Glass Ceiling Markets Revealed

Following up on our most recent post “Glass Ceiling Bullish or Bearish,” today, we unveil the two markets illustrated in that feature.

Below, we display the two phantom price charts presented for side-by-side comparison. We had mentioned that both were popular indices, and hinted that we had rendered one of the charts with monthly closes and the other using a chart of daily closes.

We consider one of these a potential analog to present conditions.

Analog   an’a’log (noun) U.S CHEMISTRY   A chemical with a similar structure to another but differing slightly in composition.

Though fascinating to discover, ponder, and observe, all analogs inevitably blow-up. Despite this truth, analog comparisons can be useful in observing how past price patterns resolved.

One can also compare what conditional similarities and foundational differences exist relative to the analog chart of the past and the doppelganger price pattern of the present.

 
Analog an’a’log (noun)

U.S CHEMISTRY

A chemical with a similar structure to another but differing slightly in composition.

 

 

Above, the chart on the left renders monthly closes of the Dow Jones Industrial Average. The Dow’s first encounter with its “glass ceiling” occurred in 1966, while its sixth such encounter took place at the tail end of 1982.

The chart below illustrates how the Dow resolved this pattern, not once looking back in the five years after it had finally shattered its glass ceiling on the sixth try in November of 1982.

 

Above, the small chart on the right renders daily closes of our modern-day doppelganger, the NASDAQ 100. The NASDAQ 100’s first encounter with its “glass ceiling” occurred on February 16, 2011, while its fifth and recent encounter took place on January 18, 2012.

The chart below illustrates the NASDAQ 100 currently amid its fifth attempt within the last twelve months at breaking out above, and shattering its overhead glass ceiling.

If the NASDAQ-100 is to produce an outcome with any semblance to the analog depicted in the 1966 – 1982 Dow, the prospective wave count, amplitude, and degrees of trend noted below, will jettison the NDX toward the 3300 level in no time flat.

 

 

Perhaps, insofar as its 83.4% two-year wipeout in 2002, which clearly broke its degree of trend correlations with the Dow, the NASDAQ may be about to embark upon another disconnect of sorts, one that may seek to realign its broken trend correlation with the Dow and S&P.

After all, another mini tech-boom that rockets the NDX away from the pack toward 3000, will merely amount to a common 61.8% retracement of its previous two-year wipeout in 2002, which we consider as the base terminal of Cycle Degree “A”.

Here are a few interesting facts about the NASDAQ disconnect during its unrelenting bubble-spike into 1999, its total destruction in 2002, and its stunning full recovery last year from the 2008 bear market lows.  

• In the bear market of 2002, the NASDAQ was completely wiped out (-83.4%) while the Dow lost only 38% of its value.
• In 2007, the Dow reached a new historic all-time-high while the NASDAQ struggled with a paltry 38.2% retracement of its complete annihilation in 2002.
• In 2008-09, the NDX held above its 2002 lows, while both the Dow and S&P breached well below their respective 2002 lows.
• In 2011, the NDX retraced 100% of its 2008-09 declines, and trades higher today than at its peak in 2007.  The same cannot be said for the Dow or the S&P 500.

Comparing Analogous Fundamental Conditions

So what was foundationally similar in the period spanning 1966 – 1983 for the Dow relative to the (twenty-times-condensed) doppelganger illustrated in the NASDAQ 100 in 2011?

For one thing, in the late 70’s and early 80’s, the world was enmeshed in a situation that is somewhat analogous to the conditions it faces today.

• Tension in the Middle East
• High Energy Prices
• High Gold Prices
• Runaway Inflation
• Rising Interest Rates

Looking at the list above, it appears that we are only missing two crucial ingredients, runaway inflation, and rising interest rates.

Institutions like the Fed, ECB, World Bank, or the IMF, who are in positions of influence over these things; fancy themselves as having the necessary control over all aspects of what they are doing to address the world’s current problems; are they correct in their assumptions or are they wrong.

One can argue that global and financial challenges occurring between 1966 and 1982 were just as dire if not more so than they are at present. 

Yet somehow, perhaps with the assistance of Nixon moving the world completely off any remnant of the Gold Standard, we managed to unleash a powerful and sustained inflation, which provided the miracle-elixir that enabled economies to breakthrough their seemingly insurmountable challenges.

Closing Thoughts

Will events unfold differently this time? Though the past and present may rhyme to some extent, in our view, one must consider two profound foundational differences.  

The first is that the hyper-inflationary effects unleashed by Nixon in 1971 removing the last remaining anchor to Gold, (which provided some level of efficient free-market moderating effects on global trade) has expended its entire payload.

