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Wednesday, May 27, 2009

90% of "Economists" Say Recession Over in 2009


You know I don't think much of Economists. They can tell you what the supply/demand of a piece of corn is at a moment perhaps, but they do ZERO for predicting social mood. And social mood (sentiment) is the driving force of economies.

(hat tip: SRS Player for the article link)

Good mood = heightened economic activity

Bad mood = recessed economic activity

Its pretty much that simple. Elliott Waves attempts to track these recognizable sentiment swings in social mood that seems to be ingrained into our very genetic fabric. The stock market is the "gauge" or indicator.

Primary Wave 2 (P2) is correcting a very large drop in social mood that occurred over the span of 17 months. Seeing stories like this only increase the likelihood that P2 is indeed doing its job and doing it well (shake out the bearish mood). This initial bullishness of economists is to be expected after the market has risen over 30% in over 2 months. What would you expect? Economists are not Elliott Wavers. The "bottom" will be in when 5 Primary-sized impulse waves play out in full. That is the theory on where we are in the larger picture. And wave 3's are usually always the strongest. We have yet to see the most scariest times....

The fact that this story comes out near the top of the first major leg of P2, is only fitting. A corrective in social mood and prices and then another bullish ABC advance of some sort will only cement feelings of bullishness and hope. The market is not there yet. At 1000 SPX, they will say even better things about the outlook of the economy. At the top of P2, a plurality will likely determine the bottom was definitely in March of 2009 and that its "all clear".

OK so what "sparks" P3? Well, it could be anything. Once P2's mood tops, perhaps there will be a singular event that easily "explains" a subsequent p3 wave. And many will believe it. Perhaps a war of some sort or some "incident". It won't really matter.

I re-read this story and I find NOTHING on WHY the economy will start to stabilize. Its full of hope yes, but the story provides nothing in facts other than that they did a survey of some guys and they were in an upswing mood so they gave a decent, (yet hedged of course) economic outlook. Incidentally economists TRACK sentiment such as consumer sentiment yet they do not make the leap of Elliott Wave Theory behind it all. They track sentiment and surveys of all kinds! But again, they never make that solid connection....hence they are merely subservient to the sentiment that they track! When everyone is feeling good, THEY feel good, and make rosier predictions.

Look it up. Look up all the "predictions" for 2008 and almost NONE got it right. Some were so way off base you wonder why they still can keep the "job" of being an economist.

Sure the economic numbers will give "pause" and some will suggest things are getting better but that is to be expected! "Numbers" do not go down in a straight line either!

Personally I think P3 shows the path to a dire outlook in social mood. Enjoy P2 while it lasts.

Many did not believe in the theory of Elliott Waves yet we predicted P2 was coming and that there would be a nice rally wave and that "good tidings" will come. Indeed it has. But eventually when you are at the top, there is nowhere to go but down.

Look, Economists cannot go out on a limb. They won't be invited to play in reindeer games if they do.

I'll give you a prediction: Primary Wave 3 will cause the market to explode on several instances to the downside. Circuit breakers. And then you'll lose more freedom because government will take a bit more away. Fascism and world wars reigns at the bottom of nasty social mood corrective swing periods. Sometimes this results in a Dark Age when they are at the millennial wave level.


  1. If I were to name the obvious problems on the horizon they would have to be:

    1) Unsolved credit crisis (commercial, credit card, prime).

    2) Inflation we have never seen before. Substantial devaluation of the dollar thus high gas prices, high commodity prices, high food prices.

    These two are the most obvious issues that will whack some sense into the economy sooner or later. But there should be another factor that will trigger a big wave. Perhaps we will see riots of some sort to trigger panic. I am not sure how accurate is Gerald Celente but he predicts complete collapse by 2012 (he predicted the credit crisis).

  2. daneric, just fyi

    the TREND ANANYLSIS ino, that's the one that generates 90% of the profit. The one u have at the very bottom of your site. that's the one they "love" 3.00 per lead

  3. one of the reasons not to be heavy long in this wave as it gets longer in the that morning you wake up after a Black Swan major earthquake or major terrorist attack etc....these will take the market to hell in a be prepared.....more than likely P3 will begin with a wimper....before ya know it.......your longs are toast....

  4. "Primary Wave 3 will cause the market to explode on several instances to the downside. Circuit breakers. And then you'll lose more freedom because government will take a bit more away. Fascism and world wars reigns at the bottom of nasty social mood corrective swing periods. Sometimes this results in a Dark Age"

    LOL, damn, I thought I was a gloom and doomer. world wars and dark ages??? I like it!

  5. dan, what are your thoughts on how we hedge against Armageddon? ya know, a little more on the personal hedge side to protect our families and such should this happen. a lot of folks i've read say guns, bullion and personal agriculture

  6. Dan, have you considered rather than a 5 wave down, it is an ABC down. And that the market finished wave A back in March and is now in wave B. Thanks.

  7. Great stuff! Thought I was a doom gloomer with peak oil / energy on my lips every two seconds...

  8. Listen to this radio guru talk about the bullshit consumer sentiment rally. It's a hoot. But true. Which only makes it that much more entertaining.

  9. How will day traders and markets be affected when Gold Bullion is confiscated by the Government for the best interest of the People?

    First Gold, next Guns....

  10. Have you ever met a rich Economist?
    Max Cherry

  11. Daneric,

    Thanks for answering my question in this long, detailed post. And thanks for giving me a "hat-tip" for providing the topic and the link. (I'm glad I could contribute something back to you finally!)

    I agree with you (and the other commenters here) that the P2 technical bounce (and the desperate market "propping") can only last so long. The causes of this global crisis are too many and too severe to be quickly solved by quantitative easing and deficit spending.

    It seems ludicrous for economists to say the recession will end in 2009 when NONE of these probelms will end in 2009:

    falling residential and commercial real estate prices, rising residential and commercial real estate defaults and foreclosures, massive bank loan losses, massive derivatives/toxic asset losses, massive monthly job losses, falling consumer spending, falling corporate spending, falling tax revenues, worsening municipal and state fiscal crises, and so on.

    And given a very vulnerable economy and market, unexpected shocks like a flu pandemic, a terrorist attack, a war, a natural disaster, etc. can destroy consumer/investor "confidence" suddenly and deeply.

    So I think the most likely future is for a "hopeful" P2 upswing for a few months -- and then a return to "fear and despair" in the crash of P3.

  12. Ha! We do think alike my friend. I've been searching for P3 catalysts for weeks now. Not sure if you visit my blog or not, but they are some of my favorite posts to do. It's coming.

    Nice post,


  13. double bottom vix 26 on pos divergance