Commentary on politics, technology and stock markets guided by Elliott Wave principles. Is Bob Prechter Hari Seldon, and has he invented Psycho-History? Or is Elliot Wave no more than Ptolemaic epicycles? On Cheer's, Cliff Claven said he had an infallible system for predicting the next President, and it could predict all prior elections. His prediction: "Yelnick McWahwah." And yet, Elliott often provides remarkable predictions. Stay tuned.

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The leading ewavers are all seeing this final C wave as having ended or ending shortly. The intraday highs went above the Mar21 wave A highs, which is what one would expect on a C wave, but the markets failed to close at those levels, showing the dissipation of strength in this move up. Futures are slightly down at the moment, but as oft said, that can foreshadow little.

The STU turned bearish yesterday, although they allow for one final spike up. Ryan Henry sees a higher chance for one last spike up, to Dow8600+. Zoran believes the top is in, and we will now go through a terminal pattern, with a drop from the intraday high followed by a reversal that will only go back 38% - 62% of the drop - a pattern that the other ewavers will label the subwaves 1 and 2 of the wave down. So we have a good chance to compare their relative prognostication.

We will know that wave 3 has truly started when the drop becomes hard and fast.
posted by dd at 4/30/2003 11:30:00 PM

 
Prechter put out an interim bulletin today. He had previously called a top at Mar21, and since then the market indices have formed an ending triangle formation (higher lows, lower highs in a series of 3-waves) which have not exceeded that top. Triangles often end with a final thrust, a so-called terminal thrust, in the opposite direction of the trend. Hence we *might* see a strong up week this week and exceed that top. He warns, don't be misled. It will be followed by the wave 3 of 3 etc.
posted by dd at 4/28/2003 01:57:00 PM

 
The leading ewavers other than STU are now calling the Wed high as the end of wave 2, rather than the Apr15 high. This will be confirmed if Monday heads down below certain levels, beginning with Dow8250, and will be disconfirmed if we break Dow8395 to the upside. We should then see one final leg up. Ryan Henry lays this out fairly well in his weekly newsletter, and charts it on his site, here. The view of the STU is that the preferred count calls for one more leg up before the end of wave 2.

Zoran has the best overall analysis of where we are - if he blogged I would refer you his site. Suffice to say that he sees the whole correction since last July as influenced by the Iraqi War. if you recall, back in September we were heading to war, then backed off to let the UN continue its inspections. We rallied off the October lows. As it became clearer that we would head to war regardless of what the inspectors found, we peaked in November. Recently we had the Victory Rally, which started before the war started as the market tried to anticipate events. During the war we were flung up and down on rumors of this or that, all in a triangle - lower highs and higher lows. The triangle either has ended or is coming to a near term resolution.

There is a lot of bullishness out there. Recent articles have suggested that the VC industry bottomed in Q3 and have begun picking up activity in Q4. Business Week picks up this theme and argues that Tech has bottomed as well. Some pundits suggest the recent activity is not waves 1 - 2 of the big 3 down, but the beginning of a new wave up! If so, we would now be in a wave 3 up, and should be seeing sharp and dramatic rises. Instead, the first wave up from the recent lows, which Yelnick reads as wave A (corrective), was fast and furious, whereas the recent wave up, which Yelnick reads as the final wave C, was much slower. Hence this is best read as corrective of a larger downtrend.

posted by dd at 4/27/2003 10:10:00 PM

 
Lots of good stuff on mesh networking, blogging, social web and similar new technologies at this conference. Being blogged of course and has a Wiki .

Clay Shirky, a long-time deep thinker on web matters, discussed the problems of managing groups online. Groups go through predictable patterns before settling down: a flirtatious/sex stage, a vilification-of-enemies stage, and a religious-fervor stage (where heretics in the group are flamed as not getting it). Thus you cannot separate technical & social issues - must empower group to govern itself or the flirts/xenophobes/mullahs will take it over. You then learn that members are different than users - a core group arises to 'garden' the environent. Although gardening may violate the libertarian instincts that typically spawn the group, it is necessary to keep the community useful. Implication is quite profound - despite or maybe because of the whizziness of the technology, social forces may doom groupware.

