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« Count Clarity | Main | Ground Hog Market & The Super Bowl Indicator »

Sunday, January 25, 2009

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DG

They urge caution: "one would be wise not to push too far the conceit that we are smarter than our predecessors."

Yet, we see this conceit peddled every day.

I had read that paper earlier this month and it is very sobering stuff indeed.

Topcoat

The hardest thing is to sit back and do nothing. To stop digging as they say.

Sean

Yelnick, when you said 5% drop or 10% drop in GDP, do you mean year-over-year drop, or cumulative drop in GDP? Thaks

yelnick

cumulative

Glenn Loser Neely

BREAKING NEWS!!

I am a loser!

Roger

You are not a loser. There is no such thing. You made some bad decisions but they don't have to keep you from making good ones now and from enjoying life. Stop wasting time with this Neely garbage. Yes, he's a charlatan but he might not even know it, himself. Anyone, most people are duped at some point in your life and you need to think of it as a learning experience and move on.

You have good stuff inside of you. Let go of the Neely-Prechter bozos and move on with your life.

DG

Actually, there are at least two types of losers:

1. The type that trades too big and goes bust, which is something no newsletter writer can help you with because you need to find your own self-discipline, then bashes the newsletter writer, who never claimed 100% accuracy and clearly outlines position sizing methods that keep you "in the game".

2. The type that comes to a blog that bills itself as "commentary guided by Elliott Wave principles", yet thinks Elliott Wave has no validity and its practitioners are "charlatans" and "bozos".

Both those types = "loser" in my book.

Posts like the two I'm criticizing have no usefulness whatsoever. One is just vitriol and the other is pseudo-insight backed by nothing but the speaker's assertion that it's so, even going so far as to speculate on the unconscious motivations of specific individual. Elliott Wave is supposed to be about "bringing order to chaos" in the markets, but posters like the above don't even begin to add to that mission. If both of you had just typed random letters, like two monkeys at typewriters trying to write Shakespeare, your posts would have potentially been more useful.

Roger

I enjoy this blog immensely even though I don't think Elliott is really useful. I try to weigh the opinions here and get a sense of the market in an admittedly non-empirical way but in a way that, nonetheless, helps me decide what to do with my assets. Godel said there are truths we can't prove... I think that kind of sums up how I think I can make money without a "system."

As to the "trades that are too big" contention... My experience with newsletter writers tells me there are plenty --including those often mentioned here-- whose advice would bankrupt you even if you only traded 1% of your money at any given time. Some of them have been just plain absurdly awful for very long stretches of time and if you are honest with yourself you will know I'm right.

So take it easy! The more strident the defensiveness the more suggestive that there is bs to be defended.


DG

My experience with newsletter writers tells me there are plenty --including those often mentioned here-- whose advice would bankrupt you even if you only traded 1% of your money at any given time.

The only one I defend is Neely. I've never seen him have a streak anywhere near that bad. Lots of people cite personal experience with Hochberg where he was literally 1 winner in every 10 trades for long stretches. 7 of Neely's last 10 S&P trades were winners and today was his first losing trade (Hourly basis) since November 14th.

I enjoy this blog immensely even though I don't think Elliott is really useful.

With all due respect, how are you or have you used Elliott in the past? As Neely says, Elliott can tell you at the exact price and the exact time that your forecast is wrong, as well as tell you when a standard pattern is likely to come to an end and a reversal to occur. If things like "flats" and "triangles" and "zigzags" and "impulse waves" actually exist and it isn't just us finding patterns where there are none, and Elliott is the method of studying those patterns characteristics, how could there be a better method to use for trading? It would be like saying "points" and "lines" and "circles" exist, but I'm going to study them using chemistry instead of geometry.

My reaction to your post was due to the use of some pretty inflammatory language without a lot of evidence. If you have some data to back up your accusation that Neely's a "charlatan", which actually, counter to your disclaimer that he might not even know it, implies intent to defraud, I'd actually be grateful to see it because if he is, he's got me fooled and it's been a long time since I've been fooled.

usdollar

well not that long ago, did not neely say that this is a sharp x wave, to me it looks like a triangle b wave???, then he changed his mind? I could be wrong, but I believe he stated that not that many weeks before.

Wavist

Well you have to give it to Neely, he managed to close even his weekly traders out of their Euro positions right at the very bottom, as in 0.0008 from the lowest tick. Of course if you were an hourly or daily trader you lost less and got the privilege of being closed out twice including following "If we get in, small wave-B will have ended or, at the very least, reached its lowest point." Really that's the trouble with his approach - he's come up with these fixed rules that make turns certain to occur by a given point. The problem is that his rules are wrong. Actually any Eliott analyst could have told you that a B wave will often retrace the entirety of wave A - or even more - and is especially likely to do so when the A wave is so fast, whilst Neely kept on saying just the opposite that because it was fast the retracement had to be small. And blaming traders for taking large positions based on forecasts is fair enough for pretty much any other analyst, but not for Neely who keeps on coming out with 'This will happen and I know it as absolute fact'. In such an environment the only give away is that he does always tell traders to risk <2% which is a suitable strategy for a blind trading system...Funny how EWI's flash system tells traders to risk 10%, and I've had great success risking 10% on all Hank's trades - I guess it all depends on how likely their trades are to work...The fact that Neely keeps on getting his followers to get in against the trend in anticipation makes it that much more dependent on his getting the turns right, hence the <2%...
In fairness it was a particularly bad week for Neely btw, with him forecasting a fierce rally for the Euro (continued to collapse) a heavy rally in the S&P (continued to collapse) and a collapse in gold (the one market that shot through the roof)...

