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« When To Go In | Main | When To Have Gone In »

Sunday, November 23, 2008

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rs

I wonder why everyone tries to catch the bottom? Is that not the first rule of trading that we are told to avoid? The benefit of Elliott Waves is that it is multi-fractal, so i wonder if the most prudent thing is not to wait for the coming Wave 4 multi month rally to show sub wave 1 of A on the daily charts and then buy in on the retracement, fine tuning entry further with the hourly charts? Much less risky and less prone to keeping us up at nights! I dont think anyone has the full conviction of their wavecounts and thus buying on dips AFTER proven strength seems to be the way to go. Anyone differ in opinion?

yelnick

rs - great question. It really depends on your appetite for risk. Right now the downside may be limited and the rally may be sharp - if you wait you may miss the first third or half of it. Next week the S&P could rally 100 pts or more, and maybe the whole rally (wave 4) will only go up 300 pts. Then again, is it worth it to take the risk of a continuing meltdown? So far no rally has sustained. In the 1930s there were many sharp rallies that all faded to deeper lows.

rs

This certainly is not an exact science we are practising and just when i feel i have my own wavecount sorted in my head, i read someone else's comments and see they have something entirely different, which naturally makes me doubt my own count. As prudent traders, we should only ever committ capital when we feel the odds are stacked in our favour. Trying to pick the bottom of this leg down is VERY risky and going against the major trend for starters. It is almost asking to be destroyed. But yelnick as you say, it all depends on risk appetite! Some of us have more cash to burn than others. Patience, patience, patience leads to better sleep and better returns. If this really is A of Wave 4 about to start, it will last some time and we can use more leverage when it has proven to be on.

rs

And note even if its not Wave 4 coming, it seems most of us agree it will have impulsive subwaves, so its definitely a move we can get in on after a retracement.

rs

Also one more comment for the folks who are trying to stick it to Prechter and the gang at EWI. I am new to their service but i just can't seem to grasp why they deserve the ridicule. If you are mistakenly trying to use their calls to make money trading, i can see how you might get angry, but thats your fault for trying. Use them as a guide and remember to use your own judgement on when to commit your capital. No one but ourselves are responsible for trading losses, which are a BIG part of the business we are in. A hedge fund trader friend of mine only gets 31% of his trades right but makes over 20% every year by keeping his losses small. Precther really seems to be the best guide i can find as to LIKELY future events. No one knows exactly how it all pans out, but I havent found anyone who is as independent in their thinking as he is, with good evidence to back his claims up. And yes, he made the grand supercycle turn call early, but what a warning it seems to have been!

Canadian Money

Yelnick

I look at things a little differently. I'm currently holding short positions for the SP500 and TSX 6o in Canada. I got out of the vast majority of all my long positions before the June peak of the markets. This decision was based on my own use of the EWP. More recently I saw the possibility of an important downturn for the SP 500 in early November near 1,000. That same turn occurred near to 10,000 on the Canadian TSX Comp. These indexes are tied at the hip.

So my question is...Do I continue short or take profits now?

In the short term (days? weeks)I see a higher probability of at least a little more downside. The wave structure since the downturn at 1000 seems clear for the SP500. It looks to me like we might see a third wave extension but in any event it does not appear to have completed 5 waves down.

I say this because 'wave 4 never overlaps wave 1 unless it is a triangle'. Therefore, my best guess is that the downward trend is still in play and we don't have the possibility of a relatively large rally yet.

However, I am open to listening to anyone else who sees the possibility of a five wave sequence having been completed since the downturn at 1000 in early November.

CM

min

RS:

You accidentally answered your own question.

You can't grasp why EWI deserves the ridicule because you are —AS YOU STATED— new to their service. Give it some time. Hochberg will grow on you like pernicious diarrhea.

Yelnick is correct, the upcoming tradable rally of meaningful duration will probably be fast. Wave one could extend and/or wave 2 will be so shallow it will catch most with their pants off. After that it will become risky to get in because it will seem like there is too much downside risk. It wouldn't be that uncommon as bear rallies are typically like that. Only an active trader would know that but it is also o.k. not to participate if it will cause undue worry.

