Look: I am eager to learn stuff I don't know--which requires actively courting and posting smart disagreement.

But as you will understand, I don't like to post things that mischaracterize and are aimed to mislead.

-- Brad Delong

Copyright Notice

Everything that appears on this blog is the copyrighted property of somebody. Often, but not always, that somebody is me. For things that are not mine, I either have obtained permission, or claim fair use. Feel free to quote me, but attribute, please. My photos and poetry are dear to my heart, and may not be used without permission. Ditto, my other intellectual property, such as charts and graphs. I'm probably willing to share. Let's talk. Violators will be damned for all eternity to the circle of hell populated by Rosanne Barr, Mrs Miller [look her up], and trombonists who are unable play in tune. You cannot possibly imagine the agony. If you have a question, email me: jazzbumpa@gmail.com. I'll answer when I feel like it. Cheers!

Friday, September 30, 2011


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?*

* Max Scherzer, Joaquin Benoit, Miguel Cabrera . . .

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 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.

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?

What The Hell?!? Friday - Sustainable Living Architecture Edition

This is pretty amazing.


Thursday, September 29, 2011

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.
* I see now that this will give you the most recent five trading days graph, whenever you hit the link.

Wednesday, September 28, 2011

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.


Tuesday, September 27, 2011

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

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.


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



 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.

Monday, September 26, 2011

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.

Sunday, September 25, 2011

Random Thought

On the Continent of Westeros, to be a singer is an inordinately risky occupation.

Saturday, September 24, 2011

Market Musing

A week ago yesterday in comments, fried asked if I was taking the anticipated FOMC action of this week into account. I admitted that I was not, and concluded that post with, "Either way, the main trend is still down." In fact, my look at the market is only influence by what takes place in the market itself.

For more conventional thinking, consider this statement by Steve Reitmeiser in the Zacks email I got this morning.

On Wednesday Ben Bernanke gave the clearest signal yet that the economy is likely headed into a recession. That is when he launched the new incarnation of Operation Twist to push long term bond rates lower to encourage economic activity. Here is the key phrase from that announcement:

"Moreover, there are significant downside risks to the economic outlook, including strains in global financial markets."

On the surface that does not sound too ominous. Yet as more investors got out their "Fed Speak Decoder Rings" they began to realize that it spells TROUBLE. That is why the Dow shed nearly 300 points in the final hours after the announcement. And Thursday brought more of the same pain.

Now more and more investors are waking up to the notion that we are likely headed into another recession. And that outcome means that stocks will head a lot lower from here. 

 Implicit in this statement is that stock markets react in big and meaningful ways to news events, which is nonsense, and that the Great God BenBer has the power to move equity markets, when the reality is that the Fed doesn't even have the power to set interest rates.

I started blogging the crash in the first week of August, after I got back from a week at the lake, almost totally segregated from news of any kind.  Recognizing that wave patters have complexities, not simple shapes, and are probabilistic rather than certain, I have have been consistently predicting an imminent major downward move for over a month and a half.

Though my thinking is outside the mainstream, it is not original.  I am deeply influenced what little I know about the Elliott Wave Theory of stock price movements.  From that perspective, we are in for a huge, multiyear decline, that will almost certainly accompanied by social unrest, at the very least.  

We are living The Chinese Curse.


Friday, September 23, 2011

What the Hell?!? Friday - I'd Rather Be Run Over By A Beer Truck Edition

H/T and thanx for the call out to Suzan.

Friday Market Action

Today, the SP500 traded mostly sideways in a rather narrow range with overlapping subwaves.  This is a corrective wave at some trend level.  I've labeled the big drop in considerable detail in the chart below.  This is done very conservatively, and I am not supremely confident that all of it is correct.   Frex, what I have labelled as 3, might only be iii, (or even 3) with the final bottom of 3 yet to come.  I am confident though, that the big drop that started late Wednesday and continued through the opening yesterday was a third wave at multiple levels of trend.

Today's bounce, such as it is, looks pretty anemic. Upside momentum, which was scant at the rise this morning, is already waning. From yesterday's low of 1114.22 to today's high of 1141.72 is 27.5 points. From the point labeled 2 on the graph, 1196.91, the total drop is 82.69.  So this bounce is a .33 retracement of that drop.  This is about the minimum you would expect for a weak correction, and suggests that my 3 might only be iii, or even 3.  No matter, though, there is lots more down-side action to be expected in the weeks, months and years ahead. 

Afterthought:  I should point out that there were at least two unsuccessful attempts to pierce through 1140 today.  What once once support now has become resistance.

Thursday, September 22, 2011

Quote of the Day

"Hige sceal þe heardra,  heorte þe cenre, 
mod sceal þe mare,  þe ure mægen lytlað . . ."
                  --  Byrhtwold

H/T to Delong

Thursday Market Disaster Action

Today's low - so far - is 1117.81.   OK.  I'll call this a convincing break of 1140. And punching through the September 12 low of 1136.07 pretty much eliminates the possibility of wave IV still being alive.  So, this is wave V down, in earnest.   And this is only the beginning.   From Tuesday's top until now - 2:20 Thursday afternoon - we have been moving in a single wave down.  My assessment at this moment is that the drop from about 2:20 yesterday is a low degree third wave, with the third of that third from about 1192 at 3:13 to the opening to the temporary bottom at 1135 a few minutes after the opening this morning.  Wave 3 was complete at about 1128 at about 10:00.  Subwave 4 peaked at about 1144 at 10:22 a.m.  Wave 5 is underway, and may be in subwave 3 of 5.  Remember, this is all within wave 1 of V.

