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John Lounsbury, Managing Editor and Co-founder of Global Economic Intersection, provides comprehensive financial planning and investment advisory services to a small number of families on a fee only basis. He has a background which includes 34 years with a major international corporation, 25... More
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  • The Hindenburg Omen, May 2010 50 comments
    May 7, 2010 8:41 PM
    Notice:  A new blog for June has been started at seekingalpha.com/instablog/98115-john-lo...

    The Hindenburg Omen is a stock market warning signal that has many followers.  One of the most diligent is SA reader Albertarocks who has been posting comments at a series of Instablogs.  The most recent (before this) in the series is
    here.

    Because the blogs' comment streams keep getting full and awkward to navigate, we have decided to post a new Instablog monthly.  This is the first.  A new Instablog will be started in early June.  Some months may have few (or possibly even none) but we will always start a new blog at the beginning of each month.

    Disclosure: No stocks mentioned.
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Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

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  • Albertarocks
    , contributor
    Comments (2233) | Send Message
     
    Now that the week of trading has closed, we can get a picture of that nagging issue about the 10 week MA on the NYSE. Here's a picture of what's transpiring:

     

    stockcharts.com/h-sc/u...

     

    If you look at the white line on the chart, it's becoming clear that the MA is rolling over. One of the prime conditions required for the HO to trigger is that it be pointing up. And by digging a little deeper, the mathematical truth is found and it's confirming the fear I expressed a little earlier this week.

     

    Last weekend the 10 week MA on the NYSE was at 7440.83.
    This weekend the 10 week MA on the NYSE sits at 7428.95.

     

    It's actually reached the point of inflection. It's actually pointed ever so slightly lower. According to the rules, this condition has therefore once again neutered the HO. Unless the market bounces pretty darned good next week the HO will officially be "offline" again. Here's the exact reason:

     

    10 weeks ago, that weekly candle was contributing to the MA and that candle's close was at 7303. But this coming week's candle will now be added to the mix and the candle of 10 weeks ago will drop off. Therefore, unless this week's candle at least matches the candle of 10 weeks ago, the MA will continue to drop. This isn't what any of us wanted to see (those of us who give a darn about the HO and want it to remain active).

     

    In early Jan., this condition occurred and the HO went out of commission for about 6 weeks. I'm afraid that's about to happen again. Not only that, but starting 10 weeks ago, the market was in the midst of a rocket ride upward that ironically lasted another 6 weeks. So the pressure is on... the markets had better surge right here, right now or the HO is going offline.

     

    This is the very reason I keep harping on this topic: Please don't "rely on" the HO to give you a sense of security. If the battery in our residential smoke alarm is dead, that doesn't mean we're safe from fire (since we won't be hearing any alarm). At this point then, all other aspects of the HO are a moot point, including that amazing switch of positions between the number of new 52 week lows and new 52 week highs. Of course, we can see with our own eyes that something drastic is happening. We don't need any Hindenberg Omen to tell us that, do we. This is where our own DD and spidey senses (and whatever other methods we use) are critical.

     

    I hope you're all enjoying a super weekend. I'm going to enjoy a wonderful evening with my son and daughter and their friends watching the UFC on my son's great big flat panel. It's a rare and blessed opportunity to be with them... together.

     

    BTW, my long missing daughter has returned to Calgary for good after being away from home since 1999 (on her quest to make it to the Athens Olympics). She had it in the bag (having very early in her rowing career won a regatta that unofficially put her at #1 in the world amongst junior women) then less than a year before Athens suffered an excruciating back injury that shot a hole in that dream. But at least she got a fabulous education and career out of her journey and got to compete in Europe and meet Olympians from all over the world. But to say we're both happy to finally be living in the same city once again would be a major, major understatement. YAAAAAAAAYYY! HAPPY! HAPPY! HAPPY!
    .
    8 May 2010, 12:34 PM Reply Like
  • smarttogether
    , contributor
    Comments (64) | Send Message
     
    Glad to hear your daughter's back! :) My main reason for investing is so I can help my kids when they need it - or at least not be a burden on them in my old age! Given how things are unfolding in the world, they may need help sooner rather than later.
    8 May 2010, 01:13 PM Reply Like
  • Albertarocks
    , contributor
    Comments (2233) | Send Message
     
    You're a clone of me dude, even though you're just an Edmontonian :-)
    9 May 2010, 11:11 AM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10612) | Send Message
     
    I think we may be witnessing a black swan event of historical proportions. Namely the collapse of European socialism. Should more PIIGS go the way of Greece the Euro may fall to an untenable level and/or the EU disintegrate.
    8 May 2010, 01:58 PM Reply Like
  • Albertarocks
    , contributor
    Comments (2233) | Send Message
     
    It's almost unimaginable to be contemplating something as monumental as that, yet it appears that's what's indeed happening right before our eyes. I can't imagine any fix for Europe that will work, so I couldn't agree more robert b. Maybe the HO was named Omen for a reason after all.
    .
    9 May 2010, 11:19 AM Reply Like
  • Albertarocks
    , contributor
    Comments (2233) | Send Message
     
    WOW! Now that's one of the best examples of "the market had better surge right here, right now" that I've ever seen.

     

    And as promised, that nagging issue with the MA on the NYSE is under repair. Here's what it looks like after this morning's little pop.

     

    stockcharts.com/h-sc/u...

     

    Actually it was last night's futures pump job because today's daytime trading has added basically nothing. What concerns me is the reason for this burst. It's not a good thing when the reason is that the basically bankrupt Eurozone was promised more money in the form of loans to make their mortgage payments. I don't know about you, but if my mortgage was under water and I couldn't make my monthly payment, my banker is not going to loan me more money with which to pay him back even more money that he already knows I don't have. That would be one stupid banker. ????? Eureka!! I've just accidentally stumbled upon the reason for the world's woes.