RS you may actually be the 1 in 100 that fits EWIs ideal subscriber model. A patient LONG TERM (100 YEARS PLUS) INVESTOR that also enjoys intellectually written and logical explanations about how markets behave. If EWI would market themselves as such they would not hear a peep from me and probably everyone else. Your comment about not trying to catch bottoms makes me think you may do o.k. with EWI but also understand that the majority of his subscribers pay for accurate market forecasting.

EWI is mostly ridiculed because even though Prechter wrote a very good book on E-Waves (good in that it is relatively easy to understand, although not necessarily complete), He and Hochberg have an uncanny ability to get it wrong. By an actual tabulation of all STUs and EWFFs I received from 2000 - 2005 (mostly 2001-2004), Hochberg’s top wave calls were correct about 1 in 10 times. I don't grasp how this is possible. Do you? Compelling stories get old after a while when there are few good results. To most successful and experienced traders, EWI soils the good methodology that E-Waves is.

At the moment your experience with EWI may be fine and dandy. Enjoy it while it lasts, as this is their moment in the sun. However I caution you not to think they know what they are talking about. I could probably show you STUs and EWFFs written in 2004 or 2005 that are pretty close matches for what is written today even though market conditions were vastly different. Even in the Nasdaq crash of 2000-2002, Hochberg managed to mis-forecast most of the countertrend moves. He didn’t even get the 911 ”no brainer” rally until it was almost done! The guy froze like a rookie!! I could go on and on but I digress

rs

noted...thanks

min

Hey RS:

Are you affiliated with EWI? I re-read your post and the little plug about Prechter's "Independent Thinking" made me think you might be associated with their PR department.

Independent Thinking is something Prechter is most proud of but he mistakenly thinks it is what his subscribers pay him for. Could you please tell him that the independent thinking is acceptable only if it also helps to CORRECTLY forecast market direction at more useful time frames like maybe 1 to 5 years instead of 100.

I'm glad you mentioned that he made the Grand Supercycle call early but let's not cheat our readers on the fact that it was some 21 bearish years early and also that it is not certain that this is what we currently have before us.

I may start my own Hedge fund as over the past 4 years my calls have averaged over 50% accuracy (and 65% in 2008) and I don't count them as correct unless I was able to place my stop at least 1% higher than my entry point.

I agree with you on keeping losses small and being responsible for one’s own trading decisions. Sharing my EWI experiences so Newcomers know who to avoid until they know the game a little better is the main reason I more than happily share what I know.

MT

Ending Diagonal finishing W5 :

http://i366.photobucket.com/albums/oo106/mtcharts/Endingdiagonal.jpg

miguel stone crow

Looks like N225 gapped lower and then started rally after 'bout half hour of trading. As of right now, Dow futures are up @34 rising quickly. I am loathe to jump in during the first half-hour to hour of trading. Would like to see Dow gap down or fade during first hour, then start rise.

During the last 6 weeks I've abandoned most trades the instant they go against me, and once taking a position I watch it like a hawk. Waves are breaking so fast that if you don't watch your trade you're likely to lose it.

I'm trying to anticipate what news scenarios will acclerate a wave or change it's direction. Such as when I thought that Market would sell the Obama win, hard. But in that case, the Obama victory was completely foreseeable. Right now, we have several stories whose outcomes will affect the directions of the Market, but they endings are not clear. Citibank and the Financials, Hoiday Season retail. I think the big 4 big B rally begins on news like the capture/execution of Bin Laden. Persian Gulf/Iran trouble is the catalyst for the calamitous next leg down, with nuclear Pakistan trouble indicating a larger degree change

MT

Yelnick, one more down and we're done. Inside strucure of hour chart displays a clear ED, abc>1 abc>2 abc>3. 4 is unfolding now. See also my ED chart before this posting.

