NEOwave Warnings - from Glenn Nealy

[drbubb]

I do agree with you regarding the correction but i dont think seasonality will have such an influence here because isnt it (seasonality) fueled by jewellery demand?.

This move in gold is fundamentally down to investment demand, this makes it even more dicey, fear and greed can turn a market before you realise what has happened.

Investment demand has been feeding on itself.

And nothing moves in a straight line, so I continue to recommend lightening up.

The fading of some gold shares is another warning sign for Gold

 

[Catflap]

I do take him seriously. His track record is superb. He was top Gold timer in 2008.

And this is one (of several) reasons I have been lightening up on Gold shares.

A drop from a double top to $500 cannot be ruled out.

And we are in the right season for a high in Gold, whatever the bulls have been saying.

 

This is completely at odds with everything Peter Schiff is saying and everything else I've read and understand - printing money and lots of it does not lead to a 4 to 6 year bear market in gold, it can't!. I must admit, I'm becoming really sceptical of anything with the words 'Elliot' and 'wave' in them these days - hasn't Prechter predicted some daft things like 100 year bear markets?. I'm predicting a big correction in gold of up to 40% but that is after it has reached something like $1200/oz first and even then I don't see a bear market in lasting more than 18 months.

 

Adam Hamilton of Zeal puts it like this:

 

I was reading a book last month that discussed the monetary base's direct impact on inflation. So I decided to take a look at M0 again. I could not believe what the data showed, I almost fell out of my chair it was so mind-blowing. Per the Fed's own data, we have just witnessed the most inflationary event in modern history. This crazy monetary base chart will make even the most rabid deflationist very uneasy.

 

M0 has gone parabolic! Year-over-year in December 2008, it was up 98.9%! This is so shocking it defies belief. In late September as the stock panic started, it had grown by 9.9% over the past year. By October, this rate ballooned to an all-time high of 36.7%. In November, it rocketed again to 73.0%. And in December, it surged up to the staggering 98.9% you can see above. Ben Bernanke's Fed has doubled the monetary base in a single year! Holy cow.

 

 

[drbubb]

This is completely at odds with everything Peter Schiff is saying and everything else I've read and understand - printing money and lots of it does not lead to a 4 to 6 year bear market in gold, it can't!. I must admit, I'm becoming really sceptical of anything with the words 'Elliot' and 'wave' in them these days - hasn't Prechter predicted some daft things like 100 year bear markets?. I'm predicting a big correction in gold of up to 40% but that is after it has reached something like $1200/oz first and even then I don't see a bear market in lasting more than 18 months.

 

Adam Hamilton of Zeal puts it like this:

Peter Schiff is less of an authority on timing and trading than Nealy is - for me anyway.

Glenn doesnt get everything right, but I am interested in his point of view.

I am recommending lightening upon gold and gold shares, and raising cash for a possible big opportunity

in general stocks in a week or two.

 

If SPX soars from early March, it will probably suck money out of the Gold and PM stocks market.

In fact, the weakness in silver stocks over the past few days makes me happy that I did some profit

taking there recently.

[drbubb]

POTENTIAL DISASTER? - this makes Neowave's 1-2 weeks of right times seem optinistic

 

Here is what we wrote in that November 7th, 2008 newsletter:

 

"The only other time over the past 85 years when the Dow closed more than four consecutive days below the envelope [ 34.7% below its two year moving average] occurred in the time zone between 1931 and 1933 and if the market begins to make a series of consistent closes below the 34.7% envelope below the moving average, we believe such closes would be the precursor to tragic economic times for this country. If, on the other hand, the Dow can remain above that lower envelope , it would be an optimistic sign that an era such as the 1930s might well be avoided. We will let the markets tell us what the actual prognosis is for the economy."

 

After that newsletter was written on November 7th of last year, the Dow made another excursion below the extreme envelope . It occurred for three consecutive trading days on November 19-21. Once again the Dow scrambled back above that extreme envelope, and in just over two weeks managed to rally over 18% on a closing basis. A reprieve had been gained once again.

