Tag Archives: Elliott Wave Theory

THE MARKET ENTERS THE PREDICTED RANGE

UPDATE MARCH 27 (EVENING) – The DOW peaked at 22,595 on Thursday.  That is within 100 points of my target.  I’ll be surprised if my third forecast target in a row is this accurate.  But, if so, I’ll take it.

I will revisit price targets for the upcoming low next week.

The way the waves are looking the following should occur:  The US Dollar will rally to new highs short-term, Gold will fall below $1050-$1250 longer term, Silver will decline below $8 longer term. and stocks will fall 30% from current levels short-term.  How all of that happens I have no idea.  But, that is what I see happening.  I never ask why or how.

The $2+ Trillion stimulus bill was signed today.  And the DOW was down 915 points.  The markets already have priced in all of the stimulus that will be thrown at the country ($6+ Trillion).  They are looking at where we will be this Summer or Fall and they aren’t happy with what they see.  I am guessing they are pricing in the virus coming back in the Fall and Winter.

Regarding Oil, I did get a reply from the experts at Elliott Wave International.  My thoughts that the combination 120-year bull and bear market might well be coming to an end are on target.  Obviously, it is rare to have such an opportunity occur in a our lifetime.  There is an issue regarding the length of this bear market (timewise).  I need to analyze the 120-year move in a bit more detail to see what I can figure out.  I will keep you posted.

I have a gripe about healthcare providers complaining about going to work….about being on the front lines and subject to getting the virus.  Seriously?  Did you think you would take care of sick people and not encounter a contagion?  Geez, too much complaining about having to work nowadays.  Just do the job you chose as a career.  Be proud that you are helping people.  You have a chance to help others and change the course of history.  Stop complaining.

Oh, I do hope GM cans their CEO.  Trying to make a killing off of this crisis is obscene.  Like him or not, Trump is great at not letting anyone screw over our country.  I am glad he invoked the Protection act and I do hope GM doesn’t get a dime for the respirators they will make.  To think we bailed them out last time around….and this is the thanks we get.  I will never buy a GM product.

Til Monday evening…stay safe.

The Mann

UPDATE MARCH 25 (EVENING) – The DOW rallied to 22,020 today.  It has satisfied getting to the range of a top for this counter trend rally.  It then fell almost a 1,000 points in the final 5 minutes due to Bernie Sanders threatening to hold up the bailout legislation.  It cannot be ruled out that the DOW could rally back above 22,020.  But, once a target range is satisfied, I start concentrating on the next wave – which is down to 13,900 to 15,400.

For trivia, this was the best 2-day rally since the 1987 crash.  And I think it was the first consecutive up days in a month.

Gold backed off its rally quickly.  Oil is starting to get its legs back.

Hopefully, Friday evening the waves will be telling us more.

Regarding real estate, early info is saying that buyers are asking for a 5%+ reduction in price on existing contracts.  That isn’t all buyers.  And that isn’t much at all.  Starter homes continue to sell well.  National Tenant Lease properties are in demand as a flight to safety.  Since these are really corporate bonds, and not real estate, this makes a bit of sense.  Of course, the question is do these buyers know what kind of downgrade the corporate bond rating will get for the tenant in the property they are looking at?  Or are these unsophisticated buyers just looking for anywhere to put their money?

Please share anything you are hearing regarding real estate prices, cap rates, closings falling thru, et al.  Til Friday evening…

The Mann

UPDATE MARCH 24 (EVENING) – I was going to post this regardless of today’s outcome.  But, worth noting today was the largest up day since the depths of 1933.

Most, if not all, analysts never state what could occur that would show their forecast to be wrong.  Flat out, if the DOW rallies above 24,200 my interpretation of the wave theory will be wrong.  Technically, it would just mean the waves were showing something else was happening.  But, to me, I say I am wrong.

I did some analyzing today and thought this rally would terminate around 22,500.  Bob Prechter’s firm put out their analysis this evening and said about 21,200-22,100 should be the top of the range.  The main point is this rally absolutely cannot go above the late February low around 24,200.

