Expect Equity Market CIT - Next Week

Hello BBTL BLOG readership,

If you have been following our recent blog commentaries, you might say we are now beginning to sound repetitious.

In a nutshell, we are now very near to the final stages of the bullish run-up that began and which KRTT accurately identified about September 01, 2010.

If you are an Elliott Wave (EW) aficionado, according to our preferred EW count we are near the completion of EW wave 3 (as shown in green), and will soon begin wave 4 down. We have also written some of the characteristics of a generic Wave Four in a recent blog.

Please note that there are other associated EW counts of greater or lesser importance in alternate colors on our charts. These fractal EW waves within waves are usually referred to the degree of scale.

Further, our considerable cycles data that we employ in our forecast, which will not be taught in a free blog, strongly suggest the turn down will begin next week.

The KRTT time targets are next week, and written on our charts. At present, we are still a little shy of our time and price targets, so in an ideal world, we still have room a little more upward price momentum left, before the time cycle roll-over.

However, we wanted to educate this evening about a valuable what if concept and strategy. What happens when things go unexpectedly wrong?

Tonight we will discuss one of the most difficult to manage financial situations - surprise.

As we have lectured and taught in our blog before, there is a considerable plethora new financial news and information overload every day. In this way, the financial markets are truly dynamic and subject to change.

Some are so misled by this constant bombardment of news, that they have mistakenly decided that the markets must be random. Let us assure you - they are NOT random.

KRTT teaches that one should discount about 99% of daily financial news as rubbish that absolutely should be ignored. Further, we educate that, as one of our clients stated, it constitutes an immense financial signal-to-noise ratio, that is intentionally designed to keep incompetent financiers and snakes in suits employed and in control your capital.

But remember, there is always an exception to every rule.

The rare type of financial news that KRTT clients search for each day, incorporates rare, yet highly significant material change. Expressed another way, some news is so powerful that it creates a tipping point.

For instance as current possible example, over the next few days China may float their currency higher, another USA financial or banking scandal could erupt with legal implications, details of a new quantitative easing and stimulus program could be announced by the FED and cause a US Dollar currency panic, or in the worst case, an unthinkable world disaster could take place.

These rarest types of financial news are indeed material in nature.

Again, they are changes that are so potent and so powerful that they financial upset the apple cart so to speak.

As the vast majority involve Man and are about Man's input on the planet, KRTT coined the phrase "Man Made Upset Mechanisms."***

We are discussing this topic for a very specific Natural Law reason. What if Man interrupts, intervenes or influences and thus interacts with Nature and natural cycles?

There always exists, right up to the expected cycle turn date, or even shorty after you initiate your sound plan of financial action, the possibility of a global change that is so significant, the natural cycle that should have happened inverts, or, as it is more commonly called - a cycle inversion.

In summary, Man lives on this planet with his own agenda, and further has the ability to upset the financial status quo. Imagine what decades of excessive monetary stimulus and sub-par interest rates - put into place by Central Bankers did to the natural cycle of recession and expansion.

The economic cycle tried to rest, but was never allowed to rest, by greedy Central Bankers and politicians who decided the economy needed to be stimulated - for their profit. This topic is even covered in "The General Theory" (John Maynard Keynes).

If you guessed that the Central Bankers are thus - the primary cause of engineering the recent Financial Crash, then you fully share our educated view. We do not usually plug the Hollywood movies here on our blog, but we are looking forward to viewing "Inside Job" recently out in the USA.

However, just as the great minds of W. D. Gann, R. N. Elliott, and Albert Einstein discovered and taught, the all-powerful forces of Cycles, Natural Law and Science, will always in the end rule our universe.

Our KRTT teachings of Nature and Nurture interacting, and details of financial cycles and Natural Law behavior at work in the financial markets, essentially will set free, the financial truth forever.

*** Please note again that the above is a KRTT copyright and KRTT proprietary topic. If you wish to discuss or use this elsewhere, you must disclose KRTT as the author. Thank you in advance for respecting our intellectual property.

In the end, those who refuse to learn about and accept Financial Natural Law as the ultimate ruler, unless they are lucky enough to live their life throughout a privileged and lucky era, will eventually find out and learn about nature and science, the hard way.

As one who was very wise once stated, the science and proof is always in the pudding.

Let's just sit tight, and see if the financial cycles we have discussed recently and our blog technical analysis forecast and teachings work out as we so suggest it will.

Then, those all-too-greedy bulls whom arrogantly ignored W.D. Gann and others, may have a little pudding on their faces. The bears may soon be smiling as the win back their recent losses. Frankly, don't bears like pudding?