Dan Gilmore discussed Journalism 3.0, his term for interactive journalism. WiFi & blogging are changing journalism dramatically. Will a Gresham's Law rule (bad money drives out good) - fast but inaccurate rumor will drive out slow but checked reporting? Good news is that Gresham's Law is empirically wrong. Dan noted that there have been many experiments on blog journalism, but no clear model yet for monetizing the new approaches. As a starter, he calls for improving the tools: WYSIWYG editing, integration of email and blogs, and addition of rich media (pictures, streaming, peer-to-peer sharing).

Dan's session evolved into a panel discussion on warblogging, and included a surprise guest speaker over the phone - Stuart Hughes, a warblogger from Iraq who lost his foot from a landmine. Check his site out, an remarkable attitude for such a devastating incident.

David Sifry explained technorati, a mucho cool site which is experimenting with new ways to show breaking news based on what bloggers are blogging.

So we come back to the question - how will blogging change Journalism? One view is it will commoditize the newsletter business. Gresham's Law again? But Dan and Stuart Hughes both are more optrimisitrc. The consolidation of news outlets which had been occurring is now facing massive decentralization, and the introduction of new voices. Stuart further comments that the BBC is learning that it needs to engage with its audience - Interactive Journalism can bring the viewers back.

posted by dd at 4/24/2003 02:31:00 PM

 
Sometimes ewaves behave as expected, with remarkable precision. As they say, even a broken clock is right twice a day. But the Yelnick view is more is happening than this. Yesterday we said watch a break of Dow8400 / SP900. The more precise number was Dow8395 - and the Dow went to that level intraday and bounced. Remarkable. Ryan Henry has a good analysis of today's action. The bounce began the final wave 5 of C. Made a nice 5 wave pattern up then corrected into the close down 61.8% of the final rise. If this is right, we should see little waves 3 - 4 - 5 tomorrow or into Monday to end wave C of 2.
posted by dd at 4/24/2003 01:54:00 PM

 
Old Count: wave 2 had topped Apr7
New Count: wave 2 continues towards SP925

We had thought wave 3 had started, but when it really starts the downside pressure will be much more intense. Ewave sites upgraded to their alt counts today. Wave B of 2 subdivided into a triangle, and we are now in the final down-up action of wave C. Look for a down day tomorrow at least at the open, followed by a final leg up. If the down leg breaks Dow8400 /SP900 then likely wave 2 has ended. Otherwise expect market to climb again above Dow8500 / SP920. Also look for Nasdaq to head south first, leading the other indices as it has done since the MOAB markets began.
posted by dd at 4/23/2003 08:35:00 PM

 
When the PC first emerged as more than a game machine, the powers-that-be saw it is a shrunken minicomputer, and tried to load on it the apps which drove the mainframe ea - accounting mostly. But what drove it to success were a new class of apps, productivity apps, beginning with the spreadsheet.

This insight should be taken to heart. Each new era of computing is driven by new applications, not by repurposing old apps. That comes later.

If we skip the first 20 years of computing (1945 - 65) as laying the groundwork for what followed, we have had three eras of computing:
> Computers 1.0 was the Mainframe Era from the IBM 360 in 1965 to the final DEC VAX in 1985
> Computers 2.0 was the PC Era from the first 32 bit PCs in 1986 to today, when it seems that hardware has raced too far ahead of software
> Computers 3.0 is now developing and has yet to be cleverly named.

Each era was presaged. The precursor to the PC era was the PC boom & bust cycle from 75 - 85, just as the precursor to Computers 3.0 has been the Internet Mother of All Asset Manias from 1995 to today. Both had blow-out IPOs: Apple went public in 1980 at the unheard of value of $2B, and Netscape did the same in 1995 at $5B - which turns out to be $2B in 1980 dollars. Is Google next? Overall, the amount of investment that went into the mania stage exceeded the returns. It was only after the mania that the winners emerged, and the contours of the new era took shape.

