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I was born and raised in southern Alberta and graduated from the department of Structural Engineering Technology at S.A.I.T. in Calgary. My background is mainly in construction management although I spent 10 years selling real estate where I gained some very valuable knowledge about how... More
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  • April Hindenburg Omen Blog 119 comments
    Apr 12, 2011 11:22 AM
    This is the continuation of a discussion led by reader Albertarocks.  At this point, on behalf of every soul who has ever stopped in to read any of the Hindenberg Omen Instas, I offer a great big "thank you" to John Lounsbury who started this entire 18 month long HO monitoring series, maintained the excellent navigation links within them, and took the time to provide this work space in his own office.  Thanks so much John.  It's about time I learned how to post an insta and take this off your hands.

    The preceding blog can be read here.  For further reference, or to read about actual Hindenberg events we have covered including the near misses which occurred in the "week before" and the "day of" the flash crash, you can find the original post  here

    Themes: Hindenberg Omen
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  • Author’s reply » At this point in the session the number of new highs and new lows are neck and neck, currently sitting at 19 and 18 respectively. We're half way through the trading day and as regular readers know by now, these numbers are cumulative and never drop at any time within a session. With this type of race ongoing, the odds are higher that if we're going to see a signal from the HO, it would almost assuredly occur very near the close.
    12 Apr 2011, 12:40 PM Reply Like
  • thanks for keeping me in the loop AR
    12 Apr 2011, 12:42 PM Reply Like
  • Author’s reply » You're welcome DigDeep. Hopefully you aren't the only one. lol
    12 Apr 2011, 12:57 PM Reply Like
  • Thanks AR. Trying to get caught up today with a lot missed in the past few days.
    12 Apr 2011, 12:57 PM Reply Like
  • Author’s reply » Hey there stinky (that's an endearing nick usually reserved for my boy). How's your son? I think of him quite often ever since I learned that he's in Japan. Hopefully he's located in Kunigami.
    12 Apr 2011, 01:03 PM Reply Like
  • AR, he is doing fine. Safe down around Hiroshima. Guess Fukushima will have the nuclear distinction in Japan now not Hiroshima.


    Thanks for asking and thanks for keeping the blog going. We might be getting to a point with QE2 ending that the markets will tank and this could be a early warning for that.




    13 Apr 2011, 10:51 AM Reply Like
  • Thanks for keeping us up-to-date AR!


    12 Apr 2011, 12:59 PM Reply Like
  • Author’s reply » You betcha bud... and thanks to you, for your willingness to guide me on the insta thing from time to time.
    12 Apr 2011, 01:09 PM Reply Like
  • Author’s reply » At the end of the day, the numbers for the new highs and new lows are 31 and 21 respectively. The numbers themselves are not as important today as the fact that they are approximately equal and in the lower range... within the general range required for an HO signal. So the market atmosphere is ripe for an alert. Whether one is issued or not remains to be seen but this is a time to be especially vigilant. We're on the case. lol
    12 Apr 2011, 04:10 PM Reply Like
  • AR: Greetings. Thanks for the update. What happened to your S&P VS OIL INSTA?
    13 Apr 2011, 10:45 AM Reply Like
  • Author’s reply » Hi Robert. That insta is back up... after spending a few days in limbo while the editors of Seeking Alpha were in the process of declining it as an article. I'd actually submitted two of them... both meeting with the same horrid firey fate. lol To quote "we do not support articles which are based on technical analysis". It's really too bad SA has that attitude since there is clearly a good deal of interest in the topic of TA. So I gave it a shot, even though I was advised by two writers here that I was wasting my time. Obviously they were right, but if you don't buy a ticket you can't win the lottery. In any event, there is another site who, being familiar with what I do, 'approached me' and asked if I would consider writing articles for them instead. 14 days and 7 articles later... I guess I'm off to the races.


    It's a bit of a shame though, that my friends at SA, at least those who are interested in my TA work, won't get to see any of it here. Not to mention any other people out there in cyberland who might inadvertently read something I write about technical analysis and discover much to their surprise, that there is indeed a whole new method of evaluating markets. Too many people don't even know what technical analysis is, yet every single trader on Wall Street uses it.


    In any event, I'll be posting all my stuff here (referring to the link below) in the future, including an article published an hour ago. If you click on my name in the top navigation bar, you'll be taken directly to a list of all of them if you're so inclined:


    Thanks for asking where that insta went though!


    There wasn't much to report on the HO front today. The new highs and new lows ended up at 40 and 10, both low numbers which continue to suggest that the atmosphere is all set up for a signal. Not suggesting that it 'has to' happen, but these numbers definitely still point toward the same general fact that not all horses are pulling in the same direction.
    13 Apr 2011, 05:54 PM Reply Like
  • AR: Greetings. Thanks. I'll take a gander at your stuff on the other site from my home machine. Might take awhile but I will get there. Thanks for the link. It really is a shame they don't examine TA in articles here because there are many here that are good at it. You and HTL are probably as good as any. Be well sir. Thanks again.
    13 Apr 2011, 06:15 PM Reply Like
  • Author’s reply » The number of new highs and lows today remains right in the HO's wheelhouse. 55 and 20 respectively. On the NAS, those numbers are 49 and 49. Stay tuned because the atmosphere is ripe.
    14 Apr 2011, 04:42 PM Reply Like
  • Author’s reply » At the end of a rather nasty day here's where the numbers stand:
    New 52 week lows - 26
    New 52 week highs - 25


    On the NAS the numbers are 41 highs and 50 lows. Of course in the case of the NAS, it's just a matter of interest since there is no HO for that index. Nonetheless, the message is the same... the market is somewhat polarized. We haven't seen the numbers hit extremes yet which would set off the HO signal, but at least you're getting the overall message just by tuning in here.


    Have a great day!
    18 Apr 2011, 04:08 PM Reply Like
  • Author’s reply » Today was a little more bullish with more advancers than decliners. But that wasn't really reflected in the HO stats since the day ended with 63 new 52 week highs and 25 new lows. The minimum number required for each was 83. So although neither was particularly close, it's helpful to remember that at previous peaks in the market the number of new highs was averaging about 300 daily. So the number of new highs is fairly weak at the moment.


    On the other hand, we have also seen the NYSE launch into some very strong rallies from situations like this where both the new highs and new lows were relatively 'unremarkable'. Again, the more we monitor the HO, the more I marvel at how perfectly it was designed. Jim Meikka sure knew what he was doing because although the HO is warning us when the market is somewhat polarized, it is still refusing to issue a signal. The key reason for that right now is that the market isn't currently "polarized enough" to set off any particularly scary alarms. Wow! What a brilliantly thought out 'fuel gauge' this thing is.


    I hope everyone is having a great day. Except the Bernank... I kind of hope he has diarrhea. Only from now on I hope he keeps it in his pants instead of spewing it all over the dollar. Gawd that demon is gonna kill us all via starvation if he doesn't knock it off already.
    19 Apr 2011, 04:51 PM Reply Like
  • I'd been checking occasionally to see if the blog was continuing as I'm sure many do. I enjoy your comments AR and was pleased to be able to read more about this interesting subject.
    19 Apr 2011, 07:19 PM Reply Like
  • Author’s reply » As you might have guessed, over the past several weeks the number of new highs has been climbing and therefore putting the requirements for a HO signal right out of sight. But this week that trend has been reversing.


    As of this moment, the number of new 52 weeks highs sits at 78 and the lows at 30. We'd need to see approximately 80 of each (varies a wee bit each day but generally around 80). These numbers are in the range where a signal could occur. It looks to me like the market wants to bounce here though, so I kind of suspect that we're probably looking at next week sometime, 'if' the HO is going to flash a signal. But stay tuned because at least we know that it's not that far out of range for now.


    Hope everyone is doing well.
    4 May 2011, 01:50 PM Reply Like
  • Alberta, Rocks: Greetings. Thanks for the update. Hope all is well with you and yours as well.
    4 May 2011, 02:22 PM Reply Like
  • Author’s reply » You're welcome Robert. Now that you're here, you may or may not have known that I've been writing a whole lot of articles on a different site since the end of March since Seeking Alpha just stubbornly refuses to support anything based on good technical analysis. But lately that site has gone 'subscription based' so everything I've written has now disappeared into the 'premium' section. People can't see it anymore unless they pay for it. lol How funny is that? This is all with my permission of course and I make a few pennies for it.


