Government "Interventions" - A.K.A. Redefining Insanity

This is such a lunatic idea that I hardly know what to say about it. You may not want to buy stocks right now, I know I don't. But, if the Fed buys stocks, then whatever you and I and anybody else "wants" ceases to matter. All Americans own equities. Period. Will they have to notify all of the 110 million U.S. households about the date and location of shareholder meetings?

Euro Vs. Dollar: In a Freefall

You can't look at this week's action in the U.S. dollar without having your jaw drop. We've already commented on the greenback's stunning strength recently despite several major "fundamental" factors that should have sent it crashing. Here's just a quick list:

What Were You Reading at Dow 14,000?

Today, six years after its launch, Robert Prechter's New York Times and Amazon best-selling book, Conquer the Crash, reads like a script. Bob says, "We're about a third of the way through CTC. There are two-thirds left. There is still time for people to get ready, but not much." Here are some highlights of the story Bob foretold in Conquer the Crash.

Admit It: People Herd

On a day when the DJIA fell another 678 points to close below 8,600, it seems appropriate to talk about the herding impulse in humans. We at EWI observed decades ago that the financial markets are anything by rational. Now the mainstream media is also picking up on this fact. So why has the stock market "become a case study in the psychology of crowds"? Here's an eye-opening answer.

Dow Below 9000: The Con(fidence) Game is Up

People have lost confidence, and the markets reflect their concern. Without confidence, the financial house of cards falls down. This is exactly what Bob Prechter writes in his best-selling business book, Conquer the Crash.

Cotton: Futures Forerunner

The votes are in. The ballots are tallied. And the official frontrunner has been declared. (And no, we’re not talking about the 2008 Presidential Election) We’re talking about the current race to determine which market -- out of all the major commodity candidates out there -- is the greatest contender for near-term opportunity. And the winner is: Cotton

European Stocks: The Dance Of The Fearful

Bear markets can destroy very quickly what took years to build. They are fast because they are driven by fear, and fear is stronger than greed, the bull market catalyst. This is what Tom Denham, Elliott Wave International Senior European Equity Analyst, says about this cycle in the opening paragraph of his current, October European Financial Forecast...

Oil Prices Plunge: What “Safe-Haven”?

According to mainstream financial wisdom, when the plane of the U.S. economy runs out of fuel and starts hurtling toward the earth’s surface, one of the few markets said to provide a parachute of safety is … Oil. Problem is, over the last four months, said parachute has failed to open. 

The $700 Billion Dollar Question

Global deflation means global recession. Still, come to think of it, as bad as it may get in the U.S., our financial, service and industrial diversifications would probably make the U.S. dollar and equities a good bet, on a relative strength basis.

Russian Stocks: From Boom To Bust

In the last month, Russia (a.k.a. “the Lungs of Europe”) has come down with an acute case of financial pneumonia. Every effort to clear the airways -- from NINE shut downs of the Russian Trading System Index (RTSI) to $150 billion in cash infusions -- has been for not. Moscow’s main bourse continues to choke, culminating in the code blue event of “Black Monday” (October 6)...

U.S. Dollar: The REAL Bear Market Maverick

Despite all "fundamental" odds, since mid-July, the U.S. dollar has been gaining strength. The euro vs. dollar exchange rate, known in forex trading world as the EURUSD, has fallen from near $1.60 mid-summer to below $1.35 on October 6. This chart illustrates this incredible 25-cent gain by the greenback...

Have You Reached the "Point of Recognition"?

With the Dow dropping more than 800 points over two days, people are reaching the "point of recognition" when they can see that the stock market is moving strongly in one direction.

Do Bailouts Work? Wait Till You See This Chart

In the last month, the finanical powers-that-be have pulled the trigger on a "bailout bazooka" AND dropped the ultimate bailout A-bomb. YET -- the big, bad grizzly goes unscathed, taking the financial world by storm like some indestructible Bearzilla, squashing every major monument to wealth in its wake. The latest casualty: the Dow Jones Industrial Average...

Where Is a Good Investment Banker When You Need One?