This has profound investment implications, as spotting the winners of the new era early leads to enormous wealth creation - placing PC bets in 1986 when the winners were clearer rather than 1980 at the start of the mania returned a stunning 40x to the clever few who did this.

The question du jour is what is the "spreadsheet" of the 3d computer era? Ray Ozzie is one of the entreprenuers whose track record says his opinion matters. He was the force behind Lotus Notes and is now pushing a peer-to-peer groupware system called Groove. His recent Perspective: A Mosaic of New Opportunities is worth reading in full. He does a great job of explaining why it is NOT an extrapolation of what we have seen in the past 10 years of the Internet. Snippets:

>Just as the first generation of personal computers was mostly about personal productivity, the first generation of the Internet has largely been about centralized Web sites, used for publishers, transactions and e-mail.

> Personal productivity tools will become joint productivity tools designed for online use instead of a paper-only world. A rich cadre of collaborative online writing, media management, presentation and consumption tools will move to the forefront of our daily electronic lives.

> A distinct third layer will emerge between the operating system and productivity layers. Think of it as a "virtual workspace" layer that links together all of your own computers and those operated by people with whom you work.


posted by dd at 4/23/2003 10:38:00 AM

 
The ewave community is in a flutter today as they expected a major wave 3 fall and got instead a wave C rise! So they are now assessing whether to make their alternative counts the prime count. This alt count was reported last week - that wave B of 2 may have been developing into a triangle, which would finish with a sharp move up in wave C. Tomorrow I will update the count after I see the consensus ewave opinion.

In the meantime, we can enjoy Ethan's Stock views. Finally, someone who makes me look succinct!
posted by dd at 4/22/2003 08:57:00 PM

 
GroupBlog Self-Love

Now that I have access, I can plug myself, instead of asking Duncan to do it for me. No, I don't mean it like that.
posted by Ethan at 4/22/2003 01:35:00 PM

 
GroupBlog Commences

My humble prediction: Within days, Duncan will throw me off for being overly verbose and underly clever. Thus is the way of the world.

On baseball: The loyal reader's statements perfectly match what happened in Cleveland -- round about 1987, the stadium started to fill up; they built a new one, and sold it out from 1994 - 2001 continously. You can now get seats easily. As it happens, my friend Craig Calcaterra is not only a corporate lawyer, but also a really excellent (now retired) baseball columnist, who is well-connected to the statistical madmen over at Baseball Prospectus and Baseball Primer. Once he gets back from finding himself across the Great American West, I'll ask him to sic them onto this theory, and we'll get some hard data. Surely the people who invent new, arcane measures of baseball prowess -- not just for fun, but for profit -- will be intrigued enough to do some stock market/attendance correlations for us. After all, SABR and "SABRmetricians" are taking over baseball despite not yet being old enough to shave. Compared to that, forming a general theory of markets, sports, and the correlation of various aspects of crowd psychology should be, well, a walk in the park.

One more related thought: New sports stadiums are often a goverment/development boon, and form the centerpiece of, variously, suburbanization, downtown renewal, or whatever the current real estate trend might be. This could partially explain the correlation of attendance with bull markets -- certainly the building of Jacobs field in Cleveland was a major component of the team's success; and that wouldn't have happened if times weren't good. When was the *last* stadium in Cleveland built? Hmmm, 1932, at the depths of the Great Depression, in the faint hope of landing the Olympics for Cleveland. No, really, they actually thought that!

posted by Ethan at 4/22/2003 01:18:00 PM

 
The wave 2 in tech stocks continues - these are reaching dot-com-edy heights!

Stock ---- P/E based on GAAP
Yahoo ---------------------- 71
EBay ----------------------- 76
Amazon ----------------------------------------- 132
Overture --- 25
FindWhat --- 32
Ask Jeeves ----------------------------- 107
posted by dd at 4/22/2003 10:35:00 AM

 
A loyal Yelnick reader sent in this indicator of the change in social mood. Headline:

MLB Teams Need More Than
New Ballpark to Attract Fans

Attendance has dropped since the peak in 2000. Parks are getting emptier. TV ratings are down. Owners find excuses.

