to a detention facility from the prosecutors' office late on Tuesday, Cho was flanked by prosecution officials and did not respond to questions from media, only saying "sorry" several times, her eyes closed and her head bowed.".

    Ohhhhhhhh!  So now it's head bowed and eyes closed!  And now Cho is sorry about everything!  Again, this is the same all over.  The elite get full of themselves, they believe they are entitled to everything and they forget that the worker is who generates ALL societal value.  Then they get abusive and as soon as the prosperity that the elite are taking all the credit for producing collapses, the people suddenly begin to chant for blood.  Bottom line: people have the massive weakness in that they are generally only sorry for getting caught, not for the act itself.

    Because the cover up backfired, daddy had to fall on his sword in order to do damage control. Instead of defending her actions, daddy dearest finally publicly agreed with the popular negative assessment of the daughter's behavior by his actions in which he "stripped her of her posts at the airline and also an affiliated hotel chain, and apologized for failing to raise her properly".

    Asians are very concerned with the idea of saving face (which is not at its root a bad thing IMO).  For the family patriarch to take all of this shame upon himself shows how seriously he is (finally) taking the offense she committed.  He did not chastise her for behaving childishly which would have been bad enough but perhaps taken simply as more pandering to the critics.  Instead, he fired the bitch and then took personal blame at the parental level.  It might seem funny from the perspective of a westerner but from an Asian perspective this is no laughing matter and the implications just exploded across the region like a C-Bomb (C=conservative!).

    The fact that Cho acted like this in the first place simply shows what she had grown accustomed to getting away with.  All people were low life underlings to her whose only purpose in life is to follow the rules thrust down upon them by the ruling class.  The same mindset is true for the liberal police state in the US.  When the mayor of NYC sided with the family of Eric Garner (but only after seeing the political damage done to liberals in the mid terms coupled with public reaction to the Michael Brown incident), the NYPD continued acting liked the spoiled child in the matter.  Instead of listening to the direction change, they turned their backs on the mayor as if this is a sound strategy. 

    Cho's daddy did not publicly kick his own ass and hers as well like that "just because".  He did so because he knows a lot of good people are suffering due to prolonged economic problems and they do not want to put up with rich people's bullshit anymore.  The wealth schism got too wide and people began to notice.  I have written many times that this would happen and indeed it has.  In fact, the Reuters article stated it clearly, "Cho's case has aggravated public resentment towards the country's powerful family-run conglomerates, called chaebol, stirred by their dominance of the economy and a widening wealth gap in society.".   Cho's daddy did what he did in order to quell a pitchfork revolution.  He finally reached out to the people.  Out of fear that things could go very south in a hot hurry, he empathized with them and he took real action.   An elite head, and that of his daughter no less, rolled.  This was damage control but at least it was not half-hearted the second time around.

    NYPD cops better wake the flock up, and soon or they will too face a pitchfork revolution but with the AR15 and 9mm parabellum being the new pitchfork.  No matter how smart they might try to believe they are, the Cops cannot defend themselves from crazy fvckers who have lost everything and feel they have nothing to lose so now they are going to "lose it".  There is no defense!!  Cops of America, I obviously feel you have brought the increase in police ambushes down upon yourselves by using heavy handed military "shoot first, you life doesn't matter to us" tactics on the people.  Like Cho, you got used to getting away with this. I'm here to teach you the history lesson you obviously slept through which is that armed people don't put up with this shit once the credit induced prosperity collapses. 

    I don't want to see anyone get hurt!  If I'm mad at you more often than not it's because some cop just killed some unarmed person for a "zero tolerance" liberal police state reason (not because they were actually an immediate danger to society).  YES, there is a time and a place and a reason to kill violent criminals who are in the act of doing violence but you assholes have turned that into a license to kill and a license to intimidate.  You have created a two tier legal system in order to support this corruption.  We the people are tired of it.  I strongly suggest that the people cannot fix this.  Only you can fix it.  YOU must show the leadership, YOU must rebuild the bridge because YOU are the underlying problem.  Don't think it can go on like this forever because if the courts won't stop you the people will eventually give up on the courts and take matters into their own hands.  Again, this is not intended to be a threat but rather a historical lesson which drives a modeled prediction.

