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« Dollar Reversal and Commodity Drop? | Main | Pause in the Final Surge »

Thursday, June 04, 2009

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Mike McQuaid

S&P500 Feb 9 to March 6 reversed and fibonnaci extended percentage points showing good harmony at 127% at May 8 with resistance back to Jan 6. The next point 161% will be at 999 that matches visible resistance back to Nov 4.
The index is poised to continue higher to 261% at 1205 matching resistance at last July 15 and chart congestion in September.
Labels 1 and 2 show off of the March 6 reversal, so we're now experiencing wave 3. The 0-2 trendline spans March 6 and May 21 '09.

Mamma Boom Boom

Yelnick, do you find that convincing?

DG

Mike,

I try and I try and I try, but you just don't seem to get it. We are not in an impulse wave up. Period. Why are you so obsessed with thinking that we are? Let the market show you whether it's in an impulsive or a corrective scenario, don't impose your views on the market. Your logic appears to be "Gee, we've gone up a lot, that must mean we're in an impulse". Huh?

Just to take one logical absurdity from recent market action (although I can see many more in the time period you've flagged as waves 1 and 2).

If we bottomed wave 2 at the low of May 21st, that means the initial move up from May 21st to May 22nd was a wave 1 of some degree. The initial correction of that move retraced 99% of it, from May 22nd to May 26th. If you've read "Mastering Elliott Wave" you know that impulse waves, properly identified, are rarely retraced more than 61.8%. Ah, well, you might say that initial correction was only wave A of 2. OK, but then wave B of 2 would have to be the move up from May 26th to May 27th. The problem with that is that would make wave B of 2 LONGER than the entire wave 1. How can a single wave of a corrective polywave be larger than an entire impulsive monowave? It makes absolutely no sense.

Then, following that running correction with the huge wave B, you have wave i of 3 going from the low of May 28th to the high of May 28th, followed by the wave ii of 3 on May 29th. Well, in a 3rd wave following a running correction, wave i of 3 would almost have to be larger than the wave B of the running correction, no? A running correction is supposed to signal a market that is ready to make a big move and both of those waves exist at the same degree, but one is part of a correction and the other is part of an impulse. Why even bother distinguishing between impulse waves and corrective waves, if corrective waves can be bigger than impulse waves of the same degree? That would be like allowing wave 2 to go back under the beginning of wave 1. Again, it makes no sense.

The very nature of an impulse wave is to represent stronger buying/selling power (i.e. a stronger "mass psychology") than corrective waves. Nothing on the chart supports your count. Period.

Mike McQuaid

DG, thanks you for the civil tone. I've loaded my posts with the evidence the chart portrays, for weeks. I don't have the will to teach you. Keep reading Neely's book.
Wave 2 can retrace 100% of wave 1, yet you are focusing on 61.8%. I can't cross-examine your mind. I suggest you study your own posts. You are doing what it takes to label charts, keep going.

anon_aka_TERA BAAP

i am LONG and STRONG..loaded up calls and ESM9 on the move off the 200 dma retest, and up BIG TIME!!!

clowns on message boards are perplexed by this market..the EASIEST market i've ever seen!!

buy ANY dip, and within HOURS you will make MAJOR cash

the market will NEVER go down..even downticks are banned

jeeeze i wonder what will happen tomorrow, after Obama and Bernanke send out the monthly jobless report??

when do we EVER sell off on a government report?

tomorrow will be BIG and GREEN...there is ZERO doubt, and NO risk

DG

Mike,

I granted you the possibility that wave 2 was a running correction flat, since the point at which wave i of 3 began (in your flawed count) was at about a 50% retrace of wave 1, even though wave A of that flat retraced about 99% of wave 1, as I said.

However, you can't just rely on that as a crutch for your count because I mentioned even more serious issues with it regarding the size of wave B of that running flat wave 2. Please, explain to me how wave B of a polywave correction can be larger than the wave 1 of the impulse wave both are contained in. Tell me which of Neely's pre-constructive rules of logic allows this. Wave B in a running flat obviously HAS TO BE larger than wave A but there is no way that the m(-1) wave in that construct is a wave 1, which it is in your count.