"It's not a precipitous fall this season alone,'' said David M. Carter, who teaches sports business at the University of Southern California. "The bigger picture is what appears to be a steady errosion over a longer period of time. Baseball is good at dismissing problems. It's the weather. It's war fatigue. It's the economy. And to an extent, it is all of those things. But if your business is suffering a three to four percent drop every year, at some point it adds up to a real number.''

The ewave view is that baseball is a bull market sport. First became popular in the Roaring '20s. Was very prevalent in the '50s, another bull market decade. Faded in the late '60s and '70s, came back in the '80s and '90s. But now is destined to fade again. Look for bear market sports to increase in popularity - those with more violence, matching the underlying social mood. Football. Hockey. Racing. Maybe Gladiators make a comeback?

posted by dd at 4/21/2003 12:07:00 PM

 
Goldman Sachs had an exellent call this morning on the impact of Iraq on the world economy. Key points:

> the war planners have not prepared for the peace. The Mullahs seem the most organized, and Iraq may quickly become controlled by the same forces which seized control of Iran in 1979.

> the massive US aid to Iraq is unlikely to materialize. US voters will not want to support the Mullah government, if that is what occurs. Also, if our economy stays sluggish, political pressure will be to spend the budget deficit at home not abroad. Thus Bush has to let French etc. firms join the reconstruction in exchange for offloading the cost.

> Iraq can be very positive or very negative for Bush in 2004. He will be soundly criticized for winning the war but losing the peace.

> the next quarter may be slightly positive due to the war suppressing this quarter's activity, but this may not last:
- the economy has been sustained by consumer home refinancing, and this cannot last much longer
- businesses will continue to be conservative, and are reducing workforce to maintain productivity
- overcapacity has to be worked out, not maintained in ill-conceived attempts to prop up failed companies

> the Bush tax policy is not well thought through - in particular, the reduction in federal taxes is being offset by State tax increases - hence Administration needs to fix State budget problems
posted by dd at 4/21/2003 11:59:00 AM

 
The big picture scenario: markets dropping in 2004 to levels of below Dow4000 and SP400, and then continuing in a triangle formation (lower highers and higher lows) into 2011-2016. If so, the period from 2004 - 2008 should be a barn-burner bull market similar to 1933-37, where the Dow went up roughly 5x in 4 years.

Many technical indicators give the forecast of below Dow4000 / SP400:
> manias retrace all the way, and this one started in Nov94 (after the Republicans won control of Congress for the first time in 40 years) around Dow3600 / SP400
> in a head-and-shoulders pattern, the amount of the rise above the neckline is the amount of the drop below, and the 1998-2000-2002 H&S pattern in the S&P has a neckline of ~SP950 and a head at SP1550 - hence the drop should be 600 pts or ~SP350
> P/E ratios get down to ~10 at a bear market bottom, whereas currently the ratio is 24 based on reported earnings (and much higher based on more traditional earnings metrics), meaning the S&P would be 2.5x lower on current earnings at a typical bottom, or around SP350

A drop of this magnitude is nevertheless extraordinary and would reflect fundamental problems in the real economy. Currrently debt is at record levels and economic conditions are deteriorating. While unemployment has been flat for two years and consumer spending relatively bouyant, this may be due to the massive refinancing of homes with the drop in interest rates. If this market scenario plays out, we should see in parallel an accelerating deterioration of the real economy.

There is a divide in the Elliott Wave community on the magnitude of the current drop. The extreme view, trumpeted by Prechter, is that the Great Bull Market of the Industrial Revolution since 1789 has run its course. This is based on wave count, which has us just ending the fifth wave of the bull market that began in 1932, a bull market that reflects the fifth wave at a higher degree since 1789 (grandiosely numbered as V). The problem with this count, besides the obvious that industrialization does not seem to have run its course, is that on an inflation-adjusted basis it appears that the bear market that started in 1929 did not end so quickly, and indeed ran until 1949. This is also consistent with more general economic and political views on the Great Depression, that are that it did not end until after WWII.

