Comments on: Treasuries could have a lot of strength left. http://sovereignspeculator.com/2009/07/29/treasuries-could-have-a-lot-of-strength-left/ Thoughts on the markets and the decline of the west Sun, 28 Nov 2010 18:52:39 +0000 http://wordpress.org/?v=2.6 By: Mike http://sovereignspeculator.com/2009/07/29/treasuries-could-have-a-lot-of-strength-left/#comment-4840 Mike Sun, 02 Aug 2009 09:42:01 +0000 http://sovereignspeculator.com/?p=2541#comment-4840 No prob, Pej. Like I said, it's an art, not a science, and it's best combined with other hints about crowd psychology from technical analysis and your take on the zeitgeist. You can take it or leave it, but I think all aspiring traders owe it to themselves to at least learn the theory. No prob, Pej. Like I said, it’s an art, not a science, and it’s best combined with other hints about crowd psychology from technical analysis and your take on the zeitgeist. You can take it or leave it, but I think all aspiring traders owe it to themselves to at least learn the theory.

]]> By: Pej http://sovereignspeculator.com/2009/07/29/treasuries-could-have-a-lot-of-strength-left/#comment-4839 Pej Sun, 02 Aug 2009 09:35:02 +0000 http://sovereignspeculator.com/?p=2541#comment-4839 Thanks for all the info Mike. The fact that the waves are fractal kind of allows for any interpretation, when there's no benefit of hindsight though. That's the troubling bit. I'm off this week, so might not get the time to read/post but I'll make sure I'll get a copy of the book once I'm back. Thanks for all the info Mike.

The fact that the waves are fractal kind of allows for any interpretation, when there’s no benefit of hindsight though. That’s the troubling bit.

I’m off this week, so might not get the time to read/post but I’ll make sure I’ll get a copy of the book once I’m back.

]]> By: Mike http://sovereignspeculator.com/2009/07/29/treasuries-could-have-a-lot-of-strength-left/#comment-4802 Mike Fri, 31 Jul 2009 10:47:23 +0000 http://sovereignspeculator.com/?p=2541#comment-4802 Hey Pej, Elliott Wave is very much an art, and IMO you have to look at the waves in the context of other TA tools like MACD, TICK, Put/Call, II surveys, the VIX, etc, as well as hints about sentiment from news headlines and the tone of comments and posts on blogs (and I guess cable TV if you can stand it -- Bloomberg is the least offensive there). You have to take all of these things together to form your hypothesis of where we are. When it comes to counting waves, it is important to remember that they are fractals, so you have different magnitudes nested within one another. You have to gauge the breadth and intensity of each wave of mood. Clearly, the rally since March is of a different order than the rally from November 08 to January 09 -- there is a much greater shift in attitude, though the percentage move in the S&P is not that much greater. So this is a primary wave (2) and that was an intermediate wave (4 of primary 1). All I can say is, it takes a lot of study and real-time practice before you can begin to make this work for you. But you don't have to be 100% on board with the theory to pick up a few tricks. If you really want to learn it, get Prechter and Frost's 1978 book, The Elliott Wave Principle. You can also hang out on evilspeculator.com -- mole and some frequent commenters there are big into EW. Or sign up for EWI's short-term updates, which show you how it works in action. That is a good service anyway, and they use a lot of other TA tools as well. Hey Pej,

Elliott Wave is very much an art, and IMO you have to look at the waves in the context of other TA tools like MACD, TICK, Put/Call, II surveys, the VIX, etc, as well as hints about sentiment from news headlines and the tone of comments and posts on blogs (and I guess cable TV if you can stand it — Bloomberg is the least offensive there).

You have to take all of these things together to form your hypothesis of where we are. When it comes to counting waves, it is important to remember that they are fractals, so you have different magnitudes nested within one another. You have to gauge the breadth and intensity of each wave of mood. Clearly, the rally since March is of a different order than the rally from November 08 to January 09 — there is a much greater shift in attitude, though the percentage move in the S&P is not that much greater. So this is a primary wave (2) and that was an intermediate wave (4 of primary 1).