     

    I'm also wondering how long this morning's gap is going to remain unfilled. Will it be one day or one month? And I'm wondering if that gap will be filled as the market passes it by in a resumption of what appeared to be a new downtrend? Man, these are wacky times. Honestly, I swear logic in the world of economics has been suspended. That's really the reason I'm not listening to fundamentals as much these days... they just don't matter as long as there are powers who can suspend logic until the day that they lose control. I find it very angering because our grandchildren and their children will feel the pain for decades.

     

    In any event, if the market continues to be strong in the next few days, the HO will be out of the shop and fully repaired. In the meantime, amazingly the number of new 52 week highs, even after this morning's stunning blast-off is only sitting at 25. However, that will rise soon if the market continues with strength.
    .
    10 May 2010, 12:01 PM Reply Like
  • Albertarocks
    , contributor
    Comments (2233) | Send Message
     
    Just a friendly reminder that the HO is still broken.

     

    stockcharts.com/h-sc/u...

     

    Dr. Robert McHugh is still telling his readers "No Hindenberg Omen yet". He is expecting one at some point. He's a great guy (I haven't met him but we've exchanged a few emails and I have heard numerous of his internet interviews) but I don't think he's noticed this detail with the 10 week moving average yet. Either that or he might be thinking a relatively small rally would correct the HO's illness (which it would), but until that happens the HO cannot flash a legal signal. Another possibility is that the MA issue is so microscopically illegal that he might be discounting that and might make "the declaration" if every other component has met its obligation. We'll have to see what the other TA guys do, but the truth is that legally the HO is still broken as of early last week (sometime prior to May 8th).

     

    In any event, neither number (of the number of new highs and lows) is within the specified range as of tonight.
    .
    11 May 2010, 04:22 PM Reply Like
  • Albertarocks
    , contributor
    Comments (2233) | Send Message
     
    The HO went back on stream at the end of today, but barely. Technically, the 10 week MA is now pointed up but only by 3 points on the NYSE. It's very, very close and could go either way, but as of tonight, the HO is on-line.

     

    stockcharts.com/h-sc/u...

     

    The number of new 52 week highs is surprisingly low (88), but is in the range it needs to be in order for a signal to be given. The number of new 52 week lows is only at 8 today, but as we witnessed last week that can change sharply in a matter of hours. Had the market not started so strongly today and time was sufficient to have hit 75 lows *before* the rise began, we would have had a HO signal today. Same with last week, had the market not dived so quickly each day and had time been granted for only a few more new 52 week highs, we would have had a signal last week as well.

     

    So far.... none, but stay tuned. I'm not suggesting anything is going to happen but we need to be aware that the HO is not hiding its inner workings. It could happen at any time. Remember, if it does trigger the rules say that we need a second one within the next 35 days. It could be the next day or 35 days later... it doesn't matter.
    .
    12 May 2010, 05:46 PM Reply Like
  • Albertarocks
    , contributor
    Comments (2233) | Send Message
     
    This is probably a real good time for a short discussion on what it really means if we get a HO signal. I think the best way to do that is to supply a quote from somebody else who's an expert on the topic, and in doing so completely eliminate Albertarocks from the picture and any biases I might have. Here's a good summary by Dr. Robert McHugh (from 2005) and beneath his quote I've pasted a link to the entire article. This is a good summary for those of you who don't particularly care to get into all the interesting little details in the rather lengthy article:

     

    ______________________...

     

    "Based upon the five parameters noted above, here's what we found: Confirmed Hindenburg Omens are very rare. Excluding the confirmed Hindenburg Omen we have now, September 2005, there were only 22 confirmed Hindenburg Omen signals over the past 21 years. This is amazing when you consider that during that time span, there were roughly 5,000 trading days. Of those 5,000 trading days where it was possible to generate a Hindenburg Omen, only 160 (3.2 percent) generated one, clustering into 22 confirmed stock market crash signals.

     

    If we define a crash as a 15% decline, of the 22 confirmed Hindenburg Omen signals, six (27.2 percent ) were followed by financial system threatening, life-as-we-know-it threatening stock market crashes. Three (13.6 percent) more were followed by stock market selling panics (10% to 14.9% declines). Three more (13.6 percent) resulted in sharp declines (8% to 9.9% drops). Five (22.7 percent) were followed by meaningful declines (5% to 7.9%), three (13.6 percent) saw mild declines (2.0%to 4.9%), and two were failures, with subsequent declines of 2.0% or less. Put another way, there is a greater than 25 percent probability that a stock market crash - the big one - will occur after we get a confirmed (more than one in a cluster) Hindenburg Omen. There is a 41 percent probability that at least a panic or crash sell-off will occur. There is a 54.5 percent probability that a sharp decline greater than 8.0 % will occur, and there is a 77.2 percent probability that a stock market decline of at least 5 percent will occur. Only one out of roughly 7.5 times will this signal fail." (Dr. Robert McHugh)

     

    www.safehaven.com/arti...

     

    ______________________...

     

    I have no doubt that it's a good idea to refresh our memories and re-familiarize ourselves with the meaning behind a HO signal. It's "not necessarily" a signal that a major market crash is upon us. It's not even necessarily signifying a crash or major correction (whatever we want to call it) of 15%. But it's absolutely something we'd better be paying attention to because one thing it's definitely not signaling is "higher prices ahead".

     

    The fact that technically it went off line once again (that issue with the MA on the NYSE) at the end of today's trading is something that's still a nagging problem.

     

    stockcharts.com/h-sc/u...

     

    Dr. McHugh didn't even mention that issue last night is his newsletter except to say "no Hindenberg Omen yet". He doesn't go into any detail behind the HO for his readers nor any indications that it's rumbling. The only place I know of where information like that is available is right here. But just the fact that he's been mentioning it lately is probably enough to get his readers to sit up and pay attention. We'll see where that MA ends up at the end of this week's trading, which of course is at the end of tomorrow's trading. I hope it's a stellar day for all of you.

