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Monday, August 1, 2011

Elliott Wave Update ~ 1 August 2011 [Update 7:55PM]

[Update 7:55PM: 30 year bonds - hey they finally made my blue box area.

EWI made a strange comment tonight, "The bond market always gets it right" and mentions how deflation brings lower yields.  I think thats total bunk - both parts.

First, the bond market is completely wrong. If it was "right", it would never had allowed the US (or other countries) to go so deep in debt. The bond market got it totally wrong. Had it been "right" and made for higher interest rates over the last few years, perhaps we wouldn't be at the precipice of disaster.

Second, the notion that lower interest rates automatically = deflation and thus higher rates mean inflation. Well, I have the 30 year yield on an impulse up long term. I do believe deflation is coming in lower wages, destroyed credit, bankruptcies, lost jobs, lower asset prices etc. But I believe a higher interest rate will help spur this terrible deflation - a rising yield deflation. Not in the "textbooks" yet I believe it will be the path forward.

Daily Sentiment is high on bonds - 93% bond bulls - as reported by EWI tonight. So the count "aligns" with sentiment measures.
Long term count. Yields up after it finds its wave (2) low.
Primary count is still an [e] wave of Minor 4 as long as the market stays above 1258SPX.
Cycle lines may be in play again:
I'll have more charts as data rolls in. 30 year bond yield count is getting exciting.
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