DG

Really that's the trouble with his approach - he's come up with these fixed rules that make turns certain to occur by a given point. The problem is that his rules are wrong. Actually any Eliott analyst could have told you that a B wave will often retrace the entirety of wave A - or even more - and is especially likely to do so when the A wave is so fast, whilst Neely kept on saying just the opposite that because it was fast the retracement had to be small.

That's not a completely accurate representation of the context of the A wave/B wave relationship in the Euro count right now. Because the prior wave ended above it's lowest point, it signaled strength in the next wave, wave A, meaning the retracement of A by B should have been smaller.

Also, it wasn't just the speed of wave A that had him thinking small retracement, it was also the size of wave A relative to nearby waves of the same degree, i.e. any of the waves of the preceding diametric formation he was tracking.

His hourly and daily traders are up over 10 cents on the Euro since end of October, so that's not exactly anything to sneeze at. I also traded the Euro short a couple of times on the way down and made a few more cents, too. His weekly traders since end of October have only taken that one trade, so they are down.

In fairness it was a particularly bad week for Neely btw, with him forecasting a fierce rally for the Euro (continued to collapse) a heavy rally in the S&P (continued to collapse) and a collapse in gold (the one market that shot through the roof)...

Because we didn't get follow through to the downside, Neely was looking for a 1-2 week rally in the S&P as of before the inauguration, but by Wednesday of last week was already saying to prepare to get short. He didn't have an opinion on gold and actually said that when gold didn't collapse new highs were likely very soon, although recent action has him thinking he's got a read on gold structure.

And blaming traders for taking large positions based on forecasts is fair enough for pretty much any other analyst, but not for Neely who keeps on coming out with 'This will happen and I know it as absolute fact'.

Well, he lays out his money management system pretty explicitly and I don't think it's meant to vary just because he says something "will" happen, so, again, it comes down to self-discipline.

DG

One other point, Wavist, is that I'm bringing concrete numbers to these discussions and no one else is. It would be better to see what Hank's actual track record is over a certain amount of time to make comparisons.

Even better than that would be to understand his risk-adjusted returns, which would require knowing where his original stops were, how they moved during the duration of the trade, etc. That's the real apples-to-apples comparison. Same for EWI's service.

Forkoholic Serge

Check this out, gang
I was scrolling through CPC to see similar pattern in 2000 Bear market
The closest I could find wich somewhat resembles current setup in Jan 2001
http://forkoholic.com/images/cpcfractal012709.jpg

EN

As far as I know there is no historical data on Neely's services in terms of percentages per year. I checked EWI's flash services a few years ago and found it to be about break-even over the course of a year. Don't know if it has improved since then.

The best Guru I have found is Oscar. He is right more often than not and if you can stomach day trading and getting up in the middle of the night to set orders, he is profitable over all.

For daytrading, I bought some vids from Snp500 on youtube. They were of use.

Look at it this way, it take 10000 hours to master any particular skill. Being a profitable trader full-time is extremely hard unless you are well capitalized and VERY experienced. My adivice would be to trade only 1 contract until you have month after month after month of profitable trading.

Tomorrow should be a fierce day in the markets. Good luck all.

DG

EN,

I went back and researched the hell out of Neely (followed Google until about the 500th link until they ran out of unique links) and found a lot of historical data, which is the primary reason why I'm so persuaded that his methods are useful. My estimate, based on some results I know for sure and others I've calculated as highly likely given his forecasted turning points in the S&P during the mid to late 90's, is that he's making upwards of 35% annually and has been since the mid to late 1980's. He says in one interview that when he started he had no money, he worked on just wave theory for a decade and took another few years to actually become consistently good at live trading.

Either that or the guy's been lying his butt off for the last two decades.

DG

For those who are "sarcasm-challenged", that last sentence was in jest. All of the forecasts I mention were done in advance of the actual turning points and can be found on various websites, if you know how to use Google and have the patience to weed through them.

DG

And since EN mentioned 10,000 hours as a "pre-requisite" to being skilled in a particular field, I'll mention that in Mastering Elliott Wave Neely estimates he's spent 30,000 hours studying it in the time between 1980, when he started, and when the book was written, about 10 years later.

Roger

Nice work on that chart, Serg. Interesting!

EN, can you begin to explain why tomorrow's going to be rough?

Glenn Loser Neely

BREAKING NEWS

I am a big loser!

Please buy my neo garbage book. I need more money to bet on the market.

Glenn Loser Neely

EN

Oh, by fierce, I merely meant fierce in terms of an increase in volatility. We have had a few small range daily bars that should break out into a wide range bar with the fed announcement - an excuse for the volatility expansion. If I had to guess, I think we might go back up to test 880 SPX.

