Professor Elam

Weekend Sept 27 2014

We hope you have logged on to elliottwave.com and entered my ewt. just create a log on name and password and you have access to several months of updates. The graphs are fascinating and confirm my prediction of a Fall 2014 high. We have expected this from the low of Dec 1974 at Dow 577. Initially I thought this would be a market low but it makes much more sense for this to be a celebrated high, forty years in the making. It is no coincidence that this long bull market in financial assets began just a couple of years after Nixon took the US off the gold standard. 

Let's look at some of th social mood indicators first. 

– Bill Gross has left the building. The high in bond prices occurred in 2012 but the social mood high is surely the exit of the bond king from the company he founded in 1971. This is the headline from the Weekend WSJ which notes that after an e mail blaming other execs for the fund withdrawals from the formerly successful Total Return fund, all said it is him or me. The right fit at the right time in my life, Gross said, remember those words.

The beginning of the end kicked off wiht El Erian abruptly leaving. Gross handled the PR poorly on that one. Then as mistakes were made withdrawals mounted in the Total Return Fund. 

Bear markets turn out badly for formerly well regarded personalities, Gross is the latest.

_____________

ABC's How to Get Away With Murder debuted this past Thursday, fittingly on the day the Dow dropped about 250 points. The first episode was a near carbon copy of the opening scen in The Paper Chase which debuted in 1973. A domineering law professors cowers the students in both instances, then it was John Houseman now a black female. but it marks an interesting socionomic anniversary from the previous period of economic stagnation, 1966-1982.

____________________

The NFL appears to be entering its own bear market. From spousal abuse to head injuries to calls for the Commission'er ouster, nothing is going well. The coming bear market will run roughshod on the debt under lavish stadiums. And if the beer companies decide social media or some such is a better venue, it's likely curtains for the revenue stream. 

_______________________

GM went bankrupt in the last financial crisis-this time around it is involved in recalls over a too cheaply constructed ignition switch. 

But, recall that auto sales plunged to 19823 levels in 2009. To get an idea of just how well sales have recovered, take in Terry Box review of the $85,000 three ton Cadillac Escalade. We have noted the ever higher prices at collectible car auctions. But a market high in sentiment should be marked by widespread optimism and the desire to display wealth. A three ton behemoth to drive to the grocery would fill that bill.The never ending craze over expensive mechanical watches is another example.

Much was expected of the new Toyota Tundra plant here in SA in 2008. It closed after three months, shocking everyone. The workers got paid not to build trucks. By moving the Tacoma production here, the plant is now producing more volumne than its original target, over200,000 units a year.

___________________________

As noted separatist movements are on the rise. Last minute lobbying kept Scotland in the UK but the separatist move continues from Catalonia in Spain all the way to China and the Ughers. 

_______________________________

?Bullish sentiment recorded by Investors Intelligence is the highest since before the 1987 stock crash. That crash occurred in October five years from its start in August 1982. We are now just more than five years out from March 2009, though the Russell topped this past March making it five years on the nose. Bears poll a mere 13.3%, a new record low. This is a contrary indicator, there are always too few bears at a top. 

_________________________________

In contrast ot the NFL, Derek Jeter retired from the Yankees. A fine athlete leaves at the top of a market, good thinking Derek. 

________________________________

No matter what the President calls it, war is the ultimate negative human emotion. Now in Syria we have not just two but three, Assad's forces, the Syrian rebels, and the IS, all figfhting one antoher. I suppose it is fitting that at a Grand Supercycle top we have multiple fronts in an ongoing war. The Mid East Islamist movement started with the US engineered fall of the Shah in the late 1970s, the previous period of economic stagnation.