Sincerely,

James Kelly Sr.,
Editor in Chief, BBTL Blog
www.KRTT.com
www.Facebook.com/KRTTcom
www.twitter.com/KRTTcom

***IMPORTANT COPYRIGHT NOTICE

About KRTT Upset Mechanism Theory...

Our KRTT Upset Mechanism discovery and theory*** also explains via emerging science, why after too much intervention or manipulation by Man himself, (i.e. sub-par interest rates by Central Bankers for too long) financial crashes or even lasting recessions occur. These crashes, are in essence, a summarizing way of essentially Nature putting back into proper order, the proper natural cycle as it was meant to be. Finally this is an extremely important endorsement for laissez-faire economics.

***Should you wish to use, quote, write about, or in any way explain and discuss our herein disclosed Upset Mechanism theory as written, we ask that you please protect our intellectual property rights and ensure that you apply recognition for such theory to Kelly Research Training & Technology (www.KRTT.com) until such time as KRTT publishes such theory, and other material in E-book format. This book will eventually be sold over the internet for a reasonable cost via our web site.

Spot the SP 500 Trend

Hello BBTL Blog followers,

The weekend markets are closed allowing for further SP500 trend and cycles analysis. I enjoy weekend financial analysis, in a calmer closed market period, allowing for reflection on the financial information in a logical concise manner.

Yet in the end, I do not have a great deal to add this weekend beyond what I stated last week. Overall, my trend and cycle forecast thus remains down in an Elliott Wave four scenario.

That stated, admittedly the SP500 index is now resting at a very interesting and important inflection point, as it heads into what could become a very volatile USA Thanksgiving holiday week.

We therefore caution to prepare yourself for some possible fake-out financial moves in either direction especially tomorrow and Tuesday morning. Given this possible confusion factor, today I will attempt to make clear - the truer market trend, by using some simple, yet powerful technical analysis rules and definitions.

Normally, the upcoming USA Thanksgiving Thursday holiday which is immediately followed by the first big Christmas shopping day known as black Friday, has a positive market bias.

Then, once this super-sale weekend shopping ends, financial analysts everywhere will decipher the weekend same store sales, to determine and forecast the full December 2010 shopping outlook, which needless to say is critical to many retailers hoping to boost annual sales and profit.

Yet, in a nutshell in 2010, even bigger events than normal and high volatility could commence during the upcoming week. Why?

Consider the ever looming economic uncertainty, the reluctance of the USA consumer to spend, the very high USA unemployment, and the ongoing global angst of the Bernanke save-the-USA-economy money printing, which so far has been completely ineffective and adds risk and tax liability.

From a more scientific and math perspective, if we look at recent technical charts and trading levels in the past few weeks, one pertinent technical analysis and math pattern now stick out as - most important.

The SP500 is currently sitting at effectively the psychological level of about 1200 points.

Using Fibonacci definitions in the shorter term, it now rests at the 50% retracement level - exactly between the recent high and low.

Essentially, the 1200 level is 27 points up to the former 2010 high (1227) as set in early November, and equally, it is also 27 points down to the recent low at 1173 made just last week in a sharp sell-off.

The question is now what?

The only way one makes a profit is to understand the current trend and go with it. This is why our blog title today of spot the trend is exceedingly important. Here is where a simple trend definition can become invaluable.

One of the more useful textbook definitions of a bullish trend is a series of higher-highs and higher-lows. Conversely, a bearish or down trend is a series of lower-highs and lower-lows.

For now, again the SP500 sits exactly in the middle of two very important support and resistance levels at 1173 and 1227.

The key question becomes; will it first take out the resistance high of 1227, to thus confirm a bullish uptrend, or alternatively, will it soon take-out the former support low at 1173?

In my own analysis, given the chance for early week pre-Thanksgiving holiday optimism, I would not be completely surprised to see the SP500 index open the week and trade modestly higher by even 7 - 15 points.

Yet frankly, a small rally or small sell-off in any direction is still generally meaningless.

The concept here is that we are attempting to confirm the trend direction by using key support and resistance levels. This means we must first bullishly take out the former record 2010 high (at 1227) or alternatively, break below the recent important low at 1173.

Later as our holiday week develops, volatility may pick up significantly, as global institutions begin to hedge their seasonal bets with either large buy or sell tickets.

By the way, although I cannot discuss all of our KRTT analysis tools for brevity and time, this higher volatility concept this week is also completely in line with our cycles and other technical tools forecast.