 

Fast forward to today. Today, February 20th, 2009, the Dow closed below the extreme envelope for the fourth consecutive day. On Monday, it would need to rally almost 6% on a closing basis in order to move back above the extreme envelope . A failure to do so could well be telling us what extreme economic conditions we are about to face.

 

The December newsletter from last year showed the Dow Jones Industrial Average on a front-page chart accompanied by what we called a 10 year support line. That potentially crucial support was labeled by us as 7385 on the Dow ± a few hundred points. Since January 1998, every price decline of the Dow has held at that level. On at least seven separate monthly occasions, prices moved down to that support level and held. On November 21st, 2008, the Dow registered its lowest intraday price of the year, a reading of 7,449.38, within 0.9% of that decade-long support level. Today, the Dow Jones Industrial Average closed at 7,365.67 with an intraday print low of 7,249.47. The lowest extreme intraday low of that group of lows occurred in October 2002 at a reading of 7,197.49.

 

What all this is leading up to is trying to explain what a very, very crucial level the market closed at this week. A convincing break of the 10 year support line would be disastrous for the market. The failure of the market to dramatically rally back above the extreme envelope discussed above within the next one or two trading days could be equally disastrous.

 

As if all that were not enough, a subscriber reminded us today that we are in the Puetz window for a market crash. For newer subscribers we will simply note that Steve Puetz did extensive research on market crashes and found that what he called the eight greatest crashes in financial history all occurred within a few weeks of a lunar eclipse and within six weeks of a solar eclipse. A solar eclipse occurred at the end of January and a lunar eclipse occurred on February 9th. As most subscribers know, our line in the sand was what we called the hidden support level on the S&P 500 which was clinging by its fingernails at yesterday's close. Those fingernails appeared to give way today and it is but one more reason to anticipate a very negative resolution.

 

(that's from Peter Eliades)

[Catflap]

As if all that were not enough, a subscriber reminded us today that we are in the Puetz window for a market crash. For newer subscribers we will simply note that Steve Puetz did extensive research on market crashes and found that what he called the eight greatest crashes in financial history all occurred within a few weeks of a lunar eclipse and within six weeks of a solar eclipse. A solar eclipse occurred at the end of January and a lunar eclipse occurred on February 9th. As most subscribers know, our line in the sand was what we called the hidden support level on the S&P 500 which was clinging by its fingernails at yesterday's close. Those fingernails appeared to give way today and it is but one more reason to anticipate a very negative resolution.

 

(that's from Peter Eliades)

 

Came across this (click link to see the chart)

 

http://www.astrojyoti.com/eclipses.htm

 

The lunar eclipse of 9th February 2009 is a is not an eclipse in the umbra shadow but a penumbra shadow eclipse and hence no major negative effects. It is visible in most parts of western and southern India (See eclipse path picture bellow). It starts at 6.08 pm IST and ends at 10.08 pm. It's happening in karka rashi and ashlesha nakshatra.

 

We might be ok then - I must say I am fascinated by the way that planets seem to act on humans and financial markets.

[paulypaul]

I do take him seriously. His track record is superb. He was top Gold timer in 2008.

And this is one (of several) reasons I have been lightening up on Gold shares.

A drop from a double top to $500 cannot be ruled out.

And we are in the right season for a high in Gold, whatever the bulls have been saying.

 

 

I like follow Glen's work as well. I was once a payed subscriber, not realising it was my execution of his recommendations that made me not make money. I will give him a try again.

 

I now subscribe to Tony Cherniawski's market newsletter which is based on elliot wave, who is predicting the same thing for Gold.

He has a weekly interview on : http://www.cyclesman.info/Articles.htm, with John Grant and Tim Wood for a good overview of his thoughts (none there at the moment though as they don't archive them and remove them from the page every so often).

