Playoffs

Wow! the Rays go into Texas and drop the Rangers 9-0.

Tigers at Yanks start in a few minutes.  My thoughts.

The Tigers for the first time in decades had a strong September. This is because they upgraded the team mid-season, acquiring Doug Fister, Wilson Betamit and Delmon Young.  Fister – who, always puts in 7 innings -- with an ERA UNDER 2 – might actually be better than Verlander.

Yanks have better offensive stats for the full season, but Tigers stats post all-star game are better than Yanks full season stats.  The bottom of the Tigers line up doesn't offer a lot of offensive punch.   But the Yanks top four hitters are way behind the Tigers top 4 in BA, OBP, SLG, and OPS.

Verlander and Fister for openers, Coke and Benoit in relief, and Valverde to close stack up well against anyone.

I think the Tigers take this series, and I hope it's in 4 games.  Granderson might tip the balance in favor of the Yanks, but  – with 31 more HR’s than Jackson, he might be the only advantage they have.

I’m most afraid of any game that Penny starts. His recent outings have been awful.

Game's starting.  Jackson is up.

Update:  In the first inning Friday, the Tigers made 5 mistakes: the passed ball strike out, putting a runner on first, two walks, Cabrera not turning the DP on an easy ground ball, and Inge not throwing the runner out at home.  It might be possible to rationalize the last two if the runner's position blocked a clear line for a throw.  But collectively, this is not the way to win.

Both Verlander and Fister in the continuation Saturday proved to be inept.  If that combination cannot win, then the Tiger's are toast.  Their batters looked dazed and confused. My despair does not come from the Tiger's being 1 game down.  It comes from the manner of the loss.  Their best were not up to the task, anywhere on the field.  Who is going to carry this team?*

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* Max Scherzer, Joaquin Benoit, Miguel Cabrera . . .
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Friday Market Action

The decline in the SP500 Index continues apace. In fact, it is moving in a very well defined, negatively-sloping trading channel. Let's have a look.  You'll see why I was unimpressed by yesterday's gain at the close.

I've put wave labels on this chart, as if I knew what I was doing.  We'll see.  I've always had trouble visualizing what a series of first and second waves looks like, but now I think it looks like this.  The wave labeled 1 is subdivided by waves labelled i through v.  Note that wave 2 is a .56 retracement of wave 1.  Though waves 1 and 2 occurred within the span of little more than a day, I think wave 3 is far from complete after two full days.  Thursday's moves defined another first wave, labelled as i, because I think it is at a single degree lower level of trend.  FWIW, note that the retracements of waves 2 and ii are nearly identical at .56 and .57.

Continuing down the channel, there is another first-second wave sequence that I didn't bother to label.  This is the beginning of wave iii of 3. 

The reason I think that the waves labelled 1 and i are complete is that the noted retracements overlap subwaves i and 1, respectively.  Since that kind of overlap within an impulse wave is forbidden per Elliott's rules, that means these retracements must be outside of the wave in question.  In other words, these retracements must be second waves - the following waves at their respective levels, not sub-waves four within the indicated first waves.

The aging support level at 1140 is also indicated.  It was pierced this afternoon.  We'll have to wait until next week to see if this is a convincing break.  If I'm right, and wave iii of 3 is unfolding, it should be very convincing indeed.
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Does Karl Smith Have This Right?

I was in the process of leaving a highly critical comment to this post by Karl when I started doubting myself, and dumped it.

His criticism of this WSJ article by Kathleen Madigan is that she conflates stocks and flows.  Flow is the change in a stock - right?  I guess that criticism has some merit; but is it relevant?

As a highly relevant aside, I would go after this statement in the WSJ artile:  "For all the talk of uncertainty, the increase in orders is a sign that companies are optimistic about the future. After all, no executive would expand production facilities if he or she thought customer demand was about to stagnate."   Not so fast, Kathleen. Increased spending on equipment and software doesn't necessarily indicate expansion, nor mean optimism about business growth. It might just mean optimism about keeping the same amount of business with still fewer employees, and jacking profits by reducing payroll.  (Oh, yeah - Lump of Labor.)

Anyway, back to Karl. He posts two graphs showing industrial investment in equipment and software along side of the total change in employees - both flows.  But look what he does to make the curves look comparable:  For the first graph, the left and right scales are different, necessarily.  Apples and oranges are nothing compared to billions of dollars and thousands of people.  But more importantly, the dollar scale is always positive, while the person scale goes deeply negative during the recession.  In other words, while the investment flow slowed down, it never came anywhere close to stopping.  You certainly can't say that about flow into the work force.

The second graph compares investment, normalized to 100% at the re-trough maximum, again to change in total employees.  The employees numbers are, inexplicably very different in the two graphs, though it's supposed to be the same data.   I think, if you're going to compare, it should be one normalized value to another.  As is, for either of these graphs, you can always do a scale expansion to make things moving in the same direction appear comparable when they're not.

I call Bull Shit!

My first thought was to look at YoY percent change in both - a flow vs a flow of a flow, I suppose.  But isn't the rate of change what's important when you're comparing two time series?  Now, expand the time scale back to 1960.  The investment data doesn't go further back than about 1996, but ignore that.  Look at the peaks in payroll change - pretty constant at about 5%, through the early 80's.  Since then, lower highs, and lower lows - the infamous jobless recoveries.

Karl appears to be thinking, though not speaking directly, in "Lump of Labor Fallacy" terms - right?  But there is no fixed amount of labor.  There is a shrinking amount.  The total number of employees is less now than it was in 2000.