Then, there was the other flaw of the wave i (a monowave) of 3 being smaller than that wave B (also a monowave and of the same degree) as well. Again, show me one of the pre-constructive rules of logic that allows that relationship between m1 and m(-1).

Trust me, I've got MEW tattooed behind my eyelids at this point.

Mike McQuaid

DG, in Neely's Question of the week section, 7-18-05 addresses time limits of the b wave in a flat. Hint, he says there is no absolute maximum. Also pages surrounding 5-18 and 10-6 apply.
More to follow, I'll comment on your points one-at-a-time.

Mike McQuaid

DG, here's my S&P500 labels using a 60 minute chart. Zero was March 6 at 666, wave 1 was March 25 at 826, a was March 30 at 779, b was May 8 at 928, c was May 21 at 879. So c completed wave 2.
That's my primary count.

Upstart

The upleg from the March low to 4/2 (where wave a of a beautiful textbook running triangle begins in the DOW) is a clear a-b-c. This is where I differ from EWI - That leg is a zigzag in itself, plain and simple. It counts as a three, so it can't be wave a with the triangle being wave b. No, rather, the leg up to the triangle is a zigzag, the triangle is an x-wave, the move out of the triangle to early May is 5 waves to make "a" of the second zigzag. Then we have what some call a triangle in May in the S&P, but it is a textbook expanded flat in the DOW, and can't be forced into a triangle, so it's really a flat - that is "b" of the second zigzag. So now we're in "c" of the 2nd zigzag. Within c, we had waves 1 and 2 at the end of May and the only question is whether we ended wave 4 yesterday and are in wave 5 or if we're in an extended wave 3. That's why I would say we're topping fairly soon in June - not July or August as EWI thinks.

DG

Mike,

The move from 879 to 896, preceded by the move from 924 to 879 and succeeded by moves from 896 to 881 and 881 to 913 falls under retracement Rule 4d or 4e, Category ii. The only possible structure labels applicable to that move from 879 to 896 are F3, c3 or x:c3, which means that the move from 879 to 896 cannot be the start of an impulse wave.

Here are the lengths of the various moves, using SPY prices for the various monowaves surrounding the one you are saying begins wave 3 up (which are, as you know, just 1/10 of SPX)

m-3 1.62
m-2 1.97
m-1 4.65
m0 4.54
m1 1.74
m2 1.68
m3 3.43
m4 2.65
m5 2.24

DG

DG, in Neely's Question of the week section, 7-18-05 addresses time limits of the b wave in a flat.

I wasn't concerned about the amount of time wave B took (and, to be clear, I am talking about the wave B of the running flat correction to wave (1) of 3 off your May 21st wave 2 low, not the strong wave B you have running from March 30th to May 8th. I'm not even going to go back that far at this point). I was saying that it took up too much price relative to what you were saying was the beginning of wave 3, both relative to wave (1) of 3 and to wave i of (3) of 3. Having the B wave be the largest of those three monowaves doesn't make sense. Wave 1 should be bigger for sure and wave i of (3) of 3 should probably be bigger as well, since it was following a running correction.

anon

This market is just like the drinking establishments I visited in my earlier years..

TOPLESS!

hahahahaha

DG

Upstart,

If you are saying that the moves up and down that started on May 21st and ran through May 29th are waves 1 and 2 of a C wave to finish off a zigzag, you run into the same issue as Mike's count, which is that none of those initial moves, when filtered through Neely's retracement rules, turn out to be impulsive.

If you look at the move down from May 20th to May 21st on the SPX as the C wave of a Flat, the initial move up off of that low should have retraced the entire move in a time period less than the amount of time it took to form wave C. That is the logic of an Impulse versus a Corrective move. Instead, we didn't go above the top of the C wave of that flat for 9 days. So, what took a corrective move 2 days to do, go from 924 to 879, it took an impulse 9 days to do (in reverse, of course)? Does that seem right to you?

