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« The Zoran Project | Main | More Real Estate Nonsense UPDATED »

Thursday, October 22, 2009

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twitter.com/DrBubb

Mind the Gap!
The whole of yesterday's SPY action was filling a GAP from Oct.6, 2009.
/see Chart on post#288: http://tinyurl.com/yleyyrn
DrBubb from GlobalEdgeInvestors dotcom

twitter.com/DrBubb

Oh dear, That link was wrong, so please delete my prior comment
Here's the correct one:

Mind the Gap!
The whole of yesterday's SPY action was filling a GAP from Oct.6, 2009.
/see Chart & calculations on post#288: http://tinyurl.com/ylp8ppf

DrBubb from GlobalEdgeInvestors dotcom

Mamma Boom Boom

Seems like the traders have all r-u-n-n-o-f-t.

Mamma Boom Boom

So far, I have no confirmation that the top is in. Close, but no cigar.

Michael Locker

I'm excited that the top is probably in. But a bit puzzled because we closed near the highs for the day. Was the top the intra-day high?

Also: is this a multi-year top?

Account Deleted

Ned:

DJIA was very strong today and rose up very close to the high point yesterday. The other indexes were much weaker and retraced around 61.8% of the drop from yesterday.

Given DJIA is so close to the high, we will have to wait till tomorrow to see if it will break out to a new high.

In the meantime, it is helpful to note that the drop from yesterday looks like an impulse wave down, while the rise today is clearly a corrective wave.

In summary, the preferred wave count at this point is that we have completed a 1-2 wave down setup. It calls for a 3rd wave down tomorrow, which will be swift and powerful.

So we will see if this turns out true or not. :)

Michael

Jing,

Are you sure that we have moved down off yesterday's highs in an "impulsive" 5-wave fashion?

I just don't see it.
If anything, it would appear to be only 3-waves down off the 1101.36 SPX high down into today's 1074.31 low.

Account Deleted

Michael:

I am not sure. That is why I wrote "... looks like an impulse wave down ... ".

Also, the wave pattern looks more impulsive for some indexes than others. So it is hard to say at this point. I mainly use DJIA and SPX to count waves.

Finally, a preferred wave count, obviously, is just one of several possibilities. It happens to be preferred by the author at this moment, due to various considerations.

The goal of this whole exercise is to come up with a prefered wave count, and then determine what should happen if this count is true, and then let market prove or disprove it. And then learn from it.

Free

The top is so elusive. Since May whenever a top is called dow hears it and responds by going up. This time round instead of going down dow is up more than 100 pts.

We've seen so many articles on gloom and doom.. let's see also some articles on bloom and boom.

U.S. Economy: Leading Index Climbs More Than Forecast
http://www.bloomberg.com/apps/news?pid=20601087&sid=aDXDtR1lrv48

BDI keeps rising
http://www.bloomberg.com/apps/quote?ticker=bdiy&exch=IND&x=15&y=11

Michael Locker

I am trying to get a sense of things. Could someone please correct me if I am wrong?

1-- The top was not put in for some indices but was in for the Dow before yesterday (Weds) as per Yelnick post above. A very important (possibly muliyear?) top was probably put in today on Dow.

2-- Tomorrow will be a very strong down day (presumably a very large-scale Wave 2?).

Is this the gist of what has been posted above? Also, is that a raccoon or a bear and what is significance of trying to cross stream?

Thank you.

Account Deleted

yelnick,
a possible ending diagonal wave C of (Y)?

the general

Looks like that bear is pointing out the possible ending patterns represented by those twigs on the other side of the stream.

yelnick

Michael, the bear picture was to show bears jumping back in (ie shorting). Tim McKnight used it after a particularly egregious short went badly, to show he was courageously going back in.

1) yes, an important top is in, in the Dow, SAP and Naz
2) not necessarily a severe down move tomorrow BUT to confirm the bifurcation the down move over the next few days/week MUST be steeper than the recent up move, hence if it meanders or flops around (spiky ups and down) it means the move is still subdividing up.

yelnick

Mark, the STU summarily rejected the ED but Prechter in his WET showed an ending wedge which is the same thing with different terminology. If we subdivide up from here, after breaking the recent wave iv, then it better be an ED or something is off in the double zigzag count

Michael Locker

Okay, thank you, very helpful.

so

1. Important top IS in.
2. Animal is a bear --water symbolizes significant short position. Bear also symbol of one who expects decline in market.
3. We will have a down move over the next week (5 trading days?) that will be sharper than the previous 5 days.