Some of these have been highlighted on the blog recently such as: Coming Fibonacci Event

For now, my bet is the recent SP 500 index low at the SP 500 1173 level is the likely candidate to be taken out first.

Remember, the very instant this 1173 level low is taken out this week or next, it would immediately confirm the down trend as in place by the definition of a series of lower lows and lower highs.

As always, there is never an absolute financial guarantee. After all, the financial markets are no longer freely traded.

Who knows if Bernanke, the FED, or the PPT will play scrooge in 2010, or alternatively, in another act of their money-printing desperation will come to the equity market rescue in possibly manufacturing the biggest ever Santa Claus rally.

There are two charts below with mark-up comments for your perusal. Enjoy.

Spot the trend.

Sincerely,

James Kelly Sr.,
Editor in Chief, BBTL Blog
www.KRTT.com
www.Facebook.com/KRTTcom
www.twitter.com/KRTTcom

Mark Carney Speaks to Michael Enright

CBC's Sunday Edition's Michael Enright had a 15 minute conversation with Bank of Canada Governor Mark Carney. You can listen to the entire interview here (hour 2, about 10 minutes in).

The most cutting point he made is transcribed below, at about 26:00 on hour 2 (emphasis mine):

Michael Enright: You expressed concern publicly for a long time I think from the moment you took the job about household debt in Canada. I think it was running somewhere around $40,000... and you're concerned about that. Interest rates are very low at the moment. Is there a correlation between the lower the interest rate [and] the more likely it is for people to take on more debt?

Mark Carney: Well this is the concern. Interest rates in Canada are low, abnormally low, exceptionally low...

ME: Are they emergency rates do you think?

MC: Well we had them at emergency levels from April of last year, in April of 2009 after the crisis...

ME: Right.

MC: The Lehman crisis. We got them down to 25 basis points and we further increased our balance sheet beyond that. But we moved them up from emergency levels because the Canadian economy is back at the level we were before the crash, we recovered all the jobs we lost during the crash, and things have moved quite positively for Canada. But they're still at exceptionally low levels. And the risk is that Canadians, some Canadians, take on debt on the assumption that interest rates will always be this way.

ME: Or they're here now, they look pretty good and they'll probably stay that way for a while.

MC: Excatly. And particularly when one thinks about mortgage debt, thirty year mortgage debt, that is not a sensible assumption. And our concern is that people will get themselves into positions which will make it very difficult to service their debt.

ME: But you can't say, wait a minute folks, I wouldn't go and buy a summer cottage because something might happen in the next 6 or 8 months. I mean, that would send Bay Street spinning, wouldn't it?

MC. No. We're taking a longer term perspective on it and we're providing as much transparency as we can about the future path of monetary policy, as much as appropriate. The one thing we can say with high degree of certainty is that over a thirty year mortgage interest rates are not going to be at the same level as they are now, they're going to be higher, and that Canadians, individuals, should be comfortable that they can service their debt at higher interest rates, and the banks that lend to them should also be comfortable about that.

That's central banker speak for "Wake the f&%$ up, Canada."

And, for macro nerds, on "currency wars" and exchange rate management:

ME: The huge worry going into the G20 and we read about it all the time... is the possibility of a currency war. First of all what is a "currency war" and if one breaks out is Canada protected?

MC: Well it's not a term that we use but the concern is that there will be a series of countries will engage in what is effectively competitive devaluation. They will hold down the value of their currency relative to others and that the number of these countries and the weight of these countries will be such that unsustainable adjustment will be pushed on other countries...

ME: To do the same...

MC: Yes. And other countries whose currencies float such as Canada. So in the extreme earlier this fall you had roughly 40% of the currencies by trade weight -- with the US dollar -- so in relative importance four of those 10, or 2 out of 5 of the currencies that trade with the US in importance managing their currencies to some extent.

ME: Gaming the system I guess... Is that what it is? It's like a trade war only you're using currency instead of goods.

MC: Yeah, you're using currency instead of tarriffs, and the issue is, the fundamental issue, is that doesn't work in the long term. You can cause damage to the global system in the short term, but it doesn't work in the long term because ultimately, those adjustments to currencies will come through relative inflation differentials, if nothing else. And if you'll allow me a second, the issue right now is that, let's take between China and the United States, and if China's currency doesn't move, the other way for China's real currency to move, in other words the real value of Chinese goods to increase relative to US goods, which is the same thing in effect, is there to be higher inflation in China than in the US. And what we've seen in the last few months, which we've been saying at the Bank [of Canada] for years, is that Chinese inflation's accelerating and US inflation is decelerating. And so you're getting a more difficult adjustment than you would have if currencies were allowed to adjust.