    Anyway, today the site has released my most recent 'piece' for the whole world to read. Just in case you're so inclined, you could see it at the link below before it disappears back into the 'premium' section (maybe a day or two, I'm not sure).
    4 May 2011, 03:26 PM Reply Like
  • AR: Greetings. Good stuff there. I'm not too much into Elliot Wave theory but the key indexes did all retreat. Thanks for sharing. Good luck and God speed.
    4 May 2011, 05:19 PM Reply Like
  • Author’s reply » Thanks RBF. I'm not very much into Elliott either. It's kind of unfortunate that the site carries that name since a good deal of the analysis there is regular old TA. But thanks for looking at it.
    4 May 2011, 05:45 PM Reply Like
  • Author’s reply » At the end of the day, the numbers for the new highs and lows were 92 and 31. This is right in the ballpark. Theoretically a signal could have even happened today since there are enough stocks within 3-4% of a new 52 week low to have triggered it. So keep your eye on this insta just in case. It 'might' happen either later in the week or after the top of the next bounce. And of course I don't mean to imply that if a signal occurs it's all of a sudden panic time. Not at all... it's just something that makes headlines. We already know from today's results that the market is once again becoming somewhat polarized. Nothing drastic but moving in that direction. I'm glad that a few of you still follow. Thanks :-)
    4 May 2011, 04:51 PM Reply Like
  • I still follow too, but I don't post much since the only thing I could add is "Thanks". So I just "thumbs up".


    Sometimes silence is "golden" as it keeps the signal to noise ratio (SNR) high. Especially if you're as long-winded as I often tend to be.


    4 May 2011, 04:59 PM Reply Like
  • Author’s reply » LOL... I always knew with 100% certainty that you're not the type who would let this topic drop HTL. I don't have any idea what you'll do with it, if anything, but I 'do' know that you'll 'want to know' when it triggers. lol


    Remember the days when this was quite the chat room? JL kind of politely asked us to reduce that a bit and we did. Boy, did we ever! I have no such rules though. lol But I actually spend very little time on SA anymore, especially since there are other sites who welcome TA a whole lot more than SA does. Anyway, nice to see you again.
    4 May 2011, 05:11 PM Reply Like
  • AR - - -


    Just to let you know, I'm like HTL - following but seldom speaking.
    5 May 2011, 12:30 AM Reply Like
  • Author’s reply » We're always glad to hear your voice John. Especially since you're the much revered 'father of this blog' :-)
    9 May 2011, 02:25 PM Reply Like
  • Ditto Rocks: Usually, the third or fourth thumbs up in every comment you make comes from my puter.
    5 May 2011, 01:55 AM Reply Like
  • Author’s reply » Thanks Maya. You're a stud. Always appreciate your company.
    5 May 2011, 03:30 PM Reply Like
  • Hey, AR, managed to get to the computer today. Been several days in the recliner floating on a drug called Nucynta. Really weird dreams. Watching like some voyer as silver gets raped by the CME every other day.


    Still not able to do much. More later, keep up the good work.


    5 May 2011, 12:14 PM Reply Like
  • Author’s reply » Thanks buddy. I hope you're feeling real good real soon. What's up? I haven't heard anything about your problem. You've got me worried now :-(


    By the way, regarding the silver issue, I just noticed a great interview with Bart Melek on BNN about that topic. Some interesting content although I missed most of the interview. I did hear him point out that Mexican banks are buying up this cheap silver by the truckload. That's ok, the entire thing will be available in the library somewhere near the close of the trading day and I'll post that link here.


    One think about Melek: He's a big tough looking, grumpy looking guy... until you see him smile. That man has a natural smile that just lights up a room. I'll bet you get a kick out of it.
    5 May 2011, 03:29 PM Reply Like
  • I had shoulder surgery last thursday. Quite painful I might add. Start rehab next monday. Wrestling match with the 4 wheeler and I did not win the first round.


    Thanks for keeping us up to date. I have been out of it since the surgery. Today is the first day I have actually gotten out of the recliner more than a couple of times. Pain meds are horrible. I just cant handle them very well.
    5 May 2011, 06:19 PM Reply Like
  • Author’s reply » Well, well! The market decided to sell off in this final hour. So here's the scoop:


    The number of new 52 week highs has been attained and is right in the wheelhouse at 94.


    The number of new 52 week lows currently sits at 32. The number required is 83. In my opinion, even if the market were to sell off quite hard during this final half hour I doubt the HO signal will be issued. I say that because I know how many issues are within 4% of achieving a new 52 week low and I don't think it's enough. Well it 'is' enough, but it would take 'all of them' to hit. I don't think that happens today.


    In any event, the HO has an itchy trigger finger right now. Stay tuned over the next week or so. If it doesn't trigger today or tomorrow then my guess is that it could very well do so at the top of the next bounce... next week perhaps.
    5 May 2011, 03:37 PM Reply Like
  • Author’s reply » As promised, here's one of those interviews from the BNN library that many readers will probably find interesting if not enlightening. This exchange occurred about an hour ago where the guest is Bart Melek, head of commodities strategies at TD Securities. The discussion is about commodities with a focus on gold and silver. The big takeaway is that Mexico just purchased 93 tons of silver and Russia 18 tons. Banks are now net buyers of metals. Not the best time to be dumping your holdings it would seem.

    5 May 2011, 04:22 PM Reply Like
  • Author’s reply » Almost forgot to conclude...


    There was no signal today although the atmosphere is perfect at the moment. We'll just have to see what tomorrow and next week bring. Generally speaking though, we already know that the market is once again becoming somewhat polarized. But overall, even though the market internals were somewhat bearish at the close, they're nowhere near what could be considered 'real bearish'. So far, there really are no alarms going off anywhere.
    5 May 2011, 04:35 PM Reply Like
  • "Not the best time to be dumping your holdings it would seem"


    But the CFTC raised margin requirements 84% in the last couple of weeks on silver and have another increase coming Monday.


    Designed to drive smaller longs out of the market to save their bankster buddies that have *huge* short positions that were going to crush them.


    JPM and Scotia and one other bank ... HSBC(?).


    Harvey Organ and several other blogs have been tracking this for a while.


    Take the leverage from those that can't afford the increased margins and you hand the henhouse to the wolves.


    Of course Gensler justifies it as the market was getting too "frothy" from excessive speculation.


    Why is it only speculation on the longs side? Why isn't it speculation on the short side too?


    Concerns about COMEX not having the silver to deliver has also been bandied about. This gets them, and probably London too, out of that bind.


    5 May 2011, 04:40 PM Reply Like
  • Author’s reply » I couldn't agree more HTL, on all the above. I remember what happened back in the late '70s when silver hit $50 and gold $840. Interest rates had been soaring for at least a year. I don't recall the details of that too clearly but I do remember paying 14.75% on my mortgage for a 6 month term. The point being that once liquidity is dropped into the system it takes almost years of rising rates to put an end to inflation. We probably haven't even seen inflation get started yet since the orcs refuse to raise rates. Sooner or later the bond vigilantes will take care of that issue on their own. In the meantime, how anyone could possibly view this recent pullback in precious metals as anything other than a stellar buying opportunity is beyond my comprehension.


    You bet HTL, this is all the result of recent actions taken to flush out the little guys and provide ample opportunity for the banks to grab up some more cheap silver and gold. It's been a long, long time since banksters were grabbing up precious metals. That alone is a pretty darned significant signal in my opinion.
    5 May 2011, 04:49 PM Reply Like
  • It is funny thew shortage of silver which should drive silver up has actually been used by Comex and the bankers to drive down the price by forcing people to sell by raising reserves.


    As for the Hindenburg idea. You can get to large new highs and lows at the same time by precipitating a commodities collapse on a market that has been rising. The bankers had better be careful lest they destroy their little money making manipulation machine along with the whole economy.
    5 May 2011, 07:09 PM Reply Like
  • I have a funny feeling that one day this week I'll look up at the sky and lo and behold...................
    8 May 2011, 11:11 PM Reply Like
  • Author’s reply » Some of you who are long time followers might remember the situation that occurred many months ago when the HO became temporarily 'broken' due to a rule violation. August 16th was such a day but I also recall a different time (I'm too lazy to look up exactly when it was) when the HO was actually sidelined for about a month.


    That situation occurred due to a violation of the rule stating that the 10 week moving average of the NYSE must be rising. Back then, for a period of time that MA had turned lower although I could see from the charts when it was most likely to turn higher once again. I reported that it appeared that the HO would be 'broken' until the week of xxxxx. And as it turned out, that's what happened. The HO once again 'came back online' and from that day forward it has done its job very well.