 

For this reason I have also lightened up (but from the start of feb - so missed a bit of the move). Most of my money was in Yamana and Silver wheaten which still both did a good double though, and my savings accounts are now in dollars - yippee so far (tremble).

 

Lets see what happens!

[frizzers]

I do take him seriously. His track record is superb. He was top Gold timer in 2008.

And this is one (of several) reasons I have been lightening up on Gold shares.

A drop from a double top to $500 cannot be ruled out.

And we are in the right season for a high in Gold, whatever the bulls have been saying.

 

$500 - do you really think we'll get there?

 

Plucking a figure out of thin air, what's your target on the downside for this move?

[romans holiday]

His gold call does not look brilliant.

I want to check and see if he has recanted

 

Guess what? I found this:

 

Glenn Neely was recently named the #1 Gold Timer (last 12 months) in the December 8, 2008, edition of Timer Digest. In addition, Timer Digest ranked Glenn in the Top 5 S&P Timers for the last 6 months of 2008 (6/08 to 12/08).

 

Join me in congratulating Glenn on this superb accomplishment, particularly considering the historic volatility of recent markets. In an interview with Ike Iossif, Glenn discusses his outlook on Gold and his expectations for a long-term deflationary environment:

 

http://www.neowave.com/company-nov2008interview.asp

Does he ever consider gold as a currency rather than an inflation hedge? How can he explain the latest advance?

 

Seems to me he has bought into the conventional wisdom that gold will not perform in a deflation.

[drbubb]

$500 - do you really think we'll get there?

Plucking a figure out of thin air, what's your target on the downside for this move?

some possible levels on the way down ... UPDATE

[drbubb]

(I am not sure what Glenn is saying now - but this seems relevant here):

 

BOB PRECHTER of Elliott Wave International has just suggested to "cover all shorts",

since being 200% short from July 2007.

 

Here's a summary of his comments:

 

"We are able to tell from the put/call ratio and other indicators that the majority of investors thought the period from October 10 to year-end 2008 was the major market bottom. But over the past four months EWI have repeatedly stated without equivocation, that the market required a fifth wave down. There were no alternative counts. The Wave Principle virtually guaranteed lower lows, and now we have them."

 

Here's a summary of the reasons that he has suggested to cover shorts:

 

1) We need to be smart bears, not pigs. If we exit now, we can hold onto profits

 

2) Wave 5 (of a bigger 1, if that's what this is) is approaching its minimum target. SPX-600 is an ideal target, but this could end above that, and very soon. The rebound after will be sharp and swift. Let's be early rather than late.

 

3) Sentiment is now massively bearish - with only 3% bulls last Friday. That's the sort of environment the generates big rebounds

 

4) We need to stay focussed on keeping money SAFE

[frizzers]

some possible levels on the way down ... UPDATE

Nice chart.

 

It's interesting how gld after it has left a gap seems to go back and bounce off the top off the gap without quite filling it. There is a lot of back-and-flling to be done.

[frizzers]

By the way I think we are in the early stages of a correction - the annual gold shake-out - but your bearish tone suggests it is going to be VERY big. Do you not think a 50% correction of the gains since late Oct - 700 to 1000 = 300 , so retrace 150 to 850 - is the most likely scenrio? Or , worse case, perhaps to that area of support just above 700 ?

 

Do you really see more than that?

 

 

[drbubb]

... your bearish tone suggests it is going to be VERY big. Do you not think a 50% correction of the gains since late Oct - 700 to 1000 = 300 , so retrace 150 to 850 - is the most likely scenrio?

Or , worse case, perhaps to that area of support just above 700 ?

Currently, I think $850 is pretty likely.

But I will watch and see how it goes. If the volume is right it could finish higher.

Or if too heavy, then maybe all the way back to $680. At this stage, I find Neally's $500 hard too believe

 

[GTG]

Nice chart.