All I can say is, it takes a lot of study and real-time practice before you can begin to make this work for you. But you don’t have to be 100% on board with the theory to pick up a few tricks. If you really want to learn it, get Prechter and Frost’s 1978 book, The Elliott Wave Principle. You can also hang out on evilspeculator.com — mole and some frequent commenters there are big into EW. Or sign up for EWI’s short-term updates, which show you how it works in action. That is a good service anyway, and they use a lot of other TA tools as well.

]]> By: Pej http://sovereignspeculator.com/2009/07/29/treasuries-could-have-a-lot-of-strength-left/#comment-4799 Pej Fri, 31 Jul 2009 07:58:09 +0000 http://sovereignspeculator.com/?p=2541#comment-4799 Mike, about Elliott Waves: I saw Robert Prechter's documentary yesterday. Thank you for letting me know about it. I had registered on the elliotwave international web site, but wasn't aware of the socionomics one. I have been following for the past several months his commentaries on the youtube channel someone set up for his interviews and have read about EW a long time ago. My problem is that I do not know how to count the waves, and so it seems like you can get mold the way you count to confirm your beliefs? I just saw this on Mish's blog: http://4.bp.blogspot.com/_nSTO-vZpSgc/SnKH347I2ZI/AAAAAAAAGis/PYrccD89He8/s1600-h/%24usd-weekly.png On this chart, without the benefit of hindsight, how would you have counted the waves in the period [july 08 - march 09]? Even worse, how would you have done for the period [oct 06 - mar 08] ? it seems there are 11 waves on the latter period, which is a lot less confusing the the former. Thanks :-) Mike, about Elliott Waves:
I saw Robert Prechter’s documentary yesterday. Thank you for letting me know about it. I had registered on the elliotwave international web site, but wasn’t aware of the socionomics one.

I have been following for the past several months his commentaries on the youtube channel someone set up for his interviews and have read about EW a long time ago.

My problem is that I do not know how to count the waves, and so it seems like you can get mold the way you count to confirm your beliefs?

I just saw this on Mish’s blog: http://4.bp.blogspot.com/_nSTO-vZpSgc/SnKH347I2ZI/AAAAAAAAGis/PYrccD89He8/s1600-h/%24usd-weekly.png

On this chart, without the benefit of hindsight, how would you have counted the waves in the period [july 08 - march 09]? Even worse, how would you have done for the period [oct 06 - mar 08] ? it seems there are 11 waves on the latter period, which is a lot less confusing the the former.

Thanks :-)

]]> By: Mike http://sovereignspeculator.com/2009/07/29/treasuries-could-have-a-lot-of-strength-left/#comment-4793 Mike Thu, 30 Jul 2009 17:39:08 +0000 http://sovereignspeculator.com/?p=2541#comment-4793 Glad I went long ES last night. Also glad I picked up calls on the 10-year this AM. Now let's see if the bond spike this afternoon signals the beginning of the end for the risk trade. Oil and copper have corrected their drops, and we've got a solid new top in stocks. We'll see... Glad I went long ES last night. Also glad I picked up calls on the 10-year this AM. Now let’s see if the bond spike this afternoon signals the beginning of the end for the risk trade. Oil and copper have corrected their drops, and we’ve got a solid new top in stocks. We’ll see…

]]> By: Mike http://sovereignspeculator.com/2009/07/29/treasuries-could-have-a-lot-of-strength-left/#comment-4790 Mike Thu, 30 Jul 2009 15:32:05 +0000 http://sovereignspeculator.com/?p=2541#comment-4790 Sure, it is subjective. I do count the waves as you label them, but those to me were wave 1 and 2 of the larger 1 that ended last March. What we have since then is clearly a large order wave, big enough to correct the large wave 1 down. Waves of course are fractals. Sure, it is subjective. I do count the waves as you label them, but those to me were wave 1 and 2 of the larger 1 that ended last March. What we have since then is clearly a large order wave, big enough to correct the large wave 1 down. Waves of course are fractals.