Some additional analysis suggests that 15,300-15,400 is really looking good for the final bottom (i.e. for this first ‘A’ wave of a Bear Market….wherever this low occurs, it should be broken down the road after a significant rally occurs).  But, a lower target of 13,900 showed up so I would have to update the ‘final’ bottom range to be 13,900-15,400.

So far, the 27,100 top forecast for Wave 2 of the decline was almost exactly on target.  And the 18,200-18,400 range for a possible appears to be for Wave 3 of this decline.  Both have been right on the money.  I suppose my luck will run out soon:)  Albeit, I usually do excellent in a major downturn, so we shall see.

22,500 for the top of Wave 4 and 13,900-15,400 for the bottom of Wave 5 of ‘a’ are up next.

I need to confirm with Mr. Prechter something I am observing regarding the Oil market.  It is significant, so I hope to get his thoughts on the matter.  Sam Zell said he bought some energy stocks.  If what I see occurring in the Oil market, per the wave theory, is accurate, then we might have an opportunity like that of the stock market in April 1933.  Will keep you posted on this one.

Oh, the $200 Gold rally in two days is due to people suddenly realizing they can’t buy the physical product anywhere.  I use KITCO and they are all but sold out.  However, the wave theory allows for this rally to still be part of the larger decline below $1056.  No change of thought on that forecast because of these two days.

Stay at home.  Be safe.  Enjoy time with your family.

The Mann

MARCH 23 (EVENING) – A fairly calm day in comparison to the past few weeks.  The Dow bottomed below 18,300 today.  It thus, entered the 14,600-18,400 range I forecast when it was around 25,000.

My analysis of the waves is very much in sync with others.  I would say there is a 25% chance of a significant bottom occurring between the 17,000’s and today’s low and a 75% chance of a bottom occurring in the 15,400 range.  This latter figure has significant support as bottoms in 2015 and 2016 occurred around this figure.  With both the waves and chart support suggesting 15,400 as the low, this figures gets greater weight at this time.

It is amazing to hear predictions of -30% to -50% for GDP and up to 30% unemployment.  If these figures occur, we will have blown away The Great Depression and The War of Northern Aggression (aka the Civil War for those north of the Mason Dixon line).

TRIN is at 0.82 is incredibly far from signalling a bottom (1.60+).

VOO is at about -$2.5 Billion for last week.  I would need to see -$10 to -$20 Billion to know the public has thrown in the towel.  Or maybe several weeks of -$10 Billion at a minimum.

For those interested in Corporate Bonds, I was introduced to an indicator to watch.  First, about 40% of Corporate Bonds graded BBB (lowest investment grade before becoming junk bonds) are expected to be downgraded to junk.    Keep that in mind regarding current ratings.  Remember, rating agencies are almost always BEHIND the curve with their grades.  They will finally lower their ratings once all of the decline has occurred.  They get paid for such hindsight.

Back to bonds….as long as the ETFs are trading at a discount to their NAV (Net Asset Value), the market is saying prices aren’t low enough, yet.  I will follow ticker symbol BND (Vanguard Total Bond Market Index Fund).  It is currently trading at about a 3% discount.

Regarding Corporate Bonds, does anyone have a source that shows what is out there and what their prices are?  Barron’s and the WSJ used to list all of them in their papers.  But, they don’t do that any more:(  If you know of a site that has this info, please share it with me.  Thanks.

We shall see what the next two days bring and I will be back Wednesday evening with an update.

Stay safe.

The Mann

DID ANYONE ELSE FORECAST TODAY’S FIRST-EVER 3000 POINT DECLINE

MARCH 16TH (EVENING) – I am curious if anyone has seen anybody else predict that a 3000 point drop in one day would occur asap.  Please email if you saw someone do such, as I like to keep up with such people who know how to forecast well.

For those new to my blog, there are two additional posts on this topic that will catch you up on how things have been playing out.

Please feel free to pass my website along to others.  Although the short-term future is bleak, having a clue of what is coming helps alleviate the fear of the unknown.

Like The Great Depression II, this downturn has been easy to forecast.  Hopefully, it will stay that way.