    We are relatively close to such an event recurring since the HO is not too far from going off-line once again. But should that occur, it would most likely happen this week and would probably last no longer than until about Thursday of next week, May 19th. Hmmmmm, something else big happens that day! Oh yeah, my daughter's birthday. lol


    This is only of passing interest. For the moment the HO is up and running just fine. It's also entirely possible that the NYA just continues higher from here, in which case this entire discussion is a moot point... the HO would be working fine. For your interest, here's a chart I'm monitoring for this very purpose. I think the annotations on the chart will help you see what I'm watching for:



    At the present moment, the number of new 52 week highs sits at 103, which is within the parameters for an HO signal. The number of new lows is currently at 11 and needs to be at about 83... something that theoretically is within reach on any given day. So the atmosphere remains conducive to an HO signal. We'll see what happens.


    Hope you're having a great day :-)
    9 May 2011, 01:57 PM Reply Like
  • Author’s reply » Do you want to hear something a little too freaky for comfort? If by chance the NYSE were to sell off between now and Friday, and gets below 8465 (a drop of 0.74% from current level), on Friday the HO will break due to the rule discussed above. It will officially be 'out of commission' and unable to issue a signal. If by further chance the HO should go off on that day (which wouldn't be a surprise since the NYSE would be selling off), some sources may well report the 'event' as having occurred. But it would not be allowed under the official rules. Personally, I'd consider it as an official signal because the warning is dire enough. I wouldn't let some little short lived 'technicality' dissuade me from taking the proper action.


    Of course this is purely an exercise in noticing what 'could' occur. In no way do I have any clue what's going to happen between now and Friday... but wouldn't that be just too ironic?
    10 May 2011, 01:56 PM Reply Like
  • Author’s reply » I failed to mention that there is only a short window where this situation could occur (of the HO going offline). In the event the NYSE were to sell off, only for the remainder of this week is there pressure for the orange line (on the chart below) to be climbing. The peak high in that line will occur on Friday. After that, the pressure on the orange line will be to drop, making it more difficult for the NYSE to catch up to it and drop below it.


    So this is just one of those relatively rare coincidences where the HO can theoretically go offline (probably Friday 'if at all'). And even if it were to happen, the odds are high that it would be short lived. This situation is being caused by the action you can see within the yellow oval on this chart:
    10 May 2011, 03:00 PM Reply Like
  • AR - - -


    This is great analysis - but then we Zeppelin fans have come to expect that from you.


    10 May 2011, 03:14 PM Reply Like
  • Author’s reply » Haha. Thanks John. One of my goals is to stay one step ahead of the Panic Room (ZH). We beat them by hours last time and I want to beat them again next time :-)
    10 May 2011, 03:33 PM Reply Like
  • AR: Greetings. Thanks for the update. Friday usually is a down day in any event.
    10 May 2011, 03:22 PM Reply Like
  • Author’s reply » You're welcome Robert. Depending on which chart we look at, the market is already showing signs of being short term overbought. The daily doesn't look particularly weak though and the market internals today are very strong. But if the market sells off between now and Friday that darned HO is gonna go off line for a short stint. lol


    It's kind of difficult to get a reading on volume nowadays too, since from this day forward we're going to be missing about 360 million shares on the NYSE due to the reverse split of Citi. As if volume wasn't anemic enough already. As ZH said, the bots have lost their favorite toy. This sure is going to expose something a little closer to the truth concerning the facts about incredibly weak volume on up days ever since the March '09 low. But that's how bots work... they won't buy big blocks of shares just above, they buy small block shares 'way above'. Aggravating, immoral, unethical, corrupt are all words that fall short of describing what we're witnessing. It just gets worse and worser.


    But other than that, life's pretty good. It's nice and sunny and warm here today. lol
    10 May 2011, 03:42 PM Reply Like
  • It's been very windy here for longer than usual. I was/am long Citti Group (C) having bought it on the cheap after the crash. Never did do much. Now there is 800% less of it not doing much at a much higher price. LOL.
    10 May 2011, 04:13 PM Reply Like
  • Author’s reply » Geez Robert... at the end of today's trading, the market internals just look really, really bullish. That doesn't make me very happy because I'm so agitated about the reasons for it. But it just is what it is.


    Take AAPL for example. It looks to me that it's right at a resistance level between $348 and $351. If it bursts through $355 (and I suspect it will) I'd honestly have to say that I'd interpret the daily chart as looking like it would be ushering in another incredibly powerful leg up for AAPL. I wouldn't even argue with $450. That would cause the NAS to just explode higher and take all the ships (sinking or otherwise) right along with it. Simply incredible... that's all I have to say at the moment. I'm just stunned by what we're witnessing here.
    10 May 2011, 04:21 PM Reply Like
  • AR: Greetings. Add to that the fact that silver just continues up in the face of repeated margin increases by the CME. I think it may have reached equilibrium and the market price is now dominant. That would be really bad news for (JPM) as their government sponser can no longer pull their shorts out of the fire through manipulation. With the end of QE2 just around the corner it's puzzeling that Mr. Market seems poised to trend up. Could it be anticipation of the administration taking positive action to drive down oil as they did silver?
    10 May 2011, 04:41 PM Reply Like
  • Author’s reply » I don't know Robert, I just don't know. In the past 2 months I've written 20 articles that all provide good evidence that there are pressures and ratios all over the place suggesting that the markets 'should' be correcting here. But gravity is simply being defied. I just don't know what to think anymore. Logic just isn't working anymore and that scares the hell out of me to be honest.


    On the one hand I think silver's going to the moon. On the other, I can also envision very strong reasons why the dollar should suddenly reverse explosively higher. I made a comment on a different site just today that it is possible for both to be going up at the same time, a comment where one participant just stared at me with a glazed look on their eyes and called me out on it. lol


    But it 'could' happen - as impossible as that sounds. If we just think of it through the eyes of a Japanese person for example, it's possible that he would see the dollar rising in value, and therefore he'd be experiencing a weakening of his own currency (relative to the dollar). On the other hand, he'd also be seeing oil fall in value relative to the dollar, but it's possible he wouldn't benefit from that if his own Yen is falling fast enough. Each separate commodity, currency and precious metal has to be viewed in terms of the local currency. What I'm getting at basically is this... it's possible for the dollar and gold to be rising more or less in tandem as the two of them surge in value relative to all other currencies in the world. But admittedly, I'm just jabbering now. Slobbering and jabbering because the FED has officially driven me nuts I think. lol


    In fact, I haven't written many comments over the past many months here on SA. But I guess I just finally reached my limit today because I placed one here:


    I guess today I was finally more or less inspired to write like I used to, with a little bit of passion along with a sprinkle of piss and vinegar. I'm just getting really agitated these days by what we're witnessing. Seriously, this is just bloody awful. In any event, what I wrote in that comment above kind of expresses how this kind of illogical world scares me and is actually very dangerous.


    All the best my good man.
    10 May 2011, 05:28 PM Reply Like
  • I expect a further correction on silver, and a sizeable one, imo. Having no crystal ball, I am not a buyer of silver here.
    10 May 2011, 07:42 PM Reply Like
  • Author’s reply » What was that you said about silver OG? It's only down by 10% today. I thought you said "sizeable". And don't try to convince anybody you don't got no crystal ball. I'm looking forward to your next 'expectation'. I'll probably act on it, too. lol
    11 May 2011, 02:53 PM Reply Like
  • Author’s reply » HAHA! Can you believe this folks? The hypothetical scenario I discussed above is playing out. If the market just stays where it is, the HO as an indicator is going to 'break' on Friday.



    I doubt the HO will signal today although it's remotely possible. If the market continues to sell off, the odds are of course much greater that it will signal tomorrow or 'Friday'. God... that would be just too rich! A Friday signal would not be 'legal.


    As our friend Doubleguns would say, I hope y'all are havin' a good day!
    11 May 2011, 01:31 PM Reply Like
  • Author’s reply » Just as a matter of interest for those curious... the number of new highs settled at 124 and the new lows at 18. Needless to say, the vast majority of those new highs occurred very early in the day. From that point forward, almost all stocks fell so that at the end of the day 72% of stocks had declined. So no doubt the number of stocks that are now much closer to attaining a new 52 week low has increased substantially. We won't get that data for a couple more hours yet but that's more or less a moot point. We know the situation is primed for a signal. Not saying it has to happen, but just that the atmosphere is conducive... (except for Friday. lol)
    11 May 2011, 04:52 PM Reply Like
  • Who woulda thunk that falling oil - good for the economy, the trade deficit, the consumer, ... everbody except the TBTF banksters I guess - would make everybody so bearish.