DG: Based on my observations of Neely, he does tend to catch big moves at the expense of several small losses. Somebody should follow his SPX service for a solid year including emergency updates and get a solid figure in terms of how many ES points gained per categaroy of trader (hourly, daily and weekly).

DG

EN,

I've been keeping those records since coming back to Neely's service at the beginning of October. So far, hourly traders have 273 points, daily 343 and weekly 303. He did catch a portion of all the big moves since then.

I'm trying to to reconstruct all of 2007 and 2008, but it is time-consuming.

deacon

neely stopped out of a TY short monday:
(http://www.traders-talk.com/mb2/index.php?showforum=45)
...i like rather the holy grail longs setup on weekly charts on the treasuries, we need ultra low yields to save the housing market:
(http://stockcharts.com/h-sc/ui?s=$UST&p=W&yr=2&mn=0&dy=0&id=p34926327614&a=109901544)

Glenn Loser Neely

I lost a lot of money listening to Neely but, rather than accepting responsibility and moving on, I am going to post pretend angry Neely Loser posts. I look like an adult but I am an angry, petulant child who wants someone to pity me and rescue me and hurt Neely.

Ross

Could someone ban Neely? He has become a terrible sore on this site..

yelnick

Ross, I have a lot of patience but I agree, this Neely Loser stuff is simply childish & annoying and does not either push the discussion forward nor is it witty. Blocked.

Wavist

True, but seems pretty obvious that the last few posts were fakes...one way of getting rid of him I guess...

Guy Who Likes to Use French Words

Gold down while market soars. Not a good sign for the market. This is a blip. The dollar refuses to die. Maybe a month or two more of upside and, apres, le deluge.

Hank Wernicki

2:54 pm

The 1/16 9:30 am 60 minute chart generator is tracing a TOP for the DOW now at 8403

60 minute chart for the XAU = 60 minute chart for the DOW = identical !

the last 3 days for the Dow is a mirror from the XAU fractal top <<<<<<<<<<<<<<<<<<

I think the rally is ending <<<< Bearish


Ross

Thanks Yelnick, I like you site very much and I agree the Loser Neely stuff is degrading a otherwise great source of information.. -Ross

DG

Good job banning that guy. Informed criticism is the lifeblood of improvement, but lashing out doesn't do anything useful. Also, for what it's worth, here is a question I just sent to Neely. The market has been absorbing tons of bad news (e.g., Microsoft's first ever layoffs, housing market continues to crater, stimulus package looking like a bunch of BS, etc.), but if his (or EWI's, for that matter) count is right, we need to make significantly lower lows and we know that Al Quaeda and other groups like to strike in the first days of new Presidential administrations. No one has a crystal ball for this sort of thing but anyone else got any thoughts?

Glenn,

It's looking like the stock market won't go down just on bad economic news. Do you think something like September 2001 is setting up, so that an external shock is the only thing that will bring the market down?

Wave Rust

DG,
i'm thinking that traders should watch out for the good news. that's the 'killer of konfidence' when dow spikes up on good news and the trader is short while expecting the collapse. usually that spike is the upside requiem but is not seen that way after a good scalding.

i'm seeing this climb now as the E wave of big 4th (I said it would seem like the 4th would take forever!). as weak as it is, it can just keep cutting legs out from under the weak bulls with whipsaws and killing a few bears by running stops on the opens and closes.

these E's of 4th's always do what you don't expect,,,
they either:
1. go much farther than you expect or,
2. not as far in price as you expect, or
3. they take much less time than you expect or,
4. they take much more time than you expect.

Worst of all, they do a combination of the 4 choices. haha

The result is that when the 4th ends, you will have had about 27 different counts, lots of stopped out scalp attempts and you will have forgotten what a trend change setup looks like because you are so pissed, confused and exhausted.

i still think the 5th will be a failure/truncated in most of the big indices.

----------

Yelnick,
per Hoover,,,
i don't remember where i read this but i checked it out many years ago.

hoover said he would not sign smoot-hawley several times during the 1930 rally. every time he said so, the market rallied and the republicans backed off. then the republicans would bring it back up to the floor and the dow would tank,,, hoover repeated and market rallied.

then hoover buckled when dow was at 50% retracement, and signed it,,, the market and the economy began its most incredible fall into the abyss. hoover was an engineer not an economist, and it showed.

i have enjoyed many of your recent posts. bernanke beat me to the point i made about rates being meaningless (you suggested an guest post about that). actions speak louder,,, etc. :)

my 2009 prediction,,,
obamanomics has about a year and a half to make the depression into a recession. if he fails, his last 2 years in office will be worse than W's. if he succeeds, he probably gets the full 8 years.

i bet he fails because the democrats see the problem as a 1-3 trillion dollar spending problem when it's really 50-100 trillion global private sector solvency problem and another 50 trillion dollar government solvency around the world.

11% real unemployment now,,, the pain hits the Congressional election fan above 15%,,, that won't take too long,,, Christmas 09?

"Start Inflation Now" will be the new republican 2010 theme.

