WESTFIELD

I still maintain this baby topped out a while ago I can count 1-2 on a minutte level. It will be a great Fibonacci bulls-eye if it holds.

THE BEARS ARE READY TO THROW THE TOWEL IN

I am one of them that is tempted to hold back for a while until we get higher.
The one blog I am reading daily- Daneric and his fellow commentators are all about to throw in the towel for another kick up in the indices.

I am doing nothing until Monday lets see what Friday and the weekend brings. Things are at a very tight space.

A POST TO AN ELLIOTT WAVE COUNTERS BLOG

Hi Dan,

 

I just want to share some thoughts. First off, what a terrific blog you have got going and I believe you are doing the EW community a fine service. I have been a subscriber to other paid services and your work technically and anecdotally is up there.

 

I can hear the frustration in your notes, and I have to confess as a long time hedge fund manager I too am feeling the heat, but I want you to know that I think we are extremely close, and as long time bears all say "surprises on the downside" so stay open to less clear wave patterns.

 

I personally love EW trading and it influences all aspects of my life, yet it is important to acknowledge that its success rate at catching turns is probably less than 50%; however, as a trader it gives you a vital edge in terms of where to place stop losses and profit objectives, therefore it can be a highly profitable trading system for disciplined traders.

 

My point therefore is to stick with the EW aspect of ones trading but to very importantly build a robust money management component to ones trading as with out it you can become the worlds best bankrupt Elliott Wave counter.

 

An ending thought; my experience tells me that having the emotional fortitude to withstand all these false starts is what is required to be a successful EW trader. The harder it gets to trade often the more profitable the trade.

 

Wishing everyone good luck on catching most of P3 whenever it may start (if it hasn't already).

 

M

FOCUSING ON MICRO

This is a squiggle 1 min chart

GLOBAL REITs

This baby continues to climb like no other but momentum is starting to diverge.

REITS

I am sticking with my view that the US REIT high is in back in September. Only concern for me is that the wave count from the wave 2 high is not yet impulsive.

I am expecting one more move higher to 43.75 or thereabouts before tumbling down.

VOLATILITY

The broader market volatility as in the VIX is making new 2009 lows. I don't believe this is sustainable given the economic backdrop. Expect a volatility breakout.

HOME BUILDERS LOOKING WEAK

I noticed how a couple of the home building names I follow were quite weak in todays strong market.

KNOWING WHO YOU ARE

I must say I am really happy that I have been able to keep some momentum going on this blog whilst I am hurting with my positions.

In life we are often placed in akward positions that define who or what we should be to satisfy the maximum number of stakeholders, but not who we really are. Unfortunatelty this same force called life, comes back and tests our ability in the new circumstances we often find ourselves in.

What am I trying to say? Let me bring it down to my case as a fund manager and one can easily extrapolate this further into ones own life.

I am trying to raise money for my funds I manage so that my business can become successful.

Now there are different types of investors who will help me get there. I want to just focus on the one type which is your institutional investor. They invest large sums of money and can take me to my destination very quickly. The problem for me is that there requirements are at odds with my style. So as many have suggested to me over the years, adapt your style.

I wish it was so easy the problem is that my track record and confidence is built along the lines of a more proprierty capital/trading fund type approach and therefore a switch even if it is just lowering the leverage in line with an institutional mandate is still not the same. So while on paper it may seem easy to adapt to something that will ensure one component of success, i.e. funds under management, the problem is with this success often comes the failure to perform as a fund manager under the new criteria you have adapted to, which really is failure if you examine the essence of what we are trying to achieve in this business.

So yes one could reach the goal of having a business that makes money even though your performance is poor because unfortunately the correlation between performance and FUM is not as strong as the marketing people would like you to believe.

Coming back to knowing who I am; over the years I have developed a distinct approach to managing money. I do not plan to change this approach even if it will cost me raising money in the short term. Call this idealistic as I have been called this before. The point is that in order for me to feel comfortable and truthful I need to stay true to the system that I believe in. I have found in the early to middle part of managing this fund as the statistics were producing numbers that were really placing the fund in a special place I was falling more and more in love with something that I am not.

