Friday, August 17, 2007

Refueling Psychotic-Optimism

Until September, this shall be our last public article 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.

Until September …

Trade Better / Invest Smarter…

Joseph Russo
Publisher & Chief Market Analyst
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