 

It's interesting how gld after it has left a gap seems to go back and bounce off the top off the gap without quite filling it. There is a lot of back-and-flling to be done.

 

I think the gaps are only there because GLD is traded in NYSE market hours where as spot gold is traded 24 hours 5 days per week so gaps in GLD are irrelevant?

 

[drbubb]

I think the gaps are only there because GLD is traded in NYSE market hours where as spot gold is traded 24 hours 5 days per week so gaps in GLD are irrelevant?

That's true.

However, most of these gaps will get filled eventually IMO

As I like to say, "Gold Trading outside NY trading hours tends to be unimportant"

[nbarter]

I must admit, I'm becoming really sceptical of anything with the words 'Elliot' and 'wave' in them these days - hasn't Prechter predicted some daft things like 100 year bear markets?.

 

Be skeptical if you like, but check out my Dow highs thread and look at the levels of the markets against the dates of my posts. I have succesfully called most of the twists and turns of this bear market using EW. In fact i have taken enough out of the market since last summer to pay for nearly a whole year off travelling, which is what i shall be doing come May (and i am only a small time gambler).

 

I accept that applying EW to gold is much more difficult though and far less certain. The patterns are less clear than they are with major stock markets. I have commented on this a few times on GEI, but nevertheless, i still agree with other EW practitioners (Prechter, Neely etc) that gold will likely fall back. I am not as bearish as Neely's $500 call, but see Prechter's $600 region call as quite possible. There was a cluster of price action there (and potentially what EWavers call a 4th wave) which is often attractive to prices that are correcting. But, that isnt to say that i would sell any small holdings of physical gold or silver if i had any. It is good to have insurance and so i would keep onto it.

[drbubb]

...i have taken enough out of the market since last summer to pay for nearly a whole year off travelling, which is what i shall be doing come May (and i am only a small time gambler)...

Very well done, DD.

Indeed your calls were great in a year of tough markets

[munsterkings]

Be skeptical if you like, but check out my Dow highs thread and look at the levels of the markets against the dates of my posts. I have succesfully called most of the twists and turns of this bear market using EW. In fact i have taken enough out of the market since last summer to pay for nearly a whole year off travelling, which is what i shall be doing come May (and i am only a small time gambler).

 

I accept that applying EW to gold is much more difficult though and far less certain. The patterns are less clear than they are with major stock markets. I have commented on this a few times on GEI, but nevertheless, i still agree with other EW practitioners (Prechter, Neely etc) that gold will likely fall back. I am not as bearish as Neely's $500 call, but see Prechter's $600 region call as quite possible. There was a cluster of price action there (and potentially what EWavers call a 4th wave) which is often attractive to prices that are correcting. But, that isnt to say that i would sell any small holdings of physical gold or silver if i had any. It is good to have insurance and so i would keep onto it.

I'm going to make a point of learning as much as I can, from your calls by going back over those posts; thanks for this reminder. And enjoy your travels.

MunsterK

[Catflap]

Be skeptical if you like, but check out my Dow highs thread and look at the levels of the markets against the dates of my posts. I have succesfully called most of the twists and turns of this bear market using EW. In fact i have taken enough out of the market since last summer to pay for nearly a whole year off travelling, which is what i shall be doing come May (and i am only a small time gambler).

 

I accept that applying EW to gold is much more difficult though and far less certain. The patterns are less clear than they are with major stock markets. I have commented on this a few times on GEI, but nevertheless, i still agree with other EW practitioners (Prechter, Neely etc) that gold will likely fall back. I am not as bearish as Neely's $500 call, but see Prechter's $600 region call as quite possible. There was a cluster of price action there (and potentially what EWavers call a 4th wave) which is often attractive to prices that are correcting. But, that isnt to say that i would sell any small holdings of physical gold or silver if i had any. It is good to have insurance and so i would keep onto it.

