Wolanchuk- always interesting reading:
This interview took place 11/16/99
SHfn Interview: Nasdaq 100 To Reach 3200; Crude Oil To Hit $33, Says Wolanchuk - November 16, 1999
By Benjamin Walters, Contributing StockHouse Editor
DON WOLANCHUK IS BACK! NASDAQ 100 To Reach 3,200 In 2-3 Months; Copper To
$1.60; Crude Oil At $33; The Year The Market Crashes!
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StockHouse: It still looks like a bull market. Do you see the bull market continuing to run over the next 3 months, 6 months, 1 year
and beyond?
Don Wolanchuk: Absolutely, a huge explosion dead ahead.
StockHouse: Do you have any new call on the Dow or are you still up there in the 40,000-60,000 range?
Don Wolanchuk: That (40,000 - 60,000) is way out there. Over the intermediate term, 16,660 is the target.
StockHouse: And that is sometime over the next year or two?
Don Wolanchuk: The educated guess is the possibility of within the next 6-12 months, we could have a huge explosion. The
market is continually held in check by the traders, so it is just a slow process. The slower the better, because if it goes too fast,
sentiment gets all out of kilter and people become overly optimistic like we saw on CNBC the other night. It scared the hell out of
me. NASDAQ was crossing 3,000 and one of the floor traders was so bullish he was actually foaming at the mouth. I thought he was
going to need a rabies shot. You know what I mean. He was really getting carried away like: "We're going to the moon." God bless
it, I ain't never seen anything this glorious in my whole life.
StockHouse: Are you bullish about NASDAQ as well?
Don Wolanchuk: Yeah, the NASDAQ, like it has been doing these last number of years, is continuing to lead the charge. The
technology sector is the place.
StockHouse: Do you see the NASDAQ 100 someday reaching 4,000 or 5,000?
Don Wolanchuk: The NASDAQ 100 is just exiting the halfway point of this particular move. Look at the NASDAQ 100 weekly chart,
and go back to last October. That is the low. You see the initial thrust up to the peak made in February. Then, you start this choppy
environment for the last 6-7 months in an upward bias. The bears call that a diagonal triangle fifth wave peak that was going to
disintegrate. The bulls know it for what it is, and it is called a running correction. The halfway is what we call an irregular ABC flat
correction. The fifth wave of that move ended in April. You had a little A-wave into June. The B-wave made the high in July. The
C-wave came back down into August. That was your regular flat. That ended the correction of that initial impulse wave. It is all
upwardly bias, a very powerful formation. That marked the centre point of the thrust because the middle of that running correction is
that halfway point of the entire move. So, in other words, from approximately the 2,150 area, you should advance the same distance
as you did from the October low to the beginning of the 2,150. So I would say from 1,200 to 2,150, what is that - 900 points? So, you
are going to be at 3,200 on this move real quick.
StockHouse: The NASDAQ 100 recently closed above 2800. Over what period are we looking for the NDX to close at 3,200?
Don Wolanchuk: It is going to take from two or three months.
StockHouse: Once we get through Y2K and everyone finds out that the electricity and telephones still work, then will the market
explode?
Don Wolanchuk: It is in the process of doing it now.
StockHouse: Recent news reports indicate foreign money racing into the United States. Is it because other countries don't trust
their banks as much, because of Y2K? Do you think that this is causing rising stock prices?
Don Wolanchuk: No, buying doesn't cause rising prices. Order flow doesn't cause rising prices. It's the rising prices that cause the
order flow. People only buy things because they are going up. Most people aren't that smart. Of course there are a smart minority
that buy them when they are at the bottom, but most people are only buying them when they are going up. That is why you see
everybody putting bearish pronouncements on the stock market after a long decline. Buying does not cause rising prices. It is rising
prices that cause the buying. Now, the faster the rise in the prices, the faster the buying. The market can go up, all the while
keeping everybody out. That is reflected in the polling services. You get 60-70% still out of the market while the NASDAQ is making
historic highs. That is how you get from wholesale to retail with as few aboard as possible. Remember the Head and Shoulders
pattern that everyone was squawking about in the S&P futures? "Man, we got lower projections. This S&P breaks that neckline,
we're in big trouble." But, they have short memories. They said the same thing about the CBOE Internet Index, when it put its Head
and Shoulders. So, it cracked the neckline for one or two days, and turned around and went straight up. So, why didn't they take
that as a hint that Head and Shoulder patterns are not bearish? They keep forgetting that, because CNBC will not remind them of the
real world. That is just one of the things. Now, when it comes to daily breadths, the Advance/Decline line, you see we still have this
army of nobodies out there, who call themselves technicians and still point their fingers at the Advance/Decline line as reason to
stay out of the stock market. Well, if they were pointing at that in 1955, they would have never gotten into the stock market because
it still hasn't exceeded the peak that it made in 1955. Obviously the A-D line has nothing to do with the stock market because it has
nothing to do with amplitude.
