Thursday, April 15, 2010

Market Finishing up Subdivisions Before Topping; Prechter on CNBC's Fast Money

The Dow made a new high today but the S&P did not. So it's possible we'll get some pullback tomorrow if this divergence holds. When the S&P makes a new high with the Dow, then this divergence is erased and we will continue to count the unfolding subdivisions higher into a top. With options expiration tomorrow, I expect to see repositioning and some volatility take place. The Dow and S&P appear to be unfolding in slightly different wave structures right now, but should reconcile these differences as they both move into a top. The constant continuation of the rally into further overbought territory only strengthens my bearish position, and any sharp rally higher will only lead to me adding to my shorts. Once I can confirm a top with high confidence, I will get aggressively short at that point. So it's a waiting game from here.

Bob Prechter on CNBC's Fast Money (given about 45 seconds to speak, and then was forced to listen to screaming bulls talk over him. Enjoy the 45 seconds.)

Thanks to blog reader Jimbo for posting this video because I would have missed it otherwise. I used to watch FastMoney (FM) everyday when Ratigan and Mackey were on, but now the show is crap in my view with perma bulls doing cartwheels all day on the show.

(below are just a copy of the comments I left in response to Jimbo's post)

This is unusual for Prechter to go on here because he's said many times he doesn't like getting into shouting matches with people so he usually only does interviews if he's the only one on. Perhaps his subscriptions have tapered off a bit so he's spreading his wings into areas he normally doesn't go into.

And I'm actually glad those guys on FM are laughing at him and blowing him off because that only strengthens his case in my view. The FM crew preaches to the mainstream masses, and if they were scared or on board with Prechter, that would be concerning. But their blind optimism and dismissal of Prechter's caution is encouraging for the bears. I watched FM the past few years and no one was calling for a major top and decline and most of the time they spent the whole show talking about stocks to buy as the market descended lower. Big bears Fleckenstein, Nourial Roubini and Doug Cass always get a lot of crap from the FM crew. During the last big decline, some of the FM crew were bearish and expressed caution here and there in the short term, but no one on that show prepared us for the magnitude of what 2007-2009 gave us, NO ONE did. But Prechter did give us the play by play on it from start to finish. Prechter should have asked them where the fu$@ they were in October 2007 when people should have been extra cautious, not throwing "Fast Money" at their buy recommendations? Why doesn't the Fast Money crew run down the list of stocks they recommended to the public to buy during that time and compare them to Prechter's recommendations? FM missed the last top, so I don't expect FM to give us the scoop on a major top this time around either.



Anonymous said...

For me, the best approach is to stay neutral and not overly opinionated with either view.

What goes up must eventually go down, and vice versa, it's that simple. The difficulty to the best and brighest one has always been the timing of the turn.

Prechther has been sort of calling a top since Dow climbed back to 9400 (38.2% fib). He never recommend shorting though, just staying in cash. Dow is now approaching 61.8% (11200) and I just start to be in the bear camp but would not bet on a huge wave taking Dow to 300 as some people whisper when we crashed in 2008.

If I were Prechther, I would not be willing to show up and be ridiculed by people who clearly do not respect his opinion. Prechter is entitled to his own opinion

Dave427 said...

Todd, an advisor I follow with OptionZone keeps close tabs on FM's track record and refers to them as Lost Money :)

Todd said...

Very well said. That was a waste of time for prechter and the FM folks certainly don't have to agree with prechter but at least let the man talk and respect his opinion. They did neither so shame on them.


Todd said...

LOL that's awesome Dave! I never cared for their individual stock pick, but used to like their macro look when ratigan and mackey were on providing entertainment. But now I see no value in the show with the current crew, with the exception of guy adami. I just can't imagine these guys providing the general public with such special insight that the average watcher could make money over time.

Anonymous said...

On the One Hand: But what if they bring Prechter online just to give hope to bears and then squeeze them.

On the other Hand: If they are loosing subscriptions, there is an easy solution. Make better calls, and when in doubt alert shorts to get out of a blazing rally, instead of feeding them to the market one squeeze at a time. They knew that wave 2 can retrace 62%, but they started calling for potential top at 23%, 38%, ... etc. without suggesting that it could still go to 62%. Especially the STU. And now @ 62% SPX (82% NDX) they suggest we might have more UP to go after a blip down. If they are loosing subscribers, it is because their subscribers don't have any money left following their calls. Of course they will always be right. Yes, market might put in a top soon, but that does not assuage the pain they caused to their subscribers.


Todd said...

Crush I'm with you on what you said. I think EWI has done a good job in many areas many times, but I think they should do a better job addressing their errors in marking a top to the rally instead of just analyzing like nothing has happened.

In the end, the market will determine if they are heroes or zeros. That's yet to be determined though, and they've served me very well during the 2007 - 2009 selloff while everyone else was making fun of the sellers for panicking and recommending "great buying" opportunities as the market continued to collapse. Prechter an EWI did me right then, so I'm throwin in with them now. At least that's my take.