DJT, RUT - New Recovery Highs

Mid-Caps, RUT, DJT all made new recovery highs today.  My counts for RUT and DJT are shown below.

RUT WEEKLY

RUT DAILY

RUT 60 MIN

DJT WEEKLY

DJT DAILY

DJT 60 MIN

Another index at an interesting spot is Consumer Staples IXR.

IXR WEEKLY

In Europe, there has been a decoupling between Spanish and Portugese bond yields over the past few weeks.

PORT 10 YR vs SPANISH 10 YR

(Spain in Green)

However, the decoupling looks to me like a consolidating bull flag for Spanish yields - a pause that refreshes, so to speak.

SPAIN 10 YR

FWIW, I'll share with you a comment I made in the FT lately, which gives my take on Europe.

Blankfiend2
March 30 3:38am


IMHO, the only real solution for the eurozone is to become a true federation of nations, along the US model. Unfortunately, I think such an accomplishment would be rather Utopian for the present day.
You mention the ESM, which is a case study in crisis propagation. True, it may be the newly installed fire extinguisher system for the next crisis, but the pipes have been filled with gasoline in the form of callable capital. When crisis hits, the ability of some nations to contribute that capital becomes doubtful. Indeed, the will to contribute it is already in doubt, given the German reluctance to pay in 11 BN Euros in 2013, as described by Mr. Munchau. The Finns are another example, as nationalistic fervor close to elections caused the EU to delay implementing an increase in the size of the EFSF. The French have Marine Le Pen and the National Front, which captured 44% of the vote in the seats it was contesting. Le Pen is an advocate of leaving the EU altogether. I dare say that as wealthier nations are called upon to support the weaker periphery, we are seeing more radical and nationalistic movements arise within those creditor nations.
The bottom line: At some point the market will throw down the gauntlet and say "Put your money where your mouth is." What happens then is far from certain.
 
A great read in regard to the ESM and EFSF flaws can be found here.
 
Meanwhile...
 

Transports

This index gives a decent picture of my world view.  Unlike some others, I am of the belief that the top we are approaching is of greater significance - probably of primary degree.  Furthermore, I am NOT a long-term optimist on the US until I see debt, both sovereign and private, addressed in some way other than through obfuscation.

MONTHLY

DAILY

60 MIN

I will be using the coming highs to solidify gains in longer term accounts.

On the Precipice

Earlier today, I put up a post of the SPX showing a potential rebound, but quickly pulled it.  I am a firm believer in the pluripotency of Elliott waves, which makes them somewhat worthless as a predictive tool for markets.  Rarely have I seen the market at a more critical tipping point than it is tonight.  Doing micro counts to assure yourself that the decline so far is not impulsive is a fool's exercise, as a huge flush tomorrow will retrospectively make the micro count into a subdividing third wave of some degree.

Really, everything depends on the situation at Fukushima, which is truly critical.  Evidently, at least two of the reactors have fuels rods that are exposed at least one or two meters within containment vessels that are apparently intact.  However, reactor 4 may very well have a completely dry spent fuel pool with loss of secondary containment.  If this is the case, radiation levels in the entire complex may preclude any further human intervention at Fukushima and lead to core meltdowns and the emission of massive doses of radioactivity.  That part of Japan would be a no-man's land for decades, and panic would ensue quickly in Tokyo.  Supposedly, there is a plan to use helicopters to try and refill these pools, but I frankly do not see how that could work.  Most of the water would simply splash away if dropped from altitude, and the steam release on contact with the heated spent fuel rods would be extremely hazardous to the air crews attempting such a maneuver.

If, by some miracle, which I am praying for, such a disaster is averted, markets will skyrocket.  If not, they will plunge.  I'll be darned if I know which.

SPX

RUT DAILY

RUT BULL

RUT BEAR

In conclusion, if there was ever a night to show two very diametrically opposed alternatives, this is it.

And Away We Go....

TNX 60

BKX 60

DJT 60

CAC and DAX have potential Morning Star doji's, while FTSE has a hammer.

Text to help quake victims in Japan

Verizon Wireless has started a mobile giving program where customers can contribute to the relief efforts. All you have to do is send a text message. There are a number of organization you can give to including the American Red Cross, the Salvation Army, and Global Giving. Each organization has its own word to text, and number to text to. Once you send the text, ten dollars will be donated to the organization you chose.
Once the text is sent, $10 will be applied to your account and it will show up on your next monthly bill. Here are the organizations and codes for each organization:
ADRA Relief: text SUPPORT to 85944

American Red Cross Relief: text REDCROSS to 90999

Convoy of Hope: text TSUNAMI or SUNAMI to 50555

GlobalGiving: text JAPAN to 50555

International Medical Corps: text MED to 80888

Mercy Corps: text MERCY to 25383

Salvation Army: text JAPAN to 80888

Save the Children Federation, Inc.: text JAPAN or TSUNAMI to 20222

World Relief Corp. of National Association of Evangelicals: text WAVE to 50555

World Vision, Inc.: text 4JAPAN or 4TSUNAMI to 20222

EFSF Deal, FTSE

European leaders unexpectedly reached a somewhat more promising deal for the EFSF late Friday night.  I say somewhat, because I consider all of this to be stop-gap that will ultimately fail.  Nevertheless, Angela Merkel has surprisingly agreed to allow the EFSF to buy bonds in the primary markets only - not in the secondary.  However, there are austerity conditions that any country selling bonds to the EFSF would have to meet, and I do not have details about this yet.