     

    "I would buy every three months some gold and not worry so much about the price because the weight stays the same". Marc Faber
    13 May 2010, 11:14 PM Reply Like
  • Augustus
    , contributor
    Comments (2320) | Send Message
     
    Thanks for keeping this thread updated. Rock On.
    14 May 2010, 11:43 AM Reply Like
  • Albertarocks
    , contributor
    Comments (2233) | Send Message
     
    YW Augustus. Thanks for stopping by.
    14 May 2010, 12:24 PM Reply Like
  • Albertarocks
    , contributor
    Comments (2233) | Send Message
     
    For the second weekly close in a row, the HO is "out of commission". This isn't at all necessarily a bad thing other than that we be aware that it's "off-line due to a technicality". But this is possibly exactly what is supposed to happen. I don't interpret this as bad news. It's the same story this weekend as last weekend... if the market surges enough next week the HO will once again come back on-line (as it did momentarily this week). This might be exactly how this thing works. This is possibly why it seldom issues a signal.

     

    stockcharts.com/h-sc/u...

     

    In any event, at week's end neither the number of new highs (15) nor new lows (18) is anywhere near what is required for a signal. So from the perspective of the HO, although we came very close to getting a signal this week, at the close of the week's trading everything's fine. Have a great weekend my friends.
    14 May 2010, 05:46 PM Reply Like
  • lower98th
    , contributor
    Comments (1420) | Send Message
     
    finance.yahoo.com/tech...=

     

    "Richard Russell, the famous writer of the Dow Theory Letters, has a chilling line in today's note:
    Do your friends a favor. Tell them to "batten down the hatches" because there's a HARD RAIN coming. Tell them to get out of debt and sell anything they can sell (and don't need) in order to get liquid. Tell them that Richard Russell says that by the end of this year they won't recognize the country. They'll retort, "How the dickens does Russell know -- who told him?" Tell them the stock market told him."

     

    He goes on to talk about 52 week highs and lows, and the eratic signals that Albertarocks has been pointing out.
    18 May 2010, 02:15 PM Reply Like
  • John Lounsbury
    , contributor
    Comments (3997) | Send Message
     
    Author’s reply » Richard Russell has seldom been wrong on facts. He is less fallible on timing, but still better than most. If he sees a disaster coming, I strongly advise you don't dismiss what he says if the time he mentioned passes without the predicted occurrence. Unless Richard says the picture has changed, the problem may still be coming.
    18 May 2010, 04:56 PM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10612) | Send Message
     
    There is definitely a storm coming with more than one storm front active in my estimation. Inflation will be the inevitable result of government policy over the last several years. Progressives won't relinquish control of the House or Senate without a protracted court battle. Green agenda folks will continue to try and control heavy industry through government energy policies using the EPA if cap and tax fails in congress. Soros and company will redouble their efforts to nationalize the banks and real estate will continue to flounder. Those are just the domestic things. China the Euro zone ETC... are all in the mix as well. So the HO not withstanding, this year, next year and 2012 promise to be interesting at the very least. Therefore battening down the hatches is very good advice. Be vigilant and agile if you keep your hand in the market. As my old Drill Sergeant always said: "Stay alert and stay alive."
    18 May 2010, 07:07 PM Reply Like
  • Albertarocks
    , contributor
    Comments (2233) | Send Message
     
    The HO is now even more broken than it was at the end of last week's trading and the week before that. As I've mentioned so many times in the past, I'm sure hoping nobody is depending upon it to "warn us of impending disaster". It can't issue a warning when it's broken just as a fire alarm can't save a life if its battery is dead.

     

    stockcharts.com/h-sc/u...

     

    I've been reading on other blogsites and find it somewhat disheartening to read so many peoples' thoughts about the HO. There has been a definite increase in references to it. "As long as that HO hasn't given a signal, I'm stayin' the course (long)". "The HO can't issue a signal because the 10 day MA is pointing down". For one thing it's not the 10 *day*, it's the 10 *week*. So I worry about those folks because they really don't have a clue how it works and appear to be waiting for some newspaper headline to give them the ok to sell. Folks, that may never happen. For example, if the market just continues to fall from here, if even slowly in a sort of "controlled demolition", the HO may never flash a signal. In theory we could see 3000 points knocked off the Dow without a whimper from the HO because it's broken.

     

    This evening neither the number of new lows (14) nor new highs (39) are near their requirement. BUT... we very nearly got two back to back signals, one on May 6 and one May 12. The only item that prevented a signal on May 6th was that we didn't quite hit the required number of new 52 week highs. And on the second "near miss" on May 12th we didn't quite get the required number of new lows. The question might be "Did we come close enough? Was that effectively a signal?" Technically, no. Effectively? Out of respect for the designer of the Omen and it's stellar performance in the past, is it even fair that we ask that question? I don't know. But I'm certainly not relying on the HO. I got positioned fully short a week too early but survived it. And am still short tonight. I'm not waiting for the HO to tell me the market is falling and that the outlook isn't bright.

     

    At this point it's looking to me that for the first time in 30 years, the HO is going to fail. I could absolutely be wrong but it's been erratic enough that I don't trust it right now. For example, if the market were to continue to fall from here, even if it were a slow steady grind, the HO will not recover from its MA malaise. And it's going to take a mighty surge in the NYSE to get it off the sick bed. It certainly doesn't look to me that that's likely unless somebody decides to jack up the indices with yet another mindless run-up in the face of crashing markets elsewhere all over the world. I just can't see that happening any more. Also, even if the HO was "on the job", it's become apparent that what's going to be needed is one day with a wild, wild swing in order to hit both the required number of new highs and new lows. And if May 6th didn't do it, I can't imagine what it's going to take. I don't think we want to know. In any event, that's really a moot point until we see the day that the HO is repaired.

     

    I feel kind of vindicated that Richard Russell pointed out some of the same bizarre occurrences that I'd reported here. I was reluctant to sound too alarmist, but what I was seeing was just nuts. I admitted that I didn't know what was causing it but it doesn't matter whether I knew the reason or not. What mattered was that I could still see it plainly and thought it best to at least let you know about it. I showed you charts of that insane megaphone pattern showing the wildest swings in the number of new 52 week highs ever seen.

