Simple Guys 2003 E Wave Takes

[chiefywiefy]

I miss BB and would also miss SG. I was thinking perhaps another type of thread would be useful in which traders post and others can view, but are not allowed to respond to any traders post. This way one can look at a variety of trading methods, develope his/her own style of trading from what they can get out of the thread. I would try to make something available to the better traders even if it means catering to them. They are well worth it and stoolland would be a better place.

[Pretzel Logic]

The upper execs knew this was how things worked and turned a blind eye to savage justice to anyone getting in the way of the high producers.

 

Just my politically incorrect 2 cents but that is how I have seen things done in the real world in places that were producing 10X products, income and quality of their nearest competitor. To anyone who disses SG, I say off with their heads! Enough of this touchly feely, experimental, we all have equal rights crap.

 

Yep. Absolutely right, and absolutely agree. I'm in sales, and the old sales adage is "20% of your sales force produces 80% of your business." As one of the top (and some years, the top) producers in my field, I expect and demand certain "rights" that others don't get. And the lesser guys invariably bitch about it... to which upper management tells them, "When you start consistently putting up Pretzel's numbers, we'll consider it."

 

"Membership has its privileges." And that's how it should be.

 

 

And, Simple Guy, very glad to hear you're staying!

[Sasquatch]

Looking for Mr. Super-cycle

Warning of new falls, Hochberg uses 300 years of data

 

By Thom Calandra, CBS.MarketWatch.com

Last Update: 10:59 AM ET Jan 8, 2003

 

SAN FRANCISCO (CBS.MW) -- Scores of companies are brightening the internal coaching, or "guidance," they give investors on their sales and profits.

 

Yet solitary voices warn of trouble ahead for major stock-market indexes. One of those voices hails from Elliott Wave International, strategist Robert Prechter's research shop that sees utter devastation ahead for stocks.

 

Steve Hochberg is the guy at Elliott Wave who keeps a minute-by-minute watch on the stock market, which Prechterites regard as being full of bull. Like his boss Prechter, Hochberg expects lower and lower levels for U.S. stock indexes over coming months and years. See: Market's last-gasp rally.

 

Hochberg, a technical anal cyst by training and now Prechter's chief market watcher, is a full acolyte of Elliott Wave fractal patterns, which he calls "the best reflection of social mood and our main methodology." Elliott Waves are credited with correctly signaling horrific equity losses -- and steep drops in currencies, commodities and bonds.

 

Conversely, the waves are blamed for exhibiting trends too early, or too late, or being too frenetic for the practical use of most individuals. Prechter acknowledges his wave signals led him -- and his subscribers -- to the sidelines during the late 1990s bull market in U.S. stocks.

 

Accountant Ralph Nelson Elliott developed Elliott Wave theory in the 1930s. The fractal premise boils down to this: all events -- psychological, physical and technical -- repeat themselves. In financial markets, market trends occur in five waves. Reversals, or pauses, develop in a three-wave pattern. According to Prechter's analysis, the Dow Jones Industrial Average ($INDU) has completed five waves since the 1974 recession.

 

Hochberg, who worked as a strategist at Merrill Lynch in the early 1980s, tells me the stock rally that began in October "is clearly a correction, a counter-trend move that is tracing out what we call an 'A-B-C' pattern. This means that the October lows will be easily swept aside in the next leg of the bear."

 

Hochberg addressed other worrisome signs for U.S. stocks. His analysis provides compelling counterpoints to claims the 2003 stock market will enjoy its first winning year since 1999.

 

The sentiment of investors is way too upbeat, Hochberg says. "It remains nowhere near what is historically seen at bear-market bottoms." Investors Intelligence surveys show twice as many believers as skeptics. Yet in 1994 and early 1995, a painful period for stocks, there were nearly 40 straight weeks of more bears than bulls, "the complete opposite of today," he says.

 

What's more, the Standard & Poor's Commitment of Traders numbers show small investors "remain net-long S&P futures. At a true market bottom, this group of traders will be deeply net short, as they were in 1994."