The fund was also expanded to a full 500 BN Euro's.  Here, Merkel insisted on non-AAA countries contributing cash on the order of 80 billion euros, while the AAA countries just get to issue guaranties, for now.  How some of these non-AAA countries are going to come up with this kind of cash should be interesting.  Furthermore, the AAA countries will have to strengthen their guarantees for the fund to have full lending capacity and yet maintain its AAA rating.  This could be politically tricky for Merkel in Germany.

Greece got a 1% reduction in its interest rate, and a term extension out to 7.5 years from 4.5 years.  Ireland did not fare so well, with a requested interest rate reduction rejected based on the Irish insistence on keeping its corporate tax rates low.

With all of this in mind, I would propose the following count for the FTSE.  Some major development in Japan could change this, and the possibility that a top is already in for [B] is not to be ignored.  The 30 minute chart shows that less likely possibility of an orthodox top.  The decline off of the actual 6105 top is challenging to count as anything other than a correction.

FTSE MONTHLY

(The monthly chart shows some of the other longer term possibilities for this index.  I am following the blue.)

FTSE DAILY

FTSE 30 MIN

On a final note, a major nuclear incident in Japan, or further after-shock damage of large degree, could bring about some interesting developments in the JGB markets.  Japan has the greatest debt-to-GDP ratio of any developed country on the planet, at ~250%.

Meltdown?

Don't know if you've have been following the nuclear containment situation in Japan, but it is getting extremely serious.  A fifty km exclusion zone has been established around the Fukishima reactor site, and authorities there are attempting to use a sea water/boric acid mix to flood an overheating reactor.  Such a measure is not really part of any standard EAP, and given the corrosiveness of sea water at high temperature, is clearly a last ditch desperation measure to cool this reactor.  If it works, the reactor is essentially a trashed rust heap.  If not, we get a meltdown ala Three Mile Island, or worse, where the reactor melts down through the floor of its containment vessel.  Unfortunately, this site has been using an experimental fuel containing plutonium, known as MOX.  MOX is more difficult to contain, causes greater wear on reactor components, and, if involved in a meltdown, would leave a more highly radioactive residue in the area.  I do not know the exact make-up of MOX, but Plutonium isotopes can have half-lives ranging from 88 to 24,100 years.

My best wishes and prayers to all involved in this!

Saudi "Day of Rage" - LIVE VIDEO!!

WOW!  Very impressive.

Saudi Arabia 'day of rage' protest fizzles

Holding The Line

Two indices to support my preferred RUT count shown this morning.  IF the lower channel boundaries can be meaningfully violated, then the picture gets more immediately bearish. 

BKX

DJUSRE

RUT - Thrust Out of a Triangle

Not what you want to see if you're a bear.  I'm looking for an impulsive [c] wave down to near the bottom orange channel boundary to mark the bottom of a second X in a triple ZZ (Z) larger move up.  Support lies around 770.

RUT 60 MIN ORANGE

My wave labels should probably be of one higher degree here, as I think this move up after [x] will be the final wave of [B].  I fixed my wave label problem.

No-Man's Land (Update 23:52)

I've been silent for a while now, and probably will be again after this post.  To me, we are still in no-man's land, with both the bearish and the bullish case in play.  What truly gives me pause is the oil scare that has led to this recent stutter-stepping in markets.  To me, this is a red herring, although it is certainly capable of becoming much more.  My focus remains on the fundamental problem with unsustainable sovereign debt and its extreme interest rate risk.  However, the market has yet to share my concerns.  Two excellent articles in this regard are listed at the bottom.

Meanwhile, I have both the green and the orange count in play for the RUT.  Green gets more plausible with a close below the line shown on the 60 minute orange count chart - somewhere below 771 or so.

RUT GREEN

RUT ORANGE

RUT DAILY

European philosophy cannot solve euro's existential crisis  (Irish Independent)


Banks? What banks? (Frankfurter Allgemeine


Finally, did you hear the bullshit about financial terrorists being responsible for the 2008 crash?  IMNSHO,
Utter Goebbels-style hogwash! The only "terrorists" involved here are the politicians and the Fed who attempted to whitewash income inequality with the illusion of prosperity built on an unsustainable level of credit. I would not be surprised to see the US government use propaganda like this to make Americans feel it is their patriotic duty to buy US Treasuries when "Phase III" gets underway in earnest.

EDIT:

To further illustrate my no-man's land idea, this is BKX.  The black count shows a potential (c) wave starting ASAP at the lower channel bound.  The red count would be indicative of a top, but needs convincing evidence that is so far lacking...

BKX