"When Worlds Collide ...."

Politicians have two objectives in life.

• The first is to get elected, and 
• the second is to stay in power. - at all costs.

If we reflect on these goals, you and I do not figure very prominently in the equation at all, and when the worlds of democracy and politics collide, there can only be one winner. One would like to think that it would be democracy, but sadly as we saw this week, it is the world of politics that soundly beat democracy.

On 24th June, the Australian Labour Party, dumped its leader, Kevin Rudd, who was also the Prime Minister of Australia, and replaced him with Julia Gillard as the new Australian Prime Minister. Now what is a little alarming about all this manoeuvring by the Labour Party, is that the position of Prime Minister is a democratically elected position by the people of Australia. And since voting is compulsory in Australia, one would think that whomever gets elected, has done so on the basis that the majority of the Australian people want them to lead the country and set the political agenda.

What I find disconcerting over the events of June 24th is that, whilst it is fair and reasonable for the Labour Party to want to change its leader, I cannot see that it is fair, reasonable or even democratic, that a few factional power brokers within the party, can engineer the dumping of a Prime Minister and the installation of another politician in the top job, who has not been voted in by a mandate from the Australian people.

What has become evident over the last week, was that a few of the key factions in the Labour Party were not happy that the Prime Minister was making decisions without reference to them as key labour unions and members of the political machine. Well that's what Leaders do - they make decisions and after all he was placed into the job to make decisions and lead the country. The end result was that a few quick phone calls, pressure was brought to bear on other key members, and the Labour Party voted Kevin Rudd out of the leadership role.

To me, it does not follow that a few disenfranchised power brokers on the left can remove a Prime Minister without a democratic election.
Although Julia Gillard is a sensible and probably palatable politician, She did not get voted into the role by every Australian - quite the contrary - She was placed into the top job by about half a dozen or so key political players in her own party. If this now sets a precedent, what happens in the future if a Labour Prime Minister does not tow the labour union line ?. Will that factions members simply huddle together, get the numbers and move to toss him out, then replace him with their own puppet leader and push their own agenda through Parliament, irrespective of what the wider community want?.

Although I did not vote for Kevin Rudd, I do agree that he was elected by a democratic process to lead the Australian people for a term of four years, and should have been allowed to do that job. If the Labour Party feel he no longer represents their ideals, then they can vote him out as their leader. But then, if they do not want him as the Prime Minister, the party should place a motion of  "no confidence" and if passed, the Prime Minister should approach the Governor General for permission to hold a general election, so the people can decide on a new Prime Minister.

Not a few back room boys, - that is not the way a democracy works.

Truly a sad day for democracy in Australia.

Cheers

"NAB, ...there's a bear in there... "

As NAB begins to retrace from its earlier Wave 4 high of $25, it would seem that the potential Wave 5 target low might be between $22 to$23.

In addition when we use the Ellipse tool to pick up the most probable position for the downward trend to continue, it has been incredibly accurate over the past few weeks. Refer to the price chart below as an example.

his is a price cart for NAB dated 24th June 2010, and as can be seen the ellipse tool has accurately picked :.

1. the false bottom to the projected Wave 5 and relabelled it as B in an ABC correction. 
2. The peak of the ABC correction as the Wave 4 high.
3. The end point of the first gap down which coincided with the Australian "Coup' where Prime Minister Rudd was deposed in favour of Julia Gillard as the new Prime Minister of Australia.
4. The last estimated ellipse point shows that NAB is at a significant support area

The plan, come Monday, is that if NAB breaks below the ellipse point of $23.83 and goes lower, then the hedge will be left in place. Otherwise the existing hedge will be closed and the profit taken to account and a new series of Puts will be put in place to hedge the stock position. If the existing hedge is closed out, the new hedge may be based on August Puts rather than July contracts as we are getting into the final 30 days and Theta decay and Gamma will escalate at a non linear rate to our detriment.

Cheers

"... a frequent path for us all...".