By my assessment, Karl is willfully missing the point about labor vs investment, his similarities are contrived and invalid, and his entire post is bogus.   I'm pretty sure Mark would agree.  How about you?
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What The Hell?!? Friday - Sustainable Living Architecture Edition

This is pretty amazing.




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Thursday Market Action

The SP500 jump this morning to 1175.87 is about 24 points up from yesterday's close at 1151.74 - quite a bit bigger than I anticipated.  And, since it overlaps the wave one low around 1170, from just before closing on Tuesday, it cannot be wave 4 of that same cycle, per Elliot's rules.  Therefore, contra my expectation, yesterday's drop down into the close was a complete 5 wave structure.  More after the close.

Update:  If you only looked at daily closings, you'd think today was pretty good, with a .81% gain from yesterday's close.  But a look at what goes on throughout the day* in more and better detail reveals the truth.  This morning's top came before 10:00 a.m. and was the high for the day. The index gave back 35 points before recovering about 20 at the end.  The resistance at 1140, now several weeks old, once again came into play, as the low was 1139.93.

The decline from Tuesday's top continues apace, in a down-sloping channel.  The jump this morning was between a .50 and .618 retracement of the drop to yesterday's bottom.  This should complete waves 1 and 2, with wave three now in progress.

This is all early in wave 5 down, headed towards an intermediate low of 1000 to 1050.
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* I see now that this will give you the most recent five trading days graph, whenever you hit the link.
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Wednesday Market Action

Yesterday I said: "My best guess is that the decline has resumed, as of this afternoon, and we can expect it to continue in earnest tomorrow."   I don't have a crystal ball and I'm not a genius.  This is just keeping an open mind and reading the waves.  The drop from about 2:15 yesterday afternoon does look like an impulse, so I'll say I got this one right.

While it's possible to read this drop as a complete 5 down into today's close, I don't think the pattern is quite finished.  I think a wave 1 (at some small trend level) ended just before the close yesterday, and wave three may have ended just before the close today.  Going out on a limb, if this is right, there should be a small wave 4 bounce - in the 5 to 10 point range - early tomorrow, followed by another 15 to 20 point (possibly larger) decline.  Then, there should be a correction of the entire drop from yesterday afternoon.  That should lead to a choppy day tomorrow, and possibly an uptick on Friday.  {/limb}

I'll have a graph later in the week with lots of wave labels.

UPDATE: Note that yesterday's open gap has been completely filled in.

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Evidently, Chris Christie is too Sane to be a Rethug Prez Candidate

The Daily Show
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Grabbed from Randi's page.

 H/T to the LW

Map of Westeros

This one is quite good.

Most of the action of A SONG OF ICE AND FIRE takes place here.

Tuesday Market Action

That was quite a jump in the SP500 today.  From yesterday's low to today's high it covered about 65 points.  But from yesterday's close to today's close, it only covered about 12 1/2 points.  Lots of volatility these days.  The jump up this morning basically doubles the width of the trading channel I mentioned yesterday.  But momentum fell all day, and with a late afternoon slide, most of the day's gains were given back, and the open gap is mostly filled in.

This looks like a retracement of the entire drop from the top at 1220.39 on 9/20 to the bottom at 1114.22 on 9/22, covering 106.17 points.  The chart shows retracement levels of .618 (1180) and .786 (1198).   This morning's jump took the index past the lower of these, but today's top of 1195.86 didn't quite make to the higher value.  And that fall off at the end does not look healthy. 

This was a fairly impressive gain, while it lasted, but it does not have an impulsive look, and it may well have finished at 2:14 this afternoon.  Reaching the .786 level is very ambitious for a retracement.  My best guess is that the decline has resumed, as of this afternoon, and we can expect it to continue in earnest tomorrow.

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Giving Gold the Finger

I have more gold on one finger of my left hand than I do in my portfolio.

Quote of the Day - Gloom and Doom Edition

"The Governments don't Rule the world.  Goldman Sachs rules the world.  Goldman Sachs does not care about this rescue package, neither does the big funds."
      -- Alessio Rastani, (rent seeking lizard person)

That is not the most striking statement in this video.  I urge you to watch the whole thing.  It's only 3 1/2 minutes.

Though I cannot admire Mr. Rastani, it is hard to argue with his assessment of the situation:  stock markets are toast, the Euro will collapse, and the U.S. dollar is one of the best safe havens


  


Source.

 For those of us in the reality based world, Rastani's dismal assessment seems quite probable.  Have you ever heard anyone comment on trans-national mega corporations who have no allegiance to anybody or anything?  That is the world where you live, and you might as well learn to deal with it.

Wow. We are really screwed.
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Monday Market Action

The recovery from Friday in the SP500 is continuing in an orderly, non-dramatic way, following a nicely-defined channel that will be highlighted the next time I post a chart.  The index rise accelerated a bit in late afternoon, and it closed at the top of the channel.  Not a lot to add to Friday's assessment until the down-trend continues.

The gold market is much more interesting, though.  Since topping at $1921.50 on September 6, gold appears to be in the early stages of a major level decline.  I see from the chart in my side bar that it has now dropped below $1600, and recovered a bit this afternoon.  That's a pretty dramatic 3 weeks.  Gold should continue to slide for several years before it bottoms out somewhere well south of $1000 per ounce.

 For more on gold, see StatsGuy and Karl Smith.

The problem with trying to figure a rational price for gold is that is has no intrinsic value - or, a least, none that makes sense in terms of pricing in a range approaching $2000.  So who do you think could be getting this right - a gray-haired old man with nothing to go on but skepticism, or world-famous veteran speculator Jeremy Granthom, who bases his reasoning on supply constraint?  Evidently he hasn't seen the links, above.