4/13 Daily Commentary

Today was I1 bottom day, but since it is a double-bottom I got flat at a target rather than waiting for near the close. Made a good profit shorting crude. 

I1 turns up from here but not enough to register a formal buy signal.  I1 will advance to 4/29, but I believe that the market will not hold up that long. From 4/15 on any decline below the DJI 5-minute, 380-unit M/A - 1.2% will cause me to re-enter short. If the market does hold up into 4/29 then I will re-enter short then. I normally do not post what I expect for the extent of upcoming moves but the decline from the late April high will be very sharp, 15- 20%, ending early July.  This will be an opportunity for big money to be made.

My goal is to avoid the twin horns of investing:
Horn#1:  Being short in a rising trend.  Elliott Wave International has been short since November and, no fault to them, are positioned to take advantage of the bear when it resumes.  Anyone holding shorts that long is taking a hit, depending on the proportion of exposure.
Horn#2:  Being out of the market during the initial leg.  The turn, when it comes, will be vicious because of the amount of leveraged money and trend-following in the market at this time.  While mutual fund inflows have been positive for 4 months the real inflow has been from hedge funds and individual traders, gaming the system.  Individual traders are very bullish and the Nasdaq and small-caps are leading the market higher, signs of speculation.
 
I accomplish this by using I1 to time my windows.  The turn will come within the I1 declining periods.  So, I am quite happy to break even shorting the declining I1s because I WILL be positioned and psychologically ready to maximize the return of the bear.  Thus my use of I1 is my method of implementing the Elliott Wave International recommended position without the loss exposure. 
More importantly, I1 is entering a 5-year declining window of sub-par values.  It enters this window from the 4/29 high.  As I have stated numerous times I am not convinced that the stock market can hold up into 4/29, but if it does I will short aggressively and hold long-term positions with wide stops.  After 4/15 and particularly after 4/22 any decline below the critical support level described at the top of this post will cause me to enter short.

I will enter short silver on any 90-minute close in May futures below 18.00.  Roubini was on Bloomberg and is definitely not bullish gold.  He believes the economy will stagnate as the stim runs out in second half.  What a surprise if the economy not only stagnated but ran through 2011 in contraction mode.  That would cause the Fed to engage in more mortgage buying right around Q12012 without exiting their existing mortgage portfolio.  The joke is that the politicians are actually declaring that they are making money on the programs they instituted.  The side joke is that they are itching to declare China a manipulator.  Wow.