Muni's anyone? Treasuries ? Bunds? :)


wave rust

DG

Wave Rust,

As he's said in his emergency public e-mails, Neely is looking for much lower lows, under 600 S&P. Last week's economic news was the worst in the past 25 years, almost certainly, yet the bid at 800 S&P just wouldn't go away. I just don't see, psychologically, how we get there without something horrific happening. Something has to happen to make those deep pockets who think 800 is the buy of the decade change their minds. Maybe I'm letting my imagination get the best of me, though, as well as running out of patience a bit, after two "false starts" to the run to new lows.

William

Glenn Loser Neely - For God's sake - Get some therapy.

I want to hear Neeley!

Bearish! What is the system you are using??


We all know timing is important in futures market. Needly's timing might be off, but I think his prediction is useful.

So, let Yelnick does what he used to do.

I want to hear Neowave's opinion.


=============
2:54 pm

The 1/16 9:30 am 60 minute chart generator is tracing a TOP for the DOW now at 8403

60 minute chart for the XAU = 60 minute chart for the DOW = identical !

the last 3 days for the Dow is a mirror from the XAU fractal top <<<<<<<<<<<<<<<<<<

I think the rally is ending <<<< Bearish

Wave Rust

DG,
if looking for 'the event' to break 800, which i think is very weak support, then maybe obama signing the 'buy american' bill could be the straw heard round the world breaking the 'free trade' camel's back.

spx 800 may not even be noticed as a pause. it would probably be gapped through.

'buy american'= smoot-hawley, or the onset of economic winter.

the irony of the current economic situation seems to be that the guy who took 13 years to finally see his prediction come true, has been relegated to the 'kook' bin. lots of people saw this coming and one of them is prechter.

the continuous attempted 'saves' by central bankers from 2001 forward has made it worse than any imagined. if in 2000-2001, the bankers had allowed the cleansing necessary, i think we would be coming out of it by now.

the 1870's to 1890's is what i think is the similar global economy, except without the underlying industrial revolution to keep economies sticking to the shorter cycles within the larger one. it also had high leveraged in US railroads and europeans went first then the US.

so, DG, i dont think you are letting your imagination run, unless you ignore that the central bankers are fighting this economic fire with every imaginable trick and tool. their fight will prolong and enflame the oozing econmic wound, over and over.

sad comment but i fear it is the truth. if they would just let it flow toward its end, the flushing would result in a situation they could begin to 'fix'. now they are in a worse fix than sysifus because the ball is getting bigger and bigger.

as a trader, i have to remember that the market should rally through about 30% of the total time the economy is in the crapper. and, move sideways for about 50% of the time, and down 20%. markets lead down and then confound by doing the opposite of the economy. doing the opposite will probably coincide with the return of inflation which help the economy at first, then it's up to the central bankers.

china thinks it is going to avoid the current crisis by growing through government spending on infrastructure. haha they need a cold shower. the light at the end of their economic tunnel is just the first train coming at them. they should visit some of the boom towns of the wild wild west which are now ghost towns.

india is in the same situation.

who is going to buy the things they have been manufacturing for the last 10 years?

in my mind, the economy has not begun to get really bad. this is the tip of the iceberg. i think bernanke understands that and just hopes he can do something to stop or slow it down.

davos is a joke. the world's economic handwringers convention who created the situation.

wave rust

Hank Wernicki


The Dow fractal unfolded perfectly and exactly today

Expect NEW LOWS shortly for the DOW

Currently also short Gold and the XAU

Cheers

Hank

TObject

I just noticed our "friend" Hugo has a "cool"
Sell at a bottom Buy at a top indicator ;-)
http://paintfantasy.com/images/spxhugocool.jpg

I'd pay a big money for that one!

Wavist

DG, the fact that Neely recommends taking small positions does in no way mitigate his responsibility for people reading his cast iron predictions and then placing large bets based on them. His recommendations on money management which are included in his trading service which he advertises as being for those who don't have the time for trading are taken by readers as being just that - his own advice. Anyone reading a prediction being made as a matter of certainty in the way in which Neely does will think, "Hang on a minute, if this is definitely going to happen why shouldn't I bet the house on it?" and actually they're one hundred percent right. The fact is that he is making at best incorrect if out outrightly fradulent claims with regards to the strength and reliability of his forecasts, and including a general trading recommendation in the small print which may not even be seen or known about by newcomers is no excuse whatsoever. And on the matter of statistics, the reality is that you can find a winning stretch for any forecaster in the world so saying that a given number of his trades from October to now really demonstrates nothing. Furthermore nobody is going to publish the times when he was wrong on their site simply because that's of no real interest to anyone - take a look at how tough it is trying to find a single failed prediction from EWI, all you get on the net from site after site is a regurgitating of their 1 in 10. The only real way to gauge the accuracy of his forecasts is to compare the number of weeks/months when the corresponding forecast was correct with those that weren't. In his case that's normally impossible to do with any validity as almost all of them include the string 'or topping/bottoming', which means that he's right whatever it does. Hank actually has started posting his results online weekly but it is of course a hell of lot more difficult to track the results of a system that trades on an intraday basis than one that frequently doesn't have any trades at all for a week simply because there are so many more trades so it's a lot more work to keep track of. Although only personal experience, in the two months that I've been subscribed I have yet to find a single week where he has lost more points than gained. A large majority of the trades are successful and his rule is to aim for three points of risk for ten points of potential gain. Really I think that both you and GLN at the opposite extremes both have in common an obsession with Neely that is holding you back from exploring the many other systems out there. Lastly there are blind trend-following systems that advertise long term returns of 150% per annum so 35% is really not something to be holding yourself back from exploring all the other possibilities out there.