The second, is that the flawed and distorted application of a centrally planned Keynesian approach to managing global economies void of tangible anchors or restraints, has created unfathomable levels of debt from which there is no escape and no turning back.

The most likely reason that we are lacking runaway inflation and rising interest rates is due to global banking cartels going “all-in” and fighting the free-market with their perpetually flawed interventionist policies in attempt to once again avert, delay, or subdue the markets natural deflationary forces of unwinding and cleansing itself of excessive malinvestment.

Lastly, we leave you with another puzzle to play with.  Given all that is known about flawed monetary policy and its effect on nominal values, from an Elliott Wave perspective, how would you label the S&P-500’s 2000, 2002, 2007, and 2009 market terminals relative to their respective degrees of trend.

 

Until next time,

Trade Better / Invest Smarter

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Audit the Fed

Dear Fellow American,

I ran for the U.S. Senate to end the federal government’s out-of-control spending and solve our debt crisis.

But that can't be done until we tackle the source of the problem: the unaccountable Federal Reserve.

As long as Ben Bernanke keeps printing money, the government will keep spending it.

You and I need to end that right now.

And just like during my campaign, the establishment is stacked against us. But look at what has already been accomplished with you in our corner!

Please take a few moments to read the message below from Campaign for Liberty Vice President Matt Hawes and support C4L in this vital effort to rein in the Federal Reserve.

For Liberty,

Senator Rand Paul

---

Dear Patriot,

Trillions of dollars have been stolen from U.S. taxpayers.

You and I, right now, are seeing the worst plundering of a country's wealth in the history of civilization, led by an out-of-control Federal Reserve.

But you and I together CAN put a stop to it all.

With your help (including completing the petition to your representative and senators) today, Campaign for Liberty is ready to take the battle straight to the heart of the problem - the Federal Reserve itself.

Last year, we came close to enacting a full Audit of the Fed.

This year, with more Fed opponents put in office and the economy still reeling, we have our best chance ever.

But you must act today.

Just think about the scope of the problem.

The massive, outrageous amount of dollars recently committed to the economic bailouts totals:

More than the socialist New Deal...

More than the entire Iraq debacle...

More than the 1980's savings and loan mess... More than the Korean War...
COMBINED.

Where will it all end?

It's time you and I put a stop to an out-of-control Federal Reserve.
And Ron Paul has a bill before Congress to do just that.

 

 

That's why it's vital you fill out your personal "Audit the Fed" petition in support of Congressman Paul's bill.

This bill, introduced in the House by Congressman Ron Paul and in the Senate by Senator Rand Paul, will finally pull the lid off the FED and expose its outrageous power grabs.

Now is the time to make sure your representative and senators feel the heat to support the Audit the Fed bill!

If you and I don't act today, I'm afraid this crisis will end with the economic ruin of every man, woman, and child in the United States.

Today, over 16 TRILLION in taxpayer dollars in bailouts and loans have been agreed to by Congress, the Bush and Obama Treasury Departments, and the out-of-control Fed.

So is it really any wonder more and more folks are starting to realize the Washington, D.C. establishment is hurtling us toward complete economic disaster?

Whether it's watching a phony "stimulus" package get rammed into law or seeing Congress pass a $700 BILLION bank "bailout," the American people are agitated and increasingly angry.

You saw the result of that anger in the Tea Parties last year and then in the November elections.

Statist, pro-Fed politicians were tossed out of office left and right!

That means it's a perfect time to unleash the pressure of MILLIONS of outraged Americans on the out-of-control Fed today!

So please agree to complete your petition urging your Representative and Senators to cosponsor and seek roll call votes on Audit the Fed - the first step toward ENDING THE FEDERAL RESERVE once and for all!

As I know you're aware, the Federal Reserve is shrouded in secrecy.
Its meetings are off-limits to the public.

Its inner-workings are off-limits to the public.

Fed leaders know coming clean with Congress and the American people on how they create money out of thin air would result in an anti-Fed firestorm.

So can you imagine the impact of a full-scale audit?

You and I will finally be able to show the American people that the Federal Reserve System leads to:

***  Constant economic crises - the housing crisis and the resulting chaos is just one example of an economic bubble created by centrally-planned interest rates and money manipulation;

***  The destruction of the middle class - as fuel, food, housing, medical care and education costs soar, everyone who is NOT on the government dole is forced to make do with less as the value of their money slowly decreases;

***  Currency destruction - history shows us that riots, violence, and full-scale police states can result when people finally realize fiat money isn't worth the paper it's printed on and REFUSE to accept it.