    One more thing: don't think for a second that my desire for peace means I am willing to give up my constitutional rights.  In other words, there will be no peace if it means the people must drop to our knees in order to receive it from the zero tolerance police state.  The founders of the USA would have spit on the graves of anyone who caved to that crap.  Mutual respect is needed and nothing short of that will suffice.  Time to wake up, boys in blue, before the people stop toying with you on this matter and begin to get seriously pissed.  We are not far from that point IMO and so you must do an about face right now.

    Just got my little toe wet with TRX

    I own quite a few options short on the general market (mostly GE 2016 and those of course I don't trade).  So I want to hedge with some long option plays that again I won't trade.  If the markets go up from here then inflation expectations will be ruling the day (for now) and in the case the junior miners will be the biggest winners.  JNUG has time value associated with it so it is difficult to buy and hold.  So I decided to pick up a 2K TRX in the AH trade @ .64 in order to begin building what is essentially a non-expiring call option in gold and silver.  TRX is one of the weakest players (meaning leverage is highest) so I don't want to go very deep into it.  If we get more weakness then I will pick up some DRD as well.  I don't plan to trade this given the low dollar value of the holding.

    UVXY update

    UVXY is getting the bounce after filling the gap as modeled in the prior post so it's time to look at what could go wrong in the near term.  Below is the model for the next threat I see which is that the recent wedge, although not fully formed with a throwunder, was just a 3rd of some kind and that the action since has been an a-b-c correction that will fill the gap shown during orange 5 of blue c of red 4 as shown below.  I will sell my UVXY if it pauses @$22.50.  Then I'll observe whether the pullback comes to the prior 4th in 3 waves or if it is going lower in a more motive fashion.

    This is my alternate model but will become my primary if ~$21.50 cannot hold on the pullback.

    USO update: model indicates it should bottom within 1-2 days

    Backlink shows a model that is working as expected per below.  The odds favor a USO bottom in the $19.50 - $19.60 range.  CJES and RUSL represent more leverage respectively on the coming bounce in oil.  These equities began their bounce a bit before the underlying commodity is modeled to do so.

    [CJES] update

    In my previous post on CJES my model suggested that WC 4th wave might have formed but then we got a small pullback and then a slightly higher high so that wedge now counts as W3 of A, then 4 then 5 of red a.  Then a 3 wave retracement to red b, and now I think beginning to wind up for a strong red c.  The usual candidate turning points are shown below in red.   Set stops at $13.  Why?  Because its about odds and not certainties and below $13 I don't see how we are forming re c yet.  As long as we continue to get this higher low, higher high rolling start that we see here it suggests a strong c wave.  But if my proprietary W3 indicator proves correct again, that bounce will only be wave 4 and 5 quick waves will likely form a double bottom but could go lower.  So be sure to take profits when the charts tell you to.

    By the way, this is a similar chart prediction to RUSL so for those who like more action, see my recent post on that ETF.   Also note that in general I would rather go long than go short as long as the chart action makes sense.

    [RUSL] update

    There are a couple of old investing (gambling) sayings that apply to right now with RUSL:  First, don't catch the falling knife.  Second, buy while there is blood in the streets.  If you are not careful about following rule 1 then the blood mentioned in rule 2 will be your own.  This is where EW is your major friend.  Just Friday, Mish said he liked Russian stocks only to have the bottom fall out again today.  Mish is a smart guy and I think he is right about Russia being near a bottom but "near" can be a lot of money with the kind of volatility we are seeing not only in leveraged ETFs but in junior markets in general.  Still, he never talks about the stock price charts when in fact that is all that really matters.  Anyone listening too carefully to him in real time would have caught the falling knife.

    Fortunately, I keep my own charts and I bailed on RUSL near the top pre 6:1 reverse split.  From this post I offered the chart below whose mode indicated wave 5 down should begin soon and in this post I cautioned to only buy in the "significant dip".