 

Thanks, not looked at that thread before - there is definitely something in it, but I find it too confusing to use and it looks complicated. I prefer to develope my own form of TA and trading which is slowly evolving and making more sense. I'm interested in the pattern of waves as they seem to repeat - I've looked at the Dow from 1929 to 1938 and it's incredibly similar to the Nasdaq from 2000 to 2009 in terms of length and where some of the lows happened (eg. major low on November 22 1937 and then falling further in late February 1938 by another 20% to 25% bottoming in late March).

 

I'm really glad it's worked out for you and I'm hoping with time to have a similar success - what does your EW count say at the moment as I'm unsure whether the markets are going to rally or fall further, at the moment I'm going with the later because gold may soon hit support and start rising again which could push stocks even lower. The UK market looks like it wants to rally but is being held back by a now bearish Dow and S&P.

 

Can we expect a March rally from here or is it going to be like March 1938 again?

[grumpy-old-man]

Can we expect a March rally from here or is it going to be like March 1938 again?

 

c'mon catflap, you shouldn't need to be asking that by now.

Sell the lot & get a good nights sleep.

[Catflap]

c'mon catflap, you shouldn't need to be asking that by now.

Sell the lot & get a good nights sleep.

 

I've everything to play for - I'm hedged with PM mining stocks and that has served me well so far. If I was sitting 100% in cash right now I would lose my nerve about going in so the best way for me to play this is to adjust my portfolio weighting on a week by week basis.

[G0ldfinger]

That's true.

However, most of these gaps will get filled eventually IMO

As I like to say, "Gold Trading outside NY trading hours tends to be unimportant"

Which is funny since the London AM Fixing is where one would think the bullion music really plays.

 

Sinclair is right in saying that the most leveraged market rules (the COMEX). Stop the COMEX from price manipulation. Take delivery and remove the bullion from COMEX warehouses.

[Saberu]

Technicals are good for short term movements and predicting seasonal behaviour but I don't think they can predict overall price direction in the long term. To say that they will discounts real world factors like sentiment which is going to be strongly affected by the wave of inflation we have coming.

[drbubb]

Technicals are good for short term movements and predicting seasonal behaviour but I don't think they can predict overall price direction in the long term. To say that they will discounts real world factors like sentiment which is going to be strongly affected by the wave of inflation we have coming.

 

Hmmm.

What would you think of this forecast then? 72 Years !

 

To celebrate NEoWave Institute’s 25th anniversary, we’re offering a 25% discount on Glenn Neely’s groundbreaking book: “Mastering Elliott Wave.” Still highly relevant and accurate, Glenn’s book changed Wave theory forever by presenting the first and only scientific, step-by-step approach to Wave analysis.

 

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Offer expires March 31, 2009.

 

Featured in the book is Glenn’s astounding 72-year market forecast

 

In 1988, Glenn mapped out and published an unprecedented 72-year stock market forecast to the year 2060.

His forecast declared: “… the minimum target of over 100,000 basis for the Dow … should be achieved no later than 2060.”

 

In 1988, the Dow Jones Industrial Average hovered at 1900. Over the next two decades, the Dow increased more than seven-fold. After reaching its 2000 high, the stock market began (according to Glenn) a 15- to 20-year bear market consolidation, which is right in line with his long-term forecast.

 

It’s important to note his 1988 forecast offers no alternate wave counts or backup bearish scenarios. Glenn’s 72-year forecast presents only one scenario, which has been on track for 20 years – an extraordinary feat, especially given that orthodox Elliott Wave analysts have altered their forecasts repeatedly throughout the last 20 years. This is the only long-term Wave forecast that remains accurate today, which proves Glenn’s NEoWave technology is superior to orthodox Elliott Wave.

 

 

Remember, this 25% discount on Glenn’s book expires on March 31.