I still think the range of 1000 to 1050 is about right for this leg of the decline.  More after the close.


Today's low of 1114.22 might have been the bottom of wave 3, or only the bottom of wave iii of 3, with waves iv and v to follow.  I lean towards the latter interpretation.  Tomorrow's action should clarify.  If there is a sizable bounce, then wave 3 has finished.  If there is a small bounce and further decline, than wave 3 is continuing.   At any rate we are in wave V down.   These possibilities are indicated on the chart.

In this fall, 1140 offered no resistance.  Third waves have that kind of power.

Here's some insight from David Zervos.  The meat of what he says relates less to the market, per se, than to the whole economy - with a bit of global perspective.

Wednesday, September 21, 2011

Doin' The Twist

Today, the Fed announced it's plans to fiddle while the economy burns purchase $400 hundred billion in long maturity treasuries and sell the same amount in short term treasuries - over the next 10 months in a feeble attempt to wrest as much as 17 basis points difference for its efforts.  This maneuver is called Operation Twist.


Mark Thoma
1. This shifts the duration of the balance sheet, but it does not change its size. I would have preferred balance sheet expansion, i.e. QE3, as that would have a much better chance of helping the economy. But the inflation hawks on the committee will not tolerate further expansion in the balance sheet due to worries about inflation.

2. It's not big enough.

3. Even if it causes rates to fall, will consumers and businesses respond?

That is, this might help some, but not enough to solve our employment crisis -- not by any means. Thus, this does not alleviate the need for Congress to implement serious job creation programs as soon as possible.

The unemployment crisis needs to be attacked vigorously, and we need aggressive action from both monetary and fiscal policymakers. But neither the Fed nor Congress has the will to do more than half-hearted measures at this point, and even that might be too much for Congress.

I wish the people making these decisions had to face what households struggling to find a job endure daily -- the world policymakers see from their insulated shell is very different from the world of the unemployed. Maybe then they'd finally get it and, more importantly, do what needs to be done.
Tim Duy:

The Three Stooges (Fischer, Plosser, and  Kocherlakota) once again dissented.  My initial take - I didn't have high hopes for this policy to begin with, and continue to be underwhelmed.  $400 billion is too small, and, more importantly, the time horizon is too long.  Really, June 2012?  Unemployment in the high single digits and they can't speed this up a bit?  Yes, another step toward more easing, but the pace of progress just seems glacial compared to the economic need.

Brad Delong:

The problem is that such policies work, to the extent that they work, by taking duration and other forms of risk onto the government's balance sheet, leaving the private sector with extra risk-bearing capacity that it can then use to extend loans to risky private borrowers.

But buying a 10 or even a 30-year Treasury bond and selling Treasury bills does not remove all that much risk from the government's balance sheet. Much better--if you have $400 billion to spend--to buy something much riskier...

Me:  Big whoop.  If you're only going to score 17 basis points, then why even get out of bed?  Look, I'm as nostalgic as anyone for the 60's  - probably more so, truth to tell.  But a program that was marginally successful then, and took 4 god-damned years to do anything, and worked because interest rates were a hell of a lot higher, and now is approached in a half-assed way is probably worse than doing nothing.

Of course the FOMC announcement at 2:15  2:25  is what sent markets tumbling this afternoon.  How this explains the 10 point SP500 gain (about 1284 to 1294) between 2:37 and 3:12 p.m. is somewhat mysterious.  (The DJI and SP500 were in absolute lock step all day.)  We can be sure though that it definitely caused the bottom to fall out a full hour about 50 minutes after the announcement was made.  Isn't that what efficient markets are all about?  Never mind that third wave of third wave thang . . .

Republicans, All Wrong, All the Time - Pt 30: Treason Edition

Senate Republican Leader Mitch McConnell of Kentucky, Senate Republican Whip Jon Kyl of Arizona, House Speaker John Boehner of Ohio, House Majority Leader Eric Cantor of Virginia and Secessionist Texas Governor cum future POTUS, James Richard Perry are all committing treason.  Thus implyeth Scott Sumner, which we discover, with a touch of irony, via Krugman.

I stopped reading Sumner a long time ago, for a variety of reasons.  Credit where it's due though, as he calls out these lizard-people - though he can't quite muster whatever it takes to explicitly play the treason card.  Instead, he weasels it like this: "Unlike Rick Perry, I don’t think it is treasonous to advocate easy money or tight money.  Treason is advocating policies that you know will hurt the country, because you hope you can derive political gain from America’s misfortune.  I’ll leave it to my readers to decide who should be charged with treason."

It's amazing that someone can suss the bull with such lucid candor, and still not poke it in the eye, though he does provide sticks.  Maybe this is what passes for subtlety among politically conservative neomonetarists.

Meanwhile --  are we screwed, or what?