The Wachovia board gave Citibank the shaft, and now Citibank is crying tortuous interference. Good luck with that one. With all that has gone on the past several weeks, is there really a judge out there who will force Wachovia to re-enter a buyout that leaves taxpayers vulnerable to potentially billions in losses and leaves bondholders out in the cold? More...

Presidential Hopefuls: A Dark Horse Ticket

While watching the October 2 Vice Presidential debate, I couldn’t help notice the huge amount of time the candidates spent playing the game, “MY Guy Predicted The Financial Turmoil First.” If anticipating the current U.S. economic crisis BEFORE it unfolded is qualification enough to run for Leader of the Free World, then I have a dark horse ticket to fill: Bob Prechter for President.

A Trend That's Bigger Than Every News Story You Can Name

It doesn't wash. News can't reverse the dominant trend, and every news story you can name has been smaller than this trend for the past 18 months....

Struggling To Stay Alive in the Credit Default Swamp

The most famous line delivered by Pogo was, "We have met the enemy, and he is us." That sentiment perfectly captures what the muck-a-mucks on Wall Street should be thinking as they look around the financial landscape and realize that the credit default swaps they purchased as insurance against their risky securities bets have all blown up.

Commodity Spotlight: How Low Will COCOA Go?

n general, using “fundamentals” to keep the course of the financial markets is a lot like using a compass to navigate on the moon: The needle rarely points in the right direction. Case in point: the COCOA market circa June 2008.

Want to Know How Big the Liquidity Problem Really Is? Here's A Comparison

During the past two weeks the liquidity crisis has grown worse literally by the day. And the bankruptcy of Lehman Brothers on Sept. 15 did indeed trigger this acute phase of the debacle. Perhaps this simple comparison can show the scale of the problem....

Historic Bailout Vote: House, Senate Vote On Bailout Plan To 'Rescue' Financial Markets – Can It?

News reports say the Senate is preparing to vote on a revised plan Wednesday evening, but the question remains: Will this bailout plan – or “rescue” effort, if you prefer the government's term for it – save the financial markets?

"What We Do" -- Longest Page on the Fed's Web Site?

I will agree that a word like "Facility" sounds so much more, well, fiduciary... even if a descriptive phrase like "Come and get it!" is arguably more precise. Thing is, every time the Fed makes the credit window bigger the list of banks still around to use it gets smaller.

Oil Prices Say "Watch Out"

If ever there was a time for the cause-and-effect logic of conventional economic wisdom to play out in the real world, September 2008 was it. And Crude Oil was the market.

The Bailouts Can’t Buy Happiness

At this point, the federal government should rename their plan for fixing the U.S. economic crisis to -- the “Weekend At Bernie’s” Bailout. Under this system, Fed chairman Ben Bernanke pretends the leading financial giants are still alive by propping them up with a multi-TRILLION-dollar back brace.

A Reckoning On An Epic Scale

"Reckon" is an Old English (OE) word, which means it's been around too long to know when its usage began. The Oxford English Dictionary includes several meanings for "reckon," from the mundane ("to count or put straight") to the unnerving ("account for one's life to God after death")....

Buy This Bailout or We'll Shoot This Bank

That magazine cover came to mind as I thought about how the Congressional bailout talks imploded on Thursday night, and how the announcement of Washington Mutual Bank's failure came on Friday morning. My inner cynic wondered whether the seizure of WaMu's assets was a "we're serious" message to the Congress from the Treasury and Fed -- as in, "Buy Bailout or We'll Shoot Another Bank"...

Bailing Out Speculators Just Like a Bad Liver Transplant

Politicians are converting bales of privately issued bad credit into what the government calls money. As we know, values do not come from nothing. So where does the value handed over to all these broke creditors come from?

An Update on the $138 Billion -- and the Inferences

Lehman's bankruptcy remains very much relevant to the proposed $700 billion bailout plan now under debate in Congress. In his testimony to the Joint Economic Committee of Congress on Sept. 24, Fed Chairman Bernanke said...

$138 Billion -- Just Inferences, We Hope

I've read several details regarding Lehman's demise and learned some interesting facts. The bankruptcy filing was "pre-dawn" on the 15th, according to Bloomberg. The filing document is available in pdf form on the internet: it names Lehman's largest unsecured creditors, and the dollar amounts of their claims....