Forkoholic Serge

Good daily setup for Wave 5 (if in fact it is )
http://forkoholic.com/images/spxdailyfork012909.jpg

Min

I've got about 3 1/2 years worth of EWI "predictions" from where I derived my "1 in 10" statistic. It was time consuming to tabulate all that but can't someone do something similar with Neely's work?

Loser, I told you you should have made your case, now you've gotten yourself banished. If there was any spot of truth to your complaints, no one will ever know now...

DG

Wavist,

You're trying to offer a rationalization for greed. I don't see how Neely is responsible for your position sizing when he clearly says "Here is the position sizing I recommend". If I take a woman home and I'm certain she wants to sleep with me, but it turns out she doesn't, can I then tell the police that I was certain, so it's not really a crime to have made her sleep with me? Come on, have some common sense.

Neely's got three years of his service's PDFs online. I'm downloading them to reconstruct his exact returns. Also, I'm not talking about the "topping" or "bottoming", which are the forecasts, and he would not say that, he'd say "sideways or down" or "up or topping", where whichever one that is in all capitals represents his bias.

Lastly there are blind trend-following systems that advertise long term returns of 150% per annum so 35% is really not something to be holding yourself back from exploring all the other possibilities out there.

Again, you need to use some common sense. $1000 compounded at 150%/year for the past twenty-five years, which is about how long Neely's been in business, is over $8 trillion dollars before taxes. Let's say taxes were ~50% of that. Do you know of anyone who ever became a trillionaire by any trading method? On the flip side, Buffet's long-term returns are just over 20% for nearly the last 50 years.

As for trading intraday, there's a passage in Reminiscences of a Stock Operator where Livermore talks about how one of the biggest realizations he had was that the big money in trading wasn't in intraday trading, but in trading the big swings correctly and holding tight, which is exactly what Neely's method is trying to get at.


If Hank is keeping better track of his trades, that's great. Hopefully we'll be able to see some solid numbers at some point. I know that some people have asked him pointed questions about his methods on this site and none of them were answered.

I'm obsessed with trying to make money. I don't care if getting there requires input from Glenn Neely or John Glenn, whatever works is fine with me.

Wavist

Well DG although it's not an accurate comparison, actually if you slept with her and were certain that you had her consent then no, it wasn't a crime, and anything she says afterwards about not really having wanted it is a load of tat. Having said that of course it's not even vaguely correlated. What an accurate comparison would be is a man coming along and proclaiming to anyone who'll listen that he knows precisely what the results of the next footie game and indeed all footie gamses will be, and that it isn't just something that he believes or expects but is rather a matter of objective scientific fact. The fact that when signing you up to receive his prediction he includes in the small print that he personally doesn't recommend betting more than 2% of your capital on his magic numbers is entirely irrelevent - the guy would still be banged away faster than you can say a 'research and advisory firm that develops innovative technical analysis approaches for market research'. And no I don't hold him responsible for anyone's actual position sizing, I do however hold him responsible for drawing in subscribers with such enticing fiction as 'Imagine knowing which way the market is going in the coming days and weeks. Never again buy when you should be selling or sell when you should be buying. The NEoWave system is not base on intuition but rather on scientific concepts that accurately predict market moves', as statements like that are downright fraudulent and pretty clearly make him liable for any losses incured by the poor sods who mistakenly bet their savings on his word. As for the impossibility of >35% returns per annum this site here is an example of the extent to which Neely's estimated returns (if correct) suck for a method with such incredible claims:

http://lshelpdesk.com/index.php?_m=knowledgebase&_a=viewarticle&kbarticleid=45

And you're probably right, it's unlikely that anyone has made trillions from any system, but that's really just the power of compounding. In the real world people will spend far too much of their profits - and no doubt give a large chunk back to the market in testing all their ideas out - for such an accumulation of capital to ever occur. It's still better than Neely though, and for a hell of a lot less work.

And as for intermediate/long term vs intraday trading, obviously it's true that when trading over longer time frames you'll be making a hell of a lot more per trade. That's inherent. Any market would be expected to travel further the longer you leave it. On the flip side though the fact that your intraday stops are so much closer means that you can take larger positions each time than you could on a longer timeframe. Much the same as with Neely's hourly vs daily vs weekly trades. To an extent it comes down to how much time and energy you personally want to put in. Anyway I wasn't saying that intraday trading is superior to longer term speculation I was just making the point that having so many more trades makes it far more difficult and time consuming to keep track of your returns over any give period. Actually I'm pretty sure it isn't Hank doing the recording of results himself but one of his subscribers. He's just posting them. As to unanswered questions over his methodoloy, personally I couldn't care less what his underlying philosophy is or how many of his forecasts come good. Fractal analysis could all be a load of bunk for all I care, the point is that he is continuously producing strong returns, week by week including during the most treacherous fourth/fifth wave movements, and that is all I can ask...