     

    stockcharts.com/h-sc/u...

     

    I've been very reluctant to impose my own opinions and have tried to just stick to the two main topics. Namely, whether or not the HO is about to issue a signal and is it healthy? But folks, Europe is in one hell of a lot of trouble and they're not getting out of it. England is in the same boat. America is in the same boat. If the bond vigilantes behave as I suspect, the collapses will go like dominoes with America being last. I'm talking about interest rates, not equities markets. The American equities markets are really the only stock markets left standing for all intents and purposes. All others are watching in agony with their fingers crossed, but if they see the American markets finally start to go the way of their own, then it's almost assuredly going to get real nasty real fast. How do I say that without sounding alarmist? I haven't figured that out yet.

     

    JL points out that Richard Russell is sometimes early (he rarely talks at all). That's true enough. Many forecasters have been early. Most of you know that Doug Kass called a top many months ago. But after watching the European markets and the Chinese markets (Beijing especially) crumble lately, I don't think Russell is early this time, but that's just my opinion. Damnit... I did it again. lol Sorry.

     

    I hope you're all having a stellar week and I wish you all the success you could ever ask for.
    18 May 2010, 10:18 PM Reply Like
  • Mark Bern, CFA
    , contributor
    Comments (5188) | Send Message
     
    AR - The only things I can think of that could have been holding up the US markets so long are: 1) All the overly optimistic reports from our government and MSM about the recovery picking up steam and starting to create jobs and 2) The fact that so much of the stimulus money has yet to be spent. I think there are a lot of high expectations for the Administration to start ramping up spending over the summer months in an attempt to kick-start the economy leading into the November elections. There is ~$400 Billion of the original stimulus package still remaining in their warchest along with much (if not all) of the additional $125 Billion they added to it after the fact. That's a lot of spending over such a short period. I don't think that the original plan was to spend it all this year. I really think that Obama's circle wanted to try to squirrel as much away as possible, spending only what was necessary to get through this November while retaining a majority in both Houses of Congress and holding back the rest to help "save" the economy running up to the 2012 re-election campaign. I think they'll need to authorize some more before November to give Obama a cushion. What the heck, it's only money; and it's somebody else's money to boot. So, why should they care? There just isn't a conscience anywhere to found inside the Beltway these days (maybe one or two, but I'm pretty sure the number isn't in double digits).

     

    But after all of that, I''m torn about which way the markets will go this summer. Short term, I expect to continue down. But, intermediate term, I could see the Administration pulling out all the stops to sway voters. That may give the HO an opportunity to work sometime in the fall. The 52-week highs may not have gotten too far out of reach and the lows will be even more attainable for more issues by then. After the post-election euphoria is over, though, I believe the down-trend will pick up some steam. Just MHO.

     

    Thanks for the update.
    18 May 2010, 11:38 PM Reply Like
  • Albertarocks
    , contributor
    Comments (2233) | Send Message
     
    Yeah, it's so difficult to know isn't it? Your viewpoints about the rate of spending being closely tied to notion of "painting the right picture" before the elections makes a lot of sense. I'm not sure though to what extent the markets are still manageable. It's a sad commentary when we even have to consider the words "markets" and "manageable" in the same sentence. But as you imply, markets have always acted in a reasonably predictable manner in election years so maybe it will be the same this time even though the world has never been in this type of bad shape in any previous election year.

     

    Certainly, if the market recovers and turns up enough, the MA in the NYSE will eventually turn back north. And when the market reaches toward new highs, the required number of new 52 week highs wouldn't be too far behind. Whether that day is 4 weeks from now or 4 months from now, nobody knows. (did I say "nobody"?) But for now the HO is a moot point. It has flat out been neutered until the next strong surge that's long enough and strong enough to repair it.

     

    One of the more dramatic effects we're seeing these days is concerted attacks on various targets. Greek borrowing rates for example went from something like 4% to 12% (just approximates) in a matter of weeks. Then last night there was a massive coordinated attack on the Australian dollar. The rationale behind that was undoubtedly the fact that the $XAD is so closely tied to the Chinese markets which themselves are under great pressure.

     

    stockcharts.com/h-sc/u...

     

    So is the loonie next?

     

    stockcharts.com/h-sc/u...

     

    Probably not until late in the game. I suspect it will still march pretty much with the $USD until then. But the point I'm making is that these concerted attacks are very powerful and violent... overkill in most cases I think. But we're very likely to be seeing a lot of extremes in the next couple of years so I guess these events shouldn't be all that surprising. Scary just the same though.

     

    Personally, I don't think the markets are going to wait for elections to pick up steam to the downside. Although regardless of what they do before the elections, I agree, they'll probably pick up steam afterwards in any event.

     

    And you're welcome for the update. I doubt there will be many more for the next couple of weeks though, unless the markets make a real snazzy bounce that doesn't seem likely at this moment. Take care kiddo and I bid a pox of good fortune on you and your family.
    20 May 2010, 03:19 AM Reply Like
  • Albertarocks
    , contributor
    Comments (2233) | Send Message
     
    For anybody who's interested, and since the links are just in the comment above, click on those links today. The affect of the incredible surge in demand for the American dollar is hitting all global currencies, but not all equally. Even the Canadian is getting hammered today, something I wasn't expecting until much later. The attack on the Aussie is unbelievable. The links above are dynamic. IOW they update in real time and you can watch the action as it happens just as I can. (I don't watch currencies throughout the day, just at the end of the day). Just a bit of fun for those of you who still drop by.
    20 May 2010, 11:27 AM Reply Like
  • Silentz
    , contributor
    Comments (714) | Send Message
     
    The conspiracy theorist in me wonders how much of this recent panic was set up in order to keep the dollar from continuing it's inevitable decline...
    20 May 2010, 11:32 AM Reply Like
  • Albertarocks
    , contributor
    Comments (2233) | Send Message
     
    You know, it took me a long time to get a grasp on the deflation/inflation argument. For most of my life, I too was one of those people who thought that inflation was the only possible outcome. I was naively looking at all the news stories about how much money the central banks of the world are printing and automatically equated that with inflation. But once I really discovered where most of the global money supply comes from and how it is created, it became clear as a bell that just as 95% of money in the world has been loaned into existence, credit contraction is the exact reversal of money creation. Credit contraction doesn't just mean "less lending", it means the actual disappearance of trillions of dollars right out of the economic system, right off the face of the earth, right out of existence itself. And of course credit contraction can take several forms, the end of lending, bankruptcies, mortgage loans not being paid and the mother of all deflationary forces... default.