Commodity Special: Sweet Opportunity In Sugar

True or False -- Crude oil prices move in step with sugar prices. Reason being, the higher the cost of oil, and the greater the demand for alternative fuels such as cane-based ethanol. Today's story has the answer that might surprise you.

Will Gold Provide Shelter From The Storm?

As the stock market continues its violent 400-point swings back and forth, one question floods the minds of investors across the country: Where is a secure place to park my money, besides the floor boards? And, like a broken record, the conventional wisdom repeats, “Gold, gold, gold…”  Are they right?

Black Swans, Rogue Waves, and Wall Street

Statistical models are linear by nature, based on averages and probabilities. Some can account for the outliers, but will assign them a probability of appearing only once in a thousand years. Your reliance on these assumptions can be measured by the shock you feel over the demise of Wall Street in the space of one week....

The Brilliance Of The U.S. Government Bailout

From the time the founders drafted the Constitution, Presidents and the Congress have often been in a tug-of-war over the scope of executive power. But this time, it's different. The expansion of executive power is not because of national security, war, or political scandal. This time, the president wants power without precedent because the debt-based, monopoly-currency financial system has failed.

I Wish The Answers Were Here

Whether in my job as Elliott Wave International’s Senior Bonds Analyst or in these essays, I enjoy writing with a slightly cynical, tongue-in-cheek style. I believe that most of the time, humor is the best thing to get you out of a bad situation. However, there are certain times when a more sober assessment is needed. Deflation is here and everybody knows it – even those who don’t yet call it by its name. Here's what it means for all of us...

Prepare to Be Robbed -- It's For Your Own Good

Picture a nice home in a nice neighborhood. Two men in dark suits walk up and knock on the nice front door: Men: Hello, we're from the government. Not only are we here to help, we're also going to rob you for your own good...

Why Is The U.S. Dollar Falling?

The U.S. dollar and the U.S. stock market are forever joined at the hip in a kind-of three-legged race to the financial finish -- or so the conventional mainstream wisdom would have you believe. Our archive of the lasting trend changes within each market over the past four years begs to differ...

Thank You for Your Support of Bailouts-R-Us!

Let's see -- "weapon," "arsenal," "combat," "threatens." Sounds like the SEC is "committed" all right, but language like that makes me wonder if bureaucrats are up to the task. Perhaps the Department of Homeland Security should do the enforcement dirtywork, or for that matter a brigade of Marines. Killing all the short sellers is easier with executioners who won't point the business end of the weapon at their own feet....

Why the Bailouts Ultimately Won't Work

Government officials and newspaper editorials, even those from skeptical writers, have been unanimous in claiming that a bailout, no matter how unpleasant, was “necessary.” But this is nonsense. Find out why.

Why Is Silver Falling? Hint: Look At Economy (Part II)

Gold and silver are traditionally considered to be a hedge against bad economic times. Put another way, precious metals go up when the economy goes down – or so says the conventional wisdom. But, as it’s often the case with various bits of conventional economic wisdom, this one also begins to show cracks the moment you look at some historic charts...

Stock Market 'Carnage' Continues

The Dow Jones Industrial Average is down some 800 points over the past three days (Sept. 15-17). Monday alone was its sixth steepest drop EVER, at 504 points. How does the recent sell off in stocks fit into the big picture AND does that picture contain the etchings of a wee cub, or a mature adult?

U.S. Dollar vs. Euro: 'Risk of a Sudden Revaluation'

Have forex traders lost confidence in the idea that the U.S. was ahead of the rest of the world in regard to bad news – and now it’s leading the way back, away from the edge of recession? Or have they lost faith in the way the U.S. does business? And if it’s the latter, does it mean they have lost faith in the capitalist way of life? And what could that mean for the U.S. dollar? Here are some thoughts from Elliott Wave International’s Senior Currency Strategist

Silver Elliott Forecast Says 'Watch Out!'

News Flash: From their March 17 peaks, Gold has plunged 27% to a one-year low, while silver has lost nearly half its value in a violent selloff to two-year lows. While a bearish bullion forecast was entirely "alien" to the mainstream experts back in March, it was every bit familiar to Elliott Wave International's team of analysts...