Wednesday Market Action

Overnight, Asian Markets were mixed and European markets were down.  Today's SP500 opening continues the slide that began late yesterday afternoon.  It looks like an impulse, so it could be that we are in the third wave mentioned as a possibility yesterday.  If so, today should be strongly down.  Yesterday afternoon took away the gains of the morning, and today's action has already wiped out most of the gains from Monday.

From about 10:56 to 11:15 or so there was a very low level corrective wave, retracing about 3 1/2 points.  This should be a very interesting, and perhaps revealing day.

Yesterday, the DJI traced out a similar pattern to the SP500, but managed to end the day slightly positive.  The two indexes are following nearly identical patterns.  Here is a quote from this Morning's Zacks email.

The Dow rose by 8 points on Tuesday. But that doesn't really tell the story at all. 
You see, Tuesday had all the tell-tale signs of a "Flight to Safety" day. That's when people cling to large caps in defensive industries while the rest of the market gets sold off. Certainly we can see this more clearly as the Nasdaq was down -0.86% and the small cap focused Russell 2000 took a more severe -1.75% beating. And just for good measure, bonds and gold rose too, which are classic signs of a safety trade. 

If my read is correct, by the time the ultimate bottom is reached, the only safe haven will be cash.

UPDATE:  As it turned out, that corrective wave at 10:56 lasted almost 3 1/2 hours, chopping around between 1192 and 1199.   The last hour and a half of the day brought a sharp break to the downside - probably a 3rd wave at some low trend level.  The close at 1166.76 is a drop of 35.33 from yesterday, almost 3%, with about 27 of those points evaporating in the last 50 minutes of trading - likely a 3rd wave of a 3rd wave.   The index is now back in the range of Tuesday, 9/13.   And this is enough of a drop to again poke through the bottom of the purple channel indicated yesterday.  I'd say this tips the odds back in favor of wave V down.  The resistance at 1140 is still significant, and a convincing break through that barrier should be the final bit of evidence.

Tuesday, September 20, 2011

Tuesday Market Action

Strange day.  Shortly after opening, the SP500 climbed for about an hour and a half, hitting the intraday high of 1220.39 at about 11:15.  The index then hovered between 1215 and 1220 until after 2:00 p.m., making at least 10 more attempts to pierce 1219-1220.  Then exhaustion set in and it fell for about an hour and a half and lay quivering between 1202 and 1204 for the last 15 minutes of the day, and closed about a point and a half below the opening.  Weird near-symmetry for the day.

On Friday, I noted a resistance band at 1230, but 1220 has been tough to pierce.  Here is a look at the entire counter-trend move (daily bars) since the end of wave III at the August 9 bottom of 1101.54  Support and resistance at 1140 and 1220 are indicated with red lines.   The counter-trend channel is in purple.

By this count, wave IV had a fairly simple A-B-C three-wave structure.  A count showing wave V developing is also included.  If this is correct, subwaves i and ii are complete, subwave iii of 3 has just begun, and a steep fall should follow soon.

The alternate possibility is that wave IV is still working out its many wrinkles.  As outlined in Chapter 1 of Elliott Wave Principle, by Frost and Prechter, R. N. Elliott identified 11 different patterns that corrective waves can take, and several of them are still potentially in play.  Hence the "or IV" and an arrow pointing to the near future.  One of these possibilities is a triangle.  If that is what is happening, it can take several more days, and the green line should be a top boundary.  To my knowledge, there is no bullish way to read this pattern.

Another Day Older . . .

In comments, Art protests about me making Reagan and Bush II the object of scorn over the issue of household debt.  He suggests yet another FRED graph, which goes back a little further, and shows more debt burden rise in the 50's.  This is Household Credit Market Debt Outstanding divided by Seasonally adjusted Salary Accruals.

I think Art wants to tell a story where debt growth has been on a continuously increasing trajectory through the entire post WW II period.  Clearly, this is not the case.  The graph above shows there was an actual decrease in debt burden in the 60's, then only a slight increase during stagflation and the moribund Carter administration.  Given the context of the previous decade and a half, the Reagan/Bush I regime pretty badly screwed workers.  Clinton did not reverse the tide, but - for a while, at least - was able to stop the bleeding.  Then Shrub started adding coffin nails by the hundred weight.

Back in the early part of the graph, things don't look so good, either.  So we can detect a pattern of Household Debt/Salary Accruals increasing across decades - but ONLY when there is a Rethug in the White House.

Somehow, though, this strikes me as not really being fair to Ike.  The increase during his administration is roughly from .5 to .9.  This is close to doubling, but the initial value is pretty low.  Coming out of WW II household debt was quite low, for a variety of reasons, including war-time rationing and supply constraints.  There was probably an excess of savings. There could well have been a pent up demand for credit that expressed itself as a housing boom, to provide necessary shelter and accommodations for the baby boom (frex, me.)

Debt is a problem if it can't be serviced, or if servicing it causes a distortion in standard of living, or spending and saving patterns.  I think it's hard to make a case for those things at debt/salary < 1.  I'm not prepared to set the break point, but it looks like it could very well be between 1.4 and 2.0 - the Shrub legacy.