     

    Each and every one of those cause demand for the world's reserve currency as people have to scramble to sell everything that isn't tied down in order to buy American dollars. So maybe a year ago I suddenly realized that we're going to "have to" go through a period of massive deflation (especially the USA), before a really insane inflation takes hold. That's what we're seeing now... the stock markets finally reacting to deflationary forces. It's not likely to end soon either because the global credit crisis is not going to end anytime soon. If there are never again going to be any threats of default in Europe, in corporations, with mortgages, etc., then I'm wrong about the deflationary argument.

     

    So as much of a conspiracy believer (I don't believe in conspiracy theories, most of them aren't theories) as I am, I don't think this was planned by the monsters. The incredible credit expansion of the past three decades just needs to be unwound and that's what's happening. The conspiracy I see is that the banks know the value of the American dollar is going to surge and that's why they're not sharing them. They're using those dollars to prop up their own balance sheets and to use for making obscene profits at the expense of good people all over the globe. "Pass the losses onto the taxpayer and keep the good stuff for ourselves" seems to be the bankers' rules of conduct. I do believe that the attacks on some of the better currencies like the Aussie and the loonie are part of the exercise of exaggerating or speeding up the process though.

     

    I think we all owe John Lounsbury a real big thanks. He's told me that he wanted to contribute to the HO discussions and he's clearly done so by creating and managing these instas for that very purpose. Mainly because I've been too disinterested (or lazy) in learning how to set up an insta... I'm plenty busy enough as it is. And the entire topic of the HO was initially brought to us by John himself, not by me. Thanks for that great idea too John.

     

    So thanks again JL. I know a lot of people who've been here in the past and those who still drop in really appreciate your kind supply of this space. I wonder if you'd mind, since the HO is dead in the water for several weeks to come if you'd allow us to expand the chatter a wee bit? This is pretty much the only place I comment anymore. I kind of like it here.
    20 May 2010, 12:37 PM Reply Like
  • John Lounsbury
    , contributor
    Comments (3997) | Send Message
     
    Author’s reply » Alberta - - -

     

    Having a chat room is fine, but I hope it is not so much that a new Insta for each month would not be enough to handle the traffic. Once a comment stream goes over 100 I think it really gets difficult for users to work down to the new comments, especially since replies get buried along the way.

     

    If things get too busy some months I could always split a month and have HO, May, 2010 Part 1 and HO, May, 2010 Part 2. The Part 1 can be added to the name when Part 2 is set up.
    21 May 2010, 12:19 AM Reply Like
  • Albertarocks
    , contributor
    Comments (2233) | Send Message
     
    Fair enough John. Besides, I'm pretty much talkin' to myself here anyway so it won't be hard to keep it down to a manageable level. :-) Thanks again for providing the space.
    21 May 2010, 12:37 AM Reply Like
  • Silentz
    , contributor
    Comments (714) | Send Message
     
    Sometimes the voices in your head are the only ones you can have intelligent conversation with, eh AR?
    21 May 2010, 11:44 AM Reply Like
  • phil4bama
    , contributor
    Comments (60) | Send Message
     
    Albertarocks, you've repeated several times through your blogs that in essence, you can't believe the HO has failed us all. I'm not very surprised at all. The number of indicators, signs, omens, theories, and systems that have "failed" since Lehman is stunning. What worked before, even for decades, is not working right now. The market is just not acting right. Maybe this time IS different. Maybe things are undergoing a paradigm shift. I don't know. All I know is the stuff I have followed and believed and had success with for the last 25 years ain't working now. So don't lose any sleep over the failure of the HO to warn us (and maybe you're dead on, the "close calls" we had were the warning and conditions have changed just enough that the HO missed the mark by a couple of inches). Stuff happens. Thanks for your posts and for monitoring and sharing the HO for us.
    20 May 2010, 07:44 PM Reply Like
  • Albertarocks
    , contributor
    Comments (2233) | Send Message
     
    Hi Phil. Thanks for letting me off the hook. I haven't lost any sleep over the fact that the HO is broken nor out of guilt for not letting people know, because I've done that here on many occasions as you pointed out. But the number of people who are aware of the HO but don't read this insta are not aware that it's broken. No newsletter writers that I know of who talk about the HO ever noticed when it became broken. At least they never mentioned that fact. I looks like some of them have just dropped the topic. True enough, undoubtedly only a very small percentage of total investors were even aware of the HO, so I don't take it upon myself to warn the world that it's broken. I just do what I can for my friends here and that's the extent of it.

     

    You are so right about how the tried and true indicators that were so dependable in the past have not worked since Lehman. And that's cost a lot of people a lot of money, yours truly included. Every time a great signal arrived strongly suggesting that the market had truly peaked, another astonishing run-up appeared out of nowhere, even though hedge funds were 90% invested already. The money just kept coming and coming as if someone had a printing press or something. The number of head fakes and late day stick saves was astonishing. Not to mention something like 24 green Mondays out of 27 where 85% of the entire run-up since March '09 came on only 14% of available trading days... all of those being Mondays. People who think that is a random occurence are just clueless. I challenge them to see how many lifetimes it takes them to hit 24 heads out of 27 coin tosses.

