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Sunday, May 10, 2009

Government owns a Majority of the Market

Not having the time to research and link all the sources that support this assertion, it would seem common sense that if you tabulate every Local, State and Federally owned mutual fund supporting retirement plans, investment vehicles and other such entities that you could actually make the case that the "government" owns 60% of the market or more. That would lead one to believe that the "government" with its crony friends at the Federal Reserve and Major banking institutions could thereby "control" the market and its direction.

But the last I checked, government was made up of humans with human frailties and foibles just as everyone else. There are literally thousands and thousands of fund managers for all these various government-owned market slices and they make their own decisions at every level.

So how could a Primary 3 Elliott Wave (or P3), the most viscous bear wave down ever, be thrust upon the market if all this "control" refuses to cooperate and sell? They will sell. Budgets at every level are being ballooned and busted at an alarming rate. None of the budgetary problems have been fixed. We merely doubled down with debt as a nation at every level to keep the train rolling.

The national debt at all levels is like an escalating Ponzi. And ALL Ponzis collapse. ALL of THEM. Some have the power to keep things going for decades (US Treasury) however that inflection point is coming like a freight train in the night.

The main point I am trying to make is that government fund managers, at every level, in an interest of raising cash and salvaging their budgets and pension obligations WILL sell in an effort to beat the "next guy" and that next guy includes other government fund managers. They are human. They will feel the fear just like everyone else.

I actually think that the fact that "government" owns most of the market GUARANTEES its eventual collapse into a nasty P3 bear wave of epic proportions. With competing budget problems it will be a race to jump ship in an effort to salvage what they can and let the next guy eat the losses.

P1 prepped us for P3 in a sense. They will remember P1 when P3 comes and this time the selling and fear will be even more intense.

When will P3 come? Hopefully not for many months. I kind of like the social mood on an upswing mode. But when they declare this bear "dead".....you will know P3 lies around the corner in waiting.

23 comments:

  1. Brilliant post Daneric.

    Thank you.

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  2. Supporting your thesis, my government 401 provides no option of short, only cash, bond or equity funds.
    I can imagine big boys close down market during P3.

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  3. Like to see this from a TA guy. Banks, Governments and other institutions have been known to " kick the chess board", if the circumstances are unfavorable to their interests. Are the board of directors getting ready to spring the trap door? Hard to tell because sometimes there is more disinformation than information, so stay tuned.

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  4. Absolutely. P3's coming, but not yet.

    The idea that the need of a pullback at this point has become pervasive enough that the bull pressure force needed to trigger P3 isn't obtainable without said pullback.

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  5. interesting article...
    wonder if P3 can hold off until 2012?
    http://georgewashington2.blogspot.com/2009/03/best-way-to-predict-stock-market-and.html

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  6. To Dan From Max Cherry
    I think Government ownership (and manipulation)will cause this to drag out for years. It seems that this bear is following the 1929 to 32 bear with one difference, 29 to 32 was on a daily basis this one appears to be moving on a weekly basis lasting for years, like Japan. Here's my view

    http://stockcharts.com/h-sc/ui?s=$SPX&p=W&yr=3&mn=0&dy=0&id=p31055921046&a=163800550&listNum=12

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  7. Wonderul Article

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  8. Interesting article on the long term view

    http://tinyurl.com/oms66a

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  9. Daneric: What can we do to bring capitalism back to America?

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  10. Buy a high capacity, high velocity firearm

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  11. the Government may control 60% of the market, but let's remember that they only control 100% of the taxes and 200% of the spending so based on this ratio it will be at least another 10 years until they control the other 40%
    of the market. A market by the way with no real net value due to the collateralized margin owed to China...

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  12. we are witnessing an economic experiment wherein the upper tier traders are transfering their risky positions to the lower tier investors via the taxpayers who are covering the margin-call...this whole economy
    and market are being reflated with a large government "whoopy cushion"...
    thanks for your charts and comments.

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  13. Dan,

    In the past i have enjoyed reading your elliot wave posts, but after this I'm going to stop. In financial market trading you can very easily figure out who is who and who is going places by how they react to losing. in the past few weeks you have been slowly lost your grip on rational thinking. If this is the sum of your analysis I would stop trading. At the very least stick to technical analysis -- you al least have some skills there -- leave global macro and political analysis to those with more skill (and capital).

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  14. dear dan you are da man....previous poster apparently has more insight than you and I on this.....anyway.....nice post.....tooo bad these scumbags that destroyed the economic and moral fabric are going to scate free.....

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  15. Nice commentary DE, US Debt is just staggering and will define life in America for years, decades, generations to come. The loss of "rational thinking" began with the first stimulas plan.

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  16. To the Anonymous poster who advises Daneric to stop his political analysis:

    Please post a comparable political analysis (by yourself or by someone you respect) so that we can evaluate whether your preferred political analysis is, in fact, superior to Dan's.

    Furthermore, here's my analysis of your post: 1)You completely fail to provide a single specific example of something Dan wrote that you find fault with. 2) You completely fail to state exactly why Dan's analysis is faulty. 3) You completely fail to state an alternative analysis. 4) You completely fail to state facts or reasons why your (missing) analysis is superior to Dan's.

    In sum, it's easy to criticize other's efforts...but you have made no effort at all to support your allegations, much less to provide your own analysis. If you pretend to intellectual, analytical superiority, why does your post fail all of the above analytical requirements?

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  17. SRS - Anon said they wer not coming back. That's most likely a lie.

    Dan - as I blog along I'm building a case for P3 as we go. If you have not read any of my posts lately, I've got a few recent posts attempting to validate the P3 stance which I agree with 100%. Market manipulation is the only reason it is where it is today. I worry about this and still believe we need and "external" catalyst to cause P3. This is not TA based I know, but when things are so controlled I'm not all that sure that TA really counts the way it once did in a normal function ing market. It may take something beyond their control to bring it all down. Thanks for all your work.

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  18. After a rally, a 50% sell off.
    http://www.zuam.ch/pdf/Article/afterarally.pdf

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  19. "We're going to run out of steam," Manus Cranny, market commentator from MF Global, said. "We've had a fantastic 9-week run, nothing lasts forever."

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  20. Nice article. Even R.N.Elliott wwould have loved this one :-)

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  21. Daneric for President '12!

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  22. I think you are losing it, I say take a few days off take a vacation or something.

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  23. Elliott waves are fascinating, they are what got me started in the markets. LETS hope the know what they are doing. HA

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