From the beginning of May, I think we had a complex correction Double Three that ended with a triangle that ended on May 29th. The X-wave of that Double Three was from May 15th to May 20th. The initial move down from May 8th to May 15th looks like a Double Combination, a zigzag followed by a very small x-wave from the low on May 12th to the high on May 13th (x-waves do not have to be large), then a flat from the high on May 13th to the low on May 15th.

Following the X-wave, you have a Contracting Triangle. Wave A is from the high on May 20th to the low on May 21st. Rather than being 5 waves down, I think there is a missing x-wave in there. Then, an Elongated Flat starting on May 21st and going to the high on May 27th for Wave B. Wave C May 27th to May 28th. Wave D from May 28th to May 29th (high at 912.78), then wave E till near the end of the day on the 29th. That was wave F of the Diametric I've written about before.

The advantage of this count is that it completely explains the "thrust" out of the triangle. When measured from the end of Wave E, the thrust targeted 95.22 SPY. Our high has been 95.37. This thrust out of the Contracting Triangle is wave G of the Diametric. Wave G looks like it is shaping up as a zigzag with a Terminal wave C. Wave C began at this morning's low.

This count also explains the absolute frothing at the mouth bullishness some posters are exhibiting (where were these posters in early March, when frothing at the mouth bullishness was actually justifiable?). Jesus Christ, you got one guy saying that nuclear war could break out and the market would go up. I don't normally judge sentiment by the lunacy of individual posters on message boards, but I've never heard anything so absurd in my life. And, since I work in risk management, when I hear someone say "There's no risk", that just screams red flag to me. Again, it appears to be just one idiot ranting on a message board, but still.

It also explains why we can't reach the top of the channel I've been tracking. We hugged the top of it when we should have (during wave C), reached the top of it when we should have (at the end of wave E) and we can't pass the mid-line of it when we shouldn't be able to, during wave G.

The two things I don't like about it are how long waves E and F took in time (although, in actuality, wave F could have ended at the May 15th low, rather than continuing on to the end of the triangle on May 29th). Still, I think the time ratios are within the boundaries of the pattern and the price ratios are definitely so (I've posted all of that before).

Mike McQuaid

DG, from 879 to 896, you're telling me you use wave structure rules on sub-minuette degree and look for "the only" wave count. Whew. At that level I just leave it to visual pattern recognition.

Thor's Hammer

I'm not frothing at the mouth bullish. I'm reasoned, seasoned bullish. I'm not cocksure or denying I could be wrong. I think this market is going much, much higher and I think we've seen lows to last a long, long time. Longer than I'll be alive.

Good luck. And don't take anecdotal clues about sentiment. n is too small.

MHD

DG... do you agree with Neely's current outlook for the S&P in the next couple of months? Or do you see problems with his current count?

DG

Thor,

I actually was not looking in your direction when I wrote that. I was thinking of "anon", assuming he's a real person. And I did put in a caveat about small sample size.

It's fine to be bullish, when the market sets up that way. When the market is not set up bullishly, it is better to be bearish.

DG

DG, from 879 to 896, you're telling me you use wave structure rules on sub-minuette degree and look for "the only" wave count. Whew. At that level I just leave it to visual pattern recognition.

Posted by: Mike McQuaid | Thursday, June 04, 2009 at 08:08 PM

I try to take advantage of the fractal nature of wave theory as much as possible and I don't trust myself to be unbiased in my pattern recognition. I keep an intraday chart that I update according to Neely's charting methods, so that I can capture information I wouldn't be able to on just a daily chart. My goal is to be able to do NeoWave as well as Neely can, so that if he decides to retire and I want to keep trading, I will have a method I can rely on.