We should also remember that there are a numerator and a denominator.  Here are the graphs of year over year increase in household debt and salary accruals.  Note the declining trend channel for salaries since the late 70's peak - and the counter-trend move in the 90's.  Other than that, I will leave pondering the dynamics of these changes as an exercise for the interested reader.  And if you've come this far, you might as well give it some serious thought.

So, to answer this question: "The number was increasing rapidly even in the 1950s. Was that Reagan's fault, too?"  I say, no.  In those days, Reagan was only responsible for some really bad movies. But I'll add that the question is irrelevant to my assessment of Reagan and Shrub.   They destroyed the American Middle Class, and along with it the American Dream.  This was no accident, and there's a lot more to the story than just debt.  Supply side economics is and always was a sham, designed to enrich the already wealthy at the expense of all the rest of society.  Look where we are now.  It worked.

Monday, September 19, 2011

Monday Market Action - 9/19

On Friday I recognized two possibilities and said: " If it is now in wave V, then wave 2 of V was an upward expanded flat, and there should be a steep decline next week as wave three down kicks in."

Today's start sure has a wave 3 down look to it.  But, since the drop only covered about 23 SP500 points, I am taking this to be very early action in wave V down.  My guess is that this is wave 3 of 1 of 5, with sideways motion since about 10:20 (it is now 11:05) constituting wave 4.  In other words, this looks to be action two levels below the wave V trend.  Since wave 2 was an expanded flat, by Elliot's rule of alternation, wave 4 ought to be a simple zig-zag that plays out rather quickly.  We should get into wave 5 of 1 of V before too much longer, and the next corrective wave could even start before day's end.

I should also note that the alternate possibility - that wave IV is still continuing - has not been eliminated.  That count would also include a drop early today.  We'll have to see how it plays out.

With rehearsal tonight, I won't have time to post a chart after closing.  Should be able to get in some more commentary later this afternoon, though.

Update:  Friday gave us a drop followed by recovery, then sideways for the rest of the day.  Today we had a bigger drop followed by sideways action, then a recovery.  I don't know how to read those waves, so I'm baffled at the moment.  Still, the total drop from Friday's high of 1220.06 to today's low of 1188.36 at about 10:20 a.m. is 31.7 points.  Today's high of 1209.43 (as well as I can read it on Yahoo's interactive chart) is within a fraction of 1209.54, the .667 retracement of the entire drop.  So, if that can be read as five down, we've completed a down wave, and likely a corrective up wave, at some low level.  Otherwise, it's the triangal possibility I mentioned Friday still developing.  

It will probably take some patience to sort this out.

The email I got from Steve Reitmeister at Zacks this morning was no more sure of anything than I am, though he does share my negative bias.  Here is the complete text.

The Last 2 Times Stocks Rose to this Level...
Stocks enjoyed a solid 5 day rally last week. However, they have now rallied up to a level we have reached twice before... just before collapsing. Yes, on August 15th and August 31st we got just above 1200 on the S&P 500 and then found ourselves 5-7% lower a few short sessions later. 
Will this time be different? 
The answer is yes, if investors are more convinced that problems are solved in Europe and the US economy improves. 
The answer is no, if Europe keeps slapping little "Hello Kitty" Band-Aids on their gaping sores or if US economic reports come in like Friday's Consumer Sentiment reading... which is at levels that have spelled recession each time in the past.
Given the recent run up, I am back to a net-short position preparing for a ride lower. I will gladly don the Bull Suit that is gathering dust in my closet if the economic data improves. Until then it's best to play the cards you are dealt. And this hand says look out below. 

Note how he again ties stock performance to exogenous news events.

Sunday, September 18, 2011

Drowning in Debt

A different pair of data sets tell the same story - with a very similar look - as the last graph in this post.

Here is Total Household Credit Market Debt divided by Total Wage and Salary disbursements - basically household debt by household income.

Via Tux, we find a compelling narrative from M Bouffant about this tragic view of the last 40 years -- "middle class serfdom."  Reagan and Bush II destroyed America.  WASF.

Update:  I posted this in the middle of reading the Bouffant post.  At the end I found out it's a lengthy quote from a New Republic article by Timothy Noah, behind a pay wall.  It appears in the Oct 6, 2011 issue of the magazine.

Friday, September 16, 2011

Friday Market Action

The SP500 made one more early morning advance, then languished the rest of the day.  This happened against waning momentum, and with week internals.  The NYSE advance/decline ratio and final ticks have fallen off during the rise. The chart below shows MACD trending toward zero.

It is difficult to tell at this point if wave IV is continuing, or if this is wave 2 of V developing as an expanded flat.   The index should not go above the 1230.71 high of August 31, and if it is in a wave IV triangle, this should take a couple more weeks to complete.  If it is now in wave V, then wave 2 of V was an upward expanded flat, and there should be a steep decline next week as wave three down kicks in.

Either way, the main trend is still down.

Thursday, September 15, 2011

Thursday Market Action

Today, The SP500 rose all day, opening at the low and closing at the high.  It also broke the 1205 resistance line, and the down-sloping channel border.

OK.  Nobody said this would be easy.  We now have trend boundaries broken low and high in rather rapid succession, as indicated by the red circles.  The latter, along with the break of 1205, challenges the idea that wave V down has started.  There is always an alternative wave count lurking in the wings, and one now needs to be considered.  If wave V is in force, there should be a rapid drop tomorrow to bring the index back into the channel.  If not, then there is more complexity to wave IV, and this could play out over the next couple of weeks with a narrowing band of sideways trading.  