And unless you and I do end the madness in Washington, D.C., we may be closer than we'd like to think to learning that history lesson firsthand, right here on the streets of our towns and cities.
That's why your commitment to helping pass the Audit the Fed Bill - and helping Campaign for Liberty fight this battle - is so vital.

 

 

Just a few years ago, there was no chance of passing any legislation like Ron Paul's Audit the Fed Bill.

So I guess there has been one "CHANGE."

You see, with the piling up of trillions of dollars in out of control "bailouts" of Wall Street and international bankers, even many politicians in Washington, D.C. want to show you they're "being responsible."

What better way for Congress to do this than by auditing the Federal Reserve to account for the trillions stolen from U.S. taxpayers?

More and more Congressmen are already feeling the pressure and are signing up to support this bill.

I've even received word Audit the Fed could move in the coming weeks in the U.S. House.
When that happens, you and I must be ready to fight.

There will be many battles you and I must wage over the coming months to take back our country.

But this one is set to rage in Congress in just a few short weeks.

And, it's both a bill we CAN pass and one that is vital to exposing the massive corruption and downright evil at the Federal Reserve.

You see, after regulating, taxing, spending, borrowing, and printing us into what looks like the worst recession in decades, establishment politicians and power brokers are assuring us they're working hard to "fix" our economic woes.

What is their solution?

You guessed it.

More of the same!

I'm convinced that if you and others will insist on Congress passing Audit the Fed, the votes will be there.

Then the question is whether Barack Obama will sign it.

But here's the thing: even if the Audit the Fed bill is vetoed by Obama, just forcing him to do it is a win/win situation.

Can you imagine how it will look in the 2012 election when you and I tell the American people President Obama refused to even LOOK for the trillions of dollars stolen from the taxpayers?

Now, we just need to show Congress the American people demand action on Audit the Fed.

 

 

Here's how we plan to do that.

First, we're already busy contacting up to seven million activists nationwide through mail, phones, and email to generate petitions to the U.S. Congress demanding action on "Audit the Fed".

But that's just the beginning.

We'll work the talk radio stations and grant local media interviews to further turn up the pressure on Congress.

And a few days before the vote, if we have the resources, we'd also like to run hard-hitting targeted radio, TV, and newspaper ads.

This entire program is designed to send this one, CLEAR message to Congress - Any politician who votes against the Federal Reserve Audit should look for another job.

But such a massive effort won't be easy - or cheap.

So, in addition to your signed petitions, I also hope you'll agree to chip in a contribution of $10 to Campaign for Liberty.

If we don't take action, the America we see in just a few years could look far worse than even the one we see today.

Can I count on you to join the fight to AUDIT THE FED by filling out the Petition and chipping in a quick $10 contribution right now?

 

In Liberty,

Matt Hawes
Vice President

 

P.S. Please complete your petition DEMANDING your Representative and Senators cosponsor and seek roll call votes on the Audit the Fed Bill TODAY!

With federal spending at record levels, and TRILLIONS of new dollars flying off the printing presses, it's never been more important the Federal Reserve's abuses are exposed to the American people once and for all.

So along with your signed petition, please chip in a contribution of $10, $25 or even $50, to Campaign for Liberty TODAY!

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Glass Ceiling Bullish or Bearish?

We have all heard of the proverbial “glass ceiling” in the business world where one attains a certain level of achievement and is unable to advance any further.

Well, the same thing happens to share values from time-to-time. They reach a certain price level, and no matter how hard they try, they are simply unable to shatter the glass ceiling overhead.

Price charts clearly reflect such episodes and offer some analog-based clues as to what may manifest following these prolonged battles at overhead resistance.

We provide two such examples below. One is an analog from the distant past, and the other is playing out in real time. Both are major equity indices. Can you recognize either of these popular equity indices?

Does either of these look familiar? What indices are they? Which is the old, and which is the new?

The first index on top sports 6-tests at the glass ceiling of resistance, while the second index shows five attempts at breaking through the resistance barrier.

If you think you have identified either of these beauties, which is the chart of the distant past and what was its outcome? Which is the chart currently unfolding in real time?  What are the general time-periods of both the old and the new?

Well, that’s all for now. Don’t worry, we won’t’ leave you hanging for long. In the next few days, we will provide a follow up piece with all of the answers along with some forward-looking analysis as well.

Do reply with a post or send us an email with your best guesses.

What do you say we make things a bit more interesting?