You did not mention other averages like transport Wilshire etc. I find it hard to imagine that they will hold up while the Dow SAP and Naz are collapsing. Do you agree?

Account Deleted

WET?Yelnick,I think you mean monthly elliott theorist.

Michael Locker

My computer screen is very small but I am concerned about four features of animal in picture.

1 - dark band across eyes
2 - seems smallish
3 - very light colored fur (which is more in line with a grizzly which is a bear most definitely NOT small)
4 - extremely agile

If you say it's a bear I will defer because as I say my screen is small and resolution may be poor. But I am thinking raccoon. I don't think it makes a huge difference (although you lose "bearishness" connotation) because act of jumping back in retained in any case.

Am I the only one who thinks we are dealing with a raccoon? Do you know where I could see photo larger or in context? Perhaps there is another similar animal in cropped portion.

Michael Locker

Looking at photo again I believe it is staged. I believe racoon was pushed off (unseen) platform or stump to try to get an unusual photograph. I'm not a tree hugging vegetarian sort but I would certainly add my voice to NOT supporting this by using photo. Raccoons are intelligent and obviously have emotions and no doubt being tricked or harmed by trusted owner is not good!

Michael Locker

Or are we to believe a raccoon can jump 8' into the air for no apparent reason near a hazard (water)?? And a photographer happened to be there to catch this once-in-an-eon moment???!

Michael Locker

For what it's worth, my wife thinks raccoon also but not sure about staged. She told me to write that she thinks Elliott's Wave is garbage! Happily, I have my own mind of things.

Michael Locker

Ah! She has just pointed out it lacks tail. This is a bear.

sorry about so many posts but very haunting/strange image

yelnick

Michael, yes, if this is indeed a major Interim top then all major indexes should act in kind, although maybe not in concert (ie at the same time). What will be interesting is whether the blow out Amazon earnings will matter tomorrow. AAPL didn't, nor did the EBAY bust. The Wilshire in particular should be very much like the S&P (the two broad indexes). The Naz and the R2K might vary the most.

As to trading, if you are long, probably best to ride it out for the moment. If short, be a little anxious before jumping deeper into the river. Based on Elliott wave, best plan now is stand aside until a break of the 0-X trendline (running Sp1048 tomorrow then 1050 next Mon.

I mentioned Zoran in the prior post. He was taking Neely and simplifying when he died. Neely's work is quite amazing in its ever-growing complexity, but inside of that complexity lie some pretty clear rules. A lot can be summarized with the concept of Bifurcation out of a trading range, which is usually not horizontal but captured within a channel. This market since Mar has twice spiked fast then slowed into a channel. The spike is the Thrust that is tradeable and the channel is the Plateau which is not. We broke out of the first channel in Jun, then spiked up; now we remain in a second channel. A break below that channel of a steeper slope than the channel itself (think reflecting the angle from up to down) is a Bifurcation. Until then, this could continue to subdivide up.

One of the great benefits of Zoran's view is that one need not have a wave count or prediction at all times; just wait for the high probability calls which come with Bifurcations. Zoran was also attempting to project those Bifurcations using Fib and Lucas relationships between Bifurcations.

yelnick

Michael, on the bear, yes, I had the same reaction - an image that sticks. When I first saw Tim post it after losing a lot, I had to smile. He has the right attitude.

yelnick

Mark, yes, EWT. Damn spell checker .. and fading eyesight.

kloughr

From a contrarian sentiment standpoint I can confidently say this market is not going to top when so many permabear bloggers like you are so cocky after one measly down day. I predict lots more egg on the face of the Prechter groupies as this market melts higher.

kloughr

And I can't for the life of me figure out why Prechter has so many groupies with his horrific market timing track record.

"Newsletter tracker Mark Hulbert has been documenting Prechter's investment trading predictions and picks since 1985 so he now has a nearly 25 year long track record which can tell us whether you should trade on his predictions or not.