The alternative view, supported by Zoran among others, is that we have completed wave 3 of V and are in wave 4 down, with a final wave 5 to go. Under this count, wave V began in 1949, and we have had only 3 waves so far - wave 1 from 49-66, wave 2 from 66 - 82, and wave 3 from 82-00. Prechter counters this by saying that the wave from 49-66 had better technicals than the recent wave from 82-00, and typically wave 3's have the strongest underlying characteristics. The relative weakness of the 82-00 bull market vs. the earlier one may be explained by the Kondretioff Wave, which began in 49 and is ending in 04; a bull market wave which runs through the end of a K-wave will show weaker characteristics. K-waves begin with a bang, peak with inflation, and end with deflation.

The implications of these differing views is profound. If we are correcting the 200 year run-up of the Industrial Revolution, the potential depth will be quite low, the duration quite long, and the fundamental economy quite weak. If we are in a wave 4 of V, the depth should be lower, the duration shorter, and a long bull market wave 5 will follow, carrying beyond our investment horizon.

Most likely we are in that wave 4, as key elements of the core economy look sound: Moore's Law is still working, oil is not running out, and globalization continues.
posted by dd at 4/17/2003 11:35:00 PM

 
Yesterday Yelnick sent out a bulletin to loyal readers that the little wave (ii) seems to be ending. It ended this morning at a 78.6% retracement level on the last day of the predicted fibonacci turn window, and then did a classic five-wave impulse down. Today was also an outside-down day, which means it went higher at open then closed below the prior day's low. Looking back over a series of waves 2 for this bear market, we see some striking similarities:

> most of these wave 2's retrace 78.6% rather than the *normal* 61.8%.
> most reversals happen in a predicted fibonacci turn window
> most end on an outside-down day or outside-down week
> most start with a fast-and-furious short squeeze in a long and strong wave A
> most end with a truncated wave C, as the bullish positions were largely placed during the A wave

This pattern - in particular the 78.6% retracement, a fibonacci ratio that represents the maximum a wave will retrace (if indeed it is corrective) - reflects the high level of wave 2 bullishness that still abounds. I guess in correcting the Mother of All Bull Markets we should expect this high level of wave 2 retro bullishness. Overall the market punditry is soundly bullish. And this when reported P/E is 24 and "core" P/E is 40, ratios well above the normal bull market peak of 22, the average level of 17, and the normal bear market bottom of 10. Remarkable.

The alt count discussed Monday is primarily based on triangles - is what we see as waves (i) and (ii) down actually waves D and E of a running triangle in the B wave of the continued wave 2 correction? Zoran has been following this closely and sent out a bulletin today that he believes we have hit the Bifurcation Point of market direction, and the next move is down.

After-market is up at the moment. The five-wave impulse down into the close today is little wave i of (iii), and will be followed by a little wave ii. So no surprise if tomorrow is up at the open. Always remember that the ewave pattern is a fractal, and has little five-wave impulses and three-wave reversals at all scales. But this little wave ii will end quickly, and be followed by wave iii of (iii) of [i] of 3 of (3) of [3]. Look for continued downward pressure through the end of May.
posted by dd at 4/16/2003 03:01:00 PM

 
I am at an MIT conference on Extreme Commmunications. The intro explained that (among many other inventions) MIT invented the flip chart. Not exactly extreme, but at least they get the Post-It award for cleverness.

Prof. Andy Lippman is making an excellent case for pushing intelligence to the edge to foster innovation. Nicholas Negroponte earlier had answered a question re 3G vs. WiFi by saying the 3G carriers have different interests than users and therefore will institutionally stifle innovation in handsets by preventing certain innovations from occuring. Hence WiFi should outrun 3G. Andy went further by using the always-handy spreadsheet example. It would not have happened if built on a mainframe, as cost of integration would have been too high. Even today, according to his survey, some 70% of spreadsheets have no formulas - which means they are designed as viewing templates to accounting data. The implication is they are not used, or certainly not used as a spreadsheet should.