]]> By: Aki_Izayoi http://sovereignspeculator.com/2009/07/29/treasuries-could-have-a-lot-of-strength-left/#comment-4789 Aki_Izayoi Thu, 30 Jul 2009 15:28:18 +0000 http://sovereignspeculator.com/?p=2541#comment-4789 Mike, I have no idea to count waves. But the Popperian in me is more concerned about the "wrong" way to do wave counts instead of the "right" way. Why can't the November 2007 top count as the start of wave one, and the March-May 2008 rally as wave two, and so on... ? When do waves start? I do think the Elliott Wave is a very useful TA tool for me as there seems to be many premutations to count waves. Mike, I have no idea to count waves. But the Popperian in me is more concerned about the “wrong” way to do wave counts instead of the “right” way. Why can’t the November 2007 top count as the start of wave one, and the March-May 2008 rally as wave two, and so on… ? When do waves start? I do think the Elliott Wave is a very useful TA tool for me as there seems to be many premutations to count waves.

]]> By: Pej http://sovereignspeculator.com/2009/07/29/treasuries-could-have-a-lot-of-strength-left/#comment-4786 Pej Thu, 30 Jul 2009 11:05:22 +0000 http://sovereignspeculator.com/?p=2541#comment-4786 Thanks for the tips. I have bought Conquer the Crash a few weeks ago, but haven't read it yet. Though I might have to change my priorities on the books i am reading. Also, this video is interesting, even though paul desmond had a pretty bad call (timing wise) a few weeks ago: http://www.tradersnarrative.com/lowry-research-update-market-going-lower-2755.html Thanks for the tips. I have bought Conquer the Crash a few weeks ago, but haven’t read it yet. Though I might have to change my priorities on the books i am reading.

Also, this video is interesting, even though paul desmond had a pretty bad call (timing wise) a few weeks ago:
http://www.tradersnarrative.com/lowry-research-update-market-going-lower-2755.html

]]> By: Mike http://sovereignspeculator.com/2009/07/29/treasuries-could-have-a-lot-of-strength-left/#comment-4785 Mike Thu, 30 Jul 2009 10:46:44 +0000 http://sovereignspeculator.com/?p=2541#comment-4785 You need to shake up your current theoretical framework a bit. Pick up a copy of Conquer the Crash and watch this video (you have to sign up but it's free): http://www.socionomics.net/history/ You need to shake up your current theoretical framework a bit. Pick up a copy of Conquer the Crash and watch this video (you have to sign up but it’s free):

http://www.socionomics.net/history/

]]> By: Pej http://sovereignspeculator.com/2009/07/29/treasuries-could-have-a-lot-of-strength-left/#comment-4784 Pej Thu, 30 Jul 2009 10:38:49 +0000 http://sovereignspeculator.com/?p=2541#comment-4784 Well, markets can be disconnected from fundamentals for a lot longer than anybody thinks. Look at the real estate market: almost 10 years of disconnection. Regarding the bonds, I am rethinking it and might close the position before going on holiday tomorrow evening. But then, just to clarify, how do you see rates staying to almost historical lows, with such a huge supply? Who has the money the buy? The only support outside china/japan I have currently thought of would be banks borrowing at 0% from the Fed to buy 2-3% yields on the treasuries, but that must have limits as well? Well, markets can be disconnected from fundamentals for a lot longer than anybody thinks. Look at the real estate market: almost 10 years of disconnection.

Regarding the bonds, I am rethinking it and might close the position before going on holiday tomorrow evening.

But then, just to clarify, how do you see rates staying to almost historical lows, with such a huge supply? Who has the money the buy? The only support outside china/japan I have currently thought of would be banks borrowing at 0% from the Fed to buy 2-3% yields on the treasuries, but that must have limits as well?

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