When I was young,
It seemed that life was so wonderful,
A miracle, it was beautiful, magical.
And all the birds in the trees,
they´d be singing so happily,
joyfully, playfully, watching me.

But then they sent me away,
To teach me how to be sensible,
Logical, responsible, practical.
And they showed me a world,
Where I could be so dependable,
Clinical, intellectual, cynical.

At night, when all the worlds asleep,
The questions run too deep,
For such a simple man.
Won't you please, please tell me what we've learned,
I know it sounds absurd,
But please tell me who I am.

Now watch what you say,
Or they'll be calling you a radical,
A liberal, fanatical, criminal.
won't you sign up your name,
We'd like to feel you're
Acceptable, respectable, presentable, a vegetable.

There are times when all the worlds asleep,
The questions run too deep,
For such a simple man.
Won't you please, please tell me what we've learned,
I know it sounds absurd,
But please tell me who I am.
Logical by Roger Hodgson,an excerpt from "Breakfast in America".

This is a "story of innocence and idealism lost", with Hodgson condemning an education system not focused on knowledge and sensitivity but focusing on the endgame. It tells of a man who:

• is taken away from the unspoiled immediacy of childhood, (When I was young, it seemed that life was so wonderful, a miracle, it was beautiful, magical).
• He undergoes a predetermined education, (but then they sent me away to teach me how to be sensible, logical, responsible, practical).
• He sees a future prepared for him lacking any spontaneity of reaction, (And they showed me a world where I could be so dependable, clinical, intellectual, cynical).
• He feels constricted in his freedom of speech, (Now watch what you say or they'll be calling you a radical, illiberal, fanatical, criminal).
• He is put under pressure to conform, (Won't you sign up your name, we'd like to feel you're acceptable, respectable, presentable, a vegetable).
• and he ends up confused, without a coherent self-image, (please tell me who I am).

Image : Roy Lichtenstein, "Hopeless".

Do any of us really know who we are or how we fit in ? It can take a lifetime to find out just what our destiny is to be.

But it is part of human endeavour to search, - it is this tenaciousness that makes us what we are, - An Individual.

Cheers

"NAB, Wave 4 in the making ..."

On April 30th we began to look for the formation of a Wave 4 with NAB retracing off its lows to a previous high in the order to $25.

The big change between April 30th and now, is that we had a number of significant market announcements that impacted financial institutions. There was the sovereign debt crisis of Greece, Spain and Hungary, leading to the "Flash Crash". Then, the was the BP oil spill, the elections in Germany, and the UK. There was the threatened demise of the Euro, and finally for NAB, there was the rejection of the AXA deal by the ACCC, and then NAB pulling out of the Royal Bank of Scotland retail branch M&A deal in the UK, which drew NAB's UK operations into question. The impacts of these market announcements is highlighted in yellow.

Chart 1.

As we can see from the the price chart above, the potential for a Wave 4 low was lost when the various falls in NAB's price were so material that we got an Elliott recount and a new Wave 3 low down to $22.25.

So, what can we expect over the next week for NAB's price? The price chart #2 below is for June 22nd and shows that NAB exceeded the traditional 38% target of $24.64 and has headed up to the next Fibonacci level for the 50% retracement level of $25.38. Interestingly, as of today the price is beginning to weaken and may reflect the beginning of the new Wave 5 down. However if we look at the recent high, the price stopped right on the 50% Fibonacci level of $25.38.

Chart2.

Elliott theory suggests that if Wave two is a simple structure, then we should expect Wave 4 to be a complex structure.

This is called the "Rule of Alternation".

So how has NAB gone since April 30th ? We can see from the price chart #2 above, that the Wave 4 has in deed had a few false starts at attempting to reach our potential target of around $25 which is consistent with the "Rule of Alternation".

It would seem that at this stage there is an early indication that Wave 4 has now completed at the 50% Fibonacci level of $25.30 and will now head back down to a Wave 5 low target of around $22.25.

 Cheers