Are Stocks (Re-)Entering "Free Fall Territory"?

[CrackSmokeRepublican]

Are Stocks (Re-)Entering "Free Fall Territory"? Prechter's New VIDEO Theorist Prepares You for What's Next
There's only one forecaster who can keep YOU a step ahead of "astonishing"

By Robert Folsom
Thu, 18 Aug 2011 12:45:00 ET    

The amazing market volatility of the past month has brought an (almost) equally amazing number of visitors to EWI's website. You're probably one of the literally tens of thousands of individuals who have seen Bob Prechter's "Free Fall Territory" chart.



(The June 2011 Theorist published an update to the chart above. The major difference is that the updated chart "telescopes out" by one full degree of trend. Prices go back to the 1930s. The scale of the white space surrounding the updated "free fall territory" chart shows what Prechter truly means.)
 
Have we re-entered free-fall territory? If so, then you should expect the price volatility to go from amazing to astonishing.


http://www.elliottwave.com/freeupdates/ ... t-s-N.aspx

[CrackSmokeRepublican]

http://2.bp.blogspot.com/-h6eygm5vBDw/T ... weekly.png

[CrackSmokeRepublican]

For some reason Karl still can't see the smiling, GoldmanSachs-JewFed-Blankfein-Scam "J-Factor" in all of this.... a bright guy but like most Goy Americans...incredibly blind... soon the "scales" may fall...   --CSR

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Are You Ready? The Government Doesn't Give A Damn
 

I hope you are.

Today proved one thing - oversold doesn't mean jack.  The ~20 handle pop into the open was sold into immediately, despite the market's severely-oversold condition.

A condition that is worse than during the height of the 08/09 crash.

Drill that into your head folks: The government doesn't get it, exactly as they didn't get it in early 2008.     They are, right now, squandering the opportunity to take effective action.  I know this for a fact because the Republican Caucus has refused to address the issue and I know they're aware of it.

This weekend I listened to McCain with his condescending bullcrap on talk TV.  Let me remind you, this is the same Senator McCain who I sent this letter to in 2008 predicting what was going to happen in the election if he did not act.  He did not, and he lost.  In fact, today he still claims that he couldn't see it coming.  Not only did he see it coming, his campaign manager was in receipt of that letter and Governor Ridge personally told me at that campaign event that they knew full well it was all driven from greed and scams.  In short, not only did he lie about what he knew at the time he's still lying.  

This is the GOP.  This is what it has done and is doing.  The GOP is proving time and time again that it will not get in front of these issues because doing so means kneecapping the    banksters that have trashed our economy and continue to do so today.

Not that Obama, Pelosi and Reid are any better, of course.

The GOP doesn't care, the Democrats don't care, and you're going to get creamed.

There is no way to avoid what's coming.  We have added roughly $4.5 trillion in debt to the Federal balance sheet trying to paper it over and have failed.  Even the "good" banks like JP Morgan and Goldman are failing to make progress.  The poorer ones such as Citibank, Morgan Stanley and Bank of America are seeing their market prices collapse.  The XLF, the composite of the large banks, is back to where it was in the summer of 2009.  Should it break below these levels it is likely going for the spring 2009 lows.

All the fraudulent accounting games, shifting Granny's earnings on her CDs to the banks through zero-interest rates and money printing have been used up as policy tools.  There are few if any weapons left in the arsenal to combat what is coming.

This is where we are, and where we're going.

I'm sure this will be scoffed at.  We'll see.  Go have a look at 2000 if you'd like.  It's pretty similar.  Through the mid-bolinger on the monthly, a bounce back, often off or near the lower bolinger, then a collapse that loses half or more of the market's value.  Twice, and now we're setting up for it again.  It's as clear as day and the reasons for it are just as clear now as they were before.

The time in that chart is probably not quite to scale, but I bet the price move is.

Impossible?  Oh no it's not.  The Nikkei stood at 40,000 before it collapsed.  It now trades under 10,000 - a 75% loss - decades later.  It has not recovered and neither will we because we refuse as a nation and as a government to force recognition of bogus debt that cannot be paid while destroying capital formation and interest margins with zero interest rates.