 

Additionally, Hochberg says the percentage of mutual fund cash is at a bull market high of 5 percent, "not at a bear market bottom of 10 percent to 13 percent."

 

Hochberg prides himself on his data retrieval. According to Sindlinger & Co.'s weekly survey, the percentage of U.S. households in stocks is 56.7 percent, "exactly where it was at the Dow's all-time peak on Jan. 14, 2000. At a bear market bottom, this percentage will be 20 percent or lower," he tells me.

 

Elliott Wave theorists track what they call "super-cycles," or sweeping trends that occur rarely. "The last two times the stock market was down four or more years in a row was in the last two super-cycle declines, which is exactly what the current decline is," he says. The previous instance was 1929 to 1932. Before that, stocks fell four straight years from 1837-1841.

 

Hochberg also goes one better (or worse) on the super-cycle angle. "The decline from the 2000 peak is not only a super-cycle decline, but it is also a decline of one higher degree -- a grand super-cycle."

 

The last grand super-cycle decline began in 1720. "During this sell-off there were three periods of four or more years of consecutive declines: 1737-1740, 1743-1747 and 1758-1762," he says. Elliott Wave degrees indicate the odds are "high" that investors will suffer a fourth year of declines in 2003.

 

Dividends are in the news these days -- with President Bush's proposal to scrap double-taxation of corporate payouts to investors. Hochberg regards dividends as "the most important metric" in the stock market. "Fully half of the market's total return of the past 100 years has come from dividends," he says.

 

He points to a new study from investment managers Robert Arnott and Clifford Asness, "Does Dividend Policy Foretell Earnings Growth?" The report suggests expected future earnings growth is fastest when current payout ratios are high and slowest when payout ratios are low. (See the report.)

 

The current Dow Jones industrials (DIA) dividend yield of 2.19 percent is above the historic average of past bull market peaks, which is approximately 3 percent. The Dow would have to decline to 6,275, or about 30 percent from current levels, just to equal the top yield at bull market highs.

 

To equal the yield typically seen at bottoms, roughly 6.5 percent, the Dow would have to fall to 2,900, or almost 70 percent below today's level, Hochberg says.

 

Finally, Hochberg warns of the media and brokerage lines of reasoning that investors should scrutinize before throwing their 401(k) and other money into the market. One of those lines is: "Don't fight the Fed," which reduces interest rates more often than Popeye eats spinach.

 

"The latest hook I've read argues that relative to interest rates, the market is cheap and therefore you should buy stocks," Hochberg says. "Don't bite. Money-market funds were yielding nearly 6 percent in 2000, near the stock market's all-time high. Yields have fallen to just over 1 percent today. If falling or low yields were bullish for stocks, the market should be soaring."

 

Instead, the Dow is about 28 percent lower than its year 2000 peak, the S&P 500 Index (SPY) 42 percent and Nasdaq Composite 73 percent (COMP).

 

[simple guy]

SG dings in for Wednesday night update

 

From this mornings post (And also iterated on the IDS YESTERDAY)

 

ST I look for 25.90 range..ish.... on q'S.... I MAY close out then, as I tend to swing trade for 1-3 days max at a whack. My returns compound doing so, trust me....

 

And so it was... I closed out at 25.92 on the close at 4pm, for a 24 plus hour FAT profit using Rydex.

 

SG sees 25.65, and possibly 25.40 as bottoms near term, with ensuing bounce back towards 26.00, with possible spillover to 26.16.

 

Since the outside count still calls for possible 27.30 max pain, I am going to take a peek at what occurs next 1-2 days and sit tight.

 

Bottom line is 22.50 is my interim target on Q's once this next mini wave up finishes....

 

and 20.12 is my target for early March ish....

 

Be back at y'all soon...

[DrStool]

Now that everyone has thrown in their 29 cents, some of which were worth it, and some not, I'll close this thread so that you can get back to relevant subject matter, that being Simple Guy's simple take on Elliott Waves and the market!

 

SG- Please open a new thread for your updated comments. Many tanks!