How about:

• The first thirteen non-subscribers (all of our current subscribers already know the answers) who get the two markets correct will get a complimentary issue of our Near Term Outlook.
  
• The first eight (non-subscribers) who get the two markets and analog outcome correct will get a complimentary issue of EWT’s Charting Bundle.
  
• Finally, the first five (non-subscribers) to also provide the general time-periods for each of the charts, will get a complimentary issue of the Chart-Cast Pilot.

We will give you one last hint. One of the indices is a chart of daily closing prices, while we have rendered the other using a chart of monthly closes.

Now post/mail in your answers and we will report all winners with the follow-up feature and analysis by the weekend.

Until then,

Trade Better/Invest Smarter

Joe Russo
Publisher and Chief Market Analyst
Elliott Wave Technology

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Lifetime Pilot Performance: 1081.06%

Here we provide the big-picture, long-term performance stats for the Chart-Cast Pilot portfolios.  Our spreadsheet breaks down returns by market, account-type, and trading/investment strategy.

Long-term investment account statistics go back as far as 1973, while Mid-Level and Short-Term trading stats reflect performance from 2007 to date.

This historical account provides testament to the efficacy, benefits, and rewards, that accompany adherence to proven trading and…

…investment strategies, which have delivered robust returns over various market cycles. 

Incorporating three distinct accounts for each market/stock traded provides for a level of strategic diversification that is virtually immune to periods of high correlation such as we have experienced over the past several years.

We have broken down each broad market and individual stock held within our portfolios by engagement at three distinct timeframes, and we have listed each under the “Account Type” column.

The year in parenthesis following LT (long-term) Investment Accounts denotes the year in which our strategy engaged that market or stock.

For long-term engagement in the broad market equity indices, under the “#Contracts/Shares” column, we represent an initial 10K exposure to these indices as the indices themselves are not actual tradables. 

For long-term engagement in Gold, Crude Oil, and the Long Bond, we recorded performance basis a single continuous futures contract.

Mid-Level and Short-Term trading accounts contain the symbol for the actual tradable under the #Contracts/Shares column.

The “Profit-Factor” column is a TradeStation generated measure of profitability. The Profit-Factor reflects the amount made relative to the amount lost. By definition, a value greater than one means that the total number of trades recorded contain a positive net profit. The higher the profit factor the greater the level of profitability.

Generally, long-term investment accounts will trade much less frequently. Mid-Level trading accounts focus engagement on the intermediate term timeframe and as a result, they typically generate a greater number of trades vs. longer-term core investment positions. Short-term trading accounts focus engagement on the short and near term. These accounts generate the greatest number of trades.

The “%Profitable” column displays the percentage of trades that were profitable amongst those recorded for each strategy. Note that high win rates are not typical for robust strategies that perform well over various market cycles. Robust profits are quite common amid strategies that sport win rates of 30% and less.

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2011 Pilot Performance: 20.73%

No doubt 2011 was a challenging year for traders and investors. The Dow Jones industrials finished the year sporting a 5.5% gain. The NASDAQ Composite Index closed down about 1.8%. And, amazingly, the Standard & Poor's 500 Index ended almost exactly flat.

To be precise, the change was four one-hundredths of a point: 1,257.60 compared with 1,257.64 in 2010. The percentage change was 0.0032% and is nearly the index's smallest change -- positively or negatively -- ever.

That the changes for the major averages would be so small may be hard to believe in a year that saw the major averages rise more than 8% by April 29 and then fall 17% or more from those levels by early October. Below is a list of broad asset returns for 2011.

Combined, the 20 asset classes benchmarked above returned a total loss of (–2.72%) for 2011. In contrast, our broad market portfolio (shown below) had a positive 2011 return of 3.12%, while our individual stock portfolio returned 38.34% for a combined average total return of 20.73%.

PORTFOLIO RETURNS: CHART-CAST PILOT

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The Pilots Take On Netflix Before it Crashed

Back on September 15 of 2011, we provided Chart-Cast Pilot members with a special report on Strategic Diversification.  We used our three levels of engagement in Netflix to provide that presentation. 

Though hindsight always provides 20/20 vision, there was no such hindsight assistance in navigating the precipitous collapse that was to occur in Netflix back on September 15, 2011.

The chart below reflects the wreckage three months later. 

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Chart-Cast Pilot

Today, in short-term trading accounts, we lifted long positions with a $2270 profit per contract and reversed short nearby Oil futures at 100.55. 

Outside the purview of our trading strategy, we have also noted a short-term downside price target at $98 even vs. the 102.44 pivot high.

