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Advisor

crb

http://stockcharts.com/h-sc/ui?s=$cci

 

Sliced through the 50dma like nothing and going to be down more if today's trade holds up.

 

The major EW advisory has shifted to my visceral take on it calling the run to 570 a complete corrective move and a downtrend resumed.

 

This leg is in fact taking on the personality of a thrid wave- long, hard and fast.  No rest for the wicked.

 

BTW, if you pull up the link, click it over to weekly and hit update, the weekly shows an interesting picture. The epic  winter short squeeze went right to the 1000dma (200dma on weekly) and stopped in its tracks.

 

I recall a conversation with a hedge fund money manager who told me that his computer backtested system moved money alllocations on the basis of very long averages.

 

We remain under the very long averagers and now the shorter averages. If you want my totos SWAG estimate on the matter I'd say we go to around 520 (wave 3 1.68-2.0 X wave 1) and then bounce back for a retest of the 50 as time pulls the long averages across each other and lower.

 

More pain and ugliness and even after a bounce from somewhere, the deflationary trend continues.

 

More SWAG, probably finish the first 5 waves down back around the support shelf at 500.

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Advisor

Re: crb

"the deflationary trend continues,"  caught my attention.  Back in 1974 when I first started farming, I sold corn off the combine, or soon after, for $3.45 a bu.  It was a dry hot summer and the yield was 100bu. per A.

I'm not sure after today's drop if  I could even get that for my 2014 crop which has the potential for 200+. Maybe not a true comparison, but still 40 years later the corn price is the same.  I wonder what seed corn cost then? Just thinking out loud here.  Had 51* this morning. 

 

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Senior Advisor

Re: crb

"deflationary trend "

 

By definition, deflation is when the inflation rate is less than zero.  Is that the case?  My understanding was the inflation rate was positive.

 

Lowering prices in any one economic sector doesn't seem to meet the criteria of deflation.  It would have to be a general decrease in prices.

 

Another explanation for what we see is excess supply for the demand.  Whether we really have excess supply or simply the mistaken belief that we do will be revealed in time.

 

How would one deal with deflation as opposed to excess supply?  Would one's production or marketing be any differetn between the two?

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Advisor

Re: crb

I think that is exactly what the longer term charts suggest.

 

We have plenty of capital to produce goods and play games e.g. hot money. Demand is strictly limited by unemployment, very limited wage pricing power.

 

Japan is in it, has been for a long time. EU is on the verge. We're closer than we think.

 

Time for a new economic paradigm- really not new at all, just not something that you don't  discuss at the country club if you want to make friends

 

 The old thing was all about inflation = too much money chasing too few goods. The current problem is with too much money to play games with, not enough demand for the goods that are an occasional accidental byproduct of the games.

 

Thus the games overshoot the real economy. What could possiblly be wrong when the SP is at 1900?

 

Ag had a great run that was partly the product of games, part peak conventional oil, part governmental dunderheadedness.

 

It was a good run.

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