5 of ED marks W5. Also the technical indicators support this scenario of an ED. If this is indeed a ED, forget it that we completed 5 of W3, it's a clear ABC from oct '07 into november '08. An impulsive 4 can't never overlaps w1 of an impulisive, only if it's a part of an Leading diagonal. I showed this in your posting "when to get in" first posting.
End of ED should mark an A of what ever degree. Wave B is just waiting around the corner.


http://i366.photobucket.com/albums/oo106/mtcharts/Endingdiagonalwave5.jpg

rs

bond futures looking very impulsive and Wave 5 seems to be on the way, suggesting equities have some trouble ahead....

Forkoholic Serge

my view of the future so far(my Crystal Ball is working today):
- I think we're in wave 4 of 5 of 3 of (whatever u like C or 3)

- I think this year's low window is (Nov 21-Dec 12)
Because Bradley model was kinda late 17 days on SPX but some indecies did set a low on Oct 27th the window is about 17 days :)

- My preference is for a low between Dec 1, Dec4-5 and 11-12

- at that time we wil start intermediate Wave 4 rally ("The trade of the Century" as I called it or just 1st trade ) :))

- hopefully wave A of 4 will be an impulse

- if it is an impluse I expect wave 1 of A of 4 will begin at low and run til Dec 22 - OPEX rally

- around after Dec 22 we will start a crash (mybe triggering by some event - "last shoe to drop?") in wave 2 of A of 4 up til Dec 29

- wave 2 will probably retrace 70%+ of wave 1 setting up a Double bottom (but higher low of course)

- from Dec 29 til Jan OPEX we will rally in wave 3/5 of A of 4 hopefully upto SPX 1000+

- at that time(January OPEX) we will start Wave 5 (of whatever u want) DOWN

- we will set a slightly lower low (say if 650 SPX in Dec08 the low will be say 600 SPX in Feb 09) around mid to end of February
Someone mentioned Fibo date Feb 19th? sounds reasonable

- from February low we will start a rally and a multi-month heated discussion about what was it - end of Wave A or Wave C or just Wave 3 of 5 etc

Forkoholic Serge

correction: Oops I ment to say whole Wave 4 will end around Jan09 OPEX

Steven_737

Howdy

I have a hard time counting this rally as a 5 wave sequence.

It Looks to me like a nice ABC correction.

..

Steven_737

can you count this wave as a bullish 5 wave sequence ?? or part of a a bullish 5 wave sequence ??

http://farm4.static.flickr.com/3246/3056695852_611f72deb5_o.gif


http://farm4.static.flickr.com/3037/3056695858_3fd3e47c0c_o.gif

...

Steven_737

Best attempt for bullish count

http://farm4.static.flickr.com/3229/3056721082_5c81351a1e_o.gif

what do you think?

Steven

miguel stone crow

Watching the President Elect speak, and watching the Market selling him kinda hard (drop @150pts. in 10-15 minutes) His diction, when not reading from the script, is filled with "Uhhs"...I half expect him to start injecting, "ya know?" into his responses. I'm beginning to think that(Uh)the President Elect will (uh) be involved in a big ideological struggle within his own party/House. He will (uh) no doubt encounter aids who are telling him that (uh) more of his left-oriented policies (uh)(tax reform, medical reform) will (uh) imperil the economy further.

All of which reminds me of how much I'm gonna miss our outgoing President Malaprop. (Food on their families....Fool me once....Love on their patients....etc.)(Bush's greatest hits.)

Obama missed an opportunity to calm the Markets by admitting that he CANNOT raise taxes too quickly. Right now Obama is a big question mark and as long he remains unknown, the Market will punish him...and us.

MT

Steven, I can't make bullish soup of it. I still see it as w4 of W5.

http://i366.photobucket.com/albums/oo106/mtcharts/november2008.jpg

We only missed the boat if this is the count and the bottom was last friday in:

11/06 = 1
11/10 = 2
11/13 = 3
11/14 = 4
11/21 = 5 = (5)

we are now in wave A of the recovery.

Steven_737

.
Thank you, MT.

Interesting point of view, Miguel; Thanks.

