A Longer Pause Before the Final Surge

I need to clarify last week's call for a pause than a final runup.  The pause is still on; the final surge awaits.  The brief pop late past week is a classic thrust out of a triangle, and denotes the end of the recent wave move.  Last week's triangle was a minor degree wave 4, and the pop was a wave 5.  I do not expect a resumption of the move up for a while.  The markets today dropped below their recent trading range in the triangle.  This makes it a Zoran Bifurcation Point and a change of trend.  This is a pretty clear wave pattern and should be respected.

The two major wave pundits concur as to what this thrust then drop means. They both expect a drop now. Where they differ is whether the top is in.   Neely sees high odds the top is in, but the STU sees this as a second X wave to be followed by the Final Surge: a three-wave pattern, probably another zigzag. The whole move off Mar6 may end up as a triple ABC, labeled W-X-Y-X-Z.  We have been through W in March, then the X pause in April, and now a longer Y in May and half of June. The May market feels like a long trading range since it encompasses the end of the A wave (iv and v), the B wave, and the start of the C wave (i and ii).  To add support for this view, all the other markets are rolling over: Dollar is up, Euro is down, Bonds are up (rates down), etc.  

For those waiting for Yves' latest, he promises an update shortly.  In the meantime, here are his comments on the USD and Bonds, plus a newsletter. He sees a comparison to 1987, and suggests it is now time to lighten up, especially as when this turns down for real, it could drop sharply.  In other words, even if a Final Surge is ahead, why take the risk?  The wave structure is also be consistent with the top being in.  

The timing for this X wave looks to be around the length of the prior one, or at least 10 trading days; so look for a trading range to down market into early July.  

Comments

[Thor's Hammer]

There are at least THREE major pundits. You forgot Thor's Hammer.

Hopefully you did not forget my advice. Hopefully you bought calls.

This will not be a pause. And this surge will not be final.

We just getting started!!!

[Watcher]

Yelnick,

Here is my question for the expert. Wave counts have alternative counts, which leaves room for Prechter, Neely and others to be wrong on a particular call and yet the theory still be considered right. My question is, especially with Neely's more rigorous method, are there cases where the theory is just plain wrong? Are there times when Neely's rules require a certain outcome, but it just doesn't play out that way? Thanks.

[Mamma Boom Boom]

>>Neely sees high odds the top is in<<

That will probably be my position within a few trading ours. Keep checking to see.

[Thor's Hammer]

Watcher--

Neely and Prechter follow hard and fast rules for labelling things, but if those rules are violated, they simply re-label.

They would say that their labels are probabilistic, not definite (though they do not usually provide probabilities).

Their predictions are often wrong. Sometimes with uncanny wrongness (which has made for great fades).

The biggest problem is the SCALE on which they are wrong. Prechter has called for an imminent and enormous collapse much of the time during the great runup from 1987 to 2007. Thus, if you tried to make any decent profits off his advice, you got creamed.

My advice is to get long and dollar cost average. Buy calls if you have a bigger appetite for risk.

[Thor's Hammer]

Buy calls as long as this garbage passes for advice

http://finance.yahoo.com/tech-ticker/article/264596/Stocks-Cheap-Don't-Be-a-Fool;_ylt=Am2CYPnbiQO7Peykm5wt1za7YWsA?tickers=%5EDJI,%5Egspc,%5EIXIC?sec=topStories&pos=4&asset=&ccode=

[DG]

Watcher,

Neely does not use the "alternative count" method often. In three years, I've seen him say that once. And, although I find his work an order of magnitude more rigorous than anything else I've seen in the area of wave theory, there may be others who are doing proprietary things that I just don't know about that exhibit even more rigor. For example, I read the other day that Renaissance Technologies has 2,600 SPARC workstations crunching data non-stop to generate an edge in the market, yet, as near as I can tell RenTec and Neely have the same annualized return profile over the past two decades and all Neely uses is wave theory and logic.