DG

MHD,

I am open to a slight variation on his count, but it is a small thing in the bigger scheme of the market's direction, on which I agree with him, i.e. that the next big move is down (everyone who reads this board already knows that's his forecast, but in the future I really want to stop giving the game away, which I think is why a private communication channel is a good idea. Anyway). My main problem with my own disagreement is that the pattern I am tracking took a bit longer than I would have liked.

Forkoholic Serge of Elliott Wave Forkology

May 8th - that's what $SPX was suppose to do since that day! Bad market! Bad! ;-))
http://forkoholic.com/images/spxdry.jpg

Forkoholic Serge of Elliott Wave Forkology

Mike McQuaid, become a forkoholic!
I will tech u how to distinguish between corrective and impulsive in 5 minutes!

RNB

DG,

How would you deal with this. Using MEW, on page 3-26, I come up with Rule 4, Condition b. However, I do not come up with a category since m3 is less than 100% of m2. Sort of stumped here. Checked the math, but no errors (that I can see).

Thanks in advance.

opttrader

Move over EWT or Neely. This guy at http://thinkingtrades.com has nailed this market at every turn. Actual trades rather than BS. I would never have come across this site if someone had not posted a link to this place at SOH.

DG

RNB,

How much less than 100%? Neely says to give a little leeway (he uses a leeway factor of about 10% give or take).

That said, since the rules in MEW don't include rules that cover new patterns (Diametrics, Symmetricals, Neutral Triangles, etc.), you might be dealing with one of those patterns.

anon_aka_TERA BAAP

and as ALWAYS i was right again

nuf said!

Thor's Hammer

If you want anecdotal evidence, the tone of the bears' posts is ample. They are clearly riding the slope of hope, beginning to lose faith in the existence of that big down wave to come but too proud/nervous/angry to change their minds. So they ride losses and rationalize.

They will power this market up, up, and away.

Forkoholic Serge of Elliott Wave Forkology

I opened my mind for irregular/complex B :)
Wave 4 is still on!
Wow! What a day! I'm ready to do forecast til 2012

RNB

DG,

It is not even close. I have 0.3779 which is not even in the ball park for the categories. Would you put down every possibility from the specific rule (i.e., rule 4b) and make a notation?

Or does Neely have an updated version of the rules that encompass the new patterns?

Thanks again in advance.

DG

RNB,

No, no updated version with all the rules, although I really wish he'd write one. You sorta need to pull in the information on the new patterns from the Question of the Week section of the website and integrate them with the old rules. There's also a section of Neely's website that has a PDF file with some of his new patterns and examples. Pull that up and see if the charts in that file match what you're seeing.

Also, if you post a chart, I will take a look at it and give you my best shot at interpreting it. I might not get any further than you, but another set of eyes usually doesn't hurt. It's your call.

MHD

DG... I'm sure you know from Neely's trading updates that he expects a low of around xxx by the end of 09. But in his other trading updates he expects a multi- week or multi- month move to these lows. Since the next move must be faster than the initial leg down to 667, would a move to his projected low occur closer to December or multi-month say bottoming in September?
Since you follow his trading strategies closely, I thought you might have some thoughts on his timing.

Forkoholic Serge of Elliott Wave Forkology

>Since the next move must be faster than the initial leg down to 667,
Why?

MHD

DG will explain!

RNB

DG,

I am actually tracking something correlated to the SPY and trying to get a wave count off of that. The reasoning behind this is that I am looking at them to provide confirmation on the top of the SPY wave (if markets fall hard like a rock, then it would make sense that the other instrument will move accordingly). I just started this project. I do not want to be biased and just pick a wave count based on what I think the pattern looks like (no group think). Trying to find the count based on the rules.

I wish that there were a secure way offline to share these thoughts with you and the spreadsheets behind the project.

Wavist

Because he has us in the last legs of expanding triangles which are the fastest and largest of their formations.

Mike McQuaid

COMP and NDX are now both at 50% retrace of the Aug '08 to March '09 move. Both are now showing 50-200dma golden crosses and trading well north of their 200dma. As these conditions persist the correction scenario camp will find it increasingly difficult to foster their outlook. One would think that camp would have gone neutral the market by now.

