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Riding the Third Wave (Happy Easter-Passover Lord Pray Spare the Bulls)

April 11, 2009

The markets are going to turn… Anyone whom has ever looked at Elliot Wave will recognize the markets move from the March 9th lows and immediately recognize two very strong technical moves and now it looks like we are upon the cusp of the third. From a perspective of a Bull Elliot Wave type recovery indicator, the third wave is considered the strongest and will determine the speed and chart of the recovery.

Others say no Dr. Nouriel Roubini’s Global Monitor, Robert Reich, and “Street Critique” -Hilary Kramer, Author of “Ahead of the Curve.” All agree we have a row to hoe yet it does appear the worst isbehind us. However, in every recession since WWII, the way out is lead by the Automotive sector, that’s why its unlikely that Uncle Sam will force an economic Katrina upon the state of Michigan by forcing GM into bankruptcy. I suppose stranger things have happened in that DC town but the numbers simply do not add up… When it cost less, in pure dollars, to fix rather than exacerbates the problem to the point of perhaps causing a Great Depression (I mean what do they think all those unemployed autoworkers are going to do with their current home mortgage?) … You have to think (and pray) that those guys have better sense. But like I said, strangers things have happened but I can’t exactly remember when.

However, some see the Elliot Wave as something akin to some kind of pseudoscience mix of black magic Keynesian voodoo economics. All I can say is that it has been a spooky dependable guide for making calls on major market moves in the past. Its simply a tool that appears to work but there are other things to consider since the March 9th bottom. AIG, since the government infusion, has been following the Swiss model of recovery, which some believe that we should have applied to all the toxic banks… They have been according to volume, considered a bit oversold… Now volume has narrowed. Also the banks (if the Wells Fargo’s report is to be believed) appear to have improved upon their assets in a considerable fashion… Add to this the international Markets (especially in Asia and along the Pacific realm) and even with Japan’s new capital infusion… In the distant the thundering herd of the third wave bull market is about to be unleashed… Awesome and sublime.

FT.com / Markets – Wall St rally extends into fifth week

Wells Fargo leapt 31.7 per cent to $19.61 after it more than doubled its expectations for first quarter earnings, with the integration of the recently purchased Wachovia going more smoothly than expected.

This came as the banking sector in general received a lift after the New York Times reported that all 19 banks undergoing government “stress tests” were likely to pass, with Federal Reserve officials finding the financial system in better shape than expected.

Citigroup rose 12.6 per cent to $3.04 on the news, while Bank of America jumped 35.3 per cent to $9.55 and JPMorgan picked up 19.4 per cent to $32.75.

Bob Maneri, an analyst at Victory Capital Management, warned banks’ capital positions were under stress but said: “The revenues from mortgage banking are going to continue to rise into the second quarter as interest rates remain low and people continue to refinance.”

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2 Comments leave one →
  1. doctorbuzzard permalink
    April 15, 2009 6:33 pm

    Seems like nothing but doom and gloom… That third wave move looks more like two steps froward and then one step back, when the song you want is “Gimme Three Steps… Give me Three Mister…. Give Three Steps to the Door, then you won’t sing the blues no more! Actually the third move is yet a bit premature because the pattern accoring to the… Elliott wave principle – Wikipedia, the free encyclopedia

    As wave three starts, the news is probably still bearish, and most market players remain negative; but by wave three’s midpoint, “the crowd” will often join the new bullish trend. Wave three often extends wave one by a ratio of 1.618:1.

    Where we have seen only a pull back and a bit of a floor action in some of the leading individual stock indicators such as with Citi.

  2. April 24, 2009 5:22 pm

    True enough and with the after hour trading markets overnight in Europe and Asia are considered the wave conditions of Elliot were met tho not as high as expectations… In hindsight the market has held up remarkably in the light of the ton a bad news lumped upon it… It got to be a bull.

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