Anyway, here is his take on when counts work best and when they don't.

Why does Elliott Wave sometimes fail?

Answer:
Many people believe Wave theory allows the skilled analyst to predict market action at any junction on any time frame, believing it is just a matter of spending the required time to determine current structure. Unfortunately, even the best wave analyst cannot specifically predict what a market will do all the time. There are times when wave structure is clear and times when it is not.

Structural clarity is highest during the early and late stages of impulsive patterns (i.e., wave-1 or wave-5) and the early and late stages of most corrective patterns (i.e., wave-a, wave-c of a Flat or a Zigzag and wave-e of a Triangle).

Structural clarity is lowest near the center of any wave pattern (i.e., wave-3 of an impulsion, wave-b of a Flat or Zigzag, wave-c of a Triangle, wave-d of a Diametric and wave-e of a Symmetrical).

To understand why, imagine you are driving a car from Los Angeles to New York City. The rules are you must stay within the boundaries of the United States, you cannot backtrack (i.e, you cannot go West), but at each juncture in the highway, you can take whatever route you choose. When first embarking, there would be a limited number of routes out of California, but the further you move out of the state, the more branches in the road you could take. By the time you reach the middle of America, you could be at almost any point in any number of states from the northern to southern end of the continent. As you pass the center of America, the number of available routes to reach your destination would begin to diminish. The closer you get to New York City, the fewer and fewer choices you have.

Wave theory works much the same way, which is why market action can be predicted so specifically (using NEoWave concepts) during the early and late stages of pattern development. As a market moves away from its start, near its halfway point, the number of structural possibilities is at its greatest. As the market continues its journey and approaches the end of its development, the number of possibilities begins to diminish, eventually returning to one.

As a result of the above realities of wave theory, during the beginning or end of patterns, forecasts can be very specific and accurate. Toward the center of any formation, the analyst must refrain from making specific forecasts and speak only in general terms (for example, "the trend is up"), but will not be able to predict specifically how it will get there.

[Wavist]

Prechter will relable, Neely will relable or add a new rule. Both will publicise the calls they get right and hide those that are wrong. Following Neely's trades has made subscribers 30 percent per year, following Prechter's trades has made subscribers -18 percent per year. Trend following systems have made subscribers 100 percent per year albeit with higher volatility than Neely. Do the maths.

[Wavist]

And yes, that was minus 18%...

[DG]

Watcher,

One other thing I would advise is that if you have a question about Neely, ask me. These other posters don't have a clue. Neely doesn't just "add new rules" if his count turns out incorrect and the corpus of rules that makes up NeoWave has been remarkably stable for the past 25 years and the introductions to the corpus have been reflections of the increased complexity of market action over that time period.

[DG]

It's overstating it to say none of them have a clue, but most of them don't.

[yelnick]

Watcher, ewave is about probabilities. Alt counts always sit in the background. Usually not brought to the fore unless somewhat even probabilities. Occasionally a really clear call comes. Prechter thinks his wave 2 call is 90% likely, and a big drop is ahead. Neely is around 85%. Where they differ is whether we have one more run to the top (Prechter_ or is the top in (Neely).

[T.H.]

This little dip is a huge buying opportunity, brought to you courtesy of the specialists and other smart money players who are using it.

Buy calls. Get long. Be grateful for it!

[Sell Sell Sell]

NEoWave's Glenn Neely Ranked #1 Stock Market Timer by Timer Digest

June 15, 2009

NEoWave's Glenn Neely Ranked #1 Stock Market Timer by Timer Digest
- In May 2009, Timer Digest recognized Glenn Neely, founder of NEoWave Institute, as the #1 S&P timer for the past 12 months. NEoWave offers trading strategies and insights for the S&P, Euro, T-Notes, and Gold.