    Makes me wonder about the motives of some of the big players in this market. We need not name them, we all know who stored oil on floating tankers last year (or was it 2009? - cna't be sure now) don't we.


    Maybe they had to sell off the market so they could buy more oil and put it in tankers again.


    I know I'm rather jaded now.


    Oh! On topic - thanks for keeping us updated on this. I read all the posts, but don't comment much.


    Now you see why! :-))


    11 May 2011, 05:46 PM Reply Like
  • Author’s reply » Lol - I 'always' like to read your thoughts HTL. I don't see as many as I would like.


    I just gotta tell you something: About an hour ago I published the longest and undoubtedly the best analysis I've ever done, on Michael Eckert's site. It pertains to the $CRX - Commodities (only) Related Stocks, and how they have impacted the broader S&P over the past 12 years. The findings stunned even me. Over that period of time, the $CRX has risen 64 times as much as the S&P has. You read that right, 6400%.


    If I could have published that article here, I would have. But by now you know the philosophy of SA... it's too technical. So unfortunately, it is hidden behind the 'premium' section at EW Trends and Charts. But Michael Eckert is so blown away by it that even he is encouraging me to get it published elsewhere, even though that's not in his own best personal interest... very kind of him in my view.


    I am in the process of seeing if I can get that done. If so, I'll let you know where to find it. Just a warning though, it's quite long with a lot of 'explanation' and 6 charts. But I know with 100% certainty that you would enjoy it. I know that with absolute certainty because I partially know how your mind works. Or should I have said "I know how your mind partially works"? No, I think the first version is the right one. lol


    In any event, the analysis is suggesting that with the breaking of a 12 year old trend line, the entire 12 year process of commodities stocks rising faster than the broader market appears to be at the beginning stages of reversing. The breaking of these rising trend lines only occurred once before... in Aug. of '08. The implications are staggering, especially since the ratio is now at an even greater extreme than it was back then. Much, much greater... thanks to the effects of POMO funds. Of course, this scenario is fully dependent upon this ratio continuing downward. All indications are now suggesting that this is indeed its intention.


    I'll try to get that piece published where the public can see it. If I can get that done, you'll be one of the first to know. As always, I appreciate you dropping in HTL.


    All the best.
    11 May 2011, 06:22 PM Reply Like
  • I do look forward to it. There are quite a few positive, as well as possible negative, implications with that scenario.


    With the environment (monetary, world economy, "race to the bottom" by all the CBs, ...) the results might be different than what history would indicate.


    But, in all honesty, I know I'm still to "n00b" (sounds better than "ignorant", but means the same) to suss it all out. If I'm lucky, I get a "broad stroke" correct.


    11 May 2011, 06:41 PM Reply Like
  • HTL I read there is plenty of inventory.
    11 May 2011, 05:59 PM Reply Like
  • Yes. Cushing is full to the gills. They have no room for much/any more. But that didn't stop it from going to $100+.


    So, one begins to wonder if the same "forces", other than supply and demand near and long-term of course, are at play.


    You do recall the recent article about how the bankers are doing it to us *again* using the free Fed money to buy up various commodities contracts and drive the prices up, right?


    I believe that article had it right. Of course, that may be only because it affirms my preconceived notions! :-((


    11 May 2011, 06:05 PM Reply Like
  • HTL - - -


    I have some work, first published in a co-authored piece with Doug Short, that discusses the strange price elasticity of demand for gasoline ( The data shows evidence of hoarding, or in the case of traded commodities, speculation.


    I have started some further work on the data but have not had time to finish it yet. I think that there is an onion here, and, if so, I'm trying to peel off the layers it.
    11 May 2011, 07:29 PM Reply Like
  • John,


    A very thought-provoking piece. My first thoughts, however, were not of hoarding or even speculation, although elements of both may certainly be present.


    Since this would be off-topic here, can I e-mail you at the old e-mail address with my thoughts?


    I believe you have a very rich onion there.


    11 May 2011, 11:22 PM Reply Like
  • HTL - - -


    I'll send you my current address at your SA mailbox.




    PS: Doug had posted his part of the article at SA before we got into the discussion that resulted in the second part with my graphs. That's why the subject hasn't been on SA yet.


    It will be submitted here when the follow on work is done.
    12 May 2011, 12:13 AM Reply Like
  • Rocks: Recieved from my Honduran archeologist pal, whom a few commenting in this column will one day meet, here's a little hilarious ventriloquism staring Jeff Dunham and Angry Old Walter. Enjoy!



    Thanks for the HO updates!
    11 May 2011, 08:23 PM Reply Like
  • Author’s reply » HTL, and anyone else who might be interested, I was indeed fortunate enough to have found a most excellent site which views my most recent article as acceptable enough to publish. And which site was willing to publish it? None other than Global Economic Intersection... our own John Lounsbury. I'm very pleased about this since John's site provides an opportunity for people who are not subscribed at EW Trends and Charts to view the piece. With not only the gracious cooperation of Michael Eckert, but at his urging, the piece entitled "The Incredible Run of the $CRX" now appears here:


    Thanks again John. Your generosity never ceases to amaze me. Now my sister can read the as piece well. To date, the only writing I've produced that she has had the opportunity to read is email. She's going to like this :-)
    12 May 2011, 08:21 AM Reply Like
  • I'll be reading it today!


    I'm glad you found a venue!


    12 May 2011, 09:01 AM Reply Like
  • Just finished reading your article 'Rocks.


    I'm struggling to state how impressive your work is without sounding like an unabashed flatterer.


    First, the charts do an excellent job of demonstrating your thesis.


    But they are not the most impressive thing - they are only the messenger of your concerns. They may have also brought you the data, as a side effect of your interests, that sparked your concerns and they may now carry the results of your work to others.


    But still, they are the messenger only. Very *good* messengers.


    Your correlation of the $CRX to the $SPX is even more noteworthy, IMO. How many intelligent and highly-placed people have *not* recognized this correlation? If we can answer "very few", that alone makes your effort even more impressive. I mean, think of the HUGE (nominal) salaries we pay these folks to identify, correlate and prognosticate as you're doing in the article. *I* haven't heard the issue raised, but maybe I just don't get around enough since I'm so busy trying to learn so many different things simultaneously. E.g., I've not been to Mish's site in ages.


    Anyway, did any one of those folks getting the big bucks earn that money early this century? How about 2008? How about now? How about our esteemed chairman of the Fed who (in)famously told us everything was hunky-dorry just prior to "The Great Recession"?


    Nary a peep about the real risks that you demonstrate exist in your charts and your article. And he's such a big "history buff", apparently since he's made a career, his name and his fortune studying and becoming "expert" on a tiny slice of it, that you would think with all the resources at his disposal he would have spotted, understood and mentioned concerns related to the things you bring to light.


    Have I missed a significant announcement from him, or others, on this issue?


    IIRC, he's still, effectively, declaring all is good because there is only transitory inflation and the economy is slowly recovering, etc.


    Of course, maybe we should consider the environment he's currently in. After all, the administration, the CFTC et al are making a conscious effort to drive money out of commodity-related vehicles, almost assuring that your trend line will be significantly broken.


    And one day they will awaken and wonder "What the hell happened"?


    Last, your correlation and clear demonstration of the leading nature of the indicators in predicting certain effects is most impressive.


    I believe your article should receive wide dissemination and attention.


    I am glad you took the time and found a venue for your effort.


    Thank you for both the original work and taking pains to make us aware of it.




    P.S. If you get any more "goat eggs", could you send me some? They should go well with the "goat's milk" with which I'm more familiar. ;-))
    12 May 2011, 09:09 PM Reply Like
  • Yeah, Rocks, you could use an extra comma here and there-- HTL is right by waxing poetic, you surely deserve kudos for this effort!
    13 May 2011, 12:05 AM Reply Like
  • OG - - -


    Thanks to you, HTL and others for your comments on AR's article. His reaction indicated he thought I might be pulling his leg when I said I wanted to post it. Maybe he'll now know I was serious when I said it was good.


    I even told him I thought we would post it based on his summary description before I even saw the full article. A little risky, but not too much since I have been following the way he does analysis for some time.
    13 May 2011, 12:51 AM Reply Like
  • I like your new endeavor, John. You are featuring very good information, imo. Thanks for that! Do you ever sleep?