Implication for innovators is to avoid the SAP trap. More money is spent on integrating SAP than on SAP, and many SAP projects fail. Much of the slwdown in IT sending can be attributed to the costs, complexities and risks of integration. Instead, innovation is coming into the enterprise through the backdoor - by business managers not IT departments. Salesforce.com is a great example, as it can be bought by the line organization without the need to backwards integrate with legacy CRM systems.
posted by dd at 4/15/2003 08:21:00 AM

 
The end of this minor wave (ii) looks close, perhaps tomorrow, right in the middle of the predicted turn window. The prime count has us in minor waves (i) and (ii) of the long-awaited wave 3 of (3) of [3] that should drive the markets down below the October lows by early summer. Today thru Wed are the prime time for the current subwave (ii) to complete and subwave (iii) of 3 of (3) etc. to begin in earnest.

For being in the 3 of 3 etc. down, market has been more corrective than impulsive. As we wait for this to resolve, let's look at some alternative counts.

The prime count is Prechter's.

Glen Neely, who is in effect the Shi'ite wing of the Elliott religion (he broke with Prechter in the '80s), thinks we are in an uptrend towards SP960 over the next few months.

Zoran Gayer, who worships at both wings, believes we are in a small Gulf War II triangle of a much bigger triangle since last summer. He sees the July2002 low as much more important than the October low. The majority of ewavers originally agreed, and thought that July marked the end of (1) down, but later relabeled October as the end of wave (1). Not one to go with the herd, Zoran continues to believe that the whole action since July is best thought of as a triangle. Wave A went to Aug22, wave B to Oct10, wave C to Dec2, and wave D to the recent Mar13 low. We would now be in the final wave E of the triangle. Interesting is that this final wave may also be resolving itself as a triangle.

The Prechter and Zoran views will both resolve in the next few days. Stay tuned.
posted by dd at 4/14/2003 05:22:00 PM

 
Market broke below a trendline drawn from the Mar12 wave 1 bottom and the recent Mar31 B wave bottom. This confirms the change of trend. We are in subwave [i] of 3 down. Look for it to complete either tomorrow or Friday, and be followed by subwave [ii] into our fib turn wndow of April 14 +/- 2 days.
posted by dd at 4/09/2003 08:39:00 PM

 
The following interview with David Horowitz, an antiwar leader from the Vietnam era, is well worth reading. It shows the difference between the antiwar struggle in the bull market '60s vs. the bear market '00s. Loss of innocence indeed. As summarized in the Blogs of War:

"I just put out an 80-page pamphlet called “Who Is The Peace Movement?” They’re communist retreads, Maoists, pro-North Korea and pro-Soviet communists. Leslie Kagan, who is the head of the “moderate” organization United for Peace and Justice, is a pro-Soviet communist. She’s been a Stalinist since the 1960s. It’s that Left - The Nation Left - people who’ve supported every communist. They’ve supported every American enemy for the last 70 to 80 years. That’s who the peace movement is. It’s not a peace movement, if it was a peace movement it would’ve demonstrated at the Iraqi Embassy for Saddam to disarm. It’s a war movement, but its war is against America."
- David Horowitz via The Ville


posted by dd at 4/08/2003 04:58:00 PM

 
If this trend change occurs as predicted, the *fun* part of this (if you enjoy this sort of macabre fun) will be how wrong the popular financial press will seem. First, they will be besides themselves trying to find the Victory Rally, like the Coalition forces trying to find evidence of WMD. When the rally evaporates, they will be stumbling over themselves to find the cause - did we finally wake up to how weak the economy is? Or how large the deficits will be? Or how complex the post-war Iraq situation will be? The ewave view is they have causation backwards. The social mood has created a situation with a weak economy, large deficits and fraying world fabric, and the market is beginning to fully recognize it.
posted by dd at 4/07/2003 05:42:00 PM