Here is a reading on the current state of the SP500 by Kevin Cook, with commentary on the trend channel.

Bearish Signposts: Of Flags and Sentiment

Total Debt

Art has a lengthy criticism of a post at Two Minds.  One part focuses on a chart of total credit debt owed, and the conclusion drawn from it.  The chart shows the exponential curve and the author concludes: "This chart leaves no doubt that the engines of the past 30 years "growth" and "prosperity" have been credit and credit-fueled speculation."

Art Demurs:  "You don't break it up that way. The increase in debt shows one long, continuous trend. One trend."

Actually, they're both wrong.

It is very hard to look at an exponential growth curve and see any of the detail.  Is the rate of growth changing?  If so, which way?  Too much for my aging eyes to discern.  The answer, of course is to display the data on a log scale.  Human mind-eye coordination is adapted to deal with straight lines, and that is what a constant growth rate provides on a log scale.  Here is the right way to look at this data.

Contra Art's objections, we can now clearly see that there are distinct differences over time: straight line growth through the early-mid seventies; steeper through the mid-late eighties; then a rather sharp knee followed by another straight line with almost identical slope as the first segment until the Great Recession.

This does not negate the idea that the last few decades have been a speculative bubble.  But, OTOH, it gives the idea no support at all.

Update: Prompted by the discussion in comments to this post, here is a graph of total credit debt divided by GDP.  I think it's pretty astounding.  Until 1980, debt was flat at about 1.5*GDP.  Under Reagan it rose to about 2.2 times.  It was close to flat under most of Clinton's term.   Then it skyrocketed to almost 4 times under Bush.  Compare to Mark's linked graph in comments.  Debt becomes overpowering when it exceeds ability to pay.  Mark's graph and this one show big moves in the wrong direction.


Wednesday, September 14, 2011

A Crash Bang Assesment

Here's a guy who thinks a lot like I do.  We part like the Red Sea over the gold issue, though.

Give him a listen.  It's worth 6 1/2 minutes.


Wednesday Market Action

From now through Spring, I'll have rehearsals on Mondays and Wednesdays, and won't have much time for evening posts.  I might not make market commentary on those days.  We'll have to see how that goes.  But today was a big move, and though it's not over, I am posting a chart.

The open gap has been filled, as I sort of expected.  Next resistance is around 1205.  This move looks pretty strong, so it might make it that far.  I don't have time to figure out what's going on with the wave count.  We'll catch up with that by the end of the week. 

UPDATE: The DJI finished up 1.27%, the SP500 up 1.35%, and the NASDAQ up 1.45% on the day.   Note the gains are inverse to blue-chippiness.  Not a good sign..b

Correlation and Causation

In comments late last night, Stone Glasgow pointed out that correlation is not causation, which is, of course, a fact.  It falls into the category of true, but irrelevant

The way I look at it, there are meaningful correlations and non-meaningful correlations.

In the meaningful case, there might be common cause, or there might actually be cause and effect.  If there is common cause, at least one phenomenon serves as a barometer for the other.  Help me out here, if I'm missing any other possibilities.

In the non-meaningful case, an apparent correlation may simply be a data artifact, or there can be pure coincidence, or what I call "coincident correlation" where two unrelated phenomena happen to follow a similar course for a while, before veering off on their own trajectories.

To sort out if a correlation is  meaningful, you have to put together a coherent narrative.  In the case of this graph, I've done that.  Here is some elaboration.  The indicator value of finance sector peaks in identifying recessions since WW II is ten for ten - 100%.  On the contrary, there is one false positive in 1986.  This gives us 10 for 11, overall, or 90.9%.  Few indicators achieve that kind of reliability.

As additional confirmation, consider the times when the percentage of finance sector capture is below trend for several years in a row.  These times are specifically the longest recession-free periods in the time frame.  Politically, these are the Kennedy-Johnson and Clinton administrations.

To call this correlation non-meaningful is asking an awful lot of coincidence.  Occum's razor firmly in hand, I prefer to think that policy matters.  Recessions are a characteristic of Republican administrations.   This relates to tax enforcement policy, deregulation that enables capital misallocation, fiscal and monetary policies, and the wealth disparity that has grown continuously since about 1980.

My coherent narrative lends credence to the meaningful correlation between high finance sector profits and poor economic performance.

High finance sector profits contribute to a concentration of wealth at the top of society.  This is ultimately destabilizing.  It happened in the 30's and it's happening again now.


Tuesday, September 13, 2011

High Finance Sector Profits Kill the Economy

I was rereading this post today, and came across this statement, with reference to this graph.

"The times of those last three peaks in the quarterly data are Q1-86; Q1- 91; and Q3-01"

I suddenly realized that the last two of those dates occurred along with recessions.  So, I spent more time than I want to admit trying to put recession bands on the graph, using an old version of Excel.  It's complicated as hell, and I didn't get it quite right, but here you go.

