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Interests: what drives behavior
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We are at a critical junction in markets, and our favorite guest blogger Yves Lamoureux advises on the change of trend. He has made recent prescient calls in other markets too, such as Japan. Earlier this year he called a change in stocks, and predicted the current blow-off run to new highs. Here is his view on the bond market: In nature, there are seasons. In the affairs of men, there are seasons. And seasons in finance? Mentioning cycles in markets hurts the fragile sensibilities of so-called objective investors, however. A wise investor knows it is not wise to follow the herd. We have come across what we believe represents the crystallization of crowd consensus on interest rates. The cover... Continue reading
Posted Nov 28, 2016 at Planet Yelnick
Guestpost from Yves Lamoureux, who was über bearish last year, but is bullish this year. Technically, he sees the current market as finishing a wave 4 down, to be followed by a blow-off wave 5 to surprising highs. It may be driven by Fed panic and QE4, if not an outright NIRP. Fundamentally, as this post discusses, he thinks trading bots are evolving towards AI trading. The financial singularity is upon us! We think about this point in time where artificial intelligence will be capable of recursive self-improvements in the financial affairs of humans. Machines have been allowed to trade at incredible speeds. Now they have been allowed to learn. Our understanding of market mechanisms may be altered permanently. We... Continue reading
Posted Feb 4, 2016 at Planet Yelnick
VR was all over CES this year. Lots of excitement, but little content - and the incredible Oculus Rift has a catch: not only will it sell for $600, it requires a fast "gamer" PC to operate. It is believed that 2016 is the make or break it year for VR. As with 3D TV, which was flogged at CES for several years before being considered a flop, VR deserves and will have a longer gestation period. Besides Samsung and Sony, Google is working on a much less expensive VR headset. Yet, the hype could lead to a rejection. Instead, at CES I began to see the longer-term promise of VR's ignored cousin, AR. I love CES!!! #ces2016 #lasvegas #samsunggear... Continue reading
Posted Feb 3, 2016 at Planet Yelnick
Technical indicators say a bottom is forming, see the attached chart from AllAboutTrends. Fundamentals say the same: this is all about oil, and oil has already been forming a bottom. Markets should follow. Why this may be so is fascinating. We should expect a final "flight to quality" to US assets as economies around the world slow down, the US being the last market standing. This has been occurring - you can see it in the rise of the USD and especially in flight capital from emerging markets. It should spill over into equities, but for some reason selling pressure has been much stronger since the new year. The countervailing force appears to be Sovereign Wealth Funds (SWF), particularly from... Continue reading
Posted Feb 1, 2016 at Planet Yelnick
Guestblog - enjoy! Bad times have a scientific value. These are occasions a good learner would not miss. – Ralph Waldo Emerson For years, the Great Recession has affected a number of families in the United States. The economic meltdown has forced private sectors to reduce their workforce. That, or employees have decided to find jobs elsewhere. The recession, though considered “a period of dark times”, is a wake-up call. With the rising unemployment rate, what else is in store for you? How will you survive? Recession and Weapons of Mass Destruction Although the war with Iraq did not directly cause the recession, it had somehow magnified its degree. According to the Center for Economic and Policy Research (CEPR), while... Continue reading
Posted Apr 27, 2015 at Planet Yelnick
I have frequently posted as a guestblogger Yves Lamoureux. Back in 2013 he called a coming China Bull Market when everyone was bearish. Here is how it turned out: The question now is when will it burst? It shows the parabolic characteristics of a bubble. Is China 2015 = Japan 1989? Continue reading
Posted Apr 14, 2015 at Planet Yelnick
Tech bubble: Different this time? By Elliott Wave International Editor's note: This article is from Elliott Wave International's brand-new investment report, "U.S. Investors Face a Giant, Historic Bubble." It originally appeared in the April issue of The Elliott Wave Financial Forecast, published March 27, 2015. For a limited-time, EWI has agreed to give our readers exclusive free access to the full report. Please click here to read it now. In March, we covered the return to a popular fascination with technology. The striking resemblance to 2000's technology mania is not going unnoticed. How can it? With the NASDAQ's much heralded return to 5000 and magazine covers proclaiming "Google Wants You To Live Forever," concern about an "asset bubble" is being... Continue reading
Posted Apr 13, 2015 at Planet Yelnick
This is a guest blog by Farnsfield Research on of the most critical issues to investors, what will the Fed do? Enjoy! With the numbers showing close to full employment, the Federal Reserve may be preparing to move on raising short-term interest rates in June. The short-term interest rate has been near zero since 2008. The Labor Department reported an increase of 295,000 non-farm payrolls in February, and the past four months have seen fast-paced job gains, dropping the unemployment rate to 5.5 percent. The question on everyone’s mind is “Will they or won’t they raise interest rates in June?” Let’s take a look at what leaders are saying. Janet Yellen Federal Reserve Chairwoman Janet Yellen is still exercising caution... Continue reading
Posted Mar 16, 2015 at Planet Yelnick
RP occasionally comments on now near the end the flight to quality will cause a spike in US assets including equities. He should stay with that! On the Long Wave, it is more descriptive than prescriptive, and I think pundits trying to create cyclical precise timing for it are missing the forest for the trees. The Dot-Com Bubble of 1995-2000 followed by the Housing Bubble from 2003-2008 and now the current 2014-2017 (?) will look a lot more like the Auto Bubble from 1914-1919, followed by the Roaring '20s from 1924-29 and the reflation bubble from 1934-37 than any comparisons to 1987. The Long Wave hit with a vengeance after the 1929-32 fall and didn't flip over to Spring until 1949. This time it appears to have hit us after 2007-2010, as the Housing Bubble postponed things after 2000-2003. The attempts to reflate this time around are not working out. After the next financial crisis, deflation will be hard to prevent as the massive debt overhang gets written down. In some scenarios the bouts of deflation plague us past 2032.