I mentioned that 14,600 to 18,400 is looking like a likely range for a bottom of some type – not sure, yet, if it will be an interim or final bottom.  Interim seems more likely.  With more information every day the market plays out, this range can be narrowed.

After today, I would narrow this range to 15,400 to 18,400.  Also, there is a low-percentage chance of an interim bottom occurring in the 17,800-18,200 range.  If a bottom occurs in that range, the rally will reveal if that is an interim bottom or just a temporary stop on the way down to an interim bottom.  The odds are higher the market will decline thru 18,000 towards an interim bottom a few thousand points lower.

I would not be surprised if we get down to 18,000 tomorrow.  The markets are moving that fast.  By the way, the volatility of the last 3 days last occurred in 1929.

The decline in Oil is just ahead of the stock market.  I haven’t tried to come up with specific targets in this market.  But, I am thinking an interim bottom is forming in the $25-$30 range.  This should be followed by a rally to $40 and then a decline back to a major low in the $25-$30 range again.

I still think it is too early to buy stocks.  Especially when we are still in the midst of a Wave 3 (various degrees for those who follow wave theory) and Wave 3 is the most severe wave.

A side note…for the first time in history T-Bill rates briefly went negative today.  Simply amazing the number of people worldwide willing to pay sovereign governments interest.

More of a note to myself, if Gold is truly in the last wave of a major Bear Market, then the target range is $829 to $928 an ounce.

Stay safe.  Remember President Kennedy’s great quote:

Ask not what your country can do for you — ask what you can do for your country.

All 320 million of us are in this virus fight together.  Do your part and this will be over sooner than later.

Godspeed.

The Mann

 

REAL ESTATE AND STOCK MARKET THOUGHTS

UPDATE – Evening of Sunday March 15th – Poor Caesar died on this date.  He would have fully related to our current times as we are living out The Fall of The Roman Empire II.

Like a good little boy doing as he is told, the Fed lowered interest rates all the way to 0%.  I thought they might do it in a few steps, but this time they did exactly as the market told them.

And like a few weeks ago, DOW futures are down over a 1000 points.  I have always said it is easier to predict events in a downturn than in a bubble.  Bubbles extend higher and longer than anyone expects.  The masses in panic mode is the same crisis after crisis after crisis.

And to another wild week we head in to….

The Mann

UPDATE – Saturday March 14th – Carl Icahn has essentially created The Big Short II.  You might need to cut and paste this URL:

https://www.cnbc.com/2020/03/13/icahn-reveals-his-biggest-short-position-amid-market-turmoil-commercial-real-estate.html

I would like to know what Sam Zell thinks.  He is the greatest real estate investor of the past 30 years.  If anyone sees anything from him, please pass along to me.

If Icahn is correct (he is a billionaire, so he has obviously been successful, but I know firsthand of some large losses he has incurred over the years….so he isn’t a perfect indicator of things to come), I would be out of CRE.  Financial institutions take note.  Investors take note.  Of course, there will be pockets that don’t do as bad as the overall market.  And if you know your local market better than anyone, then you might be able to find true bargains sooner than later.  There will likely be the normal OREO market for deals, also.

A side note regarding stocks.  You will hear a lot of pundits saying stocks are better priced than they were (no duh!).  That some bargains are out there, even if we are not at a bottom.

To be clear, we have NOT had stock bargains since the August 1982 bottom.  I might concede NASDAQ stocks after the Dot.Com Bubble burst might have hit bargain levels.  But, neither real estate nor stocks went down to bargain levels in The Great Depression II.  Look at the Schiller Price Index and you will see that home prices only got down to fair value.  And that is what I am trying to get to re stocks….this initial decline is simply wiping out excess over valuation bubble prices (enough adjectives :) ).  No way are stocks at bargain levels (individual exceptions might exist….e.g. some oil stocks look darn cheap).  Stocks likely aren’t even down to fair value, yet.

This isn’t to say that The Great Depression II  won’t repeat itself and real estate and stocks bottom out at fair value.  Just remember, we are not at true bargain levels until (Bloomberg now owns it) BusinessWeek or Barron’s run the infamous August 13, 1979 headline ‘The Death of Equities.’  Will we get that low is tough to determine at this time.