Steven

usdollar

i still think we are still in either wave 4 of wave 3, or wave 2 of wave 3, and on daily close, which filters out extreme volatility, we are now finishing up a wave c in a running flat of either 2, or 4. looking at weekly close, we might have a wide wave 2, and thus only 3.1 done, and almost 3.2, running flat, with 2 nice crashes left, until the end of feb. It is highly likely that our financial system will not be able to stay alive going further out in the end of next year. It looks scary, in the sense that most of us are dependant of food in the stores as well as energy for cars and heating our homes. Also that our government spend all our reserves trying to prop up the market, instead of letting badly run banks and companies fail, because of their incompetence of running a business, and instead trying to prop up our well run companies so they will be able to continue,now we are risking everything on one card, true gambling with us citizens life, literly. It is a matter of exponential growths, which always comes down in a hurry, since the government is throwing out the baby with the bathwater, or firing of its last bullits, they will most likely ruin the whole country instead of saving it.

Voice of Reason

min,

You're back! This always seems to happen around a fairly major direction change.

We are all looking for a place to move from short to long for the inevitable Obama rally but you seem way too full of yourself and almost unbalanced about Prechter to really have any effect on the newcomers to this site.

Have the decency to acknowledge how you wrong you were and how well Prechter's calls have gone recently.

TObject

Hey usdollar
when they gonna cut you in half how much will real estate rise?

Puravida19

Friday STU:As we said above, we don’t think this rally began today, but a strong close above 850 will indicate that we need to look at all of our indicators in light of the wave structure to make a determination as to whether wave (3) down is indeed complete, and wave (4) up underway.
------------------------
I saw a high of 849. Pretty close.


For Nasdaq 100 equivalent level is 1151.

Puravida19

Irrational Exuberance!

Upstart

The 22-week cycle bottomed. The important event, that significant Fibonacci related to 2008 indicated, is in place. A wave 2 correction to April or May has begun. Dow Predator wasn't that far off.

PL

Neely is DA BEST.

I went long on S&P this morning at the open, just as he said. So far so good. I made enough money today to have a nice Thanksgiving dinner with the family.

I also thank John Mauldin: he also saw this rally coming.

PL

min:

Voiceless YOU are back!

I have been back for a couple of weeks and fully long since Thursday market close. You would know this, if you had been paying attention, as I posted my initial nibbling at a long on this site.

If you had been paying attention you would also know that I did acknowledge EWIs "time in the sun". Only thing is it is too bad it is not due to their market forecasting skills as they are writing more or less the same stuff they did in 2003, 2004, 2005 and probably 2006 and 2007 for all I know.

Sorry If my "tell it like it is post" made your super-hero seem incompetent but I am glad it woke you up from your slumber. You coming to his defense strenghthens my conviction on going long last week as you seem to only come to his rescue when he gets ridiculed near a bottom.

I must also thank your hero Hochberg for the unusually good contrarian calls recently the latest of which was his ringing of the top bell in the dollar index on Puplava's show on Friday, this made my day.

Voiceless —stay dependent, take it easy and try not to pop a vein.

Yours, Min.

Forkoholic Serge

are we just in a bigger SPX fractal or is it just pigment of my vivid fractal imagination?
http://forkoholic.com/images/frabigger.jpg

Pathrick Neid

As regards pattern recognition we are replaying Oct 73-Oct 74 very closely. Most references to 1973 have the bear starting in Jan 73. While it is true that the market topped in Jan and sold off near 20% they fail to mention that the market proceeded to rally back to within 5% of it high by October. It is a similar argument that plagues the low of the future bull--was it Oct 74 or 781 in 1982. I have always used October 74 as the start of the bear and 1982 as the bull. That said Oct 07-Oct 08 is as close as you can get in the overlay world of price and time.

If this is 1974 redux the low should basically be in with a retest by December. Price vs time = psychology. We shall see.

God forbid if it is not!