Nearby trendline support is noted in blue, while the rising reddish trendline defends the $98 target, which would return roughly 2.4 points or $2,400 per single contract traded.  The balance of today's Pilot is available in PDF format here.

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The Near Term Outlook

No doubt the jury remains out relative to short, medium, and long-term headline risk associated with the Global Debt Crises. 

The bill is now overdue and the collectors are banging at their door for payment.  They are putting in a call to their Uncle Sam to see if he might be able to buy them more time.


A weakening US dollar will suggest they are indeed buying time, while a strengthening US dollar i.e flight to safety, suggests things are not turning out quite as expected.

If the medium-term uptrend is to eventually deliver a move north of 80, and if trendline support fails over the short-term, another modest leg down toward a truncated minute degree -c- wave may terminate the minor degree *b* near the next trendline of support, and launch a powerful leg up in minor *c* as noted. The balance of today's Near Term Outlook is available in PDF format here.

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2012-2021: Global Spring, the Time Is Nigh

Following the absolute failure and systemic insolvency that shocked global economies in 2008-2009, people of The United States , and the World at large, missed an extraordinary opportunity to champion a revolutionary shift toward liberating global citizenry from the corrupt tyrannical grip of the evil twins who have implicit mastery and command over a sacred trinity of deceit, illusion, and destruction. Breeding Ground of Corruption The evil twins to which we refer are the egregiously flawed Democratic/Communist/Socialist Governments of the G-20, in collusion with the Global Banking Cartels to which they grant coordinated fiat license to commit continuous legal fraud against the masses.   Governments around the world do this by partnering implicitly with, and granting their global banking cartels the extraordinary privilege of creating money and credit ex nihilo, or stated more clearly, by counterfeiting, which is fraudulent and illegal by the most historically common and natural rules of law known to man.   This irresistible temptation to cheat easily through the fraudulent creation of illusionary wealth from nothing has an insidious effect. Such misappropriation distorts the behavior, planning, investment, and production cycles of all agents and actors involved in every aspect of the economic and political process.   It is clear, that the United States are no longer plural, but rather a singular United State of America, part socialist, part fascist, and on the surface, free , as advertised. We trust that based upon its heavy-handed involvement in national and global economies, that all impartial observers must logically conclude that America conducts itself more like a centralized power of economically planned socialism, which, as Hayek argued, is a system doomed to fail by design. Hayek also argued that socialism is a common pathway that if left unchecked, has in the past, turned democratic nations into totalitarian regimes.   The opaque coup of the infant United States was vexing, incomprehensible, and brilliant from its founding. Masked under the flag of freedom, beyond its righteous surface, it has risen as everything but the free democratic republic it espouses itself to be. If not mended with swift caution, America will inevitably fall along with the balance of socialist/communist societies.   From its very beginnings, led principally by Hamilton, varied agents within the newly formed republic persistently lobbied and ultimately succeeded in positioning the young government in such a way as to allow it to attain a supreme privilege of omnipotent power that stood far above of the rule of law.   Brilliantly worded by the most crafty of elite and well-read scholars, clearly, the constitution contained loopholes and future amendments from which agents in support of an all powerful centralized government could eventually unpack, and thus gain the imposing capacity to empower themselves with extraordinary powers and permanent totalitarian control of the states and its citizens. Under the cloak of freedom, that is exactly what they did, and they did it well.   As evidenced by history, which leads us to the present, the masterful cloaking device is beginning to fade, and America is no longer able to connect-the-dots to reconcile its actions as the free democratic republic it claims itself to be. If held to the equal rule of law, independently, the business of government and banking are indispensible utilities within free societies. Placed together in collusion however, they become the most sinister and destructive forces on the face of the Earth.   Such collusion, and the seemingly benign but subversive entitlement it imparts to the actors and agents nearest its core, is the insidious undetectable cancer that continues to metastasize across the globe with increasing speed.   Unless we achieve full and complete success in parting these evil twins of persistent decay, and legislate that they adhere like the rest of us, to the common natural laws established throughout history, it will be our grim destiny to further enrich and empower them, and forever remain their servants at our own expense and dignity. By now, it is self-evident that a two party American system of government within a society that falsely perceives itself free, is unable to administer effective democratic governance precisely because it attempts to do so within the confines of a socialist-totalitarian yet democratic regime.   Essentially, we are assigning our elected officials with an impossible task. This clearly explains why the division of ideology grows exponentially in tandem with the growth of the socialist/totalitarian state, which thus far, has successfully disguised itself as free democratic republic.   