Mike McQuaid

The DJ Industrial Average has broken out above the 38% retrace line of the Aug '08 to March '09 move. The current action is north of it's 200dma. Since the March rally began the Average has not fallen under 50 on the RSI(14) once it got above it. The Average shows a volume landscape selling climax and a price V bottom at the March low. The bias is bullish.

DG

Moving averages are not part of wave theory.

DG

Yes, the next move must be faster and larger than any of the downward waves in the pattern since the October low. I'm looking for an initial kick-off to the downturn that surpasses the move down from early to mid-November. We dropped around 26% over a two and a half week period. We should drop to at least 640 SPX in less than 20 trading days from the top. This would be due to the nature of the "Post-constructive Rules of Logic" Neely lays out in Chapter 6 of MEW.

DG

RNB,

If you want to post your e-mail address, I will contact you. Otherwise, I am going to look into a blog host that can provide some password protected space. There are a lot of good posters here, but someplace else might work even better. Nothing commercially-oriented, just a place for sharing things better kept out of a public forum.

Just Wondering

TERA BAAP-

How'd you do today?

Al

Indices haven't turned but gold has been saying that dollars have been getting scarce. Debtors trying to get dollars. Bearish for equities, houses, and, well, everything except puts and dollars and IOUs denominated in anything but puts and dollars.

anon_aka_TERA BAAP

Just Wondering..

i did GREAT..i sold out my calls this morning like i always do on Friday, because i want CA$H for the weekend..daddy needs a new pair of shoes!

next week, i know more free money will be available as the Fed and Obama drive this market higher!!

i may start a newsletter since my performance has been far better than Neely and his clown followers

the first issue :

if the market is FLAT, then buy because it is guaranteed to go higher..

if it is down, buy even twice as much!!

If it is only up 5 points, the buy because up 5 is the same as being down!!

Flat is the new down..up is the new flat.. actual down is IMPOSSIBLE!!

TERA BAAP


Thor's Hammer

I suspect anon is being a bit facetious but the really funny thing is he's right.

Someday there will be a 1930s style meltdown. But it ain't gonna be for many, many years, folks.

Bears, be careful. Swallow your pride, skepticism, and bitterness and live another day.

Forkoholic Serge of Elliott Wave Forkology

I finally warmed up to Yves count
Dude, what took me so long!? :))
http://yelnick.typepad.com/.a/6a00d8341c563953ef01156eaf4787970c-popup

Forkoholic Serge of Elliott Wave Forkology

DG,
whats you time projection for this Wave 4? Late July early August?
I figured Wave A 60 days, Wave B 60 days, Wave C say 30 days - August 6thish?

Forkoholic Serge of Elliott Wave Forkology

Secret forum? sign me up!

Rob

June 16th bottom, July 15th to July 17th bottom, August 11th bottom , September 8th top and look out below. Anyone who thinks we are in in a bull market and the lows are in are naive. The bears don't have a problem it is the bulls that don't recognize a long in the tooth bear market rally that is doomed to failure. The housing market is in trouble for at least 3 more years and the American consumer is dead. Alt-A mortgage resets over the next 3 years are going to bring the housing market down for at least that long. A 40-month inventory in homes $750k and over is not good news and the employment data today was utter nonsense. The birth-death model added 220,000 jobs. How did small businesses add that many jobs in May, impossible!

Rob

I meant to say July 15th to July 17th top and if that isnt't THE TOP than early September will be, and perhaps for the next decade!

Forkoholic Serge of Elliott Wave Forkology

>Yes, the next move must be faster and larger than any of the downward waves in the pattern since the October low

Yep, I see it - found the pattern! wow! it almost vertical drop! jeez

Forkoholic Serge of Elliott Wave Forkology

>THE TOP than early September will be, and perhaps for the next decade!

Actually I see HUGE Bull Market after next low
78% retrace back to upper fork line. Of course it could always go sideways.


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