 
Count: Wave 3 of (3)
Target: Below Dow6400
Time: May 21 (preliminary)

One of the amazing facets of Elliott Wave theory is it often can peg a trend reversal precisely when the mass of opinion is trumpeting the other way. Today may be one of those days. Some of the major sources yelnick uses for wave understanding - EWI's short term update, Ryan Henry's Wavespeak, Abdulhameed Almousawi of StockCharts - all agree on this trend change. I am waiting for Zoran Gayer to opine as well, as he has been very good at picking Bifurcation Points, the point at which the trend change becomes clear.

Wave C appears to have truncated, as we noted was an increasing probability. If so, wave 2 ended today at Dow8520 / SP905. Look for a down few days as subwave [i] of 3 heads towards Dow8000 again, followed by subwave [ii], which will look like another war rally but will set up a great shorting opportunity: Macho Time IV. Timing for this remains Apr 14 +/- 2 days. Then (if this count is correct) wave [iii] of 3 of (3) of [3] should hit with a vengeance.
posted by dd at 4/07/2003 05:26:00 PM

 
In England at a fairly large conference Colin Powell was asked by
the Archbishop of Canterbury if our plans for Iraq were just an example of
empire building by George Bush.

He responded: "Over the years, the United States has sent
many of its fine young men and women into great peril to fight for freedom
beyond our borders. The only amount of land we have ever asked for in
return is enough to bury those that did not return."

It became very quiet in the room.

(sent by a Yelnick reader)

Great story, wish it were true - unfortunately an urban legend. The truth is less dramatic but the sentiment is similar. if only one could be as succint in real life!

posted by dd at 4/06/2003 07:25:00 PM

 
The warblog sites reported a week ago that the embeds had gone suspiciously silent for two days. They recalled that in GWI the military had pretended to focus on a direct assault on Kuwait and instead did a head-fake by end-running and flanking the Iraqi troops. Were they doing it again? Was there a hidden Northern or Western Front? A week later, none has emerged - and yet a different head-fake may have occured.

It might turn out that the 'pause' was the head-fake - a strategy to lure the Republican Guard out of hiding, sensing weakness of the US advance. And be pummeled in the open desert. Even if this strategy wasn't intended, it might be claimed after the fact.

The market too may pull a major head-fake on investors. We are well into wave C of 2, and should continue up next week, perhaps after a dip on the open Monday. Targets and timing remain on track. Yelnick has previously noted how wave C's in this Mother of All Bear Markets have tended to finish earlier and lower than normal ewave patterns (but still consistently with ewave theory) due to overly-enthusiastic fast-and-furious take-off's at the start of the rally. Thus, this wave 2 rally may complete early next week, then begin to drop in wave [i] of 3 down. This wave [i] will be followed by a wave [ii] back up, which would be the head-fake. Some market analysts are looking for a victory rally of 40% off the recent lows. Wave [ii] may look like another fast-and-furious take-off, this time of the expected vistory rally. Instead, it would merely presage a great shorting opportunity - the hard fall in the long-awaited wave [iii] of 3 of (3).
posted by dd at 4/04/2003 05:17:00 PM

 
The Geraldo saga continues. Where is Geraldo? Has he left yet? In Gulf War I, CNN was kicked out of Baghdad - that was the tragedy. But GWI helped make CNN as a business. In Gulf War II, we have Geraldo. 'Nuf said.

Similarly, in 1974 we had the impeachment hearings for Nixon, whose offense went to the heart of a democracy: messing with the electoral process. In 1998 we had the impeachment of Bill Clinton, messing with an intern. 'Nuf said.