 

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[Catflap]

I'll just add something I read on the HPC newsblog, made me laugh and made me think - 'flashman' seems like a very clued-up city trader who tells it like it is. Hope DrBubb and other EW users on here don't mind as his comments are quite cutting but he seems more than qualified to say such things:

 

 

http://www.housepricecrash.co.uk/newsblog/...ounce-22461.php

 

28. flashman said...techie and all Wavers: Robert Prechter (the chief waver) is quite a good analyst and his has genuine market insight. I have however often suspected that he analyses the situation then finds supposed Elliot Wave patterns that might roughly correlate to his analysis. This is a very good trick because like all good cons it adds an illusion of plausibility to the implausible.

I have read on this site that Elliot Waves work because they reflect the predictable patterns of human behaviour. Quite ingeniously, Elliot Wave theory anticipates the argument that unforeseen natural phenomena can alter human behaviour by saying that natural phenomena are usually affected by human behaviour and therefore are predictable (global warming springs to mind). The trouble is that there are always natural phenomena that can’t be caused by human behaviour (solar events that heat or cool the world, asteroid strikes, unexpected earthquakes/tsunamis, and many more mundane things). The natural phenomena (major and minor ones) that cannot be caused by human behaviour are constantly with us. They will always be entirely unpredictable and they will always alter our outcomes. The presence of these unpredictable natural phenomena, single-handedly rubbishes the workability of Elliot Wave theory. The poor record of Elliot Wave predictions does further damage. Respected randomness practitioners, mathematicians and Harvard professors alike have proven that it has no value, but its practitioners are unshakeable in their belief. I guess it’s a bit like the religious concept of faith.

 

Back in the day when “black box” trading was all the rage, all the big Wall Street firms spent countless millions on researching technical analysis. The world’s best mathematicians and computer programmers were hired and given dream budgets. Elliot wave theory was considered and tested by all of them. After years of testing, not one outfit concluded that it had any value. The general consensus was that its accuracy was no better than random, but even worse, its timing record was considerably worse than random. This is why, not one fund or professional trading floor in the world uses it. It is considered to be “a doomster’s drama novel, no more than a hobby for its practitioners”. People often point to an Elliot Wave prediction that ‘came true’. The trouble is that everyone knows that the markets go up and down, sometimes just a bit, sometimes a hell of a lot. Any fool could therefore predict a large drop in the markets and claim that when it eventually happens, he was right. While we are talking about Elliot wave predictions, here are a few howlers:-

1. “The Great Bear Market” was forecast in 1997. This was followed by a great bull market.

2. In 2003 he told investors how to handle the coming deflationary depression. In 2004 we started fighting inflation.

3. Dow would drop to 400 in 1995

4. Dow 400 in 1995

5. Dow 800 in 2002

6. Dow 1600 in 2009

Here is a real bit of Elliot Wavery:

“Today’s top was a spike, on news, so our feeling is it represented the top of wave {a} of an {a}-up- {b}-down, {c}-up move for corrective wave 2-up. This afternoon’s late decline was likely the start of wave {b}-down. The alternate is that wave 2-up topped intraday”.

And here’s a comment about the above that reflects my own views:

“It’s not that we don’t understand the individual words and phrases of this kind of commentary, or even what the author is trying to say. It's just that its completely untradeable, unverifiable, unfalsifiable hindsight-driven smoke-and-mirrors carnival gibberish”.

This is what Louis Ruykeyser said about Prechter when he came on the PBS show: “Robert Prechter, editor of the Elliott Wave Theorist, has been on several times and, during his last appearance got put in some pretty painful holds. He came on lying. He just denied the things he had said. And we had to point it out. He misunderstood and thought the program was for his own glorification."

This is course one of Prechter’s biggest problems. He is a vainglorious liar, (I realise that he did not invent Elliot wave, but he is undoubtedly its' biggest champion). None of its followers really care about this. It is their hobby. Perhaps more troubling, is the religion like hold it has on its follows. It’s a bit like the Shroud of Turin. It got categorically proven to have been a medieval fake. Somehow, this did not trouble its believer’s, one bit.