ME: If the worst-case scenario gets into play, is Canada going to get caught in the crossfire? What protections do we have?

MC: Well we have a number of protections. I think the short answer is no, I mean we're not naive in this situation. We have a number of tools: in the extreme we can intervene in currency markets if extreme movements in our dollar seriously threaten economic outcomes in Canada and those are decisions taken by the Minister of Finance and the [BoC] Governor. They are extreme... but we have tools there. We, very importantly, and I think it's important to understand, our level of currency is very relevant for the Bank of Canada's mandate, obviously. It affects the outlook for inflation in Canada, and if it were to threaten our ability to achieve our inflation target, which is what we're accountable...

ME: the 2%...

MC: The 2%. That's what we're accountable to parliament and Canadians for, we would adjust policy. And we have flexibility in policy here in Canada and we would not hesitate to use it if it were appropriate.

City of Vancouver Permit Update for 2010

I have been producing some graphs starting in early 2009 showing the trend of permits in the City of Vancouver (here and here). Here is an update to December, 2010.

Residential dwelling permits graphed since 2007:


Permits parsed for 1-2 dwelling units only (i.e. SFHs):Multi-unit building permits:

All permits' value, residential and commercial:


Analysis:

1. There was a significant, though not full, rebound in multi-unit permits in late 2009 and into 2010. This is commensurate with the rebound in construction employment coming out of the recession.
2. The detached market is extremely hot right now. This is evident through significant price appreciation of detached-zoned lots in the City, notably (but not exclusive to) the west side.
3. Detached permits have been falling significantly since mid-2010. Seasonality in permit applications cannot be discounted; I would not be surprised to see detached permit applications rebound going into the first half of 2011. A builder friend of mine claims the City's permit office has a backlog it's working through.
4. The building recession in late 2008 through mid-2009 is now bookended.
5. The data presented here show what a severe housing recession looks like and hint at how dependent the City is on sustained permit revenue to fund its operations.
6. The permit data are coincidental with faltering sales, however the permit data are released with about a month's delay; sales are available with virtually no delay thanks to paulb over at vancouvercondo.info. It's worth remembering that with housing markets, prices are a lagging indicator.
7. Laneway housing continued its upward trend. Builders and the permit department are likely becoming more familiar with the process and relevant codes (and likely fine-tuning it as they go). I would expect to see a continued increase in laneway housing permits, barring any major pullbacks in the availability of credit.

Teranet Index: September 2010

NOVEMBER 2010

Price declines in all six markets in September Canadian home prices in September were down 1.1% from the previous month, according to the Teranet-National Bank National Composite House Price Index™. The monthly decline ended a string of 16 consecutive increases in the composite index since the last monthly deflation in April 2009. For the first time since February 2009, prices fell in all six of the metropolitan markets surveyed. The declines were 2.4% in Halifax, 2.2% in Calgary, 1.6% in Toronto, 0.5% in Ottawa and 0.3% in Montreal and Vancouver. For Vancouver it was the third consecutive monthly decrease and for Calgary it was the second. This result was reflected in a further deceleration of the 12-month price increase in September, to 7.9% for the composite index. It was the third consecutive month of deceleration, leaving the 12-month rise the smallest since last January. The 12-month increases range quite widely from market to market: 9.2% in Vancouver and Ottawa, 9.0% in Toronto, 7.6% in Montreal, 3.6% in Halifax and 1.7% in Calgary. Teranet – National Bank National Composite House Price Index™ Contact Us For general enquiries: info@housepriceindex.ca For licenses covering all index-linked products, please contact: Simon Côté 514 879-5379 Website www.housepriceindex.ca