     

    But I think we're going to find out that those tried and true indicators are going to work in stellar fashion on the way down. You bet, this time it "is" different. Those who argue that that notion is nonsense because "it's never different" are simply oblivious to the fact that the entire world is broke and in one hell of a credit crisis. They don't realize that the point has been reached when no amount of printing is going to solve it. One undeniable example that the investment world has caught on is the reaction to the European bailout. An 8% surge party for Europe on the day after the Sunday announcement, followed by a mind numbing crash ever since. Investors have finally caught on... except those who deny the possibility that this time maybe it "is" different.

     

    You're welcome for the posts and thank you for taking the time to read them. I'm sure you're ready for the incredible swings we're about to see in both directions in the coming months. Best of success in your trading.
    20 May 2010, 11:03 PM Reply Like
  • razorthin
    , contributor
    Comments (115) | Send Message
     
    don't be so hard on yourself, rocks. this drama ain't over. there will be huge counter-trend rallies (starting with next week, to fill the gaps, as indicated by the bullish piercing reversal candles across the major indices on Friday). i would not be surprised if the HO sets itself up nicely before this grand supercycle bear is dead.
    22 May 2010, 07:03 PM Reply Like
  • The shark
    , contributor
    Comments (159) | Send Message
     
    Hi there "Rocks",

     

    Got back from Angola last night - a very interesting trip! The Chinese are very visible and their target OIL!!!

     

    I go away for a week and miss all the shenanigans and mysteries of an inefficient market that now seems to have fully embraced the real problems facing the world - earnings rightly so are now discarded as a "side show" in terms of the fundamental structural longer term issues that our dysfunctional financial world has finally realised it needs to face before sustainable recovery can be achieved. I sincerely hope this time around (although I think Governments "liquidity" is so severely limited that intervention will be limited) the "powers that be" allow the natural sequencing of the Capital markets to find a bottom from which ultimately those infamous "green shoots" can take root and start the recovery process. Further, manipulation / intervention prolongs the acceptance that the next 10 years or so are going to be very difficult - which will unfortunately take it's toll across a broad front - forcing structural changes both in the Public Sector and Private Sector - in the Public Sector the "spend what you don't have drunks" will finally sober up and start the process of rationalisation and priorisation - and the Private Sector will restructure and adopt to new consumer buying behaviours.

     

    The Chinese curse "May you live in interesting times" is upon us - denial is no longer a strategy. Governments need to accept they can't save us from ourselves (aka the Germans can't save the Greeks from themselves by lending them more money), they need to step down and force the Capital Markets to save themselves and in the process all of us - a frightening thought but a necessary journey. Perhaps that's what the markets are telling us - for while they rallied the "real deeper and longer term" were denied - if they melt down again - it may force reality to become the focus - and with it the "real solutions".

     

    The first stage of "hurt" is the credit de-leveraging and the ensuing deflationary environment - not easy with it's unfortunate "pain".

     

    Who really knows - but your past and hopefully continued insights provide much needed perspective that enables all of us to gain a measure of understanding. Your post on the de-flation was well written and I believe an accurate appraisal of where we are today.

     

    Rock on!!!
    21 May 2010, 10:05 AM Reply Like
  • TeresaE
    , contributor
    Comments (3041) | Send Message
     
    Alberta, you still Rock!

     

    I'm not surprised that the HO appears broken. If it didn't, then I would be really confused and worried.

     

    I feel like a card counter who had the shoe swapped and wasn't told. Said card counter knows that Jack of Diamonds shouldn't be there, but refuses to accept this knowledge as fact.

     

    Kinda' like the markets and indicators now. And I truly believe that what we are seeing - the "broken-ness" (yes, I know it isn't a real word, sue me detractors) - of tried and true indicators is telling us all, IF only the perma-bulls and unwitting propagandists, 'er, pundits, would open their eyes, what is going on.

     

    This time IS different. The difference is market indicators are screaming at us - THE MARKET IS COOKED, CROOKED, CORRUPTED.

     

    At this point most of us that read this blog know in our hearts what the eventual outcome will be.

     

    With or without, the HO.

     

    But, god knows I greatly appreciate the fact that someone is paying attention and letting us have a heads up, if one occurs.

     

    We need all the help we can get.

     

    Thanks again.
    21 May 2010, 01:18 PM Reply Like
  • Mark Bern, CFA
    , contributor
    Comments (5188) | Send Message
     
    Teresa - I'm happy to see you back commenting. I really enjoy your spunk and your unadulterated frankness.

     

    AR - I believe that I fall in the camp that has a feeling that the near misses just might have been the real things. But I can tell you also that I don't expect the bulls and manipulators to give up without a fight. They very well may have an agenda greater than mere profits and the November elections are one of the many things they really "need" to control. To do that we need the markets to seem rosy again pretty soon. They may allow the "correction" to go on a couple more weeks, but they'll pull out the stops if the market gets down to another level of support (say 1055 on the S&P).

     

    In any event, today's bounce does not instill enough confidence in me to start buying again, even for a short term trade. I don't do trades very often and can't bring myself to day trade or buy with a planned holding period of less than a week. It's just not in my blood. But for those that do, if they can get in sinq with Mr. Market, I think the volatility will continue for a couple more weeks with some nice swings. It's Vegas, baby!
    22 May 2010, 12:22 AM Reply Like
  • tinshins
    , contributor
    Comments (84) | Send Message
     
    Well, has a Hindenburg Omen formed yet ? Here is a link to someone that believes a great crash is coming in 2010. Some may call him a crackpot, but he was out of stocks in 2008. www.crawfordperspectiv...
    30 May 2010, 04:10 PM Reply Like
  • Albertarocks
    , contributor
    Comments (2233) | Send Message
     
    I used to get a kick out of Arch Crawford back in the 80's. I didn't even know he was still tickin'. Here's another "hot link" from his website. It takes you to a "picture of a chart" he lifted from somewhere else:

     

    www.crawfordperspectiv...

     

    Or on his website you could click on a link to his latest appearance on CNBC. "Latest" meaning 2005.

     

    And here's an actual paragraph copied from his main webpage:

     

    "Although the Mars/Uranus Crash Cycle is NOT active during this frame. That will continue for the period March 2009 thru July 2010.