    Today RUSL tanked up to 26% at one point and closed more that 23% down.  So the question is whether or not this qualifies for the term "significant dip".  I think it is time to present the big picture on RUSL which you see in the chart below.  The fact that you cannot read all the labels at this zoom level is not important for now.  What is important is the green 3, 4 and speculative 5 labels.  I know it sounds like a lot to hope for but these shares have been falling hard for a long time now and after 5 waves down you are going to get a large 3 wave retracement.  Green 4 @~$200 is the the primary target for that bounce.  When Russia gets a break from the pounding (and it will....), lots of money is going to be made on the bounce as shorts cover en masse.

    Below is the zoom in.  That 5th wave could require a trip to the top channel before playing out (red model) or we could get a small bounce tomorrow and then wave 3 of 5 down later in the week.  Either way this could end up back down at $8 in short order because blue 2 was a complex sideways wave and therefore wave 4 should be a fast and furious vee type wave.

    Zooming in more, I suspect that the top rail will be hit for blue 4 before the final collapse into wave 5.  If this is true then the current wave should bottom very soon or even already.

    Zooming in again, I model the chart needing small waves 3, 4 and 5 to play out down to the 61.8% fib.  Then I have to suspect this is a buy but use 5% stops just in case.  Anything significantly lower than the 61.8 retracement has to make me wonder if this is just going to finish green 5 down right now.  Target for green 5 should be around $8 at which it becomes a super strong buy for a huge short covering ride.

    Monday, December 29, 2014

    KKD looks ready for another wave down.

    Krispy Kreme probably just finished a 4 month, 3 wave retracement of its first wave down of the crash.  It looks to be entering 3 of 1 of C so I expect a rapid break down from here.  It would not surprise me to see that small gap filled by the coming C wave.

    [DDD] (3D systems) looks ready for a significant bounce

    DDD is a leader in 3D printing - a field which has a bright future to say the least.  Additive manufacturing is going to expand and grow in the future because of all the low cost, custom parts that can be developed using the tech.  It makes it quick and easy to prototype new ideas.

    But the shares got ahead of themselves in panic buying and darned near hit $100.  They have been giving it back ever since and they now trade at ~$33.  These could have one more wave down into the $25 range so I would buy here and stop out at $30.It's hard for me to count 5 up on the left.  It looks more like an a-b-c.  So I would not guarantee that the next wave up is a 3rd but it might just be.  This could be forming a large HT but that still means a ride to $70 ish.

    This has a lot of the characteristics of a deep vee 2nd.  Wave C going down is now the same size as wave A and that is a popular place to reverse.  Also, the chart stopped at the same level as the last big dip down which happened on the way up.  I'm usually not big on buy and hold but if this finds support here I could see how many people would want to buy and hold.  This company is in the right field at the right time.

    KO (Coke) looks ripe for a 3rd wave down.

    It's been a long standing view of mine that the coming collapse will take down long time investing icons like Buffett.  Coke is one of his favorite plays but it is now ready for a big pullback.  In my previous model it looked like the plummeting had begun but it was just a retracement.  The weekly chart now has a pretty strong looking top in place, underpinned by W3 and then a higher high.

    On the right zoom in is wave 1 down and then what is likely 2 back up.  That move back up was a 61.8% retracement which just filled the gap created by 3 of 1 down.  The could also just be A of 2 to be followed by a higher low into B of 2 and then C of 2 higher into mid January.  However, that is not my primary model even though I will be keeping an eye on it.

    If anyone was thinking of buying put options on KO, now is the time.  Again, the best time for longer term options tends not to be the actual peak of wave 5 but rather at the extreme of wave 2.  I like the Jan 2017 $30 puts at the current price of about $1 (last bid ask):


    KO could hit $36-$37 in the coming 3rd wave down.  You could leverage up by pulling in the expiration to Jan 2016 by going for the $37 puts at just over $1.20.  I like the fact that the spread on these is pretty tight:

    For those who care about so called fundamentals, KO is overpriced by every metric.  Price to book is an outrageous 5.6 and PS is 4.  These are very high for a low (and now negative) growth company.  Of course, I don't think those numbers are why it will swoon.  I think that the herd got giddy on stocks again because of the use of leverage and everyone bought up Kant Miss KO because they wanted to be like  Buffett: all nice and safe and profitable.  I think there are too many people leaning on the port rail of an Asian ferry here...