Glenn Neely's NEoWave Trading Services, which employ an advanced form of Elliott Wave theory, have been consistently ranked in the Top 5 most accurate by Timer Digest for more than a decade. In fact, in February 2009 Timer Digest recognized Glenn Neely's NEoWave Gold Trading service as the most accurate service - and, therefore, the most profitable service - in the United States for the previous 12 months.

Neely's methodology is now on a May 29, Sell signal. He said the Wave structure indicates that a MAJOR market top is forming, but from a Monthly wave structure perspective, the S&P must sell-off substantially by late June.

[vipul garg]

there is no one who can guide better than neely in a bear market.absolutely no one .
i ll stick with neely in bull market though too!!timerdigest or no timerdigest.

we need a rule based, logical and scientific trading system which he provides.

rest provide magic and mumbo jumbo that atleast i cant even think of implementing or replicating

[DG]

we need a rule based, logical and scientific trading system which he provides.

rest provide magic and mumbo jumbo that atleast i cant even think of implementing or replicating

Posted by: vipul garg | Tuesday, June 16, 2009 at 10:26 AM

This is exactly my thinking as well. I don't want to rely on some "guru" who uses "proprietary" indicators or a "black box" that could turn out to be total junk. I want someone who lays out a consistent and understandable set of rules that I can learn on my own and implement without having to rely on someone else, as well as a robust set of risk management procedures (at least in regards to price movements. Position sizing risk management is a separate issue).

No trading method is going to give 100% accurate trades, but I think anything that meets those two criteria is a great start for traders of almost any skill level and experience.

[Wavist]

Neely doesn't just "add new rules"...and the introductions to the corpus have been reflections of the increased complexity of market action over that time period.

What comes to mind is

5th Extension Terminal
Like wave-B, wave-F was a tiny rally. This has
taught me something new about Diametrics. It
appears the behavior of wave-F will mimic that
of wave-B. If I had known this I would have
been more prepared for a tiny F-wave rally.

[Wavist]

In fairness it is quite rare. What does happen pretty frequently though is for Neely to forget an existing rule. Which does beg the question if Neely can't remember his own rules what chance does anyone else have of keeping them in mind...

[Thor's Hammer]

"What does happen pretty frequently though is for Neely to forget an existing rule."

that's because his rules are

bs

snake oil

three card monty

Don't get wise with the markets. Get long. Human productivity is a far more powerful force than short term fluctuations. We are in the earliest stages of technological synergy. You ain't seen nuthin yet.

[Anon/Thor's Hammer making money? so quiet?]

Anon/Thor's Hammer

making money? so quiet?

[Mamma Boom Boom]

..Thor dick & wavie...

From what I can see, neither of you 2 clowns have enough intelligence to make an educated evaluation.

[DG]

Sure, and from people who've programmed Neely's rules into spreadsheets, I've heard that there are situations where the rules can lead to two different wave counts. Neely's advice is typically "stand aside" when things like that happen.

I have learned more about patience in trading from following Neely than I ever would have on my own. Those lessons have probably saved me far, far more in losing trades made when the setups weren't "real" than any amount of money I've paid for Neely's service.

[Thor's Hammer]

Bushong, you're lhong on bad ideas. Your website makes it clear you've been bearish for months. So please don't call me a clown for making money or trying to help others. If it weren't for me, anon, and a couple others, there'd be no alternatives to Yuchter, Stealy, and other yahoos whose crystal ball has been a shockingly reliable fade.

Futures will be up 30 by morning. We'll be at Dow 9000 in a blink. My calls are still well in the green and I haven't sold a one.

[Thor's Hammer]

By the way, it's a lame strategy that preys on idiots when you make grandiose, scary predictions that can take place any time over the next 100 years while you CONSISTENTLY offer cruddy advice for time periods short enough to make decent money on them (i.e. days to months).

[Little Orphan Annie]

Futures will be up 30 by morning. We'll be at Dow 9000 in a blink. My calls are still well in the green and I haven't sold a one.

