Refueling Psychotic-Optimism

By: Joseph Russo | Fri, Aug 17, 2007
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Until September, this shall be our last market-update prior to our return from hiatus after the Labor Day holiday.

Fed Saves Markets From Near-Meltdown:
In light of the Feds clandestine shattering of the discount window in the wee-hours of Friday morning, we really do not have much to add to last weeks rant about Ponzi-Regimes coming to the rescue of grossly mismanaged markets.

Down how much? - And already requiring immediate emergency rescue measures?
Last Thursday, stock markets were off their historic highs by around 10%, and most major metropolitan housing-markets are down anywhere from 5% - 10% at best. Certain regions like Manhattan, have experience little if any downward adjustment to their mega-bloated values - some 200% - 300% above their former 1998 values.

Nonetheless, such minor disturbances amid a perpetual debt-based prosperity-paradigm require immediate intervention by central banking cartels - with endless assistance to follow as needed.

Why Not Intervene When Markets are rising in Parabolic Buying-Panics?
There seems to be no cause for concern when various housing markets ballooned over 200% in the course of 6-short years - or when equity markets rise in extended parabolic fashion.

As far as housing is concerned, such rapid appreciation of monolithic proportions are one-off historic anomalies requiring serious downward adjustment however, most everyone would ignorantly wish to return to such a mirage, and forever embrace such folly as the "norm."

Making Waves:
In our view, the only positive effects of such meddling are the unmistakable footprints of Elliott Waves - which remain clearly marked in the wake of price action - regardless of intervention.

The Week in Review:

The NDX:
The NDX relinquished last week's trendline big-time. Though violated substantially, long-term trends remain up.

The rebound off the weekly low, attributable in large part to the Fed's continued interventions, left the index down 1.89% on the week.

We suspect strategic short-sellers would beg, borrow, and steal to gain equal favor of such omnipotent forces in incessantly working toward their fundamental causes.

However flawed, traders must be cognizant of this inherent bullish prejudice, and adapt accordingly.

Below is a common example of our approach in adapting to such flaws:
The chart below documents last weeks short-term trade-triggers and price-targets captured from Elliott Wave Technology's Near Term Outlook.

For active traders of all time-horizons, there is no better road map for navigating market indices than the Near Term Outlook.

Transparency, disclosure, and selling the truth
Bear in mind the above illustration reflects a portion of trade set-ups clearly identified by our adaptive short-term price forecasting methods. It does not depict nor represent a sequentially hand-delivered trade recommendation-history for those yearning for blind-faith trade instruction.

There are no free rides in life - especially when it comes to financial speculation
Although we set forth our short-term market forecasts with stunning clarity, traders still need to work the provided landscape vigorously in order to extract the large bounties regularly offered by dynamic markets.

Now let's see how the rest of the majors performed during last week's funk...

After setting fresh multi-year lows just a week ago - following news that its manufacturers are playing a key role in "rescuing the world" from the effects of their "marked-to-nothing-but-faith" products and mutant offspring - The Dollar has curiously begun to rise. Such a show of confidence leads us to wonder if Mr. Bernanke has been consulting with Mr. Rubin on recent matters.

The action over the past four-weeks has The Dow looking more like a "slinky" than the premier equity market of the globe. Although overwhelmingly bullish longer-term, the Dow continues to show signs of vulnerability over the near-term.

A likely result of the feds interventions along with sudden dollar stability, Gold resolved its double inside bars to the downside - returning to its intermediate-term coiling pattern.

In viewing the 6-month weekly bar chart for The S&P, it certainly looks like the beginnings of "crash" - longer-term however; this ailing index also supports a major long-term uptrend.

Should readers have interest in obtaining access to Elliott Wave Technology's blog-page, kindly forward the author your e-mail address for private invitation.

Until September ...

Trade Better / Invest Smarter...



Joseph Russo

Author: Joseph Russo

Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology

Joseph Russo

Since the bubble, 911, and the 2002 market crash, Elliott Wave Technology's mission remains the delivery of valuable solutions-based services that empower clients to execute successful trading and investment decisions in all market environments.

Joe Russo is an entrepreneurial publisher and market analyst providing digital online media solutions designed to assist traders and investors in prudently and profitably navigating their exposure to the financial markets.

Since the official launch of his Elliott Wave Technology website in 2005, he has established an outstanding record of accomplishment, including but not limited to, ...

  • In 2005, he elicited a major long-term wealth producing nugget of guidance in suggesting strongly that members give serious consideration to apportioning 10%-20% of their net worth toward the physical acquisition of Gold (@ $400.) and Silver (@ $6.00).

  • In 2006, the (MTA) Market Technicians Association featured his article "Scaling Perceptions amid the Global Equity Boom" in their industry newsletter, "Technically Speaking."

  • On May 6 of 2007, five months prior to the market top in 2007, though still bullish at that time, he publicly warned long-term investors not to be fooled again, in "Bullish Like There's No Tomorrow."

  • On March 10 of 2008, with another 48% of downside remaining to the bottom of the great bear market of 2008-2009, in "V-for Vendetta," using the Wilshire 5000 as proxy, he publicly laid out the case for the depth and amplitude of the unfolding bear market, which marked terminal to a rather nice long-run in equity values.

  • Working extensively with EasyLanguage® programmer George Pruitt in 2010 and 2011, the author of "Building Winning Trading Systems with TradeStation," he assisted in the development of several proprietary trading systems.

  • On February 11, 2011, he publicly made available his call for a key bottom in the long bond at 117 '3/32. Within a year and half from his call, the long bond rallied in excess of 30% to new all time highs in July of 2012.

  • For the benefit of members and his general readership, he responded to widespread levels of economic and financial uncertainty in the development of Prudent Measures in 2012.

  • He publicly warned of a major top in Apple on October 26, 2012 in the very early stages of a 40% decline from its all time high.

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