    One item I have been thinking about lately. Perhaps you know:
    I am interested in understanding how the Japanese earthquake/tsunami is impacting businesses outside of Japan. In other words, how it is impacting the factories that produce for Japan, that export to Japan. I know, for instance, that Toyota closed down U.S. Plants, and that there have been many slow-downs by major Japanese companies. But, I haven't been reading that the factory workers are going back to work, or that the slow-downs have improved.
    So, I wonder how that will impact 3rd and 4th quarters.
    Any ideas on this topic?
    13 May 2011, 01:51 AM Reply Like
  • Author’s reply » Thanks HTL. I find it very, very rewarding to hear from people like you (and OG and John L.) who take the time to read a long article like that, listen to what I'm trying to convey... and then invariably come out the other end fully understanding the message. I'm afraid that's the main reason I tend to write comments (and now 'articles' lol) that when finished, I usually recognize as being too long. But I guess that's just my nature... I want to 'explain it properly', or else the entire exercise might be at risk of deteriorating into kind of a confusing mess.


    So when you come out the other side of that little journey fully understanding the message, I feel so good... feeling that the entire effort I put into it was very much worthwhile. Thanks so much for taking the time to read it. And if not for John, that piece would still be hidden behind Michael Eckert's 'premium content' button. A special thanks to Michael as well, for encouraging me to get that particular piece out into the world. I've written 19 items for his site since March 30th and normally they remain 'there only' for his subscribers.


    "And he's such a big "history buff", apparently since he's made a career, his name and his fortune studying and becoming "expert" on a tiny slice of it, that you would think with all the resources at his disposal he would have spotted, understood and mentioned concerns related to the things you bring to light."


    That's the most enraging aspect about all of this. Bernanke, I'm 100% certain, is fully aware of every aspect that I covered. He "knows full well" about all of this. But he works for those who own the US currency and who profit handsomely by its demise. China can explain how that works. He lies for his evil lords like a good loyal employee.


    These things have outraged me for at least 2 decades now. Even longer. In fact, ever since I was a young man I recognized that there was just something about the entire system that isn't right. People shouldn't be fed a constant smörgåsbord of propaganda. And I recognized propaganda at a relatively young age. People shouldn't have to sit at a red light at an intersection at 1:30 a.m. when there isn't another car within 6 miles. I sure as hell don't sit there and let a machine tell me when I can proceed. Little girls shouldn't be forced to take 55 vaccinations before they are 14 years old by some oligarch, and being at risk of expulsion from the school system if she refuses even one of them. Or worse yet, the parents facing charges. That just isn't right. It's the same people who run it all, run all that nonsense, with full knowledge, with full compliance and with full understanding of what they are doing. It's no different than the illusions of wealth that the CRX presentation attempted to expose.


    I dunno... for almost all my life I have been defiant of 'the system' as we know it. When I was 23 years of age, twice I went to a court of law to stand before a judge and defend myself against traffic tickets that were unfairly doled out to me by some punk cop who didn't like my old car. On both occasions I said to the cop "see you in court". And on both occasions I did just that. On both ocassions the judge tore a strip off the cop and dropped the charges. I got a smile out of the judge on both occasions as well. At the risk of sounding a bit eccentric (I don't think I am and I don't even like that word lol), I'll just tell you that my friends, those who love me the deepest, have always known that I have a 'different way' of looking at things. They don't all understand it, but 'all of them' have expressed at least a little of admiration for the way I see things. Tyranny.... oh man... tyranny and bullying is one concept that just lights my fuse. Thank god I've had a sense of humor all my life or I might have detonated more often than I did. lol


    Maybe it's that defiant spirit I've had my entire life that is only now subconsciously driving me to reach out and start writing. The first time I ever wrote anything of any size or substance was right here on SA, not much more than two years ago. Between then and my college days (a 35 year span), I hadn't written a word. But I guess the fire was always there.


    But you're a great guy HTL... I knew with certainty that you'd appreciate (or at least take into consideration) that perspective I wrote about. Your comment alone was very impressive. Thanks for taking the time to write it.
    13 May 2011, 02:46 AM Reply Like
  • OG - - -


    We have been looking for data that we can develop. Steve has been hoping to develop something meaningful there but we have not found any worthwhile new "gems" yet. There have to be some significant interactions. Someone else may get a good analysis out on this before we do and, if so, we'll ask for permission to repost.


    14 May 2011, 02:56 PM Reply Like
  • Rocks, I read your article and thought it was an excellent summary of where we've been, and where we are going.
    12 May 2011, 12:02 PM Reply Like
  • Author’s reply » Thanks OG. Yes, the daily chart is definitely flashing a warning that the game may be over soon. But I'm not 100% convinced that it's absolutely conclusive quite yet. The FED has shaken my confidence to the core, but I can still do math. I guess the question is whether or not they will allow 2 plus 2 to equal 4 as it once used to. But thanks for taking the time to read that piece. The logic behind it is sound enough.
    12 May 2011, 12:47 PM Reply Like
  • Until commodities start diverging in different directions the risk of a nasty downturn is ever-present. Likewise, they will drive a good number of stocks to new lows. Thus when the market is at relative highs it starts to meet the Hindenburg requirement of large new lows and highs at the same time. We will be watching.
    12 May 2011, 12:10 PM Reply Like
  • Author’s reply » You may not have to wait long Moon.


    The number of new highs at the moment is 92. The number of new lows is at 32, with 81 required. There are enough stocks within striking distance of a new 52 week low if the market were to sell off later today (and it's starting to look ripe for that possibility), then we 'might' get a signal today. But ironically, tomorrow the HO will become 'broken' and will not be allowed to issue an official signal, even if every other requirement has finally been met. However, in spite of the fact that it will break tomorrow, it should come back on stream very quickly. I'd say it would be out of commission for no longer than a week tops.
    12 May 2011, 12:43 PM Reply Like
  • Author’s reply » Nope... Bernanke just issued another threat, steepening the decline in the dollar and reversing every other currency higher as well as the metals. Yields on the 10 year bond are up nearly 3% on the day as money flees the bond market. As long as he's going to continue to jawbone and threaten the USA... the games continue. He might be right about the consequences but when is it ever going to end? At Dow 42000?
    12 May 2011, 01:23 PM Reply Like
  • More likely at eggs $42.00... or higher.


    12 May 2011, 09:14 PM Reply Like
  • Author’s reply » For tomorrow, as long as the NYSE is below 8465.45 the HO is technically broken and unable to issue a signal. At the close today, the NYSE is about 9 points shy of that level. This condition will resolve quickly with a little burst higher in the NYSE or else with the simple passage of time... just a few days, perhaps 2, 3.
    12 May 2011, 04:33 PM Reply Like
  • How do you like the move in silver today, Rocks?
    It ain't over yet.
    12 May 2011, 07:52 PM Reply Like
  • Author’s reply » Like everybody else I guess, I just wish I knew what the immediate future holds for the dollar. At first glance it looks like the dollar might have finally put in a bottom, but I'm still very suspicious about that. If we knew of some real logical catalyst for a whopping dollar surge, such as an actual default in Europe then I'd be much more confident that a low is in place for the buck. But we're not seeing that just yet (although I also wouldn't be a bit surprised to hear news on that front in any given week). So your hunch could very well be correct... that silver falls even further as the dollar continues to strengthen here, although as I mentioned I'm not convinced the true dollar rally is underway just yet. I just don't know, it's just a suspicion in that regard for now. Of course that would mean yet another surge in equities if the dollar does indeed turn lower and another burst for silver.


    So I don't know what to say OG. In the long haul though I think we'll see silver at $200. Sounds outrageous I know, but when we consider that as a rule of thumb, for the past 4600 years one ounce of silver would purchase a fine dinner and one ounce of gold would have purchased a fine gentleman's suit (a suit of armor for a Roman centurion, a suit of armor for a medieval knight, a gentleman's suit in 1900 or 1921 or 1933 or 1989 or 2011), then it doesn't sound so outrageous. It's just that when the day comes when we see silver at $200, a fine dinner will still cost us that same one ounce of silver.


    This daily chart for silver is just for fun. But I don't see it falling below the yellow zone where it should find pretty strong support I'd think.