Posted by: Thor's Hammer | Tuesday, June 16, 2009 at 01:33 PM

So you're saying the sun'll come out tomorrow? Should I bet my bottom dollar? Daddy Warbucks, a.k.a. "anon" is nowhere to be found and Little Orphan Annie needs some new shoes.

[Rich S]

Wavist:

Trend following systems have made subscribers 100 percent per year...

Is this based on casual observation or did you actually do rigorous backtesting? I can tell you without a doubt that most trend following systems that made tons of money in the 70s and 80s stopped working a long time ago. The markets are far more complex than they were back then. I can produce equity curves for many systems that were money-making machines and then leveled off some time in the mid to late 90s. Most of them now are break even at best when traded for any length of time.

[Mamma Boom Boom]

>>Bushong, you're lhong on bad ideas. Your website makes it clear you've been bearish for months.<<

I missed a total of 75 points off the top, by selling early. But I went to a buy just 1 day from the March bottom. Where were you raging bullish paper traders then. My guess is you were telling anyone who would listen, how far down the market was going to go.

[Wavist]

Ned Bushong never makes any analysis whatsoever. He merely informs us of the recommendations of his genitals. And of his fondness for the letter r.

[Thor's Hammer]

Nope. I have been bullish since 1988, when I finished college. I am still bullish. I have been dollar cost averaging and happy to have been buying cheap this last year. I learned long ago that it's silly to bet against America and sillier to bet against the synergistic combo of technology and greed.

Don't get wise. Get long. That's been my attitude and will be my attitude. This market is going much, much higher. It doesn't just revert to a mean, it trends to higher rates of growth. In other words, it grows faster than any single exponential.

[DG]

I was a regular on this blog in March and I don't remember any of these guys showing up telling me to buy, buy, buy.

Plus, I haven't seen a single real-time post or even a trade set-up posted that says, "If the market does this, go long, but if it does this, get out". I mean, shit, you guys are recommending buying options (I assume front-month), where timing is absolutely crucial (unless you're recommending longer-term options, but you're not saying so), so risk management is even more key than if you're recommending futures or ETF trades, which at least can work themselves into profitability over a long enough time frame. I hope to God that no one is taking your "advice" seriously.

Yelnick does great work aggregating various E-wave perspectives and publishing his own thoughts, drawing on what are clearly many years of study and investing, and you guys come here and basically drop your pants and take a crap right in the middle of the living room. It's disgusting.

[Wave rust]

prechter on glen beck foxnews today

Wave Rust

[Mamma Boom Boom]

>>Nope. I have been bullish since 1988, when I finished college. I am still bullish.<<

That's fine! But why hang around here and piss-off some of these guys. Why take pokes at people trying to earn a living doing something different than that.

[Mamma Boom Boom]

>>Ned Bushong never makes any analysis whatsoever. He merely informs us of the recommendations of his genitals. And of his fondness for the letter r.<<

I happen to be very fond of my genitals. And, the letter r is still in play.

[Mamma Boom Boom]

>>Ned Bushong never makes any analysis whatsoever. He merely informs us of the recommendations of his genitals. And of his fondness for the letter r.<<

I happen to be very fond of my genitals. And, the letter r is still in play.

[DG]

Wave Rust,

He was quoted in Reuters last night.

http://www.reuters.com/article/InvestmentOutlook09/idUSTRE55E6BM20090615

[Wavist]

I can tell you without a doubt that most trend following systems that made tons of money in the 70s and 80s stopped working a long time ago. The markets are far more complex than they were back then. I can produce equity curves for many systems that were money-making machines and then leveled off some time in the mid to late 90s. Most of them now are break even at best when traded for any length of time.