The Mann

UPDATE – Evening of March 13, 2020 – Yesterday we approached nearly 3000 points down at one point.  As forecast, the 2000 point move was surpassed.  Today saw the largest point gain ever – almost 2000 points.  Every day this week saw over a 5% move.  Volatility (VIX) is at levels last seen in October/November 2008.  That was 5-6 months before the March 2009 bottom.

A range for the Bear Market bottom is starting to come into focus.  Albeit, it is really early to narrow the range.  Based on past crashes, a bottom should occur in the 14,600 to 18,400 range.  Analyzing the waves that are unfolding a low below 17,500 is probable.  I think the lower area of the range is most likely.  Again, it is VERY early, so I am sure I will refine this forecast as the waves unfold.

The waves are at the point where next week could see the worst of the decline to date.  That is hard to believe after all we have seen.  But, if it unfolds as expected, we might well be in the range noted above by this time next week.

A few side notes about a few myths that the masses assume to be true.  I am a gold bug, but gold is not a safe haven (nor is Bitcoin….I think it got down to $4000 this week).   Gold dropped about $175 in the past few days.  Although, it is challenging for me to see how it will happen, the long-term forecast for gold is $700 to $1050.  As always, we shall see.

The other myth is bonds being a safe haven.  On the day the Fed lowered rates 50bp, the market was down over 1000 points.  In declines this past week, everything was being sold.  Cash was king.  BTW, the markets are telling the Fed to lower rates up to 100bp.  I doubt they will go that far.  But, as the Fed follows and never leads, it will do as it is told.  Note, rates are nearing 0% so this catalyst for a rebound is about to be eliminated from the Fed’s toolbox.  Assuming the World doesn’t implode in this downturn, in the next crash following the next bubble the Fed will use its last tool – pumping trillions in to the marketplace.

More on Monday evening.  I am trying to update my forecasts Monday, Wednesday, and Friday evenings.  At least until things finally calm down.

Everyone be safe.  Follow the instructions from the CDC.  As they say, this too shall pass.

Godspeed

The Mann

March 11, 2020 – I will start a new post to make it easier for readers.  For those  who are seeing this post for the first time, I have a post on this blog that started with the significant decline that started a few weeks ago.  You can read thru it to get caught up on things.

Another week of up and down 1000+ point days.  For the few who watch volatility (aka VIX for true followers of the markets), this period was sure to occur.  Late last year we had gone thru one of the longest periods with the market not moving more than 1% in a day.  I think it was over 100 days.  Absurd calm as the stock market went straight up into a blow off top.  Welcome back to reality traders.

The only observations I have at this point is that this current decline should definitely go below 22,100 with 19,100 being a nice target.  But, that might be too high based on my next observation.

Not what many people want to hear (only those who are on the sidelines or short will like it).  The waves are lined up for what we call 3 of 3 – this is the point of major acceleration in the direction of the larger move.  The 2000 point down day we recently saw will be dwarfed.

Trading is halted when the market (S&P 500 specifically) falls 7% in a day.   The next halt is at 20% I believe.  We may not quite make it to that second circuit breaker.  But, I will be sure to turn on the TV and watch that amazing site, if it occurs.

I have been asked about real estate.  Before I guestimate a forecast, let me mention that so far this Winter 34 million (!!!!!!!) Americans have got the flu.  Can you imagine how many work hours have been lost.  How much income lost.  What if we tried to stop the flu for a Winter?  Instead of a little beer virus.  It is likely more people die every day in car accidents than will die from the beer virus.  Imagine if we eliminated all driving for a month.  We would save thousands of lives.  Perspective people.  But, the Fake News Media has no perspective.

Real Estate is a bit difficult to project at this early stage.  Obviously, real estate markets fall long after the stock market has declined.  That is simply due to real estate moving much slower.

We know for sure that the hotel industry is getting hit hard now and likely will be thru the Summer.  People won’t want to travel anywhere for awhile.  Retail properties will be hurting for awhile, too.

I am no fan of Amazon, but they are in the best position – you can order anything and have it delivered and with oil prices down delivery costs for Amazon and WalMart and such are cheap.