Except for the Q1-86 anomaly, every peak in the finance sector's share of total corporate profits lines up with  recession.  I've also put an exponential trend line on the graph to illustrate that the finance SERVICE sector capture has been growing faster than the growth of total corporate profits - which has also had exponential growth.  I had already noted (and since forgotten) that the major peaks (ex-'86) corresponded with recessions.   Now we can see that even minor peaks line up with rcessions, as well.

This indicates the level to which the servant has become the master.  Beyond the point of supplying necessary financing for businesses and mortgages, financial manoeuvrings - speculation in particular, and most especially so with sophisticated derivatives that nobody knows how to rationally value - become rent seeking.  This is a massive misallocation of resources, diverting capital from real investment into totally non-value-added financial tail chasing.

This has given us every recession since WW II.  The cumulative effect is the Great Stagnation.  The most recent crisis is the Great Recession.  It's not clear we can ever hope to recover.  We're screwed.

Tuesday Market Action

I don't have much time today, and not  much to talk about, either.

The late surge yesterday took the SP500 and other indexes into positive territory for the day.  The rise continued into about 10:20 this morning.  Since then, the action had been sideways, centered around 1170.  Momentum (MACD) peaked at the end of the morning rise, and has slid almost to 0 since.

The open gap from last Friday's opening has not been completely filled, so there might be some upside room yet.  Main direction is still down.

Monday, September 12, 2011

Monday Market Action

Asian and European stocks had big declines overnight.  This is blamed on European debt worries, which, of course,  makes perfect sense, since nobody had ever heard of the European debt situation until  a few hours ago, and it's new news that moves markets, since all other available knowledge had long-since been factored into prices.  The French CAC 40 is the worst off, down almost 4.5% at mid day local time.

I was anticipating a bounce in the SP500 for a day or two.  That looks less likely now, unless this is just the rolling follow up to our decline on Friday.  It will be interesting to see how it all plays out.

UPDATE: It's not 3:30 yet, but I have rehearsal tonight and won't have a chance later for a chart or commentary.  European stocks meandered mostly sideways after a big drop at the opening. U.S. market action has been very choppy.  The day's chart looks like a hacksaw blade, generally slanting downward until late in the day.   There's too much overlap for me to be able to decipher a wave count.  Suffice it to say that there were a few more subdivisions that needed to unfurl to complete the thrust.  At any rate, there is now a clear loss of downside momentum (typical of a 5th wave,) and there will likely be a bounce over the next couple of days.

Most notable, I suppose is the SP500 index action around Kevin Cook's resistance point of 1140.   The index bounced off of a band bordered by 1137 and 1144 no fewer than 6 times today.   Now that the up-slanting channel (in my chart noted at the same link) has been pierced, it looks like Cook is on to something - in the short run anyway, and 1140 is the next resistance level to be breached.

Sunday, September 11, 2011

September 11 Thoughts

I'm a patriotic guy - a real patriot who actually loves his country knowing full well that it is full of flaws and imperfections, not a phony who places some partisan ideal above the good of the country - as you have seen for several years now from the Repugnicant party, nor a flag-waving purblind zealot.  So I wonder about how my countrymen react on this day. 

I'm not much of a fan of the Zits cartoon, but if I could have embedded today's entry here I would have.  It's thoughtful, poignant, and can interpreted in a variety of ways.  SoBe looks at 9/11 in a way that would not have occurred to me, but I think she gets it about right.

Yes it was a tragedy.  Maybe even a day that will long live in infamy.  And we shouldn't forget.  Not that anyone really can.  But we take too many of the wrong messages from the event, and our country's misbegotten reactions to it.  I will leave pondering those things as an exercise for the interested reader.

And we are wallowing in 9/11-itis.  Every sports event of the weekend had some ceremonial remembrance.  It's all over the newspapers and television.   I don't know how much of this is genuine, how much of it is knee-jerk hearding behavior, how much is exploitation, how much is sensationalism, and how much is cynical commercialism.  So I'm really torn about how to react.

But I don't think this wallowing is healthy.

Sunday Music Blogging - Tunes for Toons

From 1936 to 1958, composer Carl Stalling wrote about 600 musical scores for Merrie Melodies and Looney Toons shorts. The arsenal at his command was impressive, including a 60-piece orchestra and his own encyclopedic knowledge of music history. Cartoons – and kids – were never the same. We discuss Stalling’s life and legacy with conductor George Daugherty of the “Bugs Bunny on Broadway” concerts. Plus: WQXR host Jeff Spurgeon highlights classical moments in Stalling’s work.

Source link.


Saturday, September 10, 2011


For today's Tigers game, an unlikely outcome, featuring a struggling batter and a closer who does not give up HR's.

What the Hell?!?  This was supposed to embed.  Oh, well.  You can click through to see the video at MLB.com.  Somebody goes home happy, and somebody goes home sad.   Happy is better.

UPDATE 9/12: (WTH?!?) ^2.  Now the embed works.  Ain't technology wunnaful!

Friday, September 9, 2011

The Texas Miracle - Part 1: Fire and Death

From the Fort Worth Star Telegram (at the Miami Herald site), via Menzie Chin.   Texas is burning.

The Legislature cut the agency's funding this year to $83 million from $117 million, according to Robby DeWitt, the forest service's associate finance director. 

