Elliot is waving above a head and two shoulders

First, I turned off a button in the blog home that allowed anyone to comment, after another stupid sales pitch came in.  My error having it on.  Blog members can still write in, but they don't
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The Confused Man - Arianne Lequay

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Below is an excerpt from the Elliot Wave web site.  Mr. Prechter, their guru, has a new book out, you may want to read. Its name is something like You, Too, Can Avoid Death and Destruction.  That's not the name, but you will find it with that thought in mind.


There is another book out I want to read about the death of the dollar. That may be the name. Just out, look for it, as it is written for us simple folk and offers simple folk steps, something I have been trying to work out in these pages. 


I listened to the author as I dozed the other night and he didn't hedge - it is coming and have your affairs in order.  Prechter leans to the deflation prognosis.  So, something is going to happen. If it is deflation, cash is king; if it is hyper inflation, cash is crap. Or, its deflation then inflation, which, I suppose, means buy metals after the crash.


Prechter says the false fun is over - stocks, commodities. We are in the "fifth wave" and passed the top parameter. When the collapse comes, sooner than later, the market will suffer a straight collapse, no bumps for an elegant withdrawal, if you are in stocks (401k people, think about this - do not let inertia take you down). Time to buy TIPS.


Other current Elliot Wave people read graphs differently: stocks on the way up!  Everyone has line graphs and several ties.


Mr. Prechter says the USD is in for a good two year rally. This makes sense as it has been butchered by the US. So, the dollar will come back even as we head into inflation.  We need to think about inflation while the dollar comes back; about stocks going back to early 2009 levels; or, is it a booming market until it stops. A simple idea is buy TIPS, that way you stay even. 


The Prechter/Elliot view corresponds, by the way, to a collapse in metals and the market, based upon non-Elliot thinking that goes like this: When the Fed decides to put on the brakes, as it says it will do according to Keynes, amen, by raising interest rates and taking back loans. 


At that point, or earlier if you are part of the oligarchy, the rush to gold will end and the drop in commodity prices will accelerate as carry trade geniuses realize they have to cover themselves as they jump from the window.  There will no longer be a fear of the dollar; it will be replaced by a fear of being stuck in gold. (Me, I say stay in fear of the dollar, even if it comes back.)


It may seem contradictory that I recently picked up silver coins. It is a bit, but I am paying the premium for a safe harbor.  If I am wrong and all is well, fine, I paid too much for a poor collection.  If I am right, I am much safer than a few months ago. I worry about this and I don't have children, so consider worry as a good thing.

A history from the Elliot Wave site, to show how smart they are:

February 23, 2009 Short Term Update:

"If one is aggressively bearish the stock market, having a planned out exit strategy now is not only prudent, but necessary in light of some of the sentiment readings we see."

Namely, a 3% reading in the Daily Sentiment Index, the lowest level in the 22-year history of weekly figures.

February 23 Elliott Wave Theorist:

"Ideally, the S&P should continue down into the 600's. When it's finds a bottom and rallies, it will be sharp and scary for anyone who is short. I would rather be early than later."

February 27 Short Term Update:

"The turn will come on or near March 10, 2009. Anywhere in this period may mark a turn, which will obviously be a market low."

The S&P bottomed two weeks later at 666.79 on March 9.

April 2009 Elliott Wave Theorist:

The rally "could carry the Dow as high as 10,000. Regardless of its extent, it should regenerate substantial feelings of optimism... the government will be taking credit for successfully bailing out the economy, and investors will be convinced that the bear market is behind us. Be prepared for this environment."

Flash ahead to today: The November 6, 2009 Short Term Update picks up where the April Theorist left off and presents the following close-up of the S&P SPDR Trust versus the 10-day Daily Sentiment Index.

Oh, the point of the graph is see what Goerge Costanza is doing and do the opposite. George is now confident. He watches ABC news. 

If you are not market fan, you may think a positive sentiment is a good thing; but, you learn - do the opposite. They keep this indicator just to warn you of a coming turn. Note sentiment is inverse to the immediate future.  The "aggressively bearish" comment means:  if you have been betting on the downside, time to stop.