I imagine we will see many bankruptcies in the energy industry.  So, lenders with loans to such entities will sustain significant losses.  Individual hotels may not default, but they should be watched closely as those with high leverage may be in trouble.

I would think apartments, industrial, and office properties would be least affected.  Obviously, companies in troubled industries that are tenants in these property types might vacate.  Especially if they declare bankruptcy.

I am thinking land acquisition, and all acquisition really, will slow down significantly.  Essentially, those real estate investors that use money from their stock market profits to buy properties are gone.  With a 20% loss they are frozen in their tracks. Even if they are up 40% for the past year or such, they are still hurting.

Like a major Election (yep 2020 has one of those), everyone will want to stand by and see how this just labelled pandemic plays out.   The problem is even if it goes away like SARS or MERS or Legionnaire’s Disease (going way back, eh folks) that won’t occur til this Summer and then people will put things on hold for the Election.  2020 is snake-bitten.

For those of us that were wondering what would take the blame of being the black swan this time around, we now what it is.  But, remember the markets are not telling us about their concerns today.  They are telling us about their concerns around Labor Day.

People may fear the beer virus.  Personally, I cannot even imagine what the real bad news is going to be this Summer/Fall!

So, for real estate, I would not be buying much.  Industrial may continue its strength as even more goods will be shipped to consumers.  Apartments depend on demographics, so the beer virus is not a significant issue.  Vacant land will likely just sit until the next upturn comes along.  Office could get hurt if bankruptcies occur that result in unemployment going up.

I have defended Retail all along because even if 12% of sales are online, 88% of sales are local brick and mortar.  Plus, online sales are just today’s version of catalogs in the past (which also had goods shipped by mail).  But, restaurants and lifestyle centers/malls likely will have fewer customers as people stay away from crowds.  It will likely depend on the tenant as we still have to get many items at retail stores and in person.

Lastly, another thought that came to mind….is this the nail in the coffin for globalization?  Globalization was on its way out over the past 4 years.  But, this certainly made every country focus internally.  Keep their people at home.  Support their local businesses.  Keep outsiders away.  It’s early, we shall see how it plays out.  Of course, I fully suspect the Fake News Media will associate the global downturn with this move to nationalism and say hey that shows globalization is better.  Certainly not the case, but the FNM promotes lies, not truths.  Just now President Trump has banned al travel from Europe to the USA for 30 days.  Wow.  Hunker down folks and buy American:)

I hope my thoughts help you think things out.  Like anyone, I am not 100% right in my forecasts.  So, think things thru yourself.  Situations vary for a million reasons.  So, know your situation.  Just don’t listen to the pundits on the business channels or radio or wherever.  Think for yourself.

I will just say, those who know me, know I live for major downturns.  2005-2011 was a dream and very easy to forecast all the way thru it.  I am not as confident about this downturn, but will do my best to nail most of my forecasts this time around, too.

You can email me at GeorgeRMann@Aol.Com.   Always interested in your thoughts, ideas, comments, questions, et al.

Remember, don’t panic.  The only way to succeed in investing is to do the opposite of the masses which Buy High and Sell Low – you need to Buy Low and Sell High.  Buying low is one of the toughest things to do on Earth.  The entire world will be negative.  Your stomach will be full of butterflies.  You will have major doubts.  But, you can smile and know that is the time to buy:)

Godspeed.

The Mann

GOLD – MANN vs. GOLDMAN SACHS

February 20, 2016 – This past week Goldman Sachs projected gold will fall to $1100 in the next 3 months and to $1000 by next year.

My current view is gold is in Wave V of the initial up Wave 1 (for those who know the Elliott Wave Theory you understand the 5 waves up followed by 3 waves down theory).  I expect it to top out between $1280 and $1345 over the next month or so.  Most likely in the lower part of that range.

Then it should decline back to the low $1200’s where it bottomed last week.  And from there the rest of the year should see the stronger Wave 3 up which should see it advance at least $300 per ounce and likely much more.

I honestly don’t believe we will see gold below $1150 ever again.

So, little ol’ me has a totally different projection than the mighty Goldman Sachs.  Let’s see how it plays out the remainder of this year.

The Mann