Here's how Prechter's trading advice has done from 1/1/85 through 5/31/09 versus the broad U.S. stock market average (Wilshire 5000 index) according to Hulbert's analysis:

Annualized Return:


Wilshire 5000 Index + 9.7 percent
Prechter's Trading Advice -15.4 percent

Total Return:


Wilshire 5000 Index + 857.1 percent
Prechter's Trading Advice - 98.3 percent

The underperformance of Prechter's newsletter is nothing short of astonishing and stunning! On an annualized basis, Prechter has underperformed the broad U.S. stock market Wilshire 5000 index by a whopping 25 percent per year! Here's what Hulbert's analysis shows would have happened to $100,000 invested according to Prechter's investing trading advice versus the Wilshire 5000 U.S. stock market index:

$100,000 Invested (1/1/85-5/31/09):


Wilshire 5000 Index $957,100
Prechter's Trading Advice $1,700 "

www.facebook.com/profile.php?id=1414164491

Hello Yelnick,

thanks for all of your effort and your analysis. Everytime a good read and a good place to be.

Now I got interested in the work of Mr. Zoran. Would you mind to guide me to some good resources to inform myself about Zorans work?

Thanks in advance,

Markus

PuraVida

Clearly it is Criss Angel in a bear costume levitating over a creek while doing the moonwalk.

Also, Prechter would say Prechter-Bashing is a sign of a turn in the market. He was vehement in calling the turn this week in Theorist. He is not afraid to put his reputation on the line. His call of the top last year was right on. We'll see.
That said, I share your frustration at his premature calls of downturns. EWT is not typically a leading indicator. Their strength is defining an ongoing trend.

www.facebook.com/profile.php?id=747123562

Somebody posted a McHugh Phi turn date of early november a few months ago. Can't remember the exact date but it is located somewhere back the in the plethora of commentary.

No sell signal yet. Looking for run to 10300 on DOW where several long-term moving averages (pointing down) converge.

Michael

Mr. Locker - Do not make the mistake that ALL indexes peak at the same time in order for a market to make a TOP. Going back over history, there are usually various divergences that occur over days, weeks, and sometimes months before a market TOPS.

The "perma-bears" that follow Prechter around like religious fantatics that are members of a "cult" would have you believe that THE TOP is in. However, it is quite possible that (even in Elliott Wave terms) we have simply completed an "A-B-C" flat correction since the 1101 SPX high... which means the market still has a rally phase left in it which can head up towards 1112 or even 1121.

Michael Locker

Thanks to all of you for your advice and amplifications. The image above (of a bear of unspecified type) epitomizes the ambivalence many of you seem to be feeling. Some of you are looking for a run to 10300. Others expect Precther to be vindicated with a return so large and fast that it makes his 98% loss record irrelevant in the long run. Hulbert may have noted that PRecther loses 15+ percent a year but Hulbert does not realize that, even with only 2% of your capital remaining, well placed bets will put you ahead of the curve should the imminent crash take markets down fast and hard and put other portfolios in the trash bin.

I, for one, plan to take advantage of the imminent crash and ferocious decline with the same zest of the bear in the photo. I will be "jumping" for joy when my puts and shorts make me wealthy while others are mired in the "stream" of losses and despondency.

That photo is priceless. It will be a real "I told you so" in a couple of days when this Top of all Tops has become apparent to the avergage Schmo in the street!

beyondtheblueeventhorizon.blogspot.com

Oh my, it took me a long while to figure out the sign in! I have used a blogger account that I haven't bothered with in years.

I used to post as EventHorizon ..

the bear looks to be a cleverly photoshopped black bear (no shoulder hump, Roman nose and long ears). Whover did it took a lot of time - check out the reflection in the ripples in the water; nice job.

Keep us posted on the Zoran work. It sure seems like the ability to define the boundaries of the "turbulent" region and go long or short on a break through the boundaries (a bifurcation) could yield a positive edge.

Mike McQuaid

SPX 30 min chart Oct 2 to 15 is riding the 25% fib retracement at 1077. 1066 could come into play as 38%. The form of this correction is sending hints as to the nature of the market and its resolution also will be instructive. So far it's taking it's sweet time (bullish)if it's going to fall under the 25% line.

Account Deleted

My gut feeling is that this is probably not the final top. Instead, just another intermediate degree top. Here are the reasons:

NYSE Cumulative A/D line is still confirming stubbornly and refuses to break down. I know Naz Cumulative A/D line has broken down, but Naz may be leading too far ahead in the pack.