I do not produce symmetrical returns
I risk appropriate amounts of capital to make large returns
I am not scared to stick with a position as it gets more and more out of favour

In the long run I know this will make my funds money and in so doing it will hopefully make my business very profitable. This journey called life needs to be lived on a level that inspires life, too many people myself included live life according to what our circumstances dictate and this leads to life being sucked from us. It is time to be courageous and not allow others to dictate but rather live life according to what you know is true to life.

BUYING CLIMAXES

ANOTHER ATTEMPT

 

 

PRE FRONTAL CORTEX

Continue to be blown away with the book Decisive Moment. Their is a really interesting section on impulse control and problem solving, I will post a short essay soon on this fascinating subject.

THE TESTER

CHESS BLIND SPOTs & OVERCONFIDENCE

I will be writing more on the blind spots I seem to encounter when a losing pattern develops.
I also wish to place on record that I undoubtedly have been feeling a sense of overconfidence in my chess player as I started beating higher ranked players and my ranking improved.

If I wish to improve there has to be more structure introduced to my play. In other words I need to play to a set of rules.

A LITTLE TESTER

As I suspected there would be a bounce at the open with an attempt at a new wave 2 recovery high. There is a lot of nervousness at these levels, even staunch EW bears are expecting one more high.
I have a feeling a new high ain't coming and the sellers (shorts) and (profit takers) may get a nasty surprise if a new high doesn't come and the selling becomes a little more than anticipated leading to aggressive selling and a mild dose of panic.

It is still early days Europe is currently up as are the US futures, but I think those that hold their ground through the little tester will be handsomely rewarded.

We shall soon see, I haven't read John Hussman's piece yet save for the headline that the market is the most overbought it has been in 9.5 years. I am practising gamblers fallacy that a correction is coming. No amount of statistical manipulation will convince me that a movement this far from the mean wont revert. True I cannot say when exactly but I can certainly shift the odds from 50:50

SAVINGS INSIGHT

Everyone including the Politicians and Central Bankers (who actually are politicians as I see it) know the only sustainable way out of the current financial mess is to save more and consume less.

However, in diametric opposition to this sound approach, the powers that be have encouraged consumption which is so short term thinking and by artificially lowering the interest rates for consumption and investment they have taken away the only real carrot for saving.

So in conclusion the so called all knowing leaders of the world have actually compounded this problem into something far worse. Of course the average Joe sucker and the not so average Joe who is actually quite sophisticated has fallen for the scheme in their HOPE that they can continue living the wonderful life they have grown accustomed to.

There is only one way for this problem to be solved and it isn't pretty and it won't be this softly softly BS, because human nature is at the root cause, and until such time as society is forced to take its medicine the pollution in the system cannot be flushed out.

I don't WANT this to happen as the pain and suffering will be terrible and my heart breaks for all the people who will truly feel this down swing; but anyone who thinks that we have suffered through this GFC is dreaming, that was nothing more than a bad day dream, the nightmare of all nightmares is almost upon us, the USD collapse is a not so subtle way of saying this cannot carry on much longer.

DEFICIT ISSUES

 
 
The federal government's promise to extricate the U.S. economy from this recession involves more spending (increasing public debt) and more subsidies for consumers, such as car rebates and home buying incentives (more private debt). In other words, more debt is supposed to solve the problem of over-indebtedness. The truth is that this policy merely indentures its citizens further without providing any income for repayment of debt. In previous letters we have discussed the fact that the government spending multiplier is zero (read Professor Robert Barro's book, Macroeconomics - a Modern Approach, p. 370).
This means there is no long term income benefit from stimulus programs. According to the latest academic research, the most recent $800 billion stimulus plan will boost economic activity in the short run, but will surely depress economic activity over time. The government problem is complicated by the fact that the tax multiplier is 3, meaning that a 1% change in taxes will change GDP by about 3% over time. More recent research (Barro & Redlick, September 2009,"NBER Working Paper 15369"suggests that a 1% cut in the marginal tax rate would raise GDP in the ensuing year by 0.6%. With the deficit rising due to a zero spending multiplier, the tendency will be to try to raise taxes to pay for this higher level of expenditures, which will further depress aggregate spending and output.