StockHouse: What is your latest call on Crude Oil?
Don Wolanchuk: Well, you see what is happening to lumber. You see what is happening to copper, and you see what is happening
to sugar. It is all going crazy on the upside. Some of them are a little slower than others, but they are all going (higher). Lumber has
had a beautiful ABC correction after the big blast up, and it is ready to blast off again. This is all the coming inflation. I am telling you
now, they are going to hate the market even more when we get inflation and a soaring stock market and soaring gold prices and
soaring commodity prices. The bond market will continue to collapse and they won't understand why the stock market continues to
go up.
StockHouse: You think that the bond market is going lower?
Don Wolanchuk: Oh, sure. You can't have an economic boom of unparalleled proportions with interest rates just sitting there. So,
that is why the stock market has gone straight up from 7,400 to where it is today, while interest rates have gone straight up also.
But, people tend to forget that.
StockHouse: Are you predicting that copper has bottomed out and is going higher?
Don Wolanchuk: Oh yes, copper is going to take out the highs that you see in the monthly charts going back a number of years.
You look at the monthly chart on copper and you are going to take out the $1.60 area there I would say within the next one to two
years. Copper has big numbers written all over it. It is huge.
StockHouse: What about the price of lumber? (March Lumber was at $329.80 on the day of the
interview.)
Don Wolanchuk: Lumber is going to go well over $520. It is just getting started. You just finished up
Wave E of a huge triangle. This is going explode.
StockHouse: And what about Crude Oil?
Don Wolanchuk: You have a huge inflationary spiral coming. We have a projection here of $33.45 over the next year. If it goes
through there, it will hit $41.
StockHouse: What about in the intermediate term? Is it going to have a little zigzag?
Don Wolanchuk: Yeah, those are the most bullish things. Those fast, straight-up moves go nowhere. Like that sharp spike we had
from $18 to $41 in 1989. Anything that goes up that fast just comes right back down. We want this to go a little bit slower. The first
order of business is taking out $27. Once that first $27 is taken out, oil will go to $33.45.
StockHouse: Is it realistic that we will see Crude Oil going through the $27 mark before the end of the year?
Don Wolanchuk: That might come next month. It can come at any time. Today's action was kinda pivotal (November 9th). I am still
holding the long contract from the $10.50. I have been rolling it forward. We took some profit up in the $22-23 area on some of the
contracts, but we had 30, and we are (still) long 10. Essentially what I will do is hold a core position and put on an occasional
spread, knowing full in my mind that we will go a hell of a lot higher, I just play the hiccups with the next month by shorting the next
month out.
StockHouse: What about gold?
Don Wolanchuk: Another chart pattern that looks like Swiss cheese, with all this sh*t on it. There is a possibility that it could
actually go right back down to $255/oz. Then, it will go right back up again. If it does that, it will go straight up. If it goes back down
to $255, it will turn right around and go right back up again, but it will go up slower. But it will be permanent. It's like the way silver
made its bottom. It spiked up out of the hole, gave it all up, started all over again, and put it in a more permanent to the upside.
There were a lot of gaps. In fact, from the first day from the bottom, there was a gap. So, you got all these stupid gaps and the wave
structure does allow for this to come right back down to $255. I can't call it. . Beyond whatever happens between here and $255,
Gold going to take out $800 an ounce. Eventually that is going to happen, it is just a matter of getting past this bullsh*t they left
underneath the market.