Is it any wonder why Americans are becoming exceedingly more indignant toward government, and in growing numbers, are demanding to know why our American system of government does not at all appear to reflect any semblance of what the constitution has outlined, the very grounds upon which Americans base their pride and patriotism.   Missing the momentous opportunity in 2009, we sheepishly stood by quietly in fear as the evil twins savagely plundered its citizenry of wealth and treasure, taking it one-step closer to the inevitable brink of complete and utter demise.   Let us not repeat such errors at the turn of the next crisis, which shall upon its certain arrival, will again elevate great fears amongst the masses. At the next crises, our masters will try to shake us once more, and again coerce us to acquiesce to the wisdom of those responsible for its cause, and bow to them as their servants, in carrying all of the generational burdens, costs, and liabilities associated with their recurrent failures.   For the love of your life, parents, children and grandchildren, under any circumstance, do not allow such pillage and plunder to happen ever again.   Instead, upon the next arrival of crisis, we shall be justified and obligated to exercise the lawful right to remove all agents comprising the corrupt elements of the failing republic, and command its restoration to comply explicitly, in accordance and the spirit that is galvanized in the original frameworks residing within the documents of our founding. We must do so peacefully, with expedient caution, and in accordance with the fundamental concepts and intent of the founding documents, which is what the majority of Americans perceive to be the unshakable foundation upon which American values and ideals solidly rest, the ideals of law, freedom, and liberty, for which they have always been prepared to die. TAMING THE EVIL TWINS Though it may be impossible to rid a system of corruption entirely, we must nonetheless endeavor to do so leaving no stone unturned. Naturally, such a large process of transition will take time, and we must remain vigilant until an even rule of law once again prevails blindly across the land, and eventually across the entire globe.   Beyond the opinions and beliefs stated above, we are not qualified to pen such a manifesto. Instead, courtesy of Mr.Jesús Huerta de Soto, we shall supply and share the tenets of a critical starting point from which to consider.   A Manifesto for Revolution, Justice, Restoration, and a New Beginning : The first and foremost priority is to stop the bleeding by stripping the evil twins of their insidious and unlawful powers. Once we stop the bleeding and return to a blind and impartial rule of law, we can then surmount the balance of corruption, which as byproducts of the failed system, shall lay in wait for removal or fundamental restoration.   De Soto s manifesto contains the essential initial framework for a rational transition that will strip the twins of the current privileged system of the government-banking cartel monopoly, to one where the rule of law is uniformly reestablished, eventually separating banking and government completely in order to avoid the greatest temptation known to humankind, creating money (ex nihilo) from nothing. Money, Bank Credit, and Economic Cycles: De Soto s brilliant Manifesto is a comprehensive treatment of the root causes of economic crisis and a failsafe blueprint for how to improve matters through a return to sound legal principle:  Can the market fully manage the money and banking sector? In this major book, Jesús Huerta de Soto argues that the market can manage the money and banking sector, that it can again, without inflation, without business cycles, and without the economic instability that has characterized the age of government control.  A complete comprehensive treatise on economic theory, the book is sweeping, revolutionary, and devastating not only the most extended elucidation of Austrian business cycle theory to ever appear in print but also a decisive vindication of the Misesian-Rothbardian perspective on money, banking, and the law. Its five main contributions: A wholesale reconstruction of the legal framework for money and banking, from the ancient world to modern times An application of law-and-economics logic to banking that links microeconomic analysis to macroeconomic phenomena A comprehensive critique of fractional-reserve banking from the point of view of history, theory, and policy An application of the Austrian critique of socialism to central banking The most comprehensive look at banking enterprise from the point of view of market-based entrepreneurship De Soto also provides a defense of the Austrian perspective on business cycles against every other theory, defends the 100% reserve perspective from the point of view of Roman and British law, takes on the most important objections to full reserve theory, and presents a full policy program for radical reform. Are you a true revolutionary committed to fighting for freedom, liberty, and sustainable solutions for effective change?   Are you dead serious about educating yourself on the history, politics, economics, laws, doctrines, and theories behind these critical matters? If you are, then you owe it to yourself and your country to carefully study and absorb De Soto s superbly crafted treatise cover-to-cover.                               Trade Better/Invest Smarter Joe Russo Publisher and Chief Market Strategist Elliott Wave Technology . Elliott Wave Technology provides a suite of Winning Solutions designed to assist those who wish to trade better and invest smarter based upon the practice and deployment of proven trading strategies in concert with expert and unbiased chart analysis.