DG

I'm past caring at this point, except to make two points. First, there is no way the "profits" in that link are real. Second, when Hank is in Timer's Digest top 1 or 2 for any of the markets he follows, I'll get interested.

April 2007
Timer Digest's latest rankings (for 100's of renowed advisors around the country) show NEOWAVE's S&P TRADING service to be in the TOP 5 MOST ACCURATE for the last 12 months!

June 2008
In the June 2, 2008 release of TIMER DIGEST, the NEoWave GOLD Trading service is listed in the TOP 5 most profitable in the nation!

August 2008
TIMER DIGEST just released its latest rankings - NEoWave was in the TOP 10 most accurate market forecasting services for the S&P over the last 3 months!

September 2008
The most recent release of Timer Digest shows NEoWave GOLD TRADING the most profitable service of its kind in the United States for the last 12 months.

January 2009
Glenn Neely was recently named the #1 Gold Timer (last 12 months) in the December 8, 2008, edition of Timer Digest. In addition, Timer Digest ranked Glenn in the Top 5 S&P Timers for the last 6 months of 2008 (6/08 to 12/08).

Go here and click on "Historic Archives" to see a string of similar rankings from the mid to late 1990s.
http://www.neowave.com/info-past-interview.asp

Maybe he should tone down the rhetoric, but to put 35% annual returns in context, check out this article:

http://en.wikipedia.org/wiki/Renaissance_Technologies

I just hope that the catalyst for new lows isn't some terrorist event. Maybe these last couple of days have brought traders back to reality and we'll head down just on economic news.

Wavist

Nah highly unlike they'd get away with publishing returns year in year out if they were fabricated especially as they're really not that different from the results of all the other turtle traders. Sure I get why you'd prefer to call them all impossible and made up seeing as you've already gone and invested all your time and energy into learning one of the most intricate theories of market timing conceieved and really that's why I was right on in placing you and GLN together in having a Neely obsession. In any event the fact that there are far more turtles claiming similar returns than there are Neowavers advertising their returns means that for the uncommitted individual trying to decide on where to put his money based purely on validity of the claimed returns, objectively the turtles' claims have more credibility simply by weight of numbers.

And we've already had that argument over Hulbert's Digest, but for the benefit of anyone who wasn't around back in those far off days reading the same old misery gutted obsessives still slagging it out I'll say it again: Saying that someone's got onto a list of the most accurate commercial market timers is like praising someone for getting onto a list of the worlds most honest politicians. Commercial market timers as a profession are famous for only one thing - sucking. Even EWI gets its analysts into Hulbert's top ten and never stopped bleating when one of them got into first place: it's not nearly impressive as it looks and even a broken clock is right twice a day. For a market timer to get his calls right more than fifty percent of the time is considered outstanding in the industry. Astonishing but true. Actually in the context of this giant bear market if anyone wants to see how good Hulbert's Timers Digest's Top Ten have been in timing this decade right take a look at this one - good for a laugh for anyone stuck kicking themselves - http://www.marketwatch.com/news/story/top-performing-stock-market-timers/story.aspx?guid={C376F696-DD62-4434-88FA-3697C4890E00}
Considering which, if Neely's accuracy as a forecaster was a fraction of what he's claiming he wouldn't be publishing with pride that he's got into the top ten, for which read - over this time period he didn't even manage to make the top five. For his claims about his system's exceptionality, i.e. "The same way calculus elevated mathematics beyond algebra and trigonometry, the logical, self-defining limits and self-confirming aspects of NEoWave raise the field of wave analysis (and technical analysis in general) above the realm of opinion and hearsay and into the realm of science and fact" you'd expect him to be easily in first place, and way in front of all the broken clocks every time.

So how do any traders make money if they can't accurately predict every turn? Because success in trading has very little to do with success as an analyst. Not every turn needs to be caught and traded, you can take your pick of either focusing on scalping tons of tiny profits or you focus on trading fairly large movements that you have a lot of confidence in based on a mix of fundamentals and technicals such as waves, flags, rsi, pfe, and stochastics. QED

DG

you'd expect him to be easily in first place, and way in front of all the broken clocks every time.

Not necessarily and if you were a statistician, you wouldn't even have put forth that argument. Statistically, what you would expect, and do see, is that he would show up more frequently than other timers. People can get lucky for a year and have some outstanding returns, then regress to their mean, but the name of the game, long-term, is not having losing years, which enables your money to continually compound. If you study the stories about the Madoff Ponzi scheme, you'll see that it was the lack of volatility in his returns that was so attractive to the people and institutions investing with him. To a certain extent, you're right about "professional" market timers sucking and if you look at the results of the 3-year trading contest Neely participated in during the 1990's and how much or little of the original $50K stake each "professional" had at the end, you'd have confirmation of half that point. Neely took $50K to $140K over three years. Prechter, incidentally, also participated and lost his entire $50K, as did the guy who invented the McClellan Oscillator (he only lost $37K), Peter Eliades and some other big names. So, you're right that being number 1 in that group isn't necessarily the occasion for kudos, but when you look a the actual returns, Neely again tops that 35% number that I'm convinced is his long-term annual return, from the data I've seen. See, one of the things I dislike about having debates is that people don't have an obsession for facts like I do, so I end up having to do their homework for them, which isn't exactly the most pleasant thing, but, in this case I was doing that work for myself anyway, so I suppose sharing it isn't that big of a burden. But, I think we can both agree that you need to put your little "blind leading the blind" theory about all market timers to bed now, don't you?