    Sunday, December 28, 2014

    GLD quietly breaks out

    There is no news on gold lately but this is when the shorts try to sneak out the back door.  The GLD chart suggests that they might have tipped their hand just now.  Black 3 bottomed all the way back in late June 2013.  The blue horizontal line has represented significant support and resistance since then.  Just recently GLD not only came back above that blue line, but did so with gusto using a gap.  That suggests near term technical strength at the very least. 

    EWI is the longer term GLD bear here and even they think it is due for a B wave back up to the level of the prior 4th as shown.  Avi thinks this is the bottom of the C wave pullback and that much higher GLD will be seen in the years ahead.  I think Avi is probably right at this point based on many things including capitulation price levels and volume on the juniors. 

    IF you have been watching GLD go down and down wondering where the bottom would be, this break back up into the range of black 3 is where the more careful market watchers would be buying back in.  In other words, the big fund managers do not try to catch the bottom.   They wait for the bottom to have some sort of confirmation and then they get back in.  As long as GLD holds that blue line then I think people should continue to own something golden.  The train has not left the station yet!  Go look at TRX and DRD!  Of course I'm trading this bottoming process with JNUG.

    As always, buy the dip.  Wait for the dip even if it means shares go higher first.  That way you don't buy the peak and then get scared out at the bottom on the dip.  Missing out on some profit is always better than being underwater and at risk of eating a loss...

    TRX update

    After a 4th wave triangle that began breaking down from its E wave peak in mid September based on basically no news.  Well, the juniors are marginal and they will get hit the first and worst.

    In mid December we see a clear wedge bottom and then the shares shot up from 0.58 to 0.91 in 3 trading days.  So that was almost a double in the blink of an eye.  But then it fell to 52 and is now trading at 59 again.   The bottom of the 23 could well be the bottom but we will know pretty quickly next week.  I only can hope that the 23rd was just 1 of 5 but I don't think I will get that lucky.

    GRPN likely about to double

    I don't know anything about GRPN except that it has to do with some kind of coupon for cut rate prepaid goods and services.  I've never used it and won't waste my time looking at its balance sheet.  However, it was mentioned in passing in an article I read so I decided to look at the chart and make a prediction based only on the chart shape with zero knowledge of the so called fundamentals.

    I see that 5 waves up peaked in Sept of 2013.  That's motive so it is an A wave.  Then I see an a-b-c retracement into the May2014 low.  That's corrective so it is B.  Now we have the stock winding up with the up-down-up-down higher lows and higher highs which I see often at the starts of Cs.  I think the herd just saw the big crash and then an excellent run to $13 (big percentage gains for longs...) and then another big pullback and it's wondering if this goes to zero or takes off now.

    While it will likely eventually go to zero, I think we still have more time before the mass BKs occur and 2015 is smelling like a year of increased inflation.  This benefits anyone who has gotten smashed into the dirt because of solvency fears and it drives shorts to cover.

    Saturday, December 27, 2014

    Mini lesson on the physics of 9-11; will Canada lead the way to a real investigation?

    Here is a very short 2 minute video of some Russian building demo wannabes trying to purposely destroy an apparently derelict  11 story (cannot fully see the first floor due to camera angle) reinforced concrete apartment building.  They apparently did not place enough charges in the upper floors and were simply hoping for it to behave like 911 where 3 buildings just magically collapsed into their own footprints at the speed of gravity.  After all, the 911 vids made it look so easy!  Why shouldn't any Russian country boy and a few boxes of C4 be able to achieve the same result?

    Now, think about 911 folks.  Think about all of that pulverized concrete that blanketed the area.  How do you think concrete pulverizes like that??  It take a lot of concentrated energy for sure.  Look at the top floors of the Russian building.  They do not "pancake" as we were told to believe happened to 3 buildings on the same day on 911.  The unexploded portion of the building remains intact, hits the ground as a unit and then darned near falls over on its side.  There is no pyroclastic dust cloud from the top floors because those responsible for that work did not wire the whole building, only the lower floor.