     

    During 2010 Expect as great or greater Crash than has yet been experienced!"

     

    Can you make any sense out of that? Neither can I. Nonetheless, a link within that paragraph takes you to this gem:

     

    www.crawfordperspectiv...

     

    Crawford was possibly out of stocks in 2008 because he was out of money in 2008. He is (or was last time I saw him about 30 years ago) an interesting dude who's very easy to make fun of. So I do. But I'm sure he's a very nice fellow. In all fairness to Mr. Crawford, here's a more recent (Jan. 2010) document where he and Larry Pesavento present a case for lower prices. At least, that was when this document appeared on the internet. But I don't see an actual date on it. It could be from the 1800's for all I know. Arch was just a young phart back then:

     

    www.docstoc.com/docs/2...

     

    To answer your question... since you're new here and therefore haven't been following the above dialogue, the Hindenberg Omen is currently dead in the water. It has been neutered because one of its main requirements (concerning the direction of the 10 week moving average of the NYSR) is not fulfilled. Here's an updated chart showing the problem:

     

    stockcharts.com/h-sc/u...

     

    Welcome aboard tinshins. There's a ton of good info available on SA, but you need to read it first.
    30 May 2010, 05:18 PM Reply Like
  • tinshins
    , contributor
    Comments (84) | Send Message
     
    I thank you. All I can say is that I will follow this board closely, and try to keep my mouth shut :-)
    31 May 2010, 12:38 PM Reply Like
  • Albertarocks
    , contributor
    Comments (2233) | Send Message
     
    lol. Tinshins, you can really learn a world of great information here. By "here" I mean all over the place on Seeking Alpha. If you have a genuine interest in investing and in the overall global situation I'd suggest that you read as much as you have time for. I suggest that mainly to give yourself a couple of days to "get a feel" for how SA works. But by all means, once you're pretty comfortable about how it works, don't hesitate to speak up. Don't hesitate to ask questions. Somebody will usually answer them, especially if they see that you're relatively new here. Everybody starts "new". Your posts will be welcome on SA, especially if they're written with an honest question or an honest opinion, rather than filled with anger and vitriole. But above all, please don't feel that you should keep your mouth shut. You're welcome here. You might want to tweak your bio a bit too and give yourself a little more credit. lol

     

    If you were to ask me for one tip, I'd point you to one of the most important revelations I've ever encountered. This is a link to a "crash course" on money creation by Chris Martenson. That man can't be thanked enough for offering this series of videos to the world for free. You might think I'm a bit cruel when you find out that the course is over 3 hours of video. lol But man, it's the most important piece of information every investor should know. And yes, I found it on Seeking Alpha:

     

    www.chrismartenson.com/
    .
    31 May 2010, 12:53 PM Reply Like
  • tinshins
    , contributor
    Comments (84) | Send Message
     
    AR, I thank you. I am fully aware of Chris Martenson. I am a regular reader of Goldseek.com , zerohedge.com , Jim Sinclair , and Martin Armstrong. If you know of any other good websites let me know. On a personal note. I have some knowledge of TA and sometimes made some money on it. Now, no matter what I do , I end up loosing money. The last time this happened was in '08. So in my limited knowledge I think something bad is coming. I wish I could buy gold, but I despair. I think gold is going to have a moonshot sooner or later, suck everybody in, and then reward them with a 50% correction. Look at gold from '73 - '76. Or if needs must, compare gold to the Dow from '82 - '07. The gold market has not as yet had its version of 1987 ... and that version is way overdue ...
    31 May 2010, 06:06 PM Reply Like
  • Jetspiral
    , contributor
    Comments (10) | Send Message
     
    Hi, guys

     

    Some of you guys should think twice about playing the market. The reason I have made so much money in the market is because I understand the importance of understanding that which I am thinking & I do not have a mind that is a junk heap of invalid theories.

     

    Crawford has one of the best track records over most of the years hes been around. Every bit of your mental content is derived from some theory & your success & happiness will hing on weather they are true or false.
    3 Jun 2010, 01:18 AM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10612) | Send Message
     
    Did you mean whether?
    3 Jun 2010, 09:26 AM Reply Like
  • Mark Bern, CFA
    , contributor
    Comments (5188) | Send Message
     
    Apparently he doesn't know how to use spell check. Also, it seems he doesn't read all of the comments since we all admit to being invested whether (see, this is the correct usage) the theory works or not. We're just trying to measure the depths of our convictions and looking for confirmations. But, if one always listen to a "Crawford" it means they don't really think for themselves. I guess he's just too sophisticated for me to understand.
    3 Jun 2010, 10:22 AM Reply Like
  • Jetspiral
    , contributor
    Comments (10) | Send Message
     
    Since words are empty containers with meaning we put into them should the correct spelling of words be the primary focus of study? I focus on understanding concepts & thier exact meaning. Even a child would be able to make out the words I miss spelled. I trust in my own eyes for logical identification & recording of logic & will use galileo s telescope of reason to take a rational approach to playing the market.
    4 Jun 2010, 04:52 PM Reply Like
  • Albertarocks
    , contributor
    Comments (2233) | Send Message
     
    So I take it you were long today? I've been so short I can walk under my chair because "I understand the importance of understanding that which I am thinking & I do not have a mind that is a junk heap of invalid theories."

