search elliott


  • Google
Share/Bookmark

Enter your email address:

Delivered by FeedBurner

FlagCounter

  • Where From?
    free counters
Related Posts with Thumbnails

« Bifurcation! | Main | Last Chance to Get Out Comes Again »

Thursday, October 29, 2009

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Michael

Kind of strange of you to come to the conclusion that I trade solely based off of using a "contrary" sentiment indicator. In fact, I find that to be pretty naive of you to make such an assumption.

As for my background, I am a former NYBOT floor trader that traded stock-index futures for a living as an independent local for ten years, along with a one-year stint for Paul Tudor Jones as an employee of his and floor broker for Tudor Investment Management back in 1986 on the COMEX.

My first boss in NYC was Victor Sperandeo back in 1984 when I worked for him as a local on the NYFE for two years. I learned many a classic technical analysis tool from Victor, among many classical teachings from Gartley to Edwards & Magee.

I hope that quenches your curiosity for who I am when I post on Yelnick's site.

Good Luck.

DG

Kind of strange of you to come to the conclusion that I trade solely based off of using a "contrary" sentiment indicator. In fact, I find that to be pretty naive of you to make such an assumption.

I didn't say that was the only method you used, although you did imply that you use it, I said it was a method I never used. Even if you use it 1% of the time, that's more than I do.

I also didn't say that you didn't have a background worthy of respect. In fact, someone whose opinion I respect quoted a posting of yours from this blog on my NeoWave blog just today, so I'm not unaware that you've had a successful career. My point was that you're lumping in people on this website who've been around the block a few times in their own right with a bunch of people who are a lot more inexperienced and show it.

I'd also say that you seemed to come pretty close to a blanket dismissal of wave theory, which I find a fairly ignorant view. I've used other forms of TA in trading in the past and compared to the precision of wave theory, other TA is like using a yardstick to measure angstroms. But, like any power tool, there will be users who simply can't properly handle it and there will be users who don't need its power for their purposes.

I left a six-figure corporate job this summer to focus on trading full-time. 95% of my trading is based on NeoWave and the trading principles scattered throughout the pages of "Reminiscences of a Stock Operator". I subscribe to Neely's NeoWave trading services, but also make my own trading decisions based on my wave analysis. The only trading software I use is Excel, to create NeoWave wave charts and calculate Fib price and time retracements. I trade the Russell 2000 ETF and the long and short 3X leveraged ETFs based on it. Since I have been trading full-time, my analysis has triggered 39 trades. 36 of them have been closed as winning trades (some had drawdown, obviously and I have a hedging system designed to deal with that) and I haven't had a losing trade since August 7th or 32 trades in a row with holding periods ranging from intraday to a few weeks. I have 2 underwater trades that are on the cusp of turning profitable and two open trades that are already up over 5% each. I won't bother with the details, but were I to fully leverage my position sizing rules on each trade, my annualized return would be 461% to-date. As it stands, it's at 76%. I have had a short-side bias since early August, so I have been able to generate these returns even though 60%+ of my trades have been to the short side in a market that has primarily rewarded longs. Now that my wave count indicates we've turned and my short-side bias is actually in sync with the market (I was up ~10% this week), I expect these returns to go even higher. If we turn back up, a trade will trigger and I will hold my nose and go long. I have no idea if these types of returns are sustainable, but given that each entry and exit are calculated to the penny and based on a finite yet expansive set of rules designed to cover almost any possible market scenario, I'm not sure why they wouldn't be. In late June, I started a blog for Neely subscribers because I wanted to get more interaction with folks who took wave theory as seriously as I do. Almost all of the people who asked for and accepted invitations to my blog came from this website and, although I haven't shared all of my trading results with them or been making real-time trading recommendations directly (I am NOT a financial adviser and, quite frankly, don't want the responsibility), they can verify the gist of what I am saying about my market view and calls over the past four months.

The problem isn't wave theory, it's people who want to apply it in a "horseshoes and hand grenades" fashion. The issue, of course, is that "close enough" doesn't cut it in trading. The funny thing is that I had tried trading with wave theory before and had poor results for this EXACT reason, even blowing out a decent-sized portfolio in the process. I thank God that He gave me the perseverance to go back to square one to figure out what I had done wrong, so I could fix it. I went back to square one, read "Mastering Elliott Wave" over a dozen times, often starting over on the very next day after I'd finished it, so that it would stay fresh in my mind. That book and "Reminiscences" are the only two books I've found necessary.

That's who I am when I post on Yelnick's site.

Hank Wernicki

Prechter does not use software .. hello !

DG

Prechter does not use software .. hello !

Boy, that's a relief. He should probably try this new-fangled thing called "monkey throwing a dart at a dartboard". He couldn't get any worse.

The whole "software versus non-software" is basically a non-issue because of the whole "garbage in, garbage out" problem with software. Prechter's real problem is that his logic isn't rigorous enough. Programming his logic into software would only enable him to come up with the wrong answer faster. Whooopee!

