i'm not a big fan of elliot wave, on a daily basis, it's a bunch of hooey contually hedged by the ever present 'alternate wave count' but on big picture cycles, it can explain the three major waves of early accumulation, broad market participation, and blowoff top, with corrective waves in between, making 5 waves we may well have seen this since 2003
that's a tough call if this really is the start of a bear, they've got to keep hope alive they've got to suck in buyers that think it's a bottom, they 've got to keep people in hoping for a better price to get out, that never comes of course, if it's not the start of a bear, then they're doing the opposite
If we close here or lower (on US indices) and the EEM is anywhere near 107-108 it is a slam dunk short for Monday as the EMs are going open down big Sunday.
I agree. But here's the problem. If hedge fund investors panic, which i believe they will (history repeating itself), you're going to see massive redemptions on the part of anyone who can get out (even before they get their statements). 1.5 trillion in hedge fund funny money, leveraged to the hill. This is exactly the type of thing that leads to cascading panic. Liquidity crunch Inverted yield curve Stocks crashing Subprime/Midprime loan crisis Greenspan dropping the "R" bomb Yen carry trade unwinding Emerging markets tanking Decelerating corporate earnings Wall street issues with order execution at the NYSE, and insider trading scandal, and backdated option issues What else will be added to the list?
regarding prime broker or hedge fund blow-up: This on Bloomberg today "Goldman, Merrill, Morgan Stanley are almost "junk", their own traders say" i.e their CDS are being priced right at a tad above BBB- spreads while their official credit ratings are several levels higher well in the investment grade department. Somebody smells something I think
You can add the spread between corporate's and treasuries finally starting to widen today, and not just the junk either.