Friday, August 31, 2012

Charts 8-31 a.m: Channel wars

We gapped out of the channel I had for wave 4, and are now dipping back inside.

Who will win ... and will we bottom into the close today?  The chart shows the current fight.

Savage knife-fighting in the pits

Thursday, August 30, 2012

Charts 8-30: Full moon Friday

Will the full moon mark another bottom?

The roach into the close left us right on the channel bottom I drew earlier today.  I'd like to see us pop a few points in the morning before rolling over to close at the 1388-1390 area to complete 4.

Yes, the W4 overlaps slightly with the W1 up to 1391.  The overall structure is one of those expanding ascending wedges that often mark tops, where 1/4 overlap is allowed as a sign of overall weakness.  A final fifth wave to 1440 reaches several levels of serious resistance.

I count the 2008 crash as [A] in 3 waves, a 5-wave A, the B-wave back to 1440, and the epic crash to 666 in a 5-wave C.   The current B wave we are in now would reach that B of [A] top at 1440 before heading south again.  We would also put a pin through the top Bollinger band on the weekly, something done at the tops in 2000 and 2007 (and several other important turns).

After tomorrow, the story will return to expectations of QE into an official FOMC meeting, so the market will trend upward again, on hold, until it's official September 12.

Looking forward to a good walk around Ballard this weekend, photo-blogging the latest RE atrocities.

I'll also work on a "slow-collapse" model this weekend, which has a similar wave count and price targets as the fast one, but dragging out well into 2013.  The support lines on the chart suggest that "C-down" could be an epic struggle of bears super-eager to short a collapse, against the financial elites and monetary authorities determined to keep the plates spinning at all costs.  So I'll chart that up and float it here.

Market top or nasty bear trap?

Charts 8-30 a.m.: Not topped yet

Tomorrow's Jackson Hole address comes on a full moon -- these have reliably marked bottoms for months now.

A bottom tomorrow in the SPX 1400 area sets us up for a stuttering 5th wave rally all the way to the next juncture September 12, FOMC and the German Constitutional Court decision on the ESM.

We would also be at the midpoint of the channel on the chart, touching serious overhead resistance at 1440.

The weekly Bollingers will also be satisfied, and allow us to top and begin heading down.

Congrats to Pieter for calling this one right ... although it hasn't happened yet ... but we think it will ... and ... Christ, you know how this TA voodoo works.  Two more weeks of the madness.

You know the drill ... one more wave 5 ... aiigh!

Wednesday, August 29, 2012

For Steve Ludlum

Steve Ludlum, "Steve of Virginia", writes the Economic Undertow blog, where he is developing a critique of modernity in the tradition of Rousseau and Nietzsche.

Here is an email I received today from BMW.  I own a 22-year old red convertible, a 325ic.  You may see it parked at many a trailhead in the PNW in the summer.

Steve would never settle for such a humble ride; he deserves something road-devouring like the M6 coupe.

On Wed, Aug 29, 2012 at 8:01 AM, BMW of North America <> wrote:

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Yet the M6 retains a softer, more inviting side, with classic coupe proportions and a sleek silhouette edged in M design details. Once inside, carbon-fiber inlays and Merino Leather upholstery highlight its race-inspired interior. An available Bang & Olufsen high-end surround sound system pumps 1,200 watts with orchestra-quality clarity for drivers who demand just as much from luxury as they do from performance.

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1Claim based on BMW AG 0–60 test results.

227% less fuel (highway), 18% less (city), 23% less combined based on BMW AG test results.

Don’t forget to add to your Address Book to keep it from skipping your inbox or getting caught in spam filters.

We want your experience with the BMW website to be as smooth and reassuring as driving a BMW. Accordingly, we diligently safeguard your privacy. If you wish to review our Privacy Policy at any time, please click on the link below, or copy and paste it into your Web browser’s location window.

We’d like to keep you up-to-date on the latest BMW products, news and events via email. If, however, you’d like to stop receiving them, you can unsubscribe at any time.

Please note that we are located at 300 Chestnut Ridge Road, Woodcliff Lake, NJ 07677. ©2012 BMW of North America, LLC. The BMW name, model names and logo are registered trademarks. For more information call 1-800-831-1117 or go to

Charts 8-29 a.m.: One last C up?

Apologies for missing a post last night, our fish Betty died and the family has been in crisis.  This means a trip to PETCO is coming soon, where we actually buy something and don't treat the place like our own private zoo.  We had a service last night, burial at sea for Betty, reminiscent of an old episode of "The Cosby Show".

My kids are really into "Fat Albert" these days, as well as Bill Cosby's 1960s stand-up comedy, but I'll take up that subject another time.  We have important business here.

Yesterday sure looked like a B-wave triangle, it reminded me of the larger ending-diagonal triangle we are in, five subwaves of triplets.  So I'm looking for one big C-wave push to 1440 by close Thursday, to make all of our fondest Three Peaks and a Domed House dreams come true.

One more thing.  A of 5 was 18 points (1398 -> 1416).  If C is 1.618 x A, that gives us a 30 point wave, starting at about 1409, will reach our target.

