Over the last couple of weeks, there has been a lot of talk about how the U.S. stock market cratered 'because of' the blow-up of the Yen carry trade - not because of the inherent Elliott Wave count of the U.S. market. Almost all financial news media outlets carried the former story but not the latter (of course). But did / does the Japanese Yen have an Elliott Wave count? We purport to suggest that it does, too, as the monthly chart of the Yen, below shows.
Yen (6J) Futures - Monthly - Zigzag |
Note, very simply from its failed ending diagonal high in 2011, the Yen has traced out a simple Elliott Wave 5-3-5 sequence, otherwise shown as Intermediate (A), (B), (C) - a zigzag. And this chart is instructive in a lot of ways.
OK. Maybe you counted the five waves down to (A) from 2011 to 2015. OK. But then would you have had the extreme patience required to count out a six-year triangle before resuming a (C) wave decline. Really? Six-years?! You would have waited and waited and waited some more before saying, "the next down break must occur."? Um, with my familiarity with readers here, I don't think so. Traders tend to be an impatient lot as it is. And yet, Neely suggests a wave corrective to a motive wave usually takes more time than the motive wave. And here you see a clear example of that in force.
So, what's next? That's all you really care about, right? Well, we are showing the wave as either having finished or having one more much smaller down wave to go. Let's have a look at the weekly chart. Just before we do that notice that the down wave might end at mid-channel of a parallel, above, which is shown, and the EWO is currently green and rising.
Yen (6J) Futures - Weekly - Potential Contracting E-D Ver #1 |
The above weekly chart shows a less proportional - but still legal - way for the Intermediate (C) way to have ended as an ending diagonal. There is, indeed, a lower low for Minor 3. The issue is that Minor 3 only 'ticks below' the prior low such that 3 seems much shorter than 1. But the following weekly chart also shows a way the diagonal count can continue for a bit.
Yen (6J) Futures - Weekly - Potential Contracting E-D Ver #2 |
Above you see the larger diagonal possibility which makes Minor 3 more similar in length to Minor 1. And although the measurement is not included for chart clarity, it shows that wave 4 is 62% of wave 2 which is a very proportional measure in a diagonal. Readers of this blog should independently confirm that measurement. This chart also shows the measurement of 0.0075370 above which the continuing diagonal would invalidate because wave 4 should not become longer than wave 2. Note, too, that the Elliott Wave Oscillator has turned back above the zero line - either the sign of a 4th wave, or the turn, up, for good.
Further it shows that wave 5 of a (C) wave diagonal can fail. This is because the diagonal would be an ending diagonal, and not a leading one.
So now, let's look at the daily chart.
Here we see three likely waves up with c/iii being almost 1.618 times longer than wave a/i. You also see a corrective looking down wave which is at the junction of a rising trend line from 0 - b/ii and from a declining overhead trend line. And you see price turning up from this lower trend line. Further, you will note that price has come down to the 18-day SMA in red, "the line in the sand".
From here, The Principle of Equivalence says we are in the same position as the equity market. If price rises and creates an impulse, we must accept its implications. And, yet, if price falls, we know to where it might fall and what it's limits might be. We also have a pretty clear idea of invalidation levels and overlaps that can be watched, especially above. Right, now a fourth wave is not overlapping.
In any event, the Yen carry trade is for the uber-wealthy that have access to the banking and trading resources to carry it off. It is difficult for smaller players to participate in (except as usual, in trying to ride the coattails of the big players).
Still, a couple of days ago no less than Jamie Daimon expressed a Yen that the wealthy be taxed more, echoing the concerns of Warren Buffett. You can read the story at this LINK. I personally concur for a lot of reasons.
First, is the example above. If the very wealthy can participate in a Yen carry trade like above 'just because of their size' and the smaller investor is at a huge disadvantage, then shouldn't increased taxes on the wealthy's profits be one manner of off-setting that purely positional advantage? Can't we level the playing field a bit? I mean they already have large algorithms, and news-reading computers, etc. How much more of an advantage do they need?
Second, by definition, wealthy people have their lower sections of Maslow's hierarchy (safety, security, food, shelter, etc.) taken care of by virtue of their money. In any society which seeks to progress, shouldn't these individuals be the ones who more help advance everyone's state in the society? No, I'm not saying to any extreme level. Just more so. Or at least proportionately so. We all know there are still corporations that pay zero taxes. That is, they give back nothing to the society they are allowed to operate in - except jobs & products, of course. But then, either all corporations pay no taxes should we allow that in the future, or they do so proportionately, and not just by legal legerdemain.
And what would the society do with such taxes - just hand it over to the poor & needy? Well, maybe some of it - but we know there can be some disincentives to behavior if that is taken too far. No, what about devoting much of it to infrastructure improvement, to improvements all can benefit from? Chief among these must be clean water and clean air to keep health care costs down.