Nah highly unlike they'd get away with publishing returns year in year out if they were fabricated especially as they're really not that different from the results of all the other turtle traders

I've looked at the Turtle Trader site and they highlight the excellence of traders like, gee, this guy:

http://www.turtletrader.com/trader-simons.html

They wonder if he's the best trader in the world. Guess which firm he runs? That's right, Renaissance Technologies, the one I linked to in my last post about how significant 35% returns are. If my calculations are correct (and I was a Statistics major in graduate school, so I'm not exactly bad at math), Neely has been earning the same returns as the one the Turtle's own website considers, possibly, "the best trader in the world".

I'm not trying to be a jerk or anything, but I'm not really sure you have any idea what you're talking about. I'd really rather just end this discussion now, but feel free to have you're last go at convincing me that 35% returns are chicken feed compared to whatever magical system you have found.

Wavist

Really it comes down to two last gasp arguments being made both of which are also invalid. Unsurprisingly one might add. First of all that it's something exceptional for your leader to be coming consistently in Hulbert's top ten when by simple virtue of the outrageous claims he's making there shouldn't be any competition for accuracy anywhere near him let alone in an industry of the hopeless. If both 1. his trades were really thought through so that he was making only those that his system claims to able to predict with certainty i.e. beginnings and ends, and 2. his rules were correct, his success rate would be 100% period. Anything else - by his own published definitions - means that either 1. he's an inveterate gambler, unable to resist trading even when his system tells him that his rules won't apply with clarity, or 2. he's a charlatan, making false claims about the accuracy of his forecasts. Of course I'm not a statistician so I don't specialise in collating all available facts and figures to produce unerringly erroneous analysis as a professional occupation. Secondly you're confusing a hedge fund with a system. If you cared to actually look at the details of the trend following systems producing larger returns you would find (unsurprisingly) that large - although apparently not too unsafe - amounts of leverage have been used, hence the higher returns than those acheived without gearing. Of course you are again missing the entire point - that trend following is by its nature brainless, and so if turtling is producing better gains than Neowave for a fraction of the time and effort then those studying it are evidently wasting their time and energy by pouring their lives into said magical system due to their unfortunate failure to notice that it is broken. And no I am not a turtler precisely because I am perfectly happy with spending all my time trading so as to achieve higher returns with less volatility. Oh, and no, don't worry you are not a jerk, merely a man who's devoted himself to meticulously charting the way back and forth through the maze...blissfully oblivious to the path that went straight past it.

DG

Secondly you're confusing a hedge fund with a system.

Here are the cumulative returns of that "system", starting with $1 at the end of 1982 (again, leaving taxes aside for the moment):

1983 54.90% $1.55
1984 298.10% $6.17
1985 428.40% $32.58
1986 225.30% $106.00
1987 1158.80% $1,334.28
1988 98.80% $2,652.55
1989 152.40% $6,695.04
1990 509.10% $40,779.47
1991 109.00% $85,229.08
1992 238.30% $288,329.99
1993 311.30% $1,185,901.25
1994 16.00% $1,375,645.45
1995 177.70% $3,820,167.40
1996 2.90% $3,930,952.26
1997 186.50% $11,262,178.21
1998 491.30% $66,593,259.78
1999 54.40% $102,819,993.10
2000 222.70% $331,800,117.74
2001 204.20% $1,009,335,958.16
2002 252.10% $3,553,871,908.69
2003 305.60% $14,414,504,461.65
2004 90.90% $27,517,289,017.28
2005 32.80% $36,542,959,814.95
2006 155.50% $93,367,262,327.21
2007 116.70% $202,326,857,463.05
2008 1504.10% $3,245,525,120,564.84


I don't care how much a trader with that system withdrew on consumption expenditures, the US GDP was only $13 trillion dollars in 2008, so that person's gains would be about 10% of the whole US economy! Are you really going to defend those return numbers, especially when I started with the absurdly small initial "portfolio" of $1? It's absurd to think that these gains represent someone's actual portfolio. How many futures contracts would someone with $200 billion dollars in 2007 need to trade in order to make 1500% on that portfolio? A million at a time? How much is the daily volume of ES futures, which volume includes firms like Goldman, Merrill, thousands of hedge funds, European banks, etc. Today's volume was 2.4 million. And you say there are multitudes of these "turtles" making similar gains. Again, you need to come back down to reality.

Statistics says it isn't exceptional to come in the top 10 once, but to come in the top 10 consistently is something exceptional. The first is calling "heads" with a fair coin and having it come up "heads". The second is calling "heads" 10 times in a row with a fair coin and having it come up "heads".

his rules were correct, his success rate would be 100% period.