400 is roughly where the S&P was before the "great bull market of fraud" began in 1995.  To think we can't return there when the fraud collapses is utter folly.  We not only can, we probably will.

But instead of putting a stop to the games we choose to allow crazy derivative schemes, balance sheets that do not reflect reality and the repeated asset-stripping from savers and productive members of society, all to protect the "gilded ones" on Wall Street from the just consequences of their own 30-year old foibles and scams.

Now let me explain what happens "down there", because it is my unbroken opinion, going back to 2007, that's where we're headed irrespective of attempts to stop it (and we've already seen how fast those attempts unwind when they fail, haven't we?)

    Every pension fund blows up.  All of them.      Many doubled into the decline and will be utterly destroyed   .  Chief among them will be big municipal funds like CALPERs.  If you have a pension of some sort, ask the pension administrator what happens to your pension if the S&P goes to 400 and stays there.  He'll poo-poo your question - but I bet he won't answer it.

    Annuities and insurance companies blow up.  You don't think they can pay when they're figuring on an 8% annualized return, do you?  Well, no they can't.  Oh yeah, your state insurance on those is $100,000 in most states - the rest of your principal is "at risk."  This, of course, assumes the State has the $100,000 too.  Did you know this in advance or are you learning it now (let's not hope the latter is true!)

    The FDIC has no prayer of covering it.  The good news is that if they act now they can shut the banks that are exposed and cram down debt to equity.  The bad news is that they have a horrible record in doing that in a timely manner and of late the losses have been anywhere from 20-40% of assets, which is both a violation of the law ("Prompt Corrective Action" is supposed to prevent this from happening) and they have no way to cover it should it become a widespread problem.  It will.  Oh yeah, you can't sue the government either.  Have a nice day.

    The government Ponzi blows up.  Unemployment will reach 20% or more.  Tax receipts will get cut in half.  Deficit spending will be impossible.  Instead of a 40% "draconian" cut in government spending we will have to cut spending by 60% or more.  Entitlements will be decimated; retirement entitlements will go last, but go they will.  Food stamps, Section 8, Medicaid, all gone.  Bet on it.

    All the other things that depend on the government Ponzi blow up.  Medical care as we know it, education, state programs, all gone.  We will return to a simpler time whether we like it or not, and we won't like it.  That much I'm sure of.

    Best guess on whether civil order is lost.  In some places I'm sure things will be fine in that regard, likely in places where self-defense is recognized as the unalienable right that it is.  In others?  Not so much.  If you live in a big city - or an "unfriendly" place in regards to self-defense, you need to be thinking about this quite-seriously.  Yesterday would have been a good time to consider it and figure out what you're going to do about it.

    Short-term and minor to moderate disruptions in what would be considered "essential" goods and services are likely.  Go down the list and figure out what you must have and what you can do without.  Be realistic.  Most people won't be, which will put you one step in front of them.

    The world will recognize the Depression we have tried to cover up.  This is not a US-centric story.  The Eurozone will get the unemployment and tax consequences too.  Germany will be forced to choose between propping up the entire rest of the Euro (which it can't) and detonating it and going back to the Deutsche Mark (which it will be forced to.)  There is a very high probability of war that comes out of this, although the exact trigger is not something I can forecast.  War is the classical solution to these problems, and it is unlikely to be different this time.

This is going to be a rough time folks.  Our government has refused to deal with the basic mathematical constructs that underlay all economies and debt.  It's not a matter of competing theoretical ideas - it's a matter of basic mathematical laws.  We are now running into the end game where entire nations are coming unglued along with their various patrons and parasites, as the cold, hard mathematical facts run into the fantasy conjurations of people like Bernanke, Geithner and Obama, along with the chortling harpies on Wall Street.

If they manage to "sticksave" things once again, and you can bet they'll try, you've lost nothing by being prepared.  But even if they do pull another rabbit from the hat, instead of a burning stick of dynamite, there are a limited of rabbits, there are sticks of dynamite in the hat, one will eventually be inadvertently selected and the games will end.

The only real choice is whether that option will take place voluntarily and now, or involuntarily and later.