Chris Barron, executive director of the State Firemen's and Fire Marshals' Association of Texas, said: "It's very frustrating that they don't have the proper tools and resources to fight these fires. If fire departments had enough funding, if the forest service had enough funding, we wouldn't be in this predicament over each and every year." 

The issue is drawing more attention in part because of the sheer scope of the Central Texas wildfire, which has destroyed more than 1,500 homes and killed at least two people. There's also a new political component as critics charge that the budget cuts are proof that the fiscal restraint Gov. Rick Perry is touting on the presidential campaign trail comes at a price.

Update 9/10It's even better than I thought.  H/T to the LW.

In some cases, fire officials say, firefighters have had to pay out of pocket for basic necessities like proper protective gear and fuel to get them to the scene. One fire department that battled the blazes in Bastrop County had to pay for a hose, recalled Bastrop City Fire Chief Henry Perry, speaking to The Huffington Post during a break from working the wild fires.

"That fire department has been on this fire every day," he said. "Before this fire, they were having to buy stuff out of their own pocket." Perry said he knows of at least one other department whose firemen had to pay for equipment maintenance and engine fuel.

In libertard paradise Texas, volunteer fire fighters get to not only risk their lives fighting wild fires, they also get the honor of paying for their own equipment, maintenance, and fuel to get to the fire. All of this so that corporations can enjoy a business environment unfettered by burdensome taxation. Brilliant!  Maybe next time one of those miraculous businesses will burn to the ground. 

Of course, the Texas miracle is utter bull shit, and Perry is a politically shrewd, though otherwise not particularly bright, sociopathic opportunist who takes pride in his 243 executions, and because of them garnered the largest applause of the night from the conservative lizards in the audience at the Rethug debasemente the other night.  Perry has no discerable moral compass.

“Your state has executed 234 death row inmates, more than any other governor in modern times,” NBC’s Brian Williams told Perry as the conservative audience broke into cheers and applause. “Have you struggled to sleep at night with the idea that any one of those might have been innocent?”

“No, sir, I’ve never struggled with that at all,” Perry flatly stated. “In the state of Texas, if you come into our state and you kill one of our children, you kill a police officer, you’re involved with another crime and you kill one of our citizens, you will face the ultimate justice in the state of Texas, and that is you will be executed.”

Does the rest of the country love state-sponsored murder the way Texans and the rest of the Jebus-loving conservatard lizard-people do?  Will it even be an issue in the presidential campaign?  It should (emphasis added) in this trombonist's humble opinion.

Perry has commuted the death sentences of 31 inmates. The great majority of those commutations — 28 — involved cases in which the defendant was a juvenile at the time of the crime. Perry begrudgingly commuted those sentences in 2005, after the U.S. Supreme Court ruled that states could not execute those who were younger than 18 at the time of their crime. “While these individuals were convicted by juries of brutal murders and sentenced to die for their heinous crimes, I have no choice but to commute these sentences to life in prison,” Perry said at the time.

In two other cases, Perry commuted to life in prison the death sentences of inmates who were proven mentally retarded, another group of individuals the nation’s highest court has excluded from the death penalty.

Perry deeply regrets not being able to legally murder children and the mentally impaired.  If he gets to be President, not only can we ALL be like Texas, Perry will get to name even more radical right wing lizard-people to the Supreme Court.  I am SO looking forward to that.

What the Hell?!? Friday - Imus-inspired Double-Entendre Edition

I will simply imbed this with no further comment.  Really - what could I add?

H/T to Avg Joe at The Corner.

Friday Market Action - 9-09

The SP500 gapped down about 16 points near the opening today.  This looks very much like a third wave of a third wave at some small trend level, consistent with yesterday's big picture chart.   Resistance at 1205 proved formidable, and the index is also now vigorously retreating from the upper boundary of the down-sloping trend channel.  No telling how long it's going to take to play out, but this is almost certainly the early stages of wave V down.

The current small wave might be small enough to finish by day's end.  Either way, we'll have a weekly chart after closing.

UPDATE: It's now about 3:00 p.m.  Today's downside move was even more vigorous than I anticipated, NOT QUITE enough to poke through the bottom of the up-slanting purple channel (see yesterday's link, above) The low for the day hit this line exactly.  though w Of course, we have yet to break Kevin Cook's 1140 resistance barrier.  I'll have more commentary after the close - this looks like a beautiful impulse wave.  Meanwhile, here is a very nice primer on how the wave form and MACD work together.

UPDATE II:  Here is a real-life attempt to show how MACD and the wave form work together, per the linked vid.

On Tuesday, MACD extremes and index peaks moved similarly (green trend lines) and up - the advance was robust.  But on Wednesday, their movement was contrary (red trend lines) - the rise was running out of steam.  Through yesterday and part of today, the movement was similar and down.  This afternoon, they turned contrary, and this leg of the move down is over.

The heavy brown lines to the right of the chart mark the .312, .5, and .618 retracement levels for the anticipated corrective wave, which should run for a day or two next week.  Note that the highest of these is just about enough to cover the open gap of the early morning drop today.  That is a common scenario. This idea is based on a correction of the two-day wave from the 1204.4 top.  Another possibility is that the correction will be relative to the entire 5 wave sequence from the 8/31 high of 1230.71.  That seems less likely, would move the targets points up to about 1180, 1190, and 1200, respectively (not shown on chart,) and would take longer to complete.