     

    Who exactly do you think you are? Most traders discussing on this topic have been trading for 30 years and I'm sure they are much, much more informed than you are. If you want to show off your skills as a wise trader I suggest you go somewhere else where you'd have a chance. That would be the smart thing to do. You are smart, aren't you? Sounds to me like you have some growing up to do.
    4 Jun 2010, 05:25 PM Reply Like
  • razorthin
    , contributor
    Comments (115) | Send Message
     
    I suppose you think you are being profound, dude. But in your words I just see gibberish.
    4 Jun 2010, 10:55 PM Reply Like
  • Albertarocks
    , contributor
    Comments (2233) | Send Message
     
    Did you mean "hinge"?
    3 Jun 2010, 03:36 AM Reply Like
  • Mark Bern, CFA
    , contributor
    Comments (5188) | Send Message
     
    AR - It looks to me like the "neckline" is holding (just barely) and that we are going to build that right shoulder now. It's going to be a little painful whether (there it is again) you're short or long as we trade range-bound. But, in the end, this is starting to look like the real thing. And with the bulls feeling their oats again, we could start to see a better balance between the 52-week highs and lows. I suspect that if volatility continues (which I expect) we'll see more selectivity by investors. That should lead to more new 52-week highs and more 52-week lows simultaneously. I plan on loading up on short ETFs when I feel like we're at the top of the range again. I haven't calculated my entry point yet, but will later today because I don't think we are too far away.
    3 Jun 2010, 10:27 AM Reply Like
  • Albertarocks
    , contributor
    Comments (2233) | Send Message
     
    I just don't know for sure Mark because I can see so many arguments for a strong sell-off right here and equally strong arguments for a bounce that would complete that right shoulder. But who the heck knows? I've about given up trying to figure it out... especially since only a couple of days ago I reported to you that some of the technical guys were discussing the situation and were envisioning a scenario where no bounce was likely for quite a while. And what happens? A 3+% bounce.

     

    I just haven't got a clue anymore kiddo. For all I know the FED wants the Dow at 53,000 and if that's what the FED wants we're going to see the Dow at 53,000. All the world markets should be headed much lower. All the other global markets seem to have gotten the message except maybe Germany. But logic has been suspended. For how much longer I don't know. But logic definitely doesn't exist anymore. And when it returns, things are just going to be a thousand times worse than they ever needed to be. We can thank the FED and the policy of TBTF for messing things up so bad that eventually there will be no chance for humanity to operate as we've been accustomed to.

     

    About a year ago one guy on Wall Street said that the Lehman collapse came within a whisker of sending mankind back to the 16th century. His counterpart retorted that that was an optimistic view. So why stocks are surging in demented jubilation at this time is beyond my understanding. I just shake my head that the delusion is being bought hook, line and sinker. I'm just preparing as best I can for the inevitable. Making some money along the way would help I guess. Best of luck bud.
    4 Jun 2010, 01:10 AM Reply Like
  • John Lounsbury
    , contributor
    Comments (3997) | Send Message
     
    Author’s reply » I have started a new blog for June, available at seekingalpha.com/insta...
    3 Jun 2010, 11:46 AM Reply Like
  • Jetspiral
    , contributor
    Comments (10) | Send Message
     
    albertarocks

     

    You were right I was long puts today. My focus has not been on trying to be wise to play the market but instead to think of how to play the market.

     

    My first post was due to the fact it takes a precise nature to play the market. (the identity of an entity must act in accordance with its nature & cant act otherwise) when I saw that you had cut down Arch who I think has been a good scientist really made me wonder if you had the precise nature needed to extract money from the market & I thought I could help you. first you have to understand the truth is your friend so you can become a great thinker like Galileo.

     

    If the reason you cut down Arch was do to low esteam. You might want to consider using an appropriate standard (which is why a lot of individuals fail in the market.) The most important value judgement an individual can make is the one he passes upone himself,since it will necessarily effect all his other value responses & thus his motivation.

     

    esteam is a term widely used, but much misunderstood -- is the resultof a positiveappraisal flowing from the recognition that one is committed to that which is true & good. It entails the sense that one is both able to live & worthy of living. The need for esteam is inescapable: it is inherent in everyone & is experienced as a basic phycological need.

     

    Since esteam is an evaluation, it prespposes a standard value. The quality of a mans esteam & the degree of his ambition will hing on weather or not the standard he uses is rational.

     

    Mans biological distinguishable trait is reason,or his ability to think. Because man is free to think or evade that effort, it is his volitional use or misuse of that ability which serves as the only rational standard of gauging esteam. It is not ones degree of knowledge or intelligence that matters, but one commitment to reason.

     

    Those who habitually measure thier self-worth by a comparitive standard often have a difficult time understanding why thier confidence yo-yos. Living in a comparitive-neurotic society, many base thier esteam on how much money, how many cars, or what ever compared to someone else. Because the acquistion of existential values depends to some extent, on factors that one doesnt have volitional control over, such is an inappropriate, or irrational standard.

     

    5 Jun 2010, 12:30 AM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10612) | Send Message
     
    Rocks: greetings. When dealing in the market as we are doing here the only meaningful valuation and motivation is profit. Mr. market couldn't care less about esteem. While one can apply moral gauges to ones investments those judgments don't necessarily add up to good business. For example I refuse to buy General Electric (GE) while Immelt remains at the helm. Based strictly on the profit motive I would have bought some at last year's low. I didn't because Immelt is an inept crook with an incestuous relationship with the administration. IMHO GE will be profitable for those that bought in under $9 at some point but I'm not one of them. I'll take profit from some where else thank you very much. With that in mind I would submit that the traders/investors who have the highest returns will have the most esteem from their peers as well.
    5 Jun 2010, 01:44 PM Reply Like
  • razorthin
    , contributor
    Comments (115) | Send Message
     
    more gibberish
    6 Jun 2010, 05:21 PM Reply Like
  • razorthin
    , contributor
    Comments (115) | Send Message
     
    OK, OK, here's the scoop...or the poop - you be the judge. But your opinion doesn't really matter, and that's just the point. For those of you who feel like geniuses or gurus - if you haven't crystallized your approach to the markets as a CONSISTENTLY applied SIMPLE strategy employing a shallow toolbox consisting of wave analysis and momentum indicators, then yes, you are simply "playing" the markets, and may GOD be with you.
    6 Jun 2010, 05:28 PM Reply Like
  • John Lounsbury
    , contributor
    Comments (3997) | Send Message
     
    Author’s reply » Note: New Instablog for June has started at seekingalpha.com/insta...

     

    I expect that Albertarocks will post future analysis there.
    5 Jun 2010, 03:52 PM Reply Like
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