Bull markets climb a wall of worry, and this one has climbed a veritable Cliff of Insanity, with steep macro problems coming out of the Great Recession. So far the Bull has largely tracked increased earnings, but they are now lagging, particularly as the Dollar strengthens and profits on foreign earnings drop. In addition, many commentators have noted how the S&P correlates with the Fed Balance Sheet from QE (see chart), but that too has now ended. What will drive stocks higher? Look no further than the Flight to Quality happening worldwide. Pundits have been surprised by the drop in US Treasury Yields after QE ended, but they shouldn't have been; the USD is rising sharply as flagging economies use... Continue reading
Posted Feb 18, 2015 at Planet Yelnick
Bond rates have dropped, surprising the herd, which had expected a continued rise as the Fed tapers. Yves Lamoureux, the New Bond Guru, has put out a new report: Where are bonds headed for 2014. He expected, since February, the long bond to drop to 3.25% this summer before snapping back to higher rates. In 2012 Yves called the end of the 30 year bond bull market. He was called the New Bond Guru for calling it correctly while the Old Bond Guru (Bill Gross) was still predicting bonds to rise and rates to drop. A year later in August 2013, after a rise and rates and then a drop, he put out an important bond call that bond apathy... Continue reading
Posted May 5, 2014 at Planet Yelnick
Shock and Awe Again? It's been quite an interesting challenge to keep re-inventing models that work as precursor of market moves. It is a reflex of ours to quickly dismiss models that do not satisfy our high level of expectations. If you have followed our work you know we have kept up with our batting average. By now most talking heads that had been screaming about a market crash have effectively made you lose sight of a great bull run. What ever the market projection you can find on the web will relate to a crash of a large magnitude ahead. We are not surprised to read one bearish view after another. It is a reflection of the current mood.... Continue reading
Posted Mar 4, 2014 at Planet Yelnick
Predictions are hard. Especially about the future. - Yogi Berra 1. Stocks rise to new highs, but peak in January or early February, and have the biggest drop since 2011. 2. Tech IPOs soar, and despite the correction, we have the best IPO market since 1999, but it won't be 1999 quite yet next year. 3. Money begins to flow into VC again, as the depressed ten-year VC returns since the last bubble begin to give way to dramatic returns in this new tech boom 4. Gold falls below $1000 before reversing. This may coincide with the Q1 stock peak. 5. US ten-year Treasury yield goes over 4% before reversing. This may coincide with the Q1 stock peak. The correction... Continue reading
Posted Jan 2, 2014 at Planet Yelnick
Looking back at Predictions made for 2013, Glenn Neely did very well for traders, and the infamous Martin Armstrong did well for big picture thinkers. My favorite pundit was Yves Lamoureux, who had a number of bold calls, on Gold topping and China bottoming (at least momentarily). I didn't post a list of predictions, but did show how post-election years normally turn out - weak. 2013 however did very well for stocks. In contrast, 2012 was very true to normal patterns. Several posts of mine hit the nail on the head: that the cleantech bubble had burst, and that AAPL had peaked. I will take a stab at 10 predictions for 2014 in my next post. Looking back farther, we... Continue reading
Posted Dec 30, 2013 at Planet Yelnick
I like to run comparison charts, that this is 1987, or 2007, or 1937, etc., that often get passed around on the Internet. Some have plausibility due to similar historical and economic conditions - 1937 for example matches 2015 if we analogize the 1915-1919 auto bubble to the tech bubble of 1994-99, and then the credit bubble of 1925-29 to the recent housing bubble of 2004-08. In that case the crash of 1929 matches the crash of 2008. The attempt to reflate the economy in 1933-37 due to revaluing gold would be analogized to the Fed's QE from 2010-now, attempting to keep interest rates low to reflate the economy. Plausible, maybe. Most of these comparisons, however, are simply eye-candy, pattern... Continue reading
Posted Dec 13, 2013 at Planet Yelnick
Yves Lamoureux has been on a roll recently. He made a prescient China Top call in 2007 (reported here), then turned bullish early this year and says he is up 25%. In October he predicted stocks 'crashing up' (reported here) and they have. Now he has become cautious. His current view on the S&P is reposted below. But first, a few comments from him: We find that the study of the yield curve has a powerful predictive ability. Where we disagree with most is on the size of the drop. Market opinion would have this ending wave drop in a C wave fashion. Drops of over 50% would therefore be possible. Our count view this pullback as a wave 2.... Continue reading
Posted Dec 11, 2013 at Planet Yelnick
Yves made a bold call on gold last February, well before the Fed's Taper Talk of May that spooked debt and currency markets. Yesterday I posted his updated gold chart. Let me show them side by side - you can see he called gold spot on. Continue reading