Either way it's going to suck, but a voluntary acceptance of reality will both suck less and be over sooner, along with being able to be mitigated.  And uncontrolled event - which is what we're headed for at the present time, will be most unpleasant.

PS: Yes, this is an update to the "What's Broken" ticker....  The last time they reached into the hat they got a rabbit - and made the problem worse.  How many more pulls do you think they'll get before the burning stick of dynamite pops out?

http://market-ticker.org/akcs-www?post=192780

[CrackSmokeRepublican]

Dow Theory Update
By Tim W Wood CPA

08/24/2011



In accordance with Dow theory, once the trend is confirmed, that trend must be considered intact until it is authoritatively reversed. In the case of an up market, a move below the previous secondary low points are required in order to authoritatively reverse the uptrend and confirm a new downturn. On August 4, 2011 both the Industrials and the Transports closed below their previous secondary low points. In doing so, the bullish primary trend that began at the March 2009 low was reversed with a bearish primary trend change in accordance with classical Dow theory.

I have seen it written that once a Dow theory so-called "sell signal" occurs, it is an ominous sign for the market in that it sets the longer-term trend. In reality, if we actually study the Dow theory, history shows us that this is not always true. While I value Dow theory, it is not the whole story and based on other technical factors, which I will not get into here, the evidence tells me that this is apt to be one of those times in which the Dow theory trend change, which is mistakenly referred to as a "sell signal," is not likely to be so ominous. The details of this are outside of the scope of this article and are covered in detail in my research letters. Anyway, the point here is that we have two opposing forces at play. On the one hand, if we look only at orthodox Dow theory, we no doubt have a bona fide primary bearish trend change in place. However, when I look at other technical studies, I question this bearish trend change.

Now, with this all said, my longer-term view has not changed in the least. I continue to believe that the rally out of the March 2009 low is a bear market rally that should ultimately prove to separate Phase I from Phase II of a longer-term secular bear market. I also continue to believe that once this rally concludes and the decline into the Phase II low does begin, that decline will be far worse than what was seen in 2008 and into the March 2009 low. This also fits from a longer-term Dow theory phasing perspective because history shows that Phase II declines are the most devastating.

Also, my view that we are operating in an environment much like that of the 1966 to 1974 secular bear market, with the advance out of the 1966 Phase I low being similar in nature to the rally out of the 2009 low has not changed either. Please see the charts at the end of this article for comparison. This period is however proportionally larger than that of 1966 to 1974. Reason being, the bull market that preceded this bear market was longer in duration.

Let me explain. As I read about the bull and bear markets of the late 1800's and very early 1900's, it becomes apparent that the secular bull markets, in accordance with Dow theory, that Dow, Hamilton and Rhea wrote about, were the upward movements of the 4-year cycle and the bear markets were the downward movements of the 4-year cycle. As our country grew, more and more people began investing and as a result the bull and bear periods became longer. As a result, bull and bear markets evolved into a series of multiple 4-year cycle periods. For example, the first bull market to consist of multiple 4-year cycles ran from 1921 to 1929 and consisted of two 4-year cycles. The low in November 1929 was a 4-year cycle low. The rally, or "secondary reaction," that followed was the upside of a 4-year cycle that topped in only 5 months. Once this secondary reaction was over, the DJIA moved down below the previous 4-year cycle low and into the 1932 4-year cycle low, which proved to be the bear market bottom. I would also like to point out that the 1921 to 1929 bull market advanced a total of 568% from the 1921 4-year cycle low at 67 on the DJIA to the 1929 4-year cycle top at a high of 381 on the DJIA.

The next great bull market began with the 4-year cycle low in 1942 and ran to the 4-year cycle top in 1966. This time the "primary" bull market was comprised of a series of six 4-year cycles and advanced a total of 1,076% from the 1942 4-year cycle low at 93 on the DJIA to the 1966 4-year cycle top at a high of 1,001 on the DJIA. Note, that this bull market advance was roughly double the preceding great bull market. The bear market that followed was also a series of 4-year cycles. From the 1966 4-year cycle top, the bear market moved down into the 1974 bear market low. This was a series of two 4-year cycles.