The ewave principle behind both these events is fascinating. The recent EWI Financial Forecast showed how bear market wars like GWII get presaged by earlier conflicts, usually during the wave 4 of the prior bull market. WWI was in the wave 4 of the bull market of the industrial revolution, that ended in 1929 - and presaged (indeed set the foundation of) WWII during the great bear market of the 30s. Vietnam was presaged by the Cuban Missile Crisis wave 4 of the post-WWII bull market. And GWI occurred during the wave 4 correction of the Mother Of All Bull markets that presaged the current and much more complex fight. Often the wrong lesson is learned from the first fight - typically, that the war would be short and easy. The US was only in WWI for 18 months, and the Missile Crisis was over in 12 days. The first war happens due to mixed signals, the second due to a change in social mood. The second war is truly a tragedy; the farce is how dreadfully optimistic the leaders are who get us into the mess (Chamberlain & the policy of appeasement in WWII, Johnson & The Best and the Brightest in Vietnam, Bush Jr & the New Unilaterists today).

The ewave principle would also predict that Bush will not get re-elected in 2004, regardless of how this war turns out. Already he may be fatally wounded; the support in the polls reflecting sensible patriotism for our troops, not deep respect for our leader. Chamberlain gave way to Churchill and Johnson did not even run in his next election.

Also working against Bush is how he got elected. Twice previously in US history we had disputed elections where the eventual President failed to win the popular vote: John Quincy Adams in 1824, and Benjamin Harrison in 1888. Both were descendents of prior Presidents: John Adams, elected in 1796; and William Henry Harrison, elected in 1840. Both were one term Presidents. Both were failed Presidencies. History may be repeating a third time.
posted by dd at 4/02/2003 10:01:00 PM

 
Commentator on MSNBC explaining that it used to take 9000 bombs to assure target destruction, now it takes 1. Sounds like the military has found its version of Moore's Law!
posted by dd at 4/02/2003 09:21:00 PM

 
Count: Wave C of 2
Target: Dow8630 / SP910
Time: Apr 15 +/- 1

Wace C has begun on schedule. Since wave 2 has already passed the "normal" 61.8% retracement of the drop from Dec2, its next most likely stopping points are where wave A = 61.8% of wave A, or ~Dow8630; or the next fib level of 78.6% of the drop from Dec2, or ~Dow8700. Equivalent levels in S&P are in the range 910-920. Interesting is that if wave C = Wave A, another common relationship, the Dow would stop just under the Dec2 high, or Dow9042. More likely, as discussed previously, Wave C will be truncated. Timing looks to be into the end of next week or early the week after.

From CNBC on down, the punditry will attribute this rally to war news, although this rally was predictable in timing and eventual scope, and there is no significant change in the war. Similarly, when this turns down decisively in Wave 3 mid-April, with an expected plummet to below the October lows by late May, the punditry will attribute it to the war bogging down in Baghdad (or whatever).

More significant today is the Bonds Away prediction is also being realized. Long term rates may have bottomed. Bonds are falling as rates are rising. Get in fast!
posted by dd at 4/02/2003 06:26:00 PM

 
I am at the VON conference in San Jose. (Silicon Valley is the other front in Bush's war - his policies have trashed the Internet economy.) listening to a voice-over-WiFi panel. Vocera has a new device which is like a WiFi cordless phone but acts as a pager/walkie-talkie as well. Very useful in a hospital, for example, where it can be carried around like a cell phone and doctors & nurses can find each other and talk wherever they are. Telesym has a similar system where the device is a laptop or PDA with special software. The panel is well-attended, people stacked out into the hall. This shows how robust the WiFi ecosystem is becoming. Expect to see low-power WiFi chips embedded in cell phones next year. Then this market takes off, as the cell phone becomes useful inside as well as outside. The battle will then shift to outside networks - will VoWiFi traffic be captured by the existing carriers or will new voice-over-IP (VoIP) carriers use the Internet to bypass the pulic switched phone systems worldwide.
posted by dd at 4/01/2003 02:23:00 PM

 
The loss of Pete Arnett and Geraldo Rivera has turned the war into a reality show - a reporter version of Survivor. Clearly the celebrity reporters are being voted out. Is Ollie North next?
posted by dd at 4/01/2003 10:37:00 AM