Elliott Wave structure is messy, and overall hard to identify impulse waves convincingly. The market goes down grudgingly with a lot of dragging-feet, not the kind of swift and powerful type you would expect in an impulse wave.

There is not a lot of divergences between indexes. There was not even non-confirmation between DJIA and DJTA. When you do identify divergences between different sectors, they are typically resolved in a few days and therefore minor in nature.

This is not to say things are not shaping up well for the bears. For example, I like the fact that DJTA is breaking down very hard, potentially setting up the base for a future non-confirmation. Also RUT is falling harder than SPX etc. All these things will help to resolve the NYSE A/D line and divergences issues in the future.

It is just that we will probably need more time to see these bear-friendly things come to pass.

yelnick

Event, welcome back! I have missed your comments. As to Zoran, the bifurcation approach (which borrows from a combo of Gann and Neely) would get us past Prechter calling the top all the time - Wolf! Wolf! calls. The more important question is whether we have bifurcated and which degree of trend. Absent a crash, which is rare, the bifurcations would give much higher confidence calls than wave epicycles. Right now we *may* have topped but the bifurcation is not yet of the degree of trend back to last July, nor of the degree back to Mar. Hence the current call is take notice and watch for the bifurcation, which may come shortly.

Zoran recognized that the chaotic nature of corrections means they could continue to subdivide against the trend much longer than ewavers can stay solvent, so to speak. I hope to figure out if his methods can reliably predict bifurcation turn windows, even if they cannot predict which way the bifurcation will go - that may be unpredictable given chaos theory.

Michael

Mr. Locker,

Your consistent use of the phrase "imminent crash" is most telling.

You are one who strikes me as most PERMA-BEARS who follow EWT and Robert Prechter like a fanatical religious cult. You are not interested in actually LISTENING to what the market is telling you, or for that matter, learning from others . . . Instead, you only want to "see" or "hear" what you want to see.

Good Luck with that kind of methodology.
It will not make you any money on a consistent basis.

You will simply be throwing your risk capital out the window time and time again . . . while frequenting the numerous Perma-Bear Blogs on the Internet ( like Kenny's and Daneric's and Binve's ) where all of the aspiring traders hang-out whining about market-manipulation and how the Fed is the Devil because these 'kids' aren't able to TRADE AN UPTREND if their life depended on it.

Just ask Daneric.
Last time I checked, he's still working at his DAY job.
If he was any good at his forecasting and interpretation of Elliott Wave, he'd be trading for a living. But he isn't.
Hmmmm...

teaf

the move off Wed's high looks like a nice fractal of EWI's dollar chart above - interesting they can't remove their bias as such. the market is doing its job of keeping the bears in the game - who of you is short and ending diagonal C wave through the weekend? while shaking off the bulls breaking previous support at 1080

just what you would expect prior to the 3 of 3 of 3 blast off

twitter.com/DrBubb

My Own Elliott Wave count:
[img]http://img27.imageshack.us/img27/3888/aa1d.gif[/img]

I am using the 13d/10d.MA's to confirm trends:

+ In wave.a, the 10d. crossed below the 13d. briefly to confirm wave.iii was done,
+ After wave.iv, prices shot up for a last gasp into a wave.v top,
+ The next crossover of the 10d.MA below 13d was in wave.b
+ The 10d. crossed below the 13d. briefly (again) to confirm c's wave.iii was done,
+ After wave.iv, prices shot up for a last gasp into a wave c's v top,

Wave c finished right at the top of a gap, going back to October 3-6th, 2008

see post#326: http://tinyurl.com/oct23wave

yelnick

Bubb, it works as long as we don't pass Sp1112 (or 3 would be the shortest)

kloughr

Mr. Locker,

your quote above,

("I, for one, plan to take advantage of the imminent crash and ferocious decline with the same zest of the bear in the photo. I will be "jumping" for joy when my puts and shorts make me wealthy while others are mired in the "stream" of losses and despondency.")

shows that your are in serious need of professional help.

Michael

Prechter and all of his fanatical "cult-like" zealots went 50% short back on August 5th at SPX 1000. Anyone that bought AUGUST, SEPTEMBER, or OCTOBER put options on the indexes back then lost all of their money. Anyone that went short the S&P futures or the SPY's off his call are underwater by 8%. Anyone that bought the Dollar or sold short energy, coal, drilling, or natural-gas names lost a lot more than just 8%. They got CRUSHED. That's a FACT!

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