    The historic long term gold:silver ratio is 17 to 1. Some claim 35 to 1, but that's only during the period of time after the FED was created. Their agent JPM had been messing with it. But at the time of the Hunt boys' venture, that ratio did indeed hit 17 to 1. It was considered outrageous back then, but it really wasn't. In fact, when silver recently hit almost $50, that ratio only touched 32 to 1. Unbelievably, in order for silver to have even 'matched' that ratio back in the day when the Hunt's went on their buying spree, silver would have had to have hit $90 at its peak on April 25th. So I don't honestly believe silver has a whole lot more downside... but maybe as far as $26-$30. Having said that, I went on record about two weeks ago saying that I doubted it would fall below $40. Goes to prove that I don't have a crystal ball. We already know you do. lol
    13 May 2011, 04:07 AM Reply Like
  • $23-ish would put us back to where we were 6-7 months ago, if I remember correctly.
    13 May 2011, 05:01 PM Reply Like
  • Author’s reply » Just for your interest, here's that chart again which shows why the HO 'did' break today as forecast, and apparently for part of next week:
    13 May 2011, 03:45 PM Reply Like
  • Author’s reply » At the moment, the number of new highs and lows are more resembling what's required for an HO signal than anything we've seen is quite some time. But we're not there yet.


    Currently there are 57 new highs and 43 new lows with 80 required for each. But as you know, the HO broke down technically on Monday as advertised, and it's still broken at this time. The way things look right now, it is also likely to be broken tomorrow and Thursday with the odds favoring that it comes out of the repair shop on Friday... as per the chart below:


    Wouldn't it be so ironic.........
    17 May 2011, 11:55 AM Reply Like
  • Author’s reply » Although technically it's a moot point, the number of highs and lows ended at 93 and 49 respectively. That's getting pretty darned close. The HO will be broken again tomorrow barring a big burst higher in the NYSE. For Thursday it's 'iffy' because two up days in a row should get it running again, and for Friday very likely the HO will be back up and running regardless.


    Hope you had a successful day :-)
    17 May 2011, 04:10 PM Reply Like
  • AR: Greetings. Thanks for the heads up. Hope your day was a success as well.
    17 May 2011, 05:56 PM Reply Like
  • AR,
    Thanks for keeping this going with the analysis. Things just don't "feel" right so this is something I'm following with you. I just could not stand it so I bought a little HDGE to lessen the pain. Of course it will whittle on the gains if wrong.
    18 May 2011, 10:28 AM Reply Like
  • AR: Greetings. All of these companies hoarding cash and Google (GOOG) choosing this timing and these market conditions to issue debt is enough of a signal for me. These companies are expecting to need access to cash as QExx goes into stall mode. I could be wrong of course. They could all be preparing to go on massive spending sprees the magnitude of which will boggle the mind and raise the economy and markets to unbelievable highs. That's not the way I'm reading the tea leaves though. Got stops and hedge rows?
    18 May 2011, 11:06 AM Reply Like
  • Author’s reply » Well here we are, in the same boat as yesterday. The number of new highs has reached the required percentage and sits at 85. The number of new lows currently sits at 20 and could theoretically be hit today if there was a big reversal lower. But even if that were to happen, the HO would be asleep and unavailable to issue any alert.


    Having said that, I doubt any sell-off of any size will happen today considering that all of today's action is machine controlled and on minuscule volume as is their modus operandi, 100% of the time. Particularly effective when stocks need to be pinned at whatever level is required to ensure that Goldman Sachs "collects" their premiums for insurance otherwise known as options. As long as GS exists and is allowed to participate in equities markets, OPEX week action can never be trusted to reflect anything even remotely resembling reality.


    My personal aggravation aside, since the action since the May 2nd high appears (at least at this time) as a 3 wave corrective pattern, the implications would be another massive explosion higher for equities. Wish I knew!
    18 May 2011, 01:55 PM Reply Like
  • Author’s reply » The NYSE has risen far enough that the HO is now up and running. Tomorrow the level that the NYSE has to be 'over' drops considerably. So as promised, the HO will be fully operational on Friday and going forward from there:
    19 May 2011, 02:10 PM Reply Like
  • Author’s reply » Holy smokes! The HO has gone off-line again, at least for the moment. IOW, if the NYA does recover enough ground by time the market closes today, it could be back on stream. In such an event, an HO signal would be valid. For tomorrow, the key orange line (indicating the price of the NYSE 50 days ago) will drop once again, drop harder on Wednesday and harder yet on Thursday. So barring a massive crash, the HO will be back on line soon. The link below is to a dynamic chart in my library and it will update for you as the day progresses. Just refresh it whenever you want:


    Today's action as witnessed by the numbers of new highs and new lows is eerily similar to what we saw just before the flash crash when the HO produced a couple of 'very near' misses. On one of those occasions we saw the market open with a big gap lower which promoted the number of new lows being attained. Later in the day the market recovered impressively, but not quite impressively enough to generate the required number of new highs. If memory serves me correctly, it missed by two or three issues. For those of you who've been following here from the beginning, you might recall that that was one of those days when I suggested that we probably should consider it as an official signal. The reason being that I didn't think we needed much more evidence than that... the warnings were clear enough, official signal or not.


    At this point in today's trading however, we're not really close to seeing a signal yet, although headed in that direction. The number of new lows is at 37 and the number of new highs is at 30. The HO will require 80 of each and since both numbers are cumulative (starting at zero each day), they will only increase as the day moves forward. I'll keep you posted, particularly in the final hour.
    23 May 2011, 12:22 PM Reply Like
  • On that previous occasion, we hadn't had the adjustment to the rules yet had we? How much effect do you think the new rules would have had and would it have actually triggered?


    23 May 2011, 12:33 PM Reply Like
  • Author’s reply » I recall that we found ourselves in the process of only discovering that Jim Meikka had changed the rules. Originally the percentage of new highs and new lows required was 2.2%. Then for a short period of time it was 2.5% and then 2.8%.


    I honestly do not recall exactly 'when' we switched from using 2.2 to 2.5, although I 'do' know that I was using 2.2% until I discovered the rule change had taken place. From then on, for a time it was rather confusing since a lot of websites were reporting different things. I finally zeroed in on the rules as discussed by Tom McClellan... a friend of Jim Meikka. Tom's parents are also the parents of the famous McClellan oscillator, which itself is a prime component of the HO.


    IIRC, I switched to using the 2.5% rule at the time of the flash crash although that was still 'behind the times' by a small amount. The difference it made in the number of required highs and lows was about 3 issues I believe. However, since discovering the 'real goods' from Tom McClellan, we've been using the correct guidelines ever since.


    On the day of the first "official" (but far less effective) signal in August, yes we were up to speed by then and using the correct rules. We beat Zero Hedge by about 4 hours in reporting the HO which was later given full explanation by Tom McClellan in the link above. Going forward though, it appears we're about the only source I'm aware of who has the rules right (at least among those reporting on it).
    23 May 2011, 01:05 PM Reply Like
  • Excerpt taken from below link:


    "At the time of this writing, more than 400 of the S&P 500 names were trading below their 10-day moving averages; on Friday "just" 257 names were below that moving average. This is a rather breathtaking expansion of breadth deterioration as far as short-term prices direction is concerned. Worse still is that the bulk of those 10-day averages are now acting as overhead resistance (green line on chart below)."



    I'll add, "Yikes!"
    23 May 2011, 02:51 PM Reply Like
  • Author’s reply » Very interesting Maya... I hadn't seen that article. But it's a great tie-in to what we're monitoring here. Thanks for posting it.


    At the end of the day the HO broke down. Kind of like Obama's car:


    Maybe that'll teach him to keep his oily feet off sacred soil.


    Anyway, at the sound of the bell tomorrow morning the HO will be back on-line yet again since the orange line on the chart will drop once more. At the end of the day there were 58 new highs and 42 new lows. Nothing outrageous but clearly showing a certain degree of polarization.
    23 May 2011, 04:25 PM Reply Like
  • Author’s reply » Just for your interest, today the numbers of new highs and lows finished at 79 and 36 respectively with the requirement of 84 for each. One thing to note though, is that even as recently as the first of May, the number of new highs was averaging approximately 275 on a daily basis. That number had reached as high as 647 on April 26th, just before the flash crash. Then it plunged and we had one of our 'near misses'... then the flash crash. Here's a chart showing that action... just a little trip down memory lane:


    Pay no attention to the fact that the number shown for today's new highs sits at only 51. The official source is the WSJ and we 'must' adhere to their stats. I have never gotten an adequate reason for this disparity, but Cole Johnson at StockCharts advised me that in cases like this where there is a discrepancy, to rely upon the WSJ. Since that's also what the rules dictate... 79 it is. And yes, the HO is working fine and will be in good shape for the next few days at least, even if the market were to continue to sell off (as long as it isn't a severe downdraft).