If this chart looks familiar, it's because of its similarity to last Friday's.  ChartPost.  Both Fridays started with a "third wave within a third wave of subwave 1 down," though today's seems to be at a lower trend level.  Note also that the weekly high of 1204.4 was just about enough to fill in the open gap shown on last week's chart. 

Notable features:
- The 5 waves of an impulse are pretty easy to read.
- The three waves of a corrective pattern can be complex and difficult to untangle.
- A sideways sequence, such as we've had since the 1101.54 low exactly one month ago, can be deciphered by studying the wave pattern.
- Wave patterns repeat similarly, not identically, at different levels of trend.
- Similar wave patterns tend to occur at different times.
- Support and resistance levels are significant - as are their failures.
- Trend channel boundaries provide support and resistance levels that change every day.
- Retracements tend to reach levels identified by Fibonacci ratios.
- Retracements tend to fill in open gaps.
- MACD trends can either confirm or conflict with index trends; these characteristics are significant and can aid in deciphering the wave count.
- In real time, it can be quite difficult to identify which level of trend you're dealing with.

Every one of these features has been exhibited by the SP500 index over the most recent two weeks.

Thursday, September 8, 2011

Five Large Cap Stocks . . .

. . . to ride out the uncertainty.  Thus sayeth Bob Pavlik, chief market strategist at Banyan Partners.  Here is the vid.  If you can't spare the 5 minutes, here are his picks: CAT, AMZN, MCD, AAPL, and GOOG.  If there is any secret about these companies, it is hiding in plain sight.

My view is that when the bear attacks the market, everyone gets bloodied, and blue chippiness will be a porous shield at best.  So, just for kicks, we'll check back with these five every month or so to see how the picks are holding up.  Pavlik's time horizon is 3 to 5 years, and that's just about how long I expect stocks to collapse in a very major way, so this will be interesting.

Stock prices as of Sept 1 and yesterday:

This should provide another test case for competing theories.

Thursday Market - 9/08

SP500 action so far (11:00-ish) today has been in the 1190-1205 band.   Overnight, European markets peaked in the late morning (their time,) slumped in the early afternoon, and are now slightly positive.  Asian markets were mixed.

In the interest of presenting opposing views, here is a (day old) link to a video of Kevin Cook, a trader who thinks 1140 offers robust resistance in the SP500.  The headline uses the word "bullish" but the actual interview is a bit more guarded, though Cook tends to be a bit circumspect about his guarding.  He also cites the anticipated content of B. Hoover Obama's jobs speech as pulling markets up.  We'll see about that.  Cook's 1140 barrier is a good test case, since I think a convincing poke through 1140-1150 confirms the next leg down.  There is a cluster of daily lows from 8/19 -8/22 in the 1121-1123 range, so I'll say a "convincing poke" includes a break of 1120.

FWIW, yesterday's move up had strong internals: 2658 shares up vs 316 down on the NYSE.  OTOH, SP500 volume was the lowest since 8/18, which closed at (gasp) 1140!

Update: The SP500 wound up off about a precent - close to yesterdays opening, giving us two days of SIDEWAYS.  (Yes - again.)  This might not be a boring as it seems, though.   Today's high of 1104, was reached a little after 11:00 a.m.  After that, it was a slide down in a rather neat channel, which could be signalling the end of a 2+ day advance.

Here's a bigger picture look at the wave pattern, from the 5/02 high.

By this analysis, subwaves 1 and 2  (at some low level) are complete and wave three should be in progress, with today's drop from the 1204 high being the beginning, at some even lower level of trend.  The 1205 and 1140 resistance/support lines are indicated.  Note how the trading range is contained in the box made by the channel boundaries - another type of resistance.

My expectation is for the lower purple line and the 1140 line to be pierced on the way to new intermediate lows.

Wednesday, September 7, 2011

Wednesday Market Action

Not a lot to add.  The SP500 jumped up at the opening, then meandered higher the rest of the day in a move that does not look impulsive.  Momentum peaked a little after 10:00 a.m. and slipped lower as the index slithered higher.

This was a rare day where the index opened at its low and finished at its high - 1198.62.  This is a bit above the .618 retracement level of 1196.  Should the advance continue into tomorrow, the next Fibonacci resistance is at .786 (SQRT of .618) or 1210-11 in the index.   Back on 8/17, a resistance band in the range of 1190 to 1205 was noted.   Any further advance beyond those levels will likely invalidate the current count, and call for a revaluation.  This would likely mean the wave IV is still unfolding, and wave V has not yet begun.

Meanwhile, through all of this the Tigers keep winning.  Things are getting very strange, indeed.

 Update:  I just checked the Asian markets markets, which are about 12 hours off of U.S. Eastern Time.  The Nikkei, Hand Seng, and Straits Times indexes all opened higher, relative to yesterday's close, and have been dropping since.  As of 11:15, my time, the Nikkei is still in positive territory, the other two are negative.  Will the American markets follow suit tomorrow?  I'm not sure who leads here.  It might be interesting to find out.  Also, European markets will open and close before our opening, as well.  They may also provide a hint of what is to come.