Short-term, view from the trenches
Survey of the larger battlefield

Monday, August 27, 2012

Charts 8-24 and 3PDH update

Looking for a small drop at the open tomorrow for a minor wave 2, which is promptly bought and pumped on low volume all week.  It would be superb if we could peak at SPX 1450 right into Bernanke's Jackson Hole address.

I expect him to announce some technical tweak of the current ZIRP regime, maybe lowering the rate the Fed pays for the banks' excess reserves to be kept at the Fed.  No ambitious QE program, though, until the US fedgov has more debt ceiling space in which to play.

Proposed top into Jackson Hole
Topping into Jackson Hole, we would then find support back at 1400 and bounce on expectations into the German Constitutional Court decision re the ESM.  The drop from there shoots us back toward the 1300 area.

Things start rollin' downhill
A final selloff brings us back to 1260, in the neighborhood of point 10 on the Three Peaks and a Domed House model I am tracking.

Speaking of which, I want to propose now that 1426 SPX was point 21 on 3PDH, and the drop back to 1398/1400 this past week was point 22.

Three Peaks and a Domed House
I took the girls hiking at Obstruction Point in Olympic National Park, in the rain shadow of Mt. Olympus and the Bailey Range.  We threw snowballs and I introduced them to a hiker's best friend in the mountains, the trusty ice axe.  I have a small, lightweight model used for speed hiking that actually fits them perfectly.

August snowfields
The air is so dry here that your sandwich bread gets scratchy and rough on the surface while you eat your lunch.
Rain forest?
I got a speeding ticket outside of Port Angeles, which sucks, because it's not worth travelling out there to fight it.  Cop said I was doing 68 in a 55, which is insane, because I had the car pegged at 62 on cruise control.  I consider the $144 ticket my contribution to the police pension fund, LOL.

Mt. Olympus and intervening ridges

Sunday, August 26, 2012

Kids' books: The joy of sets

The title of this entry comes from a small tag of the same name on a section of shelves at the legendary Bookman's Alley shop owned by Roger Carlson in Evanston, Illinois.  I bought many books from him over the years, including a full set of Goethe.

The topic is again quality children's books available from used bookstores and thrift outlets.  Previous posts in this series covered Grosset & Dunlap and National Geographic.

This week I have a few neat sets of books to share.  Besides the old encyclopedias, publishers used to release comprehensive sets of youth literature and natural science, edited with great care by formal editorial boards.

When you troll the thrift stores like I do, you see sets of Child Craft all the time, but it never much interested me.  The first set that caught my eye was The Bookshelf for Boys and Girls, published by the University Society.

Bookshelf for Boys and Girls

Many Boomers grew up with this and love it; I'm still missing a few volumes from these that I found one day in my local Value Village.

Then one day I got off my bus (the #15), walked into Value Village, and saw this:

The Ocean World of Jacques Cousteau

Jackpot!  A 20-volume set of Jacques Cousteau's youth books, examining the natural sciences in depth from an oceanic point of view, in absolutely cherry condition.  Some kid let these sit undisturbed on his shelf for years so that I could have them.

Twenty volumes!

It only gets better.  On a visit to the Goodwill in Shoreline, WA, I found a 1918 pressing of the Collier Junior Classics!  These books are spotless and were practically free.  Can you believe these books are nearly 100 years old?

Collier Junior Classics, 1918 edition

Then, back to Value Village, and another comprehensive set, the 16-volume The Children's Hour, published in 1953.

The Children's Hour

These are such beautiful books, with rich illustrations and high-quality print and finish overall.  Whatever happened to the Spencer Press of Chicago, Illinois?

16 volumes

One more set, a little gem I found at the Mercer Island Thrift Store, just east of Seattle.

Zeks appeal

First editions from the 1970s, with no wear and dust jackets in excellent shape, for $10.  A steal!

A kids' book?  Well how do you discipline your kids?  I tell mine that if they don't behave that the NKVD will sweep them away in the middle of the night to dig the White Sea - Baltic Canal.

That fixes their shit in a hurry.

Thursday, August 23, 2012

Charts 8-23: Another week ...

The pink wedge broke down, but this doesn't look like the end of the world.  Looks like we get another week of a low-volume, slow market, waiting on Bernanke's Jackson Hole address next week.

Of course, topping into the address would go against the reliable pattern lately for full moons to mark bottoms.  An alt scenario would be that 1426 marked the top, that we'll descend to the 1355 area this week (per my 3 peaks and a domed house count), and that Bernanke will trigger a wave 2 bounce off that decline.

My question has always been, can he expand the Fed's balance sheet in a meaningful way without a serious hike in the debt ceiling?  Another round of QE for Treasuries needs more room on the national VISA, doesn't it?

Or can the Fed just expand its balance sheet again and buy ... MBS?

Wave 4 in?  A, B, 5-wave C of 4

Wednesday, August 22, 2012

Things you need in the Long Emergency

Went through the basement for a yard sale recently, came across a few essentials for an uncertain future.

First, some old patches.  What could possibly deserve the Marina City patch?  How about the CHA police patch with the hands shaking over the superblock?

Cool patches
Good books.  A charming holiday tale from Mencken, and a 1st U.S. edition of Orwell.

Mencken and Orwell
Last, an Apple banner.  I don't know where it originally came from.  A friend at work gave it to me a few years ago when I as an Apple enthusiast was eccentric and strange to everyone.

 You need this