Pathrick Neid

Make that Oct 73 as the start of the bear...not 74

Rogue Poster

Also, consider the relationship between peak oil and the 1973 bear market:

The United States hit peak oil production in 1971, just as M.K. Hubbard had predicted. In that same year Richard Nixon "unilaterally canceled the Bretton Woods system and stopped the direct convertibility of the United States dollar to gold"*. 2 years later there were gas lines and the US was in the depths of a recession. These events are all related. The reason the US emerged from WW II as the most powerful industrialized nation on the planet was precisely because we were also the largest oil exporting nation on the planet. The reason Nixon took us off the gold standard was because the source of our wealth was literally drying up. However, in order to avoid the nasty effects of wealth depletion, we created a fake economy where money became illusory, based on imaginary relational value to other currencies, as opposed to referential value to something real, i.e., gold. The upshot is that the last 35 years of growth have been built on a false foundation of debt. This multi-decade fake economy is coming to an end. The foundation is crumbling and everything that sits atop it will cave in along with it.


*Source Wikipedia

Hank Wernicki

Serge,

We will know tomorrow for a confirmation

Hank


Wave Rust

MT,
I agree with your count. I like simple counts since they are usually right with a rear view miror.

I would add that this 5th may contain some nesting and if so, will extend in time but not necessarily in depth of price decline. that would push the end of 5 out towards the end of December.

if the dow kind of goes side ways into nexr week, like in a flat, then I might expect that this move up could be the 2, then 3 to new lows, after that complex 4th and 5 of 5 after xmas.

thinking a high to short on friday open and down hard for the 3of 5 leaving room for the 4th rally back channel into mid month then drop like a ston into the 5th (truncated maybe).

wave rust

usdollar

Possible start in the end of feb 2009, from 101-105 levels compared to the index. owning yen is a better deal til then. From there physical gold, since gold is supposed to bottom 2009 according to 10-9-10-9... cycles, it can of course hit a local bottom later in 2009. Owning real estate is a bad idea, if you do not own some kind of self sufficient farm/ranch/hunting cabin etc, then you will be extremly well off. Living like me in large city will suck badly. Buying real estate possibly 2012-2014 or so earliest, my humble opinion. I unfortunately believe ewi will be proven wrong again, this is not a wave 3 bottom, but a wave 3.2/3.4 top or close to it, topping out most likely if it has not nov 24, by nov 26. why i believe it might be a wave 3.2, is because wave 2s going up are most commonly sharp to fool most investers, and wave 2s going down the hill is most often sideways action to fool most investors, this can be found in Mr Prechter's books, but he never seem to use his own information from his books when he is doing his forecasts. People are still stunned, and pissed off by the corruption in Washington which was shown live on tv for everyone to watch. People are in denial at the moment, not taking any kind of action yet, being told by financial advisers to wait it out, only 5 more years of work or so is required to keep similar pensions now when the markets are turning up from here. It is the greed factor, and the incredibly high punishment for taking out ones 401k that will be their fall, losing it all.
I can not say when the dollar will be cut in half, but it is highly probable that it might go into default, since forreigners work the same way as banks, when they themselves are in trouble, who wants to, or can lend us these incredible amounts??? If it does not go in default, then it should weaken to a new low from end of feb or so next year til the beginning of 2010, when the markets will rally in wave 4, then more deflation til 2011, and a strong dollar again. Reason is that there are not that many dollars out in circulation compared to the ious. We have to wait and see how the other part works, the good faith. If the world gets divided, who do you believe in russia and europe, or the us, the third factor might be china and their currency. And the tresury department are using all our bullits and our neighbors trying to fend off deleverage of 3-400 trillions whith 2-3-10 trillions, that by itself is a leveraged bet. It is like asking the fireman to come to a forrest fire with buckets of water, or like bringing a nife to a gunfight, it is not going to stick. There is no one at the reciving end, so it does not matter how much money you will throw in there. The reciever's of the money, are the incompetent company ceos, to few people can afford to go on a shopping spree in order to turn this around 70s style.

Adding that I find Prechters work extremly useful, he has some fantastic research going, however they stink on the short term wave count, and I dont know why, but I believe their wave vount will be proven wrong again.

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