What better day than today’s predictable hard bounce to present the other side? If you believe the bounce and want to be a happy bull, just step along from this post. If you don’t mind considering other opinions or are like me in thinking 2014 stands a better than even chance of being the year that the current cycle ends, check out EWI’s 24 page report by clicking one of the graphics below.
We have come to a point in this cycle where we are supposed to feel ashamed for having bearish views or opinions. Prechter’s wrong again after all. The thing is, even a bull could use some alternate opinions. I am not talking about a market crash. Please. I am talking about a macro view. That should be someone’s basis for operation. I have my views and they have not changed since early last decade because the things I had negative views about have not only not changed, they have intensified and shifted (commercial credit replaced by official credit). But there is still a debit waiting out there.
We who hold a negative big picture macro view were stupid until the 2008 liquidation made us geniuses. Now we are stupid again and trend followers are smart. Wash, rinse, repeat. EWI is an affiliate and I make a commission on sign ups to their services. So consider this a promo. Also consider that EWI was founded by someone who was an influence of mine. So it’s not just a pitch. We’ve only recently gotten with the idea of partially funding all the free information here with ads, like most blogs have routinely done all along. Consider this an ad that I wholeheartedly recommend. And the darned thing is free for crying out loud.
Think about the year long topping process of up and down spikes on the HUI Gold Bugs index in 2011. Now think about things that may be working on replicas of that activity (hello US stocks) and things in the mirror that may be working on the inverse of it (hello grinding and dispiriting gold sector).
Now think about how long these processes take to play out and the patience involved. Also think about trading or defaulting to cash, because at times of change the volatility is something to behold (going both ways).
NFTRH 286 out now.
This is not an EWI promo, just an observance. I am listening to he of the infinite patience and big picture perspective, the thoroughly lampooned (by bull wise guys and emboldened trend followers now promoting their own genius) Robert Prechter speak about hope and fear.
First, we’ll insert our weekly chart of the S&P 500, for reference. At the end we’ll include the monthly cycle chart and a sentiment cycle chart from Sentimentrader.com by way of NFTRH 285. People can then form their own conclusions.
Did you see Alex Lifeson at Rush’s induction into the Rock & Roll Hall of Fame? In accepting the award he offered the profound words “blah blah blah, blah blah, blah blah blah blah blah…”
Well NFTRH 283 blah blah blah, blah blah… and furthermore blah blah blah blah… and it is out now!
Below are a couple clips from NFTRH 9, dated November 22, 2008. I only show this because contrary to my current tone, I am not a perma bear. Really, truly. I am just a perhaps overly intense big picture risk vs. reward manager. ← And I’ll readily admit that can be worked on, fine tuned or whatever.
But in November of 2008 NFTRH had this to say about the Dow, given that everyone was convinced of deflation, depression and the end of the world as we knew it…
Later in the ‘Wrap Up’ segment this appeared (click to enlarge):
Nothing has really changed in the 5+ years since, other than the thing has been flipped over on its head. No one can control timing, mass emotion or any other market dynamics. If/as the market breaks upward I am going to have some fun. But for good measure it will pay to keep the idea of equals, opposites and things in the mirror in mind.
Risk vs. Reward S.U.C.K.S.
Hey, have a good and bullish weekend!
 Will ya look at the helium escaping from that thing?
Guest Post by Michael Ashton
Investors have learned the same wrong lessons over the last couple of years that they learned in the run-up to 2000, evidently. I remember that in the latter part of 1999, every mild equity market setback was met immediately with buying – the thought was that you had to jump quickly on the train before it left the station again. There was no thought about whether the bounce was real, or whether it “made sense”; for quite a number of them in a row, the bounce was absolutely real and the train really did leave the station.
Folks, alas I am all written out. I can write no more today other than that this here market report, #277 is a damn fine piece of work. Key word ‘work’.
Guest Post by Elliott Wave International
Here’s one good reason why: a historic market sentiment extreme
The DJIA, S&P and NASDAQ are struggling to bounce. Yet the bullish convictions remain high. Says a February 5 Investor’s Business Daily headline:
“Why Mutual Fund Investors Need Not Panic After January Sell-Off”
I feel that 2014 is thus far giving hints that my patience, tested so aggressively in 2013 with respect to the big picture macro plan, will be rewarded this year. I find the idea that we are closing a ‘fear gap’ from 2008/2009 to be pretty compelling.