Now, I want to focus on the bear market declines. Prior to the first great bull market that ran between 1921 and 1929, the bear markets averaged some one-third the duration of the previous bull market. This relationship has also held true with the extended bull market periods as well. For example, the 1921 to 1929 bull market was 8 years in duration and the 1929 to 1932 bear market was 3 years, making the bear market duration 37.5% of the preceding bull market. The 1942 to 1966 bull market was 24 years in duration and the 1966 to 1974 bear market was 8 years, which was 33.3% of the duration of the preceding bull market.

From a cyclical perspective, the last and greatest bull market of all time began with the 1974 4-year cycle low. Some say that it began at the 1982 low and I understand that argument. However, from a cyclical and even a Dow theory perspective the bull market began in 1974 and this was the actual low point of the 1966 to 1974 bear market. 1982 was when the bull market broke out and became apparent.

At the 2000 top, the Dow theory non-confirmation and confirmed primary trend change indicated at the time that this great bull market era had ended. Upon the primary trend confirmation in March 2000, all indications, according to Dow theory phasing, were that Phase I of the great bear market had begun. Also, based upon the historical relationships between bull and bear markets that bear market was slated to run into the 2008 to 2010 timeframe, which was 33 to 37% of the preceding bull market. Again, when the rally out of the 2002 low began it appeared that this was simply the rally separating Phase I from Phase II of the bear market.

However, the powers that be threw everything they had at the market and in doing so they allowed the bear to claw its way out of existence and when both averages managed to better their 2000 highs, everything changed in accordance with the Dow theory phasing. I said at that time "I can tell you that this confirmation does not signal a "new" bull market, but rather reconfirms the existing bull market." What I was saying here in early 2007 was that the bull market that began in 1974 was reconfirmed as still being intact when both averages jointly bettered their 2000 highs and that we had never entered into a true bear market. This was written in an article on February 29, 2007.

Anyway, the advance that followed this reconfirmation carried the averages up into a joint high in July 2007. From that high a Dow theory non-confirmation was born and we all know what followed into the 2009 low. More importantly the DNA Markers that have been seen at all major tops since 1896 also appeared in conjunction with the 2007 top. It will again be these same DNA Markers that will eventually cap this bear market rally.

The bull market advance that began in 1974 ran 33 years and consisted of eight 4-year cycles with a total advance of 2,385%. Note that this advance has been roughly double the previous bull market advance, in terms of the percentage move out of the low in which the bull market began. At present, we are seeing the ongoing rally that should prove to separate Phase I from Phase II of what should prove to be a bear market of approximately 10 to 12 years duration. To think that a 33-year bull market was corrected in a mere 17 months simply has no historical basis. Based on the historical bull and bear market relationships, this bear market is expected to run some 33 to 37 percent of the duration of the preceding bull market. If so, with the bull market having lasted some 33 years in duration, a typical bear market relationship would last some 10 to 12 years, which, based upon the 2007 top, would take such a decline into 2017 to 2019. There are also other aspects of bull and bear markets including values.

So, it is because of the fact that the preceding bull market, that peaked at the 2007 top, ran some 33 years, as opposed to the 24 year bull market that preceded the 1966 top, that this bear market is expected to also be proportionally longer in duration and that the 2009 low should not have marked THE bear market bottom. I said all this to make the point that my longer-term view has not changed in the least and why. Thus, longer-term, I am still bearish. But, at this time, in spite of the fact that we have had an orthodox Dow theory primary trend change, I'm not convinced that the bear market rally is done.
  :think:

About the Author
Tim W Wood CPA
Author at Cycles News & Views

http://www.financialsense.com/contribut ... ory-update

[Anonymous]

Tim Wood is just a newsletter peddler, I have heard his predictions on FSN, he has been wrong many times. 'DOW Theory' he uses that as frame work, all good cons need something to latch on, it's nothing but primitive technical analysis. Elliot Wave, Scholastics (sp?). Really, once something makes a all time high, it is all downhill from there unless it makes another all time high. The whole lot of FSN are jews and wankers.

I must admit though, I started listening to them in 2003/2004, learn't about banking and gold from them, but like alex jones, there is only so far they can take you.