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The Road To Success

Proactive trading and investing is one of the very few endeavors in life where one must learn to expect regular and frequent failures as a routine matter of course toward achieving ongoing success.   As such, it stands to reason that prior to engaging, one must come to terms with, and embrace these expected failures as though they are an annoying but essential lifelong partner whom without one could not otherwise succeed.   Though winnings far outpace losses, riddled with failure is the Road to Success. It is a tough pill to swallow, but it is what it is, and there is simply no getting around it. More likely than not, this is precisely why 90% of all who try their hand at the business of trading abandon it at the first signs of challenge and adversity.   The Thrill of Victory   There is no greater thrill than successfully assuming the risks and responsibilities of directing your own trading and investment capital. Over the long haul however, climbing this particular ladder of success requires a great deal of planning and perseverance. . The Right Stuff   Apart from a huge burst of luck straight out of the gate, (which can frankly do more harm than good) what does it take to make it as a trader? The following is a list of essential prerequisites to consider prior to risking your discretionary speculative capital: Do you have a livable risk-free income stream? Do you have adequate insurance coverage? Do you have little or no debt? Do you own 10-20% in physical Gold/Silver as a percentage of your entire net worth? Do you have cash reserves of at least 6-months of living expenses on hand? Do you have at least $10,000-$20,000 in speculative investment capital that you can afford to lose? Do you have a proven edge or strategy that will guide your trading and investment decisions? Do you have the will and discipline to succeed in the face of regular and frequent losses? Do you know how to manage your speculative capital to avoid the risk of ruin? If you can answer yes to most of the above, you can then begin to give serious consideration in joining the elite-few who comprise the 10% of market participants that continually prevail while the majority fails. . Calculating One' s Risk of Ruin The best risk of ruin calculator we have found thus far is located here. Since we have developed a proven trading edge with historical performance stats that go back a minimum of 3-years, it is possible for us to quantify the probability of ruin for an applied strategy within a given market and timeframe with a reliable degree of accuracy.   Nothing Risked, Nothing Gained   For example, after 719 trades (periods) over the last 5-years, including $9000 in slippage and $3400 in commissions, our short-term E-mini trading strategy produced an average monthly return of $400, which amounts to more than $30,000 in total net profits throughout the entire period.   What is the risk of ruin for this strategy? If one begins with trading capital of $20,000, within any given month there is a 24.31% chance of ruin associated with trading this particular strategy. In this case, risk of ruin is reached upon a 75% loss of initial capital or (-$15,000), which would render one s account dormant due to not having enough margin money remaining to put on another trade. Below is the equity curve associated with this particular short-term E-mini trading strategy. . The Magic of Success   Naturally, as one s stake would have grown from $20,000 to over $50,000 over the period, so long as one s trade size remained the same, one s risk of ruin drops to a paltry 0.08%. One can find more excellent money management and position sizing tips here.     Shark Infested Waters   In order to survive amid the unknown waterways of trading and investing, it is essential that one plot and follow a proven strategic course to grant oneself the highest probabilities of long-term success. Acquiring reliable navigation tools to tilt the odds in one s favor is paramount. . The Thrill of Victory and the Agony of Defeat   We span the markets to bring you a constant variety of trades, the thrills of victory, (and yes) the agony of defeat. The ultimate human drama is assuming a calculated risk for unknown rewards. This is OUR Wide World of Strategic Trading and Investment Success!   Beneath the nostalgic Wide World of Sports introduction from which the previous paragraph was constructed, one may peruse our short-term trading performance for the month of October.     For October, the portfolio review of our short-term trading strategies unequivocally embodies the thrill of victory.   The monthly performance profile intends to exemplify a random statistical sample of profit opportunities that one might expect to gain through acquiring access to the PILOT within a given month of daily operations.                     Trade Better/Invest Smarter Joe Russo Publisher and Chief Market Strategist Elliott Wave Technology . Elliott Wave Technology provides a suite of Winning Solutions designed to assist those who wish to trade better and invest smarter based upon the practice and deployment of proven trading strategies in concert with expert and unbiased chart analysis.

