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Well, I hope this image is small enough, I don't need anymore grief from Doc. :)

 

I don't really use Elliot, mostly market geometry. But 1.618 of Wave 1 or A is a good target which is where we are sitting.

 

Not much time to read, sorry if this is a rehash.

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Mmmmmm. I like the bullish sentiment I'm smelling around here. Are we close to a top?

 

Here's my take - the only way, and I mean only way, this thing coasts higher is if no surprises or shocks come along. I put that chance at about, ohhh, zero.

 

Between Iraq, North Korea, and Iran there's a bunch of ways this can all go wrong.

 

Factor in Russia, China, France, Germany, the Pope and kitchen sink all banding together against an illegal invasion and, well, you have some potential to draw a few unexpected wild-cards over the next few months.

 

Russia is leaving their staff in the Bagdhad embassy. SAM experts eager to try out a new technology in repayment for Afghanistan in the 80's? Anybody remember what a few cheap Exocet missiles meant to the vastly superior British navy during the Falklands? Defending is always waaaay cheaper than attacking.

 

Oil stocks at 28 year lows? Dumping of US dollars in protest? Terrorism?

 

The number of potential directions a shock could arise is beyond comprehension.

 

What's the right trading strategy for a shock environment? I wouldn't hold a long paper position overnight right now under any circumstances.

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[ "If the nation escalates to "red alert," which is the highest in the color-coded readiness against terror, you will be assumed by authorities to be the enemy if you so much as venture outside your home, the state's anti-terror czar says." ]

 

Well now look at the fine mess you've gotten us into. Do we have interment camps for rebelling serfs too?

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A couple things about this war the market is not going to like.

 

Saddam is a vicious mass murderer leading a gang of 30,000 secret police. His closest inner circle, including his sons are maddog killers. His army may not fight, but he will use chemical weapons, and a bunch of American young men and women are going to get killed going into Baghdad. The war will not be over in a week.

 

Not to mention what they may be able to pull off here in the US.

 

When the market realizes it, it's not going to like it. Institutions buying stocks in the face of this likelihood are clear proof of the mindless depravity of Wall Street.

 

I pray that I am wrong and that everything goes far better than anyone can imagine. One way or another, when the rally ends, it will end with a bang.

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