    That is how real buildings fall down unless they are pulverized on each floor by explosives.  That is what happens if you leave support anywhere in the chain.  If you ever get the chance to watch real pros take on the task of building demo, watch the videos from Controlled Demolition inc. (the Loizeaux family) on YouTube.  You will see how careful they have to be, how well their planning must be done and how much risk exists that things will go wrong leading to a partial demo that is an even bigger problem than before a demo was attempted.  The lesson that thinking people will take away from this is that it is very difficult to completely demo a large building!

    So basically, three buildings collapsed on 911 into their own footprints in exactly the same manner, all accompanied by clouds of pyroclastic dust (hot pulverized concrete).  None were partials.  None fell over on their side where they might hit real estate that was still of value (WTC 1,2 and 7 were all at end of life).

    But the WTC buildings were significantly unlike that YouTube Russian concrete building in one main aspect: they were far, far stronger.  Note in the video above, the Russian building is steel-reinforced concrete.  You can see the re-bar sticking out the top of the unfinished building.  But the WTC buildings were all steel frame buildings.  The main support was steel I-beams which do not just pulverize so easily like concrete.  You can see from the picture below taken from this web site just how that was handled.   The massive steel beams did not "pancake", they were cut at a very severe angle so that the building they supported would slide off of them like snow off of an Alpine home's roof.   Look at the perfection of that cut.  It was obviously done by some kind of shaped charge which I know a little something about having served as a 46170 in the USAF (munitions).

    Note the angle on the cut above.  Now look at building demo people (not related in any way to 911) place shaped charges on a concrete pillar of a building they are setting up for demo.  It is the same angle as the steel beam above because that's just how the pros do it!

    This is what a shaped charge looks like up close.  Shaped charges are specifically designed to cut in a directional fashion.  You can see the fine line of energy coming out the bottom of that vee toward the camera:

    The "vee" concentrates the explosive force in the direction opposite that it is pointing and when it goes off it sends a superheated copper projectile into the intended area.  Here is what a steel beam looks like after a known shaped charge was used on it:

    If you have trouble believing that what is essentially an explosion can produce this kind of focused cut, here is a short video showing just how focused that shaped charge is when properly formed.  Don't trust your gut folks, trust the data.
    The cut in the photo above is identical to the precision cut on the steel support girder of WTC shown at top.  Note: some on the Internet say that the girder in the top pic might have been cut after the building collapsed as part of the cleanup.  This is the flimsy kind of evidence that underpins the so called "debunking" of 911 controlled demo science.  Of course, that is bullshit on 3 levels:
    1. while that cut is pretty straight, it is not clean like a cutting torch would do.  Ever used a cutting torch?  I have.  They leave very clean edges, not the ragged edge you see above.
      1. At right is a view of what modern plasma cutting equipment is capable of doing.  Yes this was done by a robot and no they would not have used a robot for the cleanup but they would likely use a straight edge simply to achieve the maximum cutting efficiency.  Besides, a professional welder can cut pretty cleanly even freehand. 
    2.  nobody is going to sit there and cut at that angle because when it breaks loose it will fall dangerously close to the person cutting.  Instead, they would cut around the perimeter and then push it over in the intended direction in a way that is safe and easy to control.
    3. the picture shows firemen on the scene.  They were part of original search and rescue and these guys look intently involved in doing that work.  Who had time to haul in cutting torches that quickly and begin to cut down beams like that?  Nobody, that's who.  Besides, why begin the cleanup in the middle of the debris field?  Why haul equipment into that mess?  Workers would probably clear the exterior debris before taking on a risky cut like the one shown.  Which of course is more evidence that workers did not do this.
    If you have spent most of the time since 911 believing the official propaganda and lies about how and why this happened, it's about time to wake up, don't you think?  Stop trusting your gut instinct in this matter because your herding behavior has been used as a weapon against you by people who certainly know how it works and how to manipulate the masses with propaganda.  Intelligent people do not blindly listen to just one side of a story.  They look at all the facts (not just unsupported and theoretical claims like the government makes about "pancaking") but actual facts.  Thinking people make up their own minds without regard for what the fish, bird or sheeple standing next to them in the herd thinks.