    And just for your 'further' interest, the numbers for the NAS are just the opposite, with 48 new highs and 81 new lows being registered today... considerably worse. Or as they say in Philly, "more negativer", right Maya? lol
    24 May 2011, 04:22 PM Reply Like
  • AR: Greetings. Thanks for the update. Are we still in the not that bad equals good tracking mode for economic progress?
    24 May 2011, 05:44 PM Reply Like
  • I understand that the HO calc is based upon NYSE numbers. However, the NYSE has really changed with all of the listings of the many ETFs. Breadth measures created and based upon the NAS have remained more "true" to the originals. Of course, all of the really long term systems were based upon the NYSE trades as that was considered the real stock exchange. Just something to keep in mind.
    24 May 2011, 09:09 PM Reply Like
  • Author’s reply » You're welcome Robert.
    Lol, not really sure I understand the question. Is it like this?:


    ? not that bad = good ?


    If so, I'd say 'negative'. The old saying goes "bull markets never end on bad news but on good news that just wasn't good enough". I think we're seeing a market rising in the face of the worst possible news. And from that perspective, I guess it still looks very powerful. But it's so contrived it's just mind boggling. In fact the market internals right now are simply devastated. Here's one example:


    It's the Summation Index for the NYSE, which is basically a longer term cumulative, smoothed, look at the McClellan Oscillator. And the MCClellan Oscillator is a breadth measuring device. So $NYSI is a smoothed out picture of overall market breadth (how many stocks are rising vs. how many are falling). Currently it's showing a picture of really stinky brea(d)th. It came from an article that I published just last night.


    It shows that fewer and fewer stocks are rising while more and more are falling. It definitely shows that the market is breaking down internally, regardless of price action. As long as this keeps up, it's only a matter of time. That's not to imply that things couldn't turn around right smartly.... just that until we see such a turnaround, the market is crumbling while it waits. Somebody had better step up to the plate pretty darned quick here and inject another couple hundred billion dollahs or these stocks are just going to continue crumbling. I think the European debt crisis is on the verge of a really bad outcome. But I have to admit, what the heck do I know?
    24 May 2011, 09:21 PM Reply Like
  • Yo! Absowootley!
    24 May 2011, 09:29 PM Reply Like
  • Author’s reply » That's true Augustus, the NYSE has been changed quite a bit with the addition of so many ETFs and a few more bond funds. I'm not so sure the bond funds are all that big an issue though, since 30 years ago the biggest investors in bonds were the banks anyway. But regardless, a couple of years ago the inventor of the HO 'did recognize' the changing face of the NYSE and made some adjustments accordingly. He changed the requirements needed for it to issue a signal so that now they're quite a bit more strict. It takes an even greater extreme now to set it off (27% more new highs and new lows are required now). I think that's why it's still working about as well as it ever did, all things considered.
    24 May 2011, 09:49 PM Reply Like
  • Ditto what Robert said!


    24 May 2011, 05:49 PM Reply Like
  • Author’s reply » You might get a kick out of this. I've copied and pasted the results of yesterday's action below because today's numbers are basically the same. lol


    Tuesday - Just for your interest, today the numbers of new highs and lows finished at 79 and 36 respectively with the requirement of 84 for each.


    Today - Just for your interest, today the numbers of new highs and lows finished at 64 and 36 respectively with the requirement of 84 for each.


    Hope you had a great day at the casino :-)
    25 May 2011, 05:18 PM Reply Like
  • Hey, how can you not enjoy such a highly predictable computer algorithm in the casino?


    25 May 2011, 05:27 PM Reply Like
  • Author’s reply » Lol. BTW HTL (I love that... I can talk to you in extra short shorthand), EW Trends and Charts has published a piece I did on the S&P priced in oil over the past dozen years. It's a real eye opener for those who don't look back that far when counting their money. If you're interested, you can see it here since this one is open to all visitors:
    25 May 2011, 06:27 PM Reply Like
  • I recently signed up for their club. Have started the long, slow, arduous road to seeing how that applies, *if* I can ever get to the point of reconciling what I *see* with the plethora of apparent "exceptions to rule" that seems to have sprung up over time as they reconciled the base theory to the reality.


    Didn't I see your article already over at Econintersect?


    25 May 2011, 06:35 PM Reply Like
  • Author’s reply » Not unless you looked for it within the past 10 minutes. JL just emailed me saying they'd published it just now. However, the premise is basically the same. This particular piece looks at the S&P as priced in an actual commodity... oil. The $CRX piece looked at the S&P as seen through the eyes of a basket of commodities 'stocks'.


    I'm not following you with your first paragraph. Are you having trouble with EW Trends and Charts? You sounded angry. Yikes.
    25 May 2011, 06:44 PM Reply Like
  • I almost never get angry. It's just an observation as I try to learn and find what starts to look like a "Grand Unified Theory of Everything" with all the exceptions to the fairly straight-forward waves concept and fractal underpinnings get into trying to show the real world.


    My response is to slow down and work smaller pieces at a time and see if over time I can see what they describe appear *reliably* in individual stock charts.


    Since I've not completed any course in EWT, I may be fighting a losing battle.


    But I've been good a "book learning" and I don't give up easily.


    Congrats on the publication!


    Off to dinner before my wife kills me for letting it get cold.


    Be good!


    25 May 2011, 06:51 PM Reply Like
  • Author’s reply » Oh... you're referring to EWT. That concept has exasperated me from the first day I ever heard of it. Has cost me a lot of money too. So needless to say, I don't put much weight in it other than to acknowledge that it 'can' help to identify the difference between an impulsive type wave (in the direction of the larger trend) and a corrective wave (which goes 'counter' to the larger trend). I do take it into account but only after hinging 90% of my faith in the basic mathematical (non-subjective) methods. Market internal activity is probably the most reliable. The HO is a prime example of a mathematical model that I trust 900 times as much as I'd trust wave theory.


    Nonetheless, the study of Fibonacci numbers is indeed interesting. And there's definitely something to it since that golden ratio occurs so frequently in nature. It's astounding actually. Here's an interesting link that touches on that topic:


    If your wife gets mad at you just tell here it was my fault. And tell her my name is Ben Bernank.
    25 May 2011, 07:24 PM Reply Like
  • AR - I just dropped my subscrip to EWT
    It seems to me that while the Fed pumps unprecedented liquidity into the system, it distorts historic wave theory. Looking back on multiple EWT updates and monthly reports over the last 18 months detail their suggested/expected drops in equities and commodities. They very well might be correct - but their timing has been off...thanks to QE


    Getting late and nodding off - thanks for the link to your oil v spx article - I see you're thinking upcoming deflation on the horizon - I'll read it closely after a hot cup of joe in the am...again thanks and glad JL is running on econintersect - great site.
    25 May 2011, 11:44 PM Reply Like
  • Author’s reply » Hi DigDeep! I've never had a subscription to Bob Prechter's site if that's the one you're referring to. I've never even read one of their newsletters other than the occasional free one. But that site is probably the most annoying site I've ever been to since it doesn't matter which link you click on, it seems they're standing there with their hand out looking for more money. I've read many, many comments from other people all over the technical blogosphere who 'are' subscribed to EWI and the consensus is definitely that they're just as fed up as you are. That's why I only produce analyses based on ratios, or market internals, or momentum indicators, pos. or neg. divergences, support and resistance levels, trend lines... anything but wave counting.


    I'm starting to wonder if H.T. Love is confused about which site I publish articles on. I have nothing to do with Prechter's site, nor do I even talk much about Elliott Wave Theory, nor have I ever even posted a 'wave count'. I have very little faith in the prediction value of it and I'm just not a good 'waver, except when a bus full of hot chicks drives by. Bottom line... it's a waste of my time.


    But I 'do' see some merits in, although only to the extent that it's taught me to be more cognitive about whether a move in stock price is likely impulsive or corrective. Having said that though, when I 'do' see a clear five wave sequence, I absolutely 'do' sit up and pay attention.


