Zeev's Turnips Patch-No Politics (ZEEV)

[marketmaven]

Strategic Market Thoughts : http://urbansurvival.com/week.htm
POS Group LOL !

I've mentioned Robin Landry several times to you. In order to get a better bead on the future, I'll frequently poll Robin on his market outlook. because it is so pertinent, I will be posting the following portion on the public (free) side of the site on Sunday evening for the Monday morning edition:

With the market down under his target of 9852 to even have a prayer of avoiding a collapse, you can bet that on Monday morning, Robin Landry - who is the only honest broker I know (email Office: [phone] ) & got his clients out of stocks and into bonds in the spring of 2000 when the Internet tech bubble party was still going – will be watching with great interest.

Just what does Landry see ahead for this coming week – baring any major news developments between now and the open tomorrow (Monday)?

“The first thing I look for is on Sunday evening – is I will look at the Japanese market to see how it is trading. Then, when I do my couple of overnight checks, I will look in on Europe and see how they are holding.

If they continue the decline – which I expect barring a major direction changing news story - just looking at the pattern, we have broken the trend line and the recent low of the market from the lows of last October or March, depending on which index you look at.

There’s no question in my mind, that barring an all-out rescue attempt – we’re headed lower."

“What’s lower, Robin?”

"The first support is 9500 on the Dow. The next support after that is 9,230. Now, at that point in time – if we go through that and head lower, and we can’t turn, the last point at which I believe we can have a positive resolution is the 9,000 level give or take 50-points or so.

If we break below the 9,000 level, and we can’t turn within a day or so at max, then we will likely visit the lows of 2002. That low was 7,197 intra-day.

We got down to 7,416 in March (2002 – G), but this count would tell me that we are going to that area – and most likely to the 6,300 area that I mentioned to you a few weeks back.

At that point, if you recall our conversation, I told you that it was my belief that if we broke below the 6300 area then there was no or little chance of a bullish resolution for a number of years."

“That implies the Second or Greater Depression I have been warning of for six years – will have really shown up, right?”

"I would have to agree. There are a couple of other points which I will watch with great interest if we move in that direction. There will be some very swift rallies. So how the wave structure looks when we get to say 6,300 will determine if we then go directly to 5,200 (or lower) or if we take some intermediate bounces along the way.

“But the bounces there would still be under say 7,100 if I under stand the count correct?”

That’s right. The most negative count would have us just now beginning a Wave 3 down. The decline from the highs in 2000 to the October of 20002 low was would count as Wave 1 down, then since October of 2002 until the high in February of this year was the Wave 2 bounce.

Now one other thing I should mention here is that Wave 3 is where the majority of damage is done. In other words, a minimum we might expect would be where Wave 3 equals Wave 1, and that was a decline from 11,750 to a low of 7,197. That’s 4,553 points. So now we go to the (Wave 2) high in February of 2003 which was 10,753 and knock off those 4,553 points and you can see a Dow of 6,200.

Now, that 6,200 is the minimum, George. Wave 3’s are generally the longest and the strongest. Or the weakest on the downside – the most bearish.

Is there a case for a different count? Yes. This could be a five-step move down and the rule is that the third wave can not be the shortest. That means we could literally see the Dow number become much lower than even 6,200. "

“How much lower, oh bearer of bad news?”

In this particular case, the next level of support, once you pass the 5,200 area is around 4,000 – now, mind you, we are talking about a decline of nearly 6,000 points from Friday.

The more bullish count of the bear counts (less destructive) would have the A Wave (from March 2000 to October 2002 as Wave A – and the rally from the October was Wave B. That would mean we are now in wave C. In that case, the rule states that most often, the C wave is equal to the A wave, which again would tell us we’re heading for that 6,200 – 6,300 region.

If you will recall George, for a long time, while we were on the old longwaves group*, I said I believed there was a possibility that this was a large Wave 4 on the ultra-big picture Super Cycle view instead of the top of Wave 5.

If that’s the count, then instead of March of 2000 being top of Wave 5 of the Grand Super Cycle, that it was Wave 3 of the Super Cycle and that we were in a large Wave 4. Then that would mean a decline here, but it would be followed by 5 to 8 more years of upward market action to finish Wave 5 of the Grand Super Cycle before all of the downward action started.

While I believe this has very low probability now, it’s always wise to be on the lookout for something unexpected.

Now, what would tell me that was a possibility? If that count was to be the case, the second most logical target down of a third wave down of an A-B-C Wave 4 down is for the C Wave to be .618 of the A Wave.

In other words if this decline halts in its tracks and reversed at 9,740 plus or minus, then we might ending Wave 4 and that would set up a splendid inflationary run of 6-8 years before the deflationary collapse.

“OK, so we have a collapse to 6,200 as the most likely case, but the alternate and more bullish count is this last one where we hold 9,740 and then turn into another Bull Market. But with the economy looking like another recession just ahead, especially when you look at all the made-up numbers in the jobs report, how realistic is the Bullish count holding 9,740 and then going up?”

"Oh the odds of that happening are less than a 20% chance of happening – but like I tell my clients that means that it will happen - one time out of five.

But it’s still a possibility we have to plan for. In other words if we don’t make a new low and the market turns back up, be prepared – and be watching gold, oil, silver, all the natural resources, and the commodities - because we will be in a fifth wave up. Wave 5’s are natural resource commodity-based waves – and it could be very inflationary this time. So that’s where some fortunes will be made.

That would tell us it boils down to inflation or deflation. We can have a German-like hyperinflation and then have a deflationary collapse, or we can go directly into deflation. I’m not smart enough to know the answer. I’m just watching both: 80% chance this is the Big IT but 20% says there’s another 6-8 year Bull run out there. But, we’ll know soon enough.

I told a group of new clients last week: In Oklahoma jargon, when you look out the window and you see a storm, dark clouds, and a funnel, do you go into bed and go to sleep or do you head for the cellar?

The wise and prudent person will move the bed to the cellar and occasionally check to see if the storm has passed.

That’s what I believe everyone must be doing right now. If we have the one last chance of an inflationary blow-off before a deflationary collapse, then everyone will have been given one last chance to prepare. Rarely do you get a second chance. But if it happens and you don’t avail yourself of it, you will have no one but yourself to blame – and your family, friends, and loved ones will suffer right along with you. "

Monday Update: In the email from Robin Monday morning: "Starting out as expected in Japan. Look for attempt to turn it back up, but doubt it is successful." The Nikkei closed down 63 and change.