For example, just imagine if a good use of A-I (whenever it fully comes on board) is not just to out-game the enemy in war (real or otherwise). But what if A-I could actually control your traffic lights in real time so that your car used even less gasoline or electricity, than sitting idly by at an intersection with no traffic coming from the cross-directions. This could help reduce the level of pollution and frustration for nearly everyone without implementing what looks like "handouts".
I hope Mr. Daimon and Mr. Buffett can get some further traction on this idea. Because, after all, they are some of wealthiest people, with a Yen to pay more taxes. Enough of the pun - they are literally begging that society increase their taxes. I say we just take them up on it. What say you?
Have an excellent rest of the weekend & start to the week.
TraderJoe
Warren has long argued that he wanted to pay higher taxes and he owns enough of the economy that he probably gets it back down the road anyways. Somebody has to pay for his son getting hundreds of thousands in farm subsidies.
ReplyDeleteI always like Peter Buffett's take.
DeletePhilanthropy, he said, has become “conscience laundering” for the rich, who are “searching for answers with their right hand to problems that others in the room have created with their left.”
Yes, I think a good government (we the people) is/are a better determiner of who really needs what - provided that we don't take a scatter-shot approach like we were almost forced to in the pandemic. Hundreds of businesses took the money from the PPP, and just cashed in - never using the money for what it was supposed to be used for. But if you set up long term programs and try to define outcomes I think we make some good decisions. There is no perfect one. TJ.
DeleteThanks Tj. Please write a book. You have so much knowledge. Please pen down. I will be the first buyer.
DeleteI'm.sure this on the.peanuts end but I was buying a boat motor from a guy and we had the normal small talk. He was a banker and couldn't wait to retire. "When your doing a PPP loan for 1.5 million and putting in an account.that has already got 5 million in it, I want out."
DeleteWhy not use the windfall to pay for the budget deficit we already have and relieve some of this inflation? Maybe pay down some debt at some point.
Delete@MJhawk .. yes, I think some of it 'could well' be used for that, since that helps future generations get by in the world. However, I do humbly suggest that if there are still communities with lead or other clear undesirables in the drinking water, or too much ozone/particulates in their air, these things need to be worked on quickly since they directly impact people alive today. We can reduce health care costs by not getting people sick in the first place (i.e. a wise man once said, "to get out of a very deep hole, first stop digging!"). TJ.
Deletefyi only - Some econ calendars have it, some don't; but the Conference Board Index of Leading Indicators is due out at 10 am ET with a consensus of -0.4%. TJ.
ReplyDeleteVirtually ALL economic news out of this administration should be taken with a grain of salt. The sad truth is.thet are corrupt and have agenda, which is to make the administration look effective. The dramatic monthly change on retail sales recently reported was beyond laughable. Stunning so few talking heads challenged it!. Even funnier how they threw the BS right in our faces: look at how many times the report said "ESTIMATE". Lol!
ReplyDelete..correction, "out of all administrations". They all do it. "Covid will be gone shortly", etc. TJ.
Delete....and inflation is transitory.
Deletefyi only - Leading Economic Index came out at -0.6%; worse than expected. TJ.
ReplyDeleteSPY Cash (2 Hr): in this view, now approaching equality.
ReplyDeletehttps://www.tradingview.com/x/DXPa3vlq/
TJ
..and another "high of day" for the noon news on Wall $treet. TJ.
DeleteI see the yen doing another leg down as the Commercials have gone short Yen 100k contracts in two weeks! I have never seen that before.
ReplyDeleteThe fourth-hour chart suggests that if Yen declines, it started it with a diagonal, followed by a flat. Alternately, there is just red a-b-c down for all of four, or a triangle for iv. Dicey stuff because there have been so few impulsive waves.
Deletehttps://www.tradingview.com/x/8S1arZRE/
TJ
Sure looks like flagging action on that wave up!
DeleteThis might be a good place for (ii) to end
ReplyDeletehttps://quickshare.samsungcloud.com/rmdZuyqcwyYE
Dont think this is Ii. Either B of triangle or 5th up
Deletethis can be B of flat or expanded flat. This can 1 be of V. This can be 4 of expanding diagonal. if can be X of WXY.
DeleteYes could be B of triangle grr
ReplyDeleteAnd if it is B, then C wave down should be swift?
ReplyDeleteYes very
DeleteHard to think new highs not in the cards imo...
ReplyDeleteI can easily believe that if tomorrow is down
Delete90 percent up on spy reached at the close.
ReplyDeleteSo above 78 to 82% retracement
ReplyDeleteDoubt it can still be a (ii) ??
Odds are it's not
ReplyDeleteA new post is started for the next day.
ReplyDeleteTJ