KRG

Michael:

I don't think that this website and posters have any undue respect for Prechter or EWI's trading calls.

However I am sure you would like to give credit where it is due. For Pretcher it is (a) popularising EW and (b) for providing insights into socio economics ; For Neely it is making (a) EW more rigorous (as otherwise, as DG keeps patiently explaining, one keeps seeing non-existent impulse waves everywhere)and (b) integrating risk management into his wave forecasts. Neely has a great track record so far and I hope that his other interests donot make him complacent in his own methods

BTW: DG has been giving some great analysis on his Neely subscriber blog. And I think Ron is more sarcastic than a cheerleader

I personally feel that any trader interested in EW, if exposed to Neely's methods will be circumspect on the traditional EWI style of counting waves

min

Michael

Re:

>>You can make a small fortune using them as a CONTRARY indicator!<<

Totally agree. I just got out of NDX longs I opened in March. Hochberg's expectation of more sub divisions to the upside was a big deciding factor in getting out right at the top (so far).

This is not the first time I've done this either.

min

DG:

>>I think respecting Prechter for reviving Elliott Wave is the primary reason most of the people posting here talk about him as a "genius", as well as a general sense that perhaps this is his time to shine as a forecaster and not just as a theorizer.<<

I don't know about "most people" but some certainly consider him a genius it seems. I can respect him only for being a successful author but can't see he's earned respect as a competent forecaster -the thing most of his subscribers probably pay him for. Even if he is now in the business of being an "intellectual", as the founder of EWI he has at least some responsibility for Hochner/STU land.

Prechter may be somewhat redeeming himself recently after decades of bad market forecasting (similar to 2000-2002 which still had a lot to be desired) but after his devastating P3 disappoints this time around, how long do you think he'll string his adulators along this time around?

Last time it was roughly 3+ years it will probably be the same or worse this time around. It's not a bad idea to have some "anti-cheerleading" for those using this blog to guage wether to buy into "Prechterism" or not.

I've had very similar experiences to Michael only 10 years apart so I doubt Prechter has fundamentally changed much and now ready to do his job better. More like the market has temporarily moved to his neck of the woods and he'll continue to defend his Armageddon scenario to the end.

min

You guys want to read how a typical glib market spectator regards Prechter?

>>If it wasn't for Prechter none of us would be here discussing EW. Everyone makes mistakes, no on is perfect. The guy is a genius and very unique in his thinking.<<

Battle scarred Lions look at things a little differently.

One thing I do agree with though is that he is unique in his thinking. So unique he is wrong 9 out of 10 times -a far greater number of times than anyone else I am aware of. This is a product of a "strength of his convictions" type of thinking that blinds to the exclusion of reality (other than his own).

I actually tabulated EWI results based on calls made from 2001-early 2005 at about 1 in 10 but for those who may acuse me of being biased, I'll get you an unbiased link to look at shortly.

min

Here is the link for those interested

http://www.cxoadvisory.com/gurus/Prechter/

min

Ron Stein's view of Prechter:

>>He is full of sage advice and brilliant wisdom not to mention intellectual manna from heaven. I do not know how often one of these brilliant, rugged individualists come to earth to break icons and elucidate the masses (Einstein, Frank Lloyd Wright, Beethoven come to mind<<

Jeez, I step away less than a week...

This stuff is to gag on. No wonder Michael got P.O.ed

Ron you better lay off the steins for a while.

1. Just Imagine Einstein's calculations being off 9 out of 10 times. Yeah, we would've had Armageddon for real a long time ago.

2. Imagine Beethoven's aural perfection marred by disharmonious cacaphony 9 out of 10 times. Yeah we probably would've expereinced Armageddon a couple of centuries back.

3. Frank Lloyd Wright may compare well though. Frank LLoyd Wright designed beautiful buildings in harmony with nature while serving the needs of it's occupants -concepts in many ways still ahead of their times. Many of his buildings unfortunately leaked and the man's flambouyant yet flawed character eventually caused a bad ending to his life. Ron, it's your call whether you want to press that comparison for your hero.

Intellectual manna from heaven? Really? Ron, I think you need to expand your horizons and get yourself better spiritual leaders or you're toast. There are much better people out there for that. I do admire that he's a successful author though.

min

Re: Prechter does not use software .. hello !

You know, maybe he should use software. Might improve things? Just thinking out loud here...

Michael

Min - Your comments have hit the nail on the head.
For those of us that have been trading for the last couple of decades, we all remember a heck-of-a-lot more than just the "Lost Decade" from 1994-2003 that Yelnick has highlighted where Prechter took a tremendous drubbing.

DG - Congratulations on your track record. Sounds like you could have made a tremendous amount of money over the last several months if you had not FOUGHT the trend with so many shorts. Not sure why anyone would fight the TREND as much as you did unless they were influenced by the "perma-bear" calls of Robert Prechter and Steven Hochberg. If the latter was not the case, it sure sounds as though you were biased towards fighting the TREND. Why is that?

