Well John a literal sea of red this morning.
January durable goods orders tumble 7.8 percent
I have had the Dow, SPX, and the NDX in [B] waves, EW wise. And more importantly perhaps, the same with the HUI. B waves are sucker waves, as they keep sucking in the lemmings, right to the end. Then the trap door shuts tight.
Any major reversal should start with a larger move down, in magnitude, than was seen during any part of the last wave up. We now have that in the DOW, the real key. Too early to get too excited, but things is looking up for the bears, I do believe.
I think Shillings comments need repeating here. I also did a bit of research on Shilling. Not one to be taken lightly, per what I could find. If Shilling is correct, we have one hell of down cycle, maybe the last vestige of the deflation cycle, coming up.
Note his item (3) second section. My LT EW says this is entirely possible, with a DOW bottom in the oh shall we say 5 to 6000 range, in about six years. Time wise we may roughly go 2, 4, 6. 2 years for the first big A leg down. 4 years for the B leg up, just completing. And 6 years for the ensuing C leg down.
Anyway we see how this move down goes, but it looks to be something a bit serious. The headlines would seem to indicate the economy is in full retreat.
"TAKE A LOOK AT WHAT'S BEEN IN INSIGHT LATELY:
JANUARY 2007
“The 2007 Investment Outlook: 12 Nonconsensus Themes”: As was true in 2006, six background elements will dominate the investment climate in 2007:
1. The world is still awash in financial liquidity
2. Inflation remains low
3. So many investment returns are low
4. Speculation remains rampant
5. So investors assume more risks to achieve expected returns
6. The insatiable U.S. consumer will spend until borrowing power is exhausted
In this climate, we foresee 12 investment themes, eight of which are likely to unfold in 2007 while four will probably work but maybe not until later:
1. The housing bubble will burst. If so,
2. The Fed will ease; meanwhile, the yield curve will remain inverted
3. U.S. stock prices will fall, perhaps below the 2002 lows, in the midst of a major recession
4. China will suffer a hard landing due to domestic cooling measures and U.S. recession
5. Weakness in U.S. and China will spread globally, dragging down economies and stocks universally
6. Treasury bonds will rally
7. The dollar will rally, but not before the recession is global
8. Commodity prices will nosedive
9. Maybe global and chronic deflation will commence in 2007.
10. Maybe U.S. consumers will start a long-run saving spree, replacing their 25-year borrowing and spending binge
11. Maybe deflationary expectations will become widespread and robust
12. Speculative areas beyond housing may suffer in 2007" |