    It's been a long standing prediction of mine that willful ignorance of the herd will evaporate when the credit Ponzi begins to roll over.  The leaders at some point in time figure out that there is no way forward without some kind of public accounting for past crimesThe NYT is demanding it for the US torture regime but at some point the topic will turn back to 911 and in fact it is now finally making progress in Canada of all places.
    Just because collapse has not been felt in the US yet, don't think we will escape it.  Look at Russia now: overnight lending rates are 19%.  The Ruble has fallen into rubble.  I expect similar problems to soon emerge in Japan and then China and then finally the good old Eye of Horus on top of the pyramid here in the USA.  First deflation and then massive inflation. That is what I always expected based on my supernova economy theory which is only enabled to happen by the presence of a fake, fraudulent money supply.

    TVIX update

    Here is the backlink.  If you open the model chart on that page and compare it to actual below you will see that the model was reasonably correct and in fact remains intact.  The red lines coming off the bottom in that link were not meant to imply "we go up from here in a straight line forever" but rather "this is the near term bottom which will now reverse and begin to trend upwards".  Of course nothing goes straight up or straight down.  Smart traders will always use stop loss sell orders in something like this, especially if we begin to see heaviness in the chart after a big move up and especially after the completion of a long trend in which the possibility of a deep vee second is high.

    By my count  we should be at or very near the low of wave 2.  I would not be surprised to see one more move down to the blue line in order to get the inclining double bottom angle into the norm but it could take off from here as well.  I'm playing this with UVXY but since my last model showing this final downward push into early Dec was done with TVIX I decided to follow through using TVIX in this post.

    $COMPX update

    Here is the backlink in which my model pretty much captured the direction change but not the full severity of the decline.

    The model has since hit a higher high indicating it was a C wave.  In any case, I think $COMPX is at a critical juncture again.  As you can see from below, the blue line creates a potential neckline on an inverted head and shoulders (even though I an not thrilled with the lack of symmetry between the shoulders). 

    I have seen these break above the neck line and then break back down below the neckline again, thus invalidating the pattern but it generally happens very soon after the breakout or break down.  In other words, this has to change direction within 1-2 trading days or it is likely going to head up to 5000 and UVXY/TVIX will certainly get much lower lows in that case.

    If the leveraged vix is not ready to pay off, don't force it.  There is always another play.  JNUG for example has been paying off nicely following the bottom that I recently modeled.  RUSL should be good to buy on a dip too. 

    IF $COMPX  makes it near 5k then I think the psych barrier would be ripe for a major pullback.  Of course this could turn into a double top right here, right now as well.

    GDX Update

    Here is the backlink and it seems the blue model was taken almost exactly so far.  If I'm right about this, this double bottom will lead to much higher highs for GDX, GDXJ and JNUG.  I see USO bottoming soon and the dollar at a peak right now.  So again, at least the early portion of Q1 of 2015 should be great for commodities.

    Up until now I have been modeling the early Nov low as 5 and then the spike into late Nov as wave 1 with the recent deep vee as wave 2.  This is the conventional wisdom count and for now it is fine to stick with it.  But based primarily on my W3 indicator I will be wondering if the coming move up is really wave 3 or just C of 4.  C of 4 would imply a lower low into 5 down and it would enable a shot at Avi's GLD $105 ish target.  The other factor that makes me like this count is that several days of sideways chop in the build up to green a.  That easily counts as an a-b-c.  If the wave that is forming right now cannot make it above about $19.80 then I can also begin to suspect that a HT is forming here which will eventually break to lower lows.

    For right now, I like JNUG unless it falls below the corresponding green B on its chart (which is still completely messed up in TDAmeritrade StrategyDesk to the degree that it is useless here).

    USO update

    Here is the back link to the larger model.  USO has fallen more than modeled there but it should be no surprise when wave 5 falls below wave 3.  That was supposed to be a rough directional indicator only.

    In any case, I don't think a bottom is quite in yet as you can see from the updated and more detailed model below.  The top of this wave was an e of 4 throwover.  It looks like the bottom could be around $18 if 5 ends up the same as black 1.  The subsequent bounce should be to the $40 level.  Russia will benefit from this coming bounce so be sure to think about buying RUSL on the significant dip.  Don't buy the peak!  Never chase IMO especially if you are leveraged in any way.

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