Whilst returns have differed from system to system, turtle Russell Sands continued producing similar returns over the last decade as during the nineties, admittedly with a couple of down years at the turn of the century http://www.turtletalk.net similarly Phil Seatons's returns over the past decade have been every bit as heavy over the same period as his backtested results were in the 80s and 90s http://lshelpdesk.com/index.php?_m=knowledgebase&_a=viewarticle&kbarticleid=117&nav=0,2

[anon_aka_TERA BAAP]

Next week is the FOMC meeting!! do any of you bears even understand the ramifications???

Do some homework, and find out when the Fed met, what the market did!!

The market ALWAYS rallies big at FED time..in fact..

FED day is the day the market gets FED.. as do all us BULLS!!

there is NO risk, as we go higher!! I am massively long SPY, GS, XOM, WFC calls

in case you clowns want to get stupid, i may scan and post my trade confirms where on 1/20/2009 i bought a nice chunk of GS shares at $67.01 !!!

They are now at $144, and up even today!! How many "shoes'" you can buy?? maybe couple of LEXUSes!

HAHAHAHHAHA

[Forkoholic Serge]

Dear Forkoholics & Friends!

Long awaited June issue of Elliott Wave Forkology Newsletter is out!
And more exciting news! EWF Newsletter is now on Scribd! (see below)

June issue is thick, with whopping 11 pages of invaluable EWF research of market trends, pitchforks and fractals. The actual number of pages is 21 ( a Fibonacci number! ), but we needed to add some BS as paperweight ;-) So what so exciting about this issue? We finally found the fractal which may confirm Bob Prechter's Dow 400 prediction! How's that for a headline?

You can preview current issue at http://www.forkoholic.com/JuneEWFsp.pdf
Please also make sure you spam all your friends who invest/trade, with this preview link, so they can see what Elliott Wave Forkology all about. More Forkoholics, better!

In June issue:
Quick Guide to Elliott Wave Forkology
Success of EWF’s Forecast
$SPX projection update into Autumn 2009
NASDAQ $COMPAQ one more time?
Gold: Two conflicting views
Echo Fractal may confirm Prechter’s Dow 400 target
Create Your Own Indicator
Slicing & Dicing $NYMO 5 ways
Random Fractals: Goldman Sachs, 30 year T-bond
Random Fractals: SHOCKING! Apple at $7 again?
1987 crash: Fractal & Fork Review
Forkoholics 1000 Club

Exciting new development! Now you can buy and download our newsletter directly from Scribd! So no more waiting for e-mail delivery if you're in a rush. It's a little over our regular rate as Scribd charges additional fees. So convinience or frugality? you decide!

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Size does matter. June issue is about 6Mb Adobe PDF format so make sure you have enough juice in your mailbox. Full size charts are also available as an extra 3Mb file, see instructions at the end of the newsletter.

Thanks, and good luck with your trading!

- Forkoholic Serge -
http://forkoholic.spaces.live.com/

[Upstart]

Today was 70 tr. days from the March bottom. I can't count the number of times that 70 days has marked a small turn in the last two years Right at trendline support. Could go slightly lower tomorrow am. Junk bond funds, which smooth-out the daily volatility, hardly budged the last two days. One that I follow was unchanged both days. Not pointing down...yet. Pullback is a zigzag 4 of a diagonal, alternating with the flat correction in May, as I detailed last night. This is a great time to look for the 5th wave to be a failed 5th, given where price is,(and further track my Nikkei analog!), thus making the folks that say the top is in essentially correct, as it will look like a deep correction of the initial decline, but definitely a 5th wave is coming. Five clear waves down from October, 2007, and everybody is trying to count the first big upward correction as complicated as they can! Simplicity...parsimony...Learn it. Live it!

[Thor's Hammer]

How low do you think a failed 5th would go, Upstart?

Incidentally, I respect the work Yelnick and many others here do immensely. Not, however, such a big fan of Prechter and Neely.

Would, however, be a fan if they traded and posted instead of hawked! Trading is tough. Selling subscriptions is yuchh.