Re-read the section in Mastering Elliott Wave on "Emulation". Overall, you're leaving the time element out of the picture, too. If I'm applying one of the rules at Time X, it's because that's the correct rule to apply to that configuration of waves. By the time Time Y comes around, nothing guarantees that the rule I had just applied will continue to be in effect. That's where the Post-constructive Rules of Logic come in. I've read Mastering Elliott Wave half a dozen times and I have never seen him say, "These rules will give you 100% accuracy". You've built this strawman in your head and, as is probably obvious, it's not my job to defend it or try to take it out of your head.

Believe what you want to believe, though, it's a free country.

Hank Wernicki

I have a CPA who is documenting every trade I do this year on a spreadsheet

It will posted here ..

Cheers

Took some nice profits today --- Jan was a good month, now Feb

Wavist

I like your numbers and they certainly are fascinating. However the flaw that I pointed out previously remains: the reason no one in 08 has 10% of US GDP is because no one is ending 07 with 202 billion, and the same for all the other years. You see the point is that what you are demonstrating is - as I said earlier - not the impossibility of 3 digit returns as you believe but merely the gargantuan effect of compounding annual growth. The reality is that for better or for worse no one really does put the money aside year after year. Instead pretty much everyone is withdrawing the bulk of earnings as income. Your opening argument which suggests that this could only amount to a tiny fraction of the accumulated profits is invalid as it is confusing a withdrawal from a hypothesised final pot in 2008 with the ongoing cumulative effects of expenditure year after year. This on the other hand would evidently not amount to a small proportion of an individual's capital being spent. Starting at the opposite end for an equally invalid example all it would require is a deduction of 55 cents in the first year and $2.98 in the second year to ensure that the individual ends with only one dollar. Really this incredible display is just recourse to the first time we fantasise about how much we would have if only our great great etc grandparents had put aside 100, well seresti I guess, back then and allowed it to grow for us. Nothing theoretically impossible with it. Life just doesn't happen that way. Now that we have established the cause of the monumental figure that resulted all that we are left with is the question of how large a return on one's investment it would be possible to make in any given year. When analysing this particular systems gains we are again brought back not to the 13 trillion dollar figure, which was merely a statistical obfuscation but rather to returns of 2-1500% in any given year. I can say without any doubt from personal experience that this is perfectly possible having done a good deal better both last year and on a weekly basis annualised. Does that mean that I am building up a country's worth of capital? Of course not, I've not that much more than what I started with, as I don't need obscene sums of money sitting in the bank to brag about, whilst I do need money to spend on myself, my family and friends, and on charities, and more than ever during these hard times. So that resolves for me at least the question of what percentage returns are theoretically feasible, which suggests the validity of the leveraged trend following systems gains too. So now we arrive back at the point being made - that if you can achieve better returns with less time and effort why go down the most difficult and bramble laiden path you can find. Again a lot of unnecessary work in circumventing obfuscation to get all the way back to what was really a pretty short and simple point. However it was certainly quite rather interesting so I'm jolly happy regardless. On the question of the coin toss it is certainly quite true that it would be astonishing to call heads ten times in a row correctly (although of course in theory it would occur eventually just due to probability) and so if Glen Neely was to get ten forecasts in a row correct it would indeed be most impressive. However you are again making an invalid comparison as should already have become evident. For what you are referring to is instead Glen Neely being placed repeatedly in the list of the top ten newsletter writing market timers. This is nothing remotely astonishing and indeed it is self evidently precisely what one would expect from an analyst believed to be amongst the top ten. I was not arguing that the information from Timers Digest is without value as appearing in a list of the top ten market timers is something that will statistically happen to all timers eventually. What I was and am arguing however is once again firstly that being amongst the top ten market timers counts for a great deal less than many would expect as it just places you amongst the least innacurate in the profession, and secondly - and of far more fundamental importance - that one's success or otherwise as a market analyst has very little relation to a trader's success as even EWI have begun to realise, and as such your argument that Neely's trading system is evidently better than Hank's simply by virtue of the former and not the latter appearing on said list remains invalid. Incidentally and whilst it is not that likely to be of a great deal of interest to the world population I suppose that as you told us all what you majored in I ought mention that mine was philosophy after which I trained in psychoanalyis. Frankly trading is a great deal less stressful, which says it all really. On the last point, where you mention that he has never said that his rules will give you 100% accuracy and it is I who am imagining this to be his claim, I am again led to requote 'Imagine knowing which way the market is going in the coming days and weeks. Never again buy when you should be selling or sell when you should be buying. The NEoWave system is not base on intuition but rather on scientific concepts that accurately predict market moves'. He may not have said it, but he has certainly written it. And that is the way that he is choosing to bring the punters in. No strawman, just a mannequin. Incidentally most people can believe what they want anywhere, simply because it is impossible to know what anyone else believes without subjecting them to polygraph analysis, which is inherently not possible for an entire population. Having said that it is most certainly not a free country as indeed such a thing cannot ever exist. Just as well too. Toodle pip.

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