    But I totally buy into the Fibonacci sequence as it pertains to nature, mathematics, pure beautiful natural forms, the human body, trees, flowers, nautilus shells, ferns, corals, the natural population growth of a herd of stampeding rabbits, etc. But looking for Fibonnaci ratios in market 'waves' is pure folly. They can always be found 'somewhere' in retrospect, but absolutely can not predict the future path of markets with enough dependability to place a bet on it. Having said that, I have also met a ton of people who absolutely 'do' believe wholeheartedly in Elliott Wave theory and most of them are the finest and brightest people I interact with. Probably 95% of them understand and employ other TA methods as part of their overall basket of tools.


    Yes, I see the deflationary outcome as a very real possibility. In fact I don't see how it would be possible for the economic world 'not to' implode considering that so many sovereign countries have their credit card full the very limit and then have the pleasure of having the interest rates on those cards jacked up every second week. That's how Mastercard works as well. They entice you to load that card up to the limit, and if you do, they offer you a higher limit... encouraging you all the way. But the second you miss a payment... BAM, you're looking at 19.75% interest rates. Killer rates. And they learned that little trick from their parents, the global banking mafia.


    Yes, I agree. John is growing GEI by leaps and bounds and it's actually a very exciting place to visit every day. The future for that site looks very bright indeed.


    All the best :-)
    26 May 2011, 02:36 AM Reply Like
  • AR thanks for the comments
    The Day job kept me away - and have read your articles oil and crx v equities.
    I was one of the idiots in 1999-2000 going long on all the tech's thinking I knew what I was doing. Somehow in Aug 87 I pulled my funds out of equities and did the same in Dec 2007. Lucky I suppose - wasn't reading SA and the other sites at the time. Jumped back in early Mar 09 - the 0ish % bulls at the time seemed like an obvious entry point....and jumped out in May 2009 thinking 35% gain was enough..and have been in cash ever since.
    To my detriment, I've not trusted equities or commodities since - although I asked my broker to get me into oil in Dec09 - USO was his only answer and I'm not keen on futures (tech bubble-burst scars). Following Prechter for a while convinced me to go short with some $...watching his analysis be wrong long enough.....


    So - Great to read yours and others with great analysis and insight.
    I'm bearish and don't trust hype or the Fed and leadership in general. It'll be a good day for the US when we get some strong leadership in power and get off the debt cycle for illusions of growth.
    The devaluation of the $ (and other fiat currencies) is such a farce and would be funny except that the middle class bears the brunt of their antics - eventually all will be smacked between the eyes with financial pain - like the kids coming out of college now and the average working man (and non working) are feeling right now.


    Thanks again - plenty to think about and you and others sure make it interesting and worthwhile.
    26 May 2011, 05:02 PM Reply Like
  • I took a crack at trying to figure out the intracies of Elliott Wave Theory about a year, or a year and a half ago. Too many subtle nuances within nuances that attempt to explain the waves within waves. I made some progress, but then decided to shelve the learning curve.


    But like you, Rocks, I definitely sit up in my desk chair when I see a clear five wave pattern, down or up. I'm potentially looking at one right now with Beacon Power (BCON), which "looks" as if it has finally bottomed, after five "nuanced-filled" downward waves. I'm in the hole with this one, and am debating doing some cost averaging.


    The key for me is if I see what looks like a beaten up stock I want to buy, is if concurrently at the bottom of the fifth wave, the daily trading volume drops off significantly, which is happening with Beacon, and another stock whose story I like, Axion Power (AXPW).


    But buying anything long right now is a challenge, with POMO ending, and the upcoming fiasco that will occur when states have to present balanced budgets come July 1. Pretty crazy that Uncle Sammy targeted the end of POMO exactly when the states have to "budget-up."


    By the way, the dollar/euro has a quite clear five wave pattern it just completed a few days ago.


    I heartedly agree with DigDeep's comment.
    26 May 2011, 01:09 PM Reply Like
  • Author’s reply » On Thursday the Hindenburg Omen nearly issued it's first signal since August of last year.


    Today. the required number of highs and lows on the NYSE was 85 for each. Today's action produced 97 new highs and 77 new lows. Another rule states that the McClellan Oscillator ($NYMO) must also be negative on the day of a signal, but today it was to the plus side. So not only did we miss the required number of new lows by 8 issues, but NYMO was saved from finishing in the red by a final hour surge in the markets.
    27 May 2011, 12:50 AM Reply Like
  • It would seem the disparity and meaning of the signal is evident, despite being a few issues short.
    27 May 2011, 08:01 AM Reply Like
  • Author’s reply » That's my take on it too DigDeep. Back in the week of the flash crash we had a similar near miss. Actually, that one was even closer because the NYMO was negative as required. And then on the morning of the flash crash we had another similar near miss before the bottom fell out. In both cases I'd advised that I personally was not going to ignore the overly clear message just because we were short by a half dozen or less new highs or lows. The bottom line though was that the HO 'did not' issue a formal signal at the April top but 'did' issue a signal half way through the August correction. Of course, both these events provided fodder for the debunkers to have their fun. I don't understand how people can disparage a purely mathematical and logical gem like the HO. Actually, I 'do' know why they do that... because they don't have a clue how it works and they want to be popular. 'The empty can makes the most noise' syndrome. lol Whether it issues a signal or not, once a person understands what the HO is measuring and what those results are at any given time, that information is very valuable.


    As it stands today though, personally I'm thinking the market is getting wound up for another run higher. If so, then probably higher than the recent highs of a couple of weeks ago. It seems to me that with all the bad signals coming from the market internals data, the market should have sold off hard already. But since it hasn't sold off and is somehow able to defy gravity, then it would seem to me that it just isn't ready yet. Or perhaps I should be more honest and say "the manipulators" aren't ready yet. I'd certainly be looking for a top somewhere in there though, before the end of June most likely. Just an educated guess... I certainly don't have any crystal ball. For that service you need to get in contact with OptionsGirl... she has one :-)
    27 May 2011, 09:08 AM Reply Like
  • Rocks: Sometimes one gets lucky (even when using Elliott Waves!).


    The Beacon Power stock I spoke of potentially bottoming yesterday, did. Was up over 40% today, now floating around being up 30%.


    Outta 'dat hole!
    27 May 2011, 11:47 AM Reply Like
  • Author’s reply » Wow! I'd looked at that chart after seeing your comment Maya. My thoughts were that although it was oversold and due for a bounce, the only clue that a bounce was coming was probably from some pos. divergences on the hourly chart. But I didn't think they were all that compelling quite yet, because of the 'relentlessness' of the push lower. But wow... did that baby ever pop nice. One would have to think that it's not finished popping either... not by a long shot. 'At the very least', even if this were just a 'corrective' wave in the overall larger down trend, this move up should still produce 3 waves at minimum. So far we're only looking at one (with a wave two lower in progress). And of course there's every possibility it could turn into a fiver up, in which case yer just gettin' started. lol


    But in no case would I dare put an actual E wave count on it. All I would use EWT for would to be to identify when a three wave pattern is complete... if that's even possible. Great pick there Maya. That's a talent you folks seem to have that completely passed me by. Well, maybe not... maybe it's because I very seldom look at individual stocks. Well done!
    27 May 2011, 02:10 PM Reply Like
  • Thanks Rocks! Even a blind peacock finds a tree.


    I agree, in that it appears Beacon actually did put in a firm bottom on Tuesday and Wednesday. Shares traded today are around 13 times yesterday's volume, with another hour yet in play--big indicator right there.


    Admittedly, I was very close to capitulating. If it were not for being aware of Elliott's five waves down theory, I likely would have.


    Or, maybe you have a few bigwig ghosts following this terrific column!
    27 May 2011, 03:03 PM Reply Like
  • Author’s reply » There was no HO signal today, even though the NYSE fell hard enough to darned break the damned thing again. Actually, the way things are looking now, if the NYSE continues lower tomorrow or the next day, the HO is in jeopardy of becoming broken for a couple of weeks if not permanently. Who'd have guessed this could happen?


    In any event, today the number of new highs was attained early in the day, settling at 104 while the number of new lows came in at 34. No doubt the number of stocks now within 1-2% of establishing a new 52 week low is now pretty big. So in the event that the NYSE bounces over the next few days, the atmosphere is perfect for an HO signal or two. But I don't see that as very likely now after seeing today's carnage with 95% of the volume being 'down' volume. We'll see what happens but we're definitely at a point where the HO is probably either going to issue a signal or break trying.
    1 Jun 2011, 04:51 PM Reply Like
  • Author’s reply » A new insta has been created where we'll continue monitoring the HO. Please join us by clicking on the link below:
    2 Jun 2011, 10:31 AM Reply Like
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