[Account Deleted]

Hey DG/VG,
there is no one who can guide better than neely in a bear market.absolutely no one .
i ll stick with neely in bull market though too!!timerdigest or no timerdigest.

we need a rule based, logical and scientific trading system which he provides.

I completely agrre with u guys here.Anyone who has learnt from him will definately see an improvement in his trading results and analysis,no doubt about that.He basically has no competition.

[Account Deleted]

BTW VG ,
Check out the weekly chart of DJIA between 1955-1970 ( roughly),you might notice some similarity in that period and the Sensex from the top till date .Lemme know ur thoughts.Anyone else who tracks the Indian market is also welcome.U can mail at [email protected]

[Account Deleted]

sorry correct that to 1952 - 1957 .we might have something similar from 2003-4 onwards.

[DG]

manish,

If you are a Neely subscriber and are interested in the subscriber blog I have set up, e-mail me at neowavetrader at gmail.com. Include a few sentences from a recent Neely update as proof and I will send you an invite. I am not affiliated with Neely in any way, but we've got a good ongoing conversation about the markets over there, mostly from a NeoWave perspective.

I don't understand the animosity toward Neely on this board. It seems to come from the fact that he is writing a newsletter and charging money for it or people lump him in with Prechter, who is a good writer but apparently a horrible trader. Anyone who's read Neely's newsletters will say that Neely is almost the exact opposite. He doesn't write more than a paragraph about the market in most of his updates, but his trading skills are excellent and he always gives you exact entry and exit points. In my opinion, if a person can write a book like "Mastering Elliott Wave", I am interested in reading what that person has to say about the markets and I am willing to pay about $1 per day to get that information.

For people who say that Neely is not trading his own forecasts, that actually appears to be untrue. Unless you have some specific evidence that he is lying when he says he is trading his forecasts, you have no way of knowing either way, so saying that you know is just as much BS as if I said I know for sure that he is. He says he is trading them and he's said that in 2007 he had a huge loss on the same trade I also had a big loss on, so I tend to believe him when he says he's trading his own recommendations. In many of his trading updates, he will mention his own fill price on a futures contract.

[Rich S]

Wavist,

I didn't say a profitable trend-following system doesn't exist, just that most of them don't. Furthermore, one that does work today, may stop working, as systems tend to lose their edge over time. Long-term trend following requires deep pockets and lots of patience. You may have to suffer through years of drawdowns before encountering a favorable environment. Most people don't have the stomach for it. Trading is tough, regardless of your approach.

[Forkoholic Serge]

Another interesting thing - decline started exactly as we hit upper fork's line
http://forkoholic.com/images/spxlongtermarithm.jpg

[Rich S]

I agree with DG. I'm certain Neely actually trades his recommendations. I don't understand the bashing either. The guy has a profitable track record, has made some amazing calls and charges a reasonable amount for his services. I have a feeling some of the bashers didn't follow his advice consistently or took on too much risk and got burned.

[Account Deleted]

Hey DG,
I have already sent u the mail a few days ago.

[EN]

I know Neely from the course I took with him over the phone.

He sometimes trades in addition to the trading advise his service dispenses when he sees super high risk/reward oppurtunities set-up. He told me one day that he made 70K trading gold on a 15 minute chart with a pyramiding technique. That day (spring of 2006), gold had fallen close to 100 dollars. He just stayed with the trend until it stopped going down.

He has very good trading discipline . . . which is vital in this game.

Still on a daily short signal. If we close below 890 this week, that signal will turn weekly.

Let's see what tomorrow brings.

[Forkoholic Serge]

>Today was 70 tr. days from the March bottom.
Also
June 12th was Fibonacci 610 calendar days from Oct 11, 2007 top
June 13th was Fibonacci 2584 calendar days from May 17th, 2002 high

[vipul garg]

manish
mailed you .
dont have the data for that far back on dow. will arrange and get back.
whats looking on nifty though?