I can't imagine anyone having made much money fighting the rallies in energy, drilling, coal, and mining names over the last several months. Why did you not play these high-beta groups from the LONG SIDE?

As far as Elliott Wave International's influence on Yelnick and this website, I would simply refer you to the 12 paragraph "summary" of the STU that Yelnick has posted on this website on Friday night.

Enough said.

DG

If the latter was not the case, it sure sounds as though you were biased towards fighting the TREND. Why is that?

Remember what Soros said about finding "the trend whose premise is false"? Well, I'm not a believer in the premise underlying the equity market rally, neither fundamentally nor technically. That, combined with a wave count that showed the trend could end at any time, had me seeking short opportunities at the expense of seeking long opportunities. I'm fine with the opportunity cost of missing some long side trades when I'm convinced that the game on the long side is about to end. You must have also heard the saying, "Opportunities are more easily made up than losses".

The one long trade that my wave count signaled that I didn't take and I regret was a long that I should have taken on July 15th, I think it was, at the open on the gap up breakout over the previous couple day's high, with a stop at the low of the previous day's last Hourly bar. That would have been a long I could have ridden for a nice gain, since with the way I move my stops, I wouldn't have been stopped out until mid-August. After that move peaked around 102 SPY, we basically chopped for a month and I only took a few trades and mostly just watched to see if my scenario remained on track, which means that I was watching to make sure that the move to the upside didn't "break" my wave count, which it never did.

On my blog, I also called the September high to within 8 cents on the SPY (on that one, I didn't make the call weeks in advance, but as we got closer and the wave count became clearer, I put 108.62 as a "line in the sand") and October low to within a penny on the SPY (that one I did call well in advance, due to the nature of the wave structure of the September advance, which implied a certain retracement), but didn't go long there because I was uncertain how long it would be before the downtrend reasserted itself, although I was already saying then that a new high could happen, and, since my system is somewhat discretionary (if I think we're in an uptrend, I will take every long that triggers, but not every short and vice versa in a downtrend), when the trade triggered I didn't take it.

As I become more and more comfortable with the trading process, I will hopefully become less discretionary and separate process from bias better and just take those trades that make me uncomfortable, since I know from tracking those trades that I'm leaving money on the table.

As far as being a "perma-bear", far from it. In fact, I've got a wave count "in my back pocket" that projects as high as 118 SPY and another that projects to 124 SPY. But, the market has to "prove" to me that that's the right scenario by "breaking" my current wave count by moving above certain levels. There is a process for switching wave counts and I tend to follow it. Right now, my "line in the sand" is 110.98 SPY, which will trigger the 118 SPY count and I will have the option of either getting long or sitting on the sidelines for 7 SPY points. I'm not like those wave counters who think every 5 SPX point move above an old high is the "[v] of 5 of [V] of circled-5" or whatever symbols they are using. As I continue to say, the problem with those kinds of wave counts is that they are too subjective. From reading those blogs, I also think those guys "need" to be in the market (even if only metaphorically and they aren't really trading) each and every day. I don't. There are times when I will have none or a very small percentage of my trading capital deployed, waiting for an opportunity.

Anyway, I'm saying now, in real-time before the fact, that I'm thinking 102 SPY will be the area of a reversal back up, which will target the 106 SPY area. After that, I expect another reversal down. We'll see how it plays out.

Michael

"Well, I'm not a believer in the premise underlying the equity market rally, neither fundamentally nor technically."

Like I said in a previous post, it sure sounds like you have an inherent BIAS and it "colors" any technical work that you do.
Enough said.

DG

Like I said in a previous post, it sure sounds like you have an inherent BIAS and it "colors" any technical work that you do.
Enough said.

Show me someone without any bias in this world, or, more importantly, in the market. Anyone holding a position in the market is obviously biased that the market will go their direction, otherwise they'd exit the position (with due allowance for the timeframe they are trading).

Again, I was willing to put down a "before the fact" forecast based on my bias. You, apparently, would rather hide behind your alleged unbiasedness. Enough said, indeed.

min

>>Min - Your comments have hit the nail on the head.
Posted by: Michael | Saturday, October 31, 2009 at 12:20 PM<<

Thanks Michael, as you know we've both had similar experiences 10 years apart. It's unbelievable that that his thinking persisted so long.

It's not too hard to come up with what I write as I lived and survived through that most unglorious initiation.

min

Michael;

In reading some of your posts it seems Prechter completely soured you on E-Waves as a viable TA tool?

It's too bad if that's the case but if you have come up with something else that works well for you, more power to you. That's really what it's about anyway.

I was able to make E-Waves into a useful tool for me. But I had to totally discard the "Prechter Market lenses". And at those times when E-waves don't give me a good read I have no problem grabbing something else. Like a good craftsman, you use the best tool for the task at hand and there's always more than one good tool for the job. At least that's what works for me.

The comments to this entry are closed.