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Technical Tipping Point Near at Hand

. In September, following five months of impulsive decline from its May high, the Dow has reversed abruptly, rallying incessantly after a fleeting 20% roller coaster drop from its secondary QE-2 bailout crest. The Dow is currently on path toward violently reclaiming more than 60% of these recent losses within the extremely short span of 14-sessions. The price action along with all of its key participants and influencers should be keenly aware that equity markets are nearing a potential tipping point similar to that following the like rally in 2008, which occurred just prior to the implosion and widespread recognition of outright systemic insolvency, which has yet to be resolved. The Elliott wave rendition and implied bearish outcome below assumes that the recent history of 2008-2009 is drawing toward an imminent tipping point of repeating itself in the not too distant future. Do be advised that there are various alternate paths associated with the unwinding of longer-term bearish forecasts. At present there appears to be two realities from which the financial sphere struggles to define daily values. The status-quo rendition of imposed reality courtesy of the monopolistic interventions and kick-the-can short-term band-aid fixes for long-term problems vs. the underlying truths of various mathematical impossibilities caused by blatant fascist interference in markets and the monopolistic micromanagement thereof, which deceitfully aligns itself under the protective guise of free market capitalism. The first rendition of reality is associated with so-called Cramer-laden fundamentals of company earnings, corporate balance sheets, etc. If you trust and believe the official numbers reported by statist sovereign governments and the bailout-modified accounting standards of various corporations, then trade that version of reality, which would be long-term bullish with a stop loss for good measure beneath the September lows. The latter and intentionally suppressed rendition of reality is associated with massive unsustainable debts, deficits, and the flawed paradigm of global trade, which is based upon the artificial currency arbitrage of one nations skilled labor and make-believe money vs. another' s. Such corrupt and imbalanced trade is by no means free, and benefits only those relative few who are in a position to profit from global fiat currency arbitrage. As we draw closer and closer to the end of this corrupt charade of supposedly free global trade, we are suddenly beginning to see the outline of its endgame effects taking shape. In this latter version of reality, nothing is more revealing or uglier than the underlying truth. If you embrace the latter, then short the indices with buy-stops to cover above the May highs. . Trade Better/Invest Smarter Joe Russo Publisher and Chief Market Strategist Elliott Wave Technology . Elliott Wave Technology provides a suite of Winning Solutions designed to assist those who wish to trade better and invest smarter based upon the practice and deployment of proven trading strategies in concert with expert and unbiased chart analysis.

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WHIPSAW: The Song Remains the Same

What Does Whipsaw Mean?  Simply stated, a whipsaw market condition is present when a security's price heads in one direction then reverses sharply and abruptly in the opposite direction. Derived from the push and pull action used by lumberjacks to cut wood with a type of saw with the same name, the term has become synonymous with large fast-moving head-fake-type swings in the financial markets. Whipsaw is an ever-present challenge in the trading and investment arena. According to one of Jack Schwagers original Market Wizards Ed Seykota, the only way to avoid whipsaw losses is stop trading and investing. Disengagement may work for a time however; I do not believe that Seykota intended for people to interpret his quote as a serious solution. Seykota, best known for his extremely successful trend-based strategies, concedes that each is subject to whipsaw drawdowns and losses. In addition to being one of the best-in-class trading systems developers, Seykota has musical talents and a rather keen sense of humor as well. The video below is of Ed Seykota and his blue grass band performing The Whip-Saw Song. Embedded within the artistic levity are numerous pearls of wisdom. Do enjoy. If you want to get insight and exposure to successful trend trading strategies like those used by Ed Seykota, subscribe to the PILOT today. RELATED NEWS 2008 Financial Crisis Causes and Consequences John Allison, Retired Chairman and CEO, BB&T Corporation recently spoke to the Harvard Law School Tea Party about the causes and consequences of the 2008 financial crisis. The hour and a half C-Span coverage of the event is well worth the time. Allison' s talk clarifies succinctly all that is going on in the global financial sphere and its impact on regional economies around the world. \ Apart from the bounty of illuminating financial and political aspects of Allison' s talk, the one thing that also struck a chord were his thoughts and philosophy regarding individuals sense of purpose and self-esteem relative to their chosen career paths. Deriving passion from ones chosen field of expertise aligned with a mission to assist others and make the world a better place is the underlying theme of Allison s philosophy. After soaking in all of the shared wisdom, I asked myself three things: Am I passionate about my work? Am I assisting others? Am I attempting to make the world a better place? Though there is always room for improvement on every front, to my delight, I was able to answer yes to each of these three essential questions. Nothing Risked-Nothing Gained There is no way to avoid regular bouts of occasional and sometimes extended periods of whipsaw. In a choppy market riddled with whipsaw, the only strategy that may deliver alpha is a successful counter-trend strategy however; they too are subject to their own brand of whipsaw. . Trade Better/Invest Smarter Joe Russo aka ~ the PILOT Publisher and Chief Tactical Strategist Elliott Wave Technology Elliott Wave Technology provides a suite of Winning Solutions designed to assist those who wish to trade better and invest smarter based upon the practice and deployment of proven trading strategies in concert with expert and unbiased chart analysis.

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