Monday, February 25, 2013

Divergences everywhere, Elliott Wave Pattern, and record complacency and bullishness portend swift decline

With the textbook throw-over after an ending diagonal pattern having completed, record bullishness,  the patterns in the U.S. Dollar, Commodities, and precious metals, the situation could not be more dangerous and deflationary.

First, the U.S. Dollar. The U.S. Dollar index bottomed in March 2008 at 70.70, and, even with all the central bank inflation,  has not  even taken out that low. And, the Dollar index now has in place a massive divergence with equities since the Spring of 2011.

Next, Commodities topped in the Spring of 2011 commensurate with the bottom in the U.S. Dollar, and have been diverging with equities ever since.

All of these divergences are big warning signals, which, when combined with record bullish sentiment, a VIX that looks ready to explode to the upside (has already begun), and the longer-term phasing in equities with a cycle wave b wave labeling, portend a massive deflationary move in a cycle wave c down to complete supercycle wave (a) down of the Grand Supercycle Bear Market.

Further, I want to address one more thing. Many people say that there is a big decline coming, but it will be in real terms only,and won't be in terms of "worthless U.S. Dollars" becasuse "Helicopter Ben" will just keep printing money. It's not that simple. The FED is NOT "printing money". They are adding reserves to the banking system, and it takes a willing populace to  borrow and spend those Dollars (velocity) and willing investors to take the money and speculate with it. With speculation at unheard of levels already, and with social mood about to reverse dramatically from a decade-plus long topping process, the outcome should be a stock market decline of greater than 90% in nominal terms. For more on this discussion, please listen to the interview I conducted with two other gentleman on Friday, February 15, 2013, which can be found in my post below.


  1. maybe a little business to the upside comment made by tim ?

  2. Hi Chris, I just stumbled across your site. About five years ago I too was enamoured with EWI and their radical stance or interpretations of how things would play out in the markets. After two years of paying EWI for analysis and absorbing their philosophy, I'd lost £110,000. They are, have been, and will continue to be bearish, even during one of the biggest bull runs in history. Albeit a bear market rally? Ultimately, until our financial system reaches critical mass and fails, inflation is patent and obvious. And contrarian theory does not make it otherwise, and nor will it. Yes we will have corrections, but not on the scale you preach. Fundamentally, the biggest problem with EWI is that they (like most analysts who have their noses pressed too close to the screen), simply cannot count waves. They miss just about every c wave going, as the 'a' wave nearly always fulfils EW minimum requirements. And because of their ever bearish stance, they continually fit abc's where 12345's belong and vice versa. Elliott wave theory is a great tool, and reading or listening to Prechter a joy, but historically his predictive success rate is appalling. Even with his most famous call, he had to wait something like twelve years before it came true because he clearly mis-counted waves, and others say he plagiarized another famous analyst who had said the same thing 24hrs earlier? There are a number of EWI satellite analysts on the WWW, and to be honest, most seasoned investors avoid them like the plague. Endlessly calling for an apocolypse scenario may garner followers in the same way a religion does for fear of hell, but it has not made EWI followers rich. On the contrary, EWI are famous for bankrupting huge numbers of clients. Personally I suggest you do some research on third party reviews of their service. Indeed there are several websites full of such detrimental accounts, and if I cannot vouch for those, I can certainly vouch for my own. So if you wish to get on in the analytical world, I suggest you read someone like:
    who has a real and lengthy track record of predicting the markets to a high degree of accuracy, and who has no time for EWI even though they advertise on his site and he uses elliott wave theory to help him reach his conclusions. My top picks for EW analysts are Sid at EW predictions, Nate's market analysis, Gemwax, Lara, ewforex, actionforex, fxstreet and on. The historic wavecount (or what some call the 'address') is what really matters, as it offers context, and if there's one thing I'm sure of, it's that EWI's historic wavecount is wrong. Read Nate's historic wavecount listed on his webpage for a different perspective. So here I sign off. I wish you well but in brief suggest if you are serious about an analytical future that revolves around shepherding investors to financial gain, then you should first broaden your horizons. Best wishes