In October, according to our calculations based on data from the Canadian Real Estate Association, market conditions were balanced in Canada as a whole, with Calgary presenting a buyer's market. Teranet – National Bank House Price Index™ The historical data of the Teranet – National Bank House Price Index™ is available at www.housepriceindex.ca. Metropolitan area Index level September % change m/m % change y/y Calgary 156.89 -2.2 % 1.7 % Halifax 128.07 -2.4 % 3.6 % Montreal 135.67 -0.3 % 7.6 % Ottawa 132.64 -0.5 % 9.2 % Toronto 125.98 -1.6 % 9.0 % Vancouver 154.84 -0.3 % 9.2 % National Composite 137.94 -1.1 % 7.9 % The Teranet–National Bank House Price Index™ is estimated by tracking observed or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation of the index. This is known as the repeat sales method; a complete description of the method is given at www.housepriceindex.ca The Teranet–National Bank House Price Index™ is an independently developed representation of average home price changes in six metropolitan areas: Ottawa, Toronto, Calgary, Vancouver, Montreal and Halifax. The national composite index is the weighted average of the six metropolitan areas. The weights are based on aggregate value of dwellings as retrieved from the 2006 Statistics Canada Census. According to that census1, the aggregate value of occupied dwellings in the metropolitan areas covered by the indices was $1.168 trillion, or 53% of the Canadian aggregate value of $2.207 trillion. All indices have a base value of 100 in June 2005. For example, an index value of 130 means that home prices have increased 30% since June 2005. By: Marc Pinsonneault Senior economist Economy & Strategy Group National Bank Financial Group Teranet - National Bank House Price Index™ thanks the author for their special collaboration on this report. 1 Value of Dwelling for the Owner-occupied Non-farm, Non-reserve Private Dwellings of Canada.

Reiterate Bearish Outlook

Hello BBTL Blog readership,

It is late evening and my time is short. Nonetheless, I simply wanted to repeat the bearish theme I have developed recently.

Although seasonally and statistically, we are now within the normally optimistic and positive equity biased USA Thanksgiving holiday week, the equity markets looked extremely vulnerable today.

A late day equity rally was equally suspicious, and yet we must also assume a sell-off this week could be halted by the USA PPT, or even the aftermarket stabilization team from Wall Street dealers, as they attempt to prevent the massive GM from heading south too soon.

One thing however is very clear. There are many troubling global events at present. After my analysis today, I again concluded that this is a global equity market that is living on borrowed time.

The only thing missing now is the financial catalyst event and media spin to explain any sell-off. Be warned, even a watershed sell-off would not be surprising to see. Indicators are VERY WEAK.

Along with the charts here are a few analysis thoughts......

Logical Analysis = SELL

1. With the global debt crisis in the Euro Zone resurfacing, the USA dollar could rally (against a weaker Euro). This would set-off a renewed deflationary sell-off in both stocks and commodities.

2. China spends vast amounts on currency wars and maintaining their low Yuan rate. Since Japan and China are the two largest foreign owners of USA debt, they have a large vested interest to see the USA currency rise. The recent QE2 events suggest currency wars too are heating up. Most agree the USA dollar is in trouble with the FED excessive money printing, but on the flip side, few realize the FED also has massive dollar swaps with foreign central banks abroad, that must be eventually repatriated. These are both causes for a higher USA dollar. Again, a higher USA dollar even if temporary, would have a potential negative impact on prices of commodities and equities.

3. Wall Street scandals continue and frankly, the public is on the verge of revolt and anger, if banks and brokers that break laws are not prosecuted. It is long overdue a time to level the playing field for market participants and instill a sense of law and order on Wall Street. Read the latest USA financial scandal by clicking the link. Insider Trading Scandal

Technical Analysis = SELL

1. Check out the technical indicators in the SP500 chart below. They remain weak and suggest that a the down trend must soon resume.

2. Then, add some advanced analysis and market logic of Natural Law in the way of W.D. Gann (Gann Box) and Elliott Wave. Note, that both of these market wizard mindsets would now also likely agree that this is an equity market to sell; now.

3. Finally, we said it before and will say it again for the record. We hinted about the coming Fibonacci event in recent past blogs. We suggest you go back and check that former post and look carefully at the chart. We have also stated that Fibonacci math is both universally systemic, and it is amongst the most important to heed in the Financial markets. In early December there is a coming Fibonacci hot-spot.

Exhibits

 
Sincerely,

James Kelly Sr.,
Editor in Chief, BBTL Blog
www.KRTT.com
www.Facebook.com/KRTTcom
www.twitter.com/KRTTcom

SP500 Trend remains Down

Hello BBTL blog followers,

Although I do not place a great deal of emphasis on a single trading session, especially on a low volume holiday Black Friday, the SP500 Index trend this week was as forecast.

As it is Friday and I am short of time, I am updating today via two technical analysis charts that remain negative. My overall analysis conclusion now suggest that a renewed thrust down in the index will likely commence early next week in a Wave C corrective pattern.

If I get more time over the weekend I may write something in further detail, but suffice is to say that my view is down, with immediate risk to at least the 90 day moving average on a daily chart.

See the two exhibits below with mark-up educational comments. Enjoy your weekend and follow the trend.

Sincerely,

James Kelly Sr.,
Editor in Chief, BBTL Blog
www.KRTT.com
www.Facebook.com/KRTTcom
www.twitter.com/KRTTcom