Posted Nov 25, 2013 at Planet Yelnick
The Iranian nuclear deal may catch Oil and Gold investors in a Bear Trap. Initially it will be very negative for both - Oil and Gold should drop - as war fears had built a risk premium into these assets. When Oil gets and stays below $90 it should spook a lot of other markets by raising Liquidity issues. It is after that we may see a bear trap as bears pile on the dropping assets. This will, however, unfold slowly. Yves Lamoureux sent a message to that effect, and will follow up with more specific recommendations. His chart on Gold shows the coming drop as a fifth wave down, indicating end of trend. He also expects it to show... Continue reading
Posted Nov 24, 2013 at Planet Yelnick
For fun I post the pattern comparisons to past crashes. Recently bears tried to compare this relentless up market to 1987 (fail) and 2007 (fail). The latest is to 1937, which at least has an historic logic to it: we are in a new Great Depression, which is following a different path but may end up even worse for cumulative loss of GDP. More to 1937, the sequester led to the Budget Control Act, which has remarkably lowered actual Federal spending for two straight years (that hasn't happened in a long time) and reduced the deficit both in nominal Dollars and as a percent of GDP. This reduction of Federal stimulus has made Keynesians nervous, since they worry that it... Continue reading
Posted Nov 20, 2013 at Planet Yelnick
Our frequent guestposter Yves Lamoureux, president of Lamoureux & Company, a market advisory firm based on behavioral economics, has a view on stocks: up! Neely sees the S&P in a final thrust up. The grinding climb of the Wall of Worry that has characterized this market since 2009 will continue until a final, panic-buying stage sets in. We may be now entering it. From Yves point of view, so what; a tumble in 2014 will simply set the stage for more appreciation downstream. Two competing lomg-term views that share a short-term prediction. Enjoy Yves perspective. Crashing up! Climbing a wall of worry at its best Vantage point: We are of course not surprised at the reaction of players who have... Continue reading
Posted Oct 24, 2013 at Planet Yelnick
Planet Yelnick got a good plug from The Wall Street Journal's MarketWatch over an analysis by our frequent guestposter Yves Lamoureux, president of Lamoureux & Company, a market advisory firm based on behavioral economics. Yves has come back with a new update on gold. He made a prior prediction (in this blog) that turned out to be prescient. Now he is back with a new update: Yves on Gold Update Part 2 We are amazed that a 2 months bounce can create so much attention on gold. We feel this is misplaced as oil is the asset that best gives out conditions of the macro environment. We suspect that few would entertain an Asian and European growth pick up at... Continue reading
Posted Sep 3, 2013 at Planet Yelnick
Planet Yelnick got a good plug from The Wall Street Journal's MarketWatch over an analysis by our frequent guestposter Yves Lamoureux, president of Lamoureux & Company, a market advisory firm based on behavioral economics. Yves has come back with a new update on gold. He made a prior prediction (in this blog) that turned out to be prescient. Now he is back with a new update: Yves on Gold Update Part 2 We are amazed that a 2 months bounce can create so much attention on gold. We feel this is misplaced as oil is the asset that best gives out conditions of the macro environment. We suspect that few would entertain an Asian and European growth pick up at... Continue reading
Posted Aug 31, 2013 at Planet Yelnick
Albert Edwards prediction: sees the Emrging Market economies collapsing,driving down US stocks and reversing the recent rise in interest rates to a sub-1% 10-yr Treasury. In his diatribe, he references Zerohedge and its wont to show analogies to 1987, like this: I have run a number of these sorts of charts over the years, including recent 2007 comparison, and none has come to fruition. So treat this as stock market eye candy. Edwards does not say a crash is imminent either; he thinks hte next shoe to drop will be China in Q4, and will come with a rather shocking devaluation of the RMB. That could spook markets worldwide. Continue reading
Posted Aug 29, 2013 at Planet Yelnick
What to do after the interest rate spike? This is a very important Guestpost from Yves Lamoureux: From Bond Apathy To Panic A harbinger of the next 5 years Stock Bull We have been glad this year to be on the side of the bull camp. Our job has been an easy one as we pursued the long side of stocks. We remain bullish despite raising big amounts of cash many weeks ago. We think we can redeploy money shortly once we feel the corrective phase is over. It has been a much different story on the income side. One that shows only the start of something much bigger. We did forecast long bonds to drop to a yield of... Continue reading
Posted Aug 27, 2013 at Planet Yelnick
This should be easy - Canada has the same numbering system as the US (and the same plugs!), had a Bell System, and is so close. But nooooo. Don't be fooled. AT&T does not directly work here, and you get... Continue reading
Posted Aug 22, 2013 at Happy Travails