StockHouse: What about silver? There is a lot of chat right now about silver.
Don Wolanchuk: Well, silver finished five waves down. It looks like silver is finished with its correction.
StockHouse: And you are seeing silver go higher?
Don Wolanchuk: Yes.
StockHouse: Over what period?
Don Wolanchuk: I think it will be a little slower. I mean when you have five waves down, there is going to be a lot of skepticism on
the next rally. What happens is you get three waves up and then the short sellers will come in, because it is a classic Elliot Wave
bearish count. What happens is the C-wave, of that ABC rally, will turn into a B-wave because it will come back down, turn into a flat
and then take off again. It depends on how people respond to these advances and declines. You have to constantly monitor the
formation. I have to tell you that the world of traders out there is very in tune with Elliot Wave analysis. There isn't a trader out there
that doesn't do a Fib. Well, you ask any commodity trader, "Well, I go home. Before I go to work in the morning, I make sure I get all
my Fibs done."
StockHouse: What is a Fib?
Don Wolanchuk: The Fibonacci relationship. If you look at any chart pattern, you will see where it'll
stop. I think silver stopped at a 1.18 retracement. It nailed it at that big spike you had up to
$7-something many months ago. That was a big Fibonacci relationship. It stopped right on a dime
there. Fibonacci rules the stock market. Nothing else rules the stock market. It is all
Fibonacci-related, and it is all manipulated and the traders are in total control of the stock market at
all times. The other side of the coin is the fundamentals. That is for people who don't know anything
about the stock market. They think that the stock market moves for fundamental reasons. That is, of
course, the furthest from the truth.
StockHouse: What is the book to read on Fibonacci?
Don Wolanchuk: Well, Prechter's book. Anybody who knows anything about Elliot Wave and the Fibonacci relationship. Just
because I recommend Prechter's book, doesn't mean that he is a good analyst. It just means he knows a lot about Elliot Wave. I
mean there is more to the stock market. He predicts the stock market bearishly based on his Elliot Wave analysis. Well, Elliot
Wave is a great analysis if it is used by the person who knows how to use it properly. That is like blaming Steinway for someone
who doesn't know how to play the piano. Anyway right now we are seeing the January effect take hold. You are seeing the small
caps going nuts on the upside. Stocks like E phone [EPHO], Voice Mobility [VMII].
StockHouse: Voice Mobility?
Don Wolanchuk: Yes, Jay Hutton is the president. Their web site is www.voicemobility.com. This is where you can have your voice
mail, faxes, e-mail, everything on one number.
StockHouse: Any other picks?
Don Wolanchuk: Valence Technologies [VLNC]. It is under accumulation. What is holding it back is their financing with Castle
Creek. Once they get that out of the way, and the first huge announcement comes out. I mean, their factory in Ireland is running two
shifts and they are pumping out batteries like mad. Hanil, a Korean manufacturing company who builds Valence batteries, was their
50/50 venture and they just announced they are cranking out a million batteries a day.
StockHouse: Will there be any major stock market correction in the near future?
Don Wolanchuk: Looking a little farther out for the stock market, we are faced with the four-year cycle of 2002. It is going to be an
ugly year for stocks, but a golden time to buy stocks. So, between now and then, we have to time our exits.
StockHouse: If we were concerned about the market crashing, when is the latest we should call you?
Don Wolanchuk: Never call me late, call me early.
StockHouse: What is the earliest we should call you?
Don Wolanchuk: Everyday.
StockHouse: Yes, but you are such a self-promoter.
Don Wolanchuk: First of all, don't blame me if you lose your ass in the stock market. For the price for a pack of cigarettes at
3:30pm Eastern, you can call me and calm yourself.
StockHouse: What is the 900 number that all of the hyperactives and nervous nellies should be calling?
Don Wolanchuk: 900-288-MONEY. And before you spend a dime on the 900 number, I want you to dial toll-free 1-800-511-0781
and listen intently. You will be able to make up your mind whether you even want to dial a 900 number. Oh, when Richard Russell
(Dow Theory) says, "This is a primary bear market," remember that he does this every October.
StockHouse: Thanks for another fun interview!
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