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« China and the New American Manufacturing Paradigm | Main | Did ObamaCare Spook the Bond Market? »

Thursday, March 25, 2010

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OracleLurker

These reversals do seem to me to work better then just about any other form of price based technical analysis. The difficulty is they always pump far enough that anyone with any kind of discipline has to at least partially cover and then once they've pulled the rug out you must immediately get back into essentially the same trade you've just lost on - one which you have just been conditioned to avoid from when you got stopped out. At that point you have to embrace the madness of repeating the exact same behavior with the expectation of a different result.

David

thanks for the update yelnick and site checking... i am calling a top here... dangerous, i know! i have posted an update for those interested :-)

http://www.tradeyourwayout.com/2010/03/spx-daily-chart-update-bear-market.html

nspolar

Wow!

nspolar

Wow!

Not many Yelnick bear blog or other bear blog top callers today.

Interesting.

As stated previously the polar thought has been to watch oil, gold and commodities. Techically no big breaks to the downside yet for the commodities, but the dollar has broken to the upside. Potentially way to the upside.

Now if weak global demand hits oil, and at the same time we have a safe haven run to the dollar, might we see oil in the 30's again? And gold? It always over shoots, in both directions.

The HUI has an extremely bearish wave count, that could take it to the depths.

And how is the Neely blow-off WAVE E going in gold?

Let it happen. The bottom will be the gold/miner buy of 10 lifetimes.

ns

DG

I still like this count best.

http://img401.imageshack.us/i/spydaily2.png/

Doesn't preclude a new high, though.

Wags

The Coal, Steel, Energy, and Mining stocks rolled over hard and were under a lot of selling pressure late in the day given the Dollar's response to Jean-Claude Trichet's comments.

These sectors have had huge runs since the February low; moreover as "nspolar" and I have pointed out on several occasions, the commodity rally for the last 12 months has kept a solid "bid" in the S&P. With the Dollar on fire and China bound to slow, the commodity/energy "bid" may eventually get pulled from the US equity market.

Until then, I continue to watch one of the more classical technical indicators of all-time, the cumulative NYSE A/D line, which is (finally) starting to show signs of "sloppiness" over the past week.

Interestingly enough, it is an indicator that is significantly absent from the majority of E-Waver blogs that have been trying to Pick the Top for the last 6 months and
filled with "Perma-Bears".

Wags

By the way, CARL FUTIA is the ONLY blogger that I know of out of the one's that Yelnick has mentioned above that actually TRADES for a living, and posts his E-Mini trades on the S&P real-time on his blog.

He is not someone that is charting the market via their own "interpretation" of Elliott Wave. He is not someone that is blogging as a "hobby" like so many others on the Internet . . . or who pulls the trigger on a trade once a month. The guy is in his 50's and has a tremendous amount of market history and trading activity under his belt.

Futia has been tremendously successful milking this Bull trend for all that it has been worth. As the majority of E-Wavers were convinced of seeing 5-waves down and the beginning of P3 as the market traded down in early February into the 1050 level, Futia was steadfastly bullish calling for a rally to 1200.

I believe that everyone in Yelnick's article above falls into the "Perma-Bear" category except for Futia. I think that says a lot.

He deserves a lot of credit for his analysis that has consistently been correct in identifying and confirming the TREND, not too mention his ability to pull the trigger time and time again from the long side.

Kudos to Carl!

nspolar

DG, I'll try to be civil.

You have no more basis to label each of those wavelets with a :3, than you do a :5. The method you have used in gross terms is good, but I tend to believe you are putting those :3's on there well just because you want to, and you want to follow Neely's count, which has an A ? at the last bottom. And since you are a bear your vision is clouding your counting ... you want to 'believe' those are :3's, which then allows you to put a B at the end.

We do not always get what we want. Not even Neely.

If you want to improve your skills, throw out the subjectivity, and since you profess to use risk so well, well consider those might be :5's, and put this on your chart. It may pay off on the risk side, if you allow for other possibilities.

Neely? Who cares?

The worst thing any trader can do is follow someone else.

What do I think?

I do not know for sure.

I well tell this blog of a possibility however.

I think we are still in a bear move LT, still in progress. W/r to the 2000 to 2002 plus move down, yes there could be some fractal action, if one wants to look at it that way.

So where 'might' we be?

Imo we could be at an equivalent point to the late 2001 action. The move up off the mid 2001 bottom was a bit different in the Dow and SPX, but in each case likely an ABC to the next top.

In brief there is no reason this move up off the early 2009 bottom can not be an 'A' up, but all the bears want it to be a 'B'. Desperately so I might add. It is oh so obvious that this is what they want.

And there is something else, since I just mentioned gold and the HUI. In the 2000 to 2002 plus downdraft, gold and HUI bottomed well before the general markets. I anticipate the same thing could happen again.

All should look at this closely, and remember it.

The HUI could already be in a 'c' down. If there is a big down move coming in general indices it will be a 'c', but it has not yet officially started. The move off the last top in the general indices is not a 5 wave continuous Big C as so many have it labeled. C waves are sharp, quick and will channel much better than the entire move off the last top did. On this I think we agree. Hell I even agree with Neely on that one.

ns

Mr. Panic

3 Patriot Coal insiders sold $9million in shares each on March 4. This really is shades of 2000. March 24 2000 10 year anniversary of the $ndx all time high. (March 25,2000 was a saturday) Yet it doesn't appear CNBC is hyping the date like they apparently were doing back on March 10,the 10 year anniversary high of the overall Nasdaq and $rut.
And Dan Zanger re-emerging from relative obscurity to relive his glory days. Heck, I am even feeling euphoric and want to trade biotech stocks Dan Zanger style.
Portfolio managers are now basically all in and invested at levels last seen in 2007.

Mr. Panic

UYM, the Pro Shares Basic Materials ETF didn't break its January high and made a massive daily reversal today.(saw this over at SOH while searching for the Yelnick highlighted post) EEM, the Emerging Markets ETF never exceeded its January highs either.
Investor's Intelligence bull-bear spread widened furthur to important top like levels. 48.% bulls to 20% bears.

DG

You have no more basis to label each of those wavelets with a :3, than you do a :5. The method you have used in gross terms is good, but I tend to believe you are putting those :3's on there well just because you want to, and you want to follow Neely's count, which has an A ? at the last bottom. And since you are a bear your vision is clouding your counting ... you want to 'believe' those are :3's, which then allows you to put a B at the end.

Actually, I have every single basis in the entire Elliott Wave universe to label those as :3s and not :5s. If you don't realize that, your knowledge of Elliott Wave is completely and utterly superficial.

Your lack of knowledge of the rules which distinguish Impulse waves from Corrective waves is something you will either eventually come to recognize or not. Until you do, I can point you to Chapter 5 of "Mastering Elliott Wave" and tell you that without a thorough understanding of the rules of the chapter it is actually YOU who are using subjective methods for identifying Impulse waves, not me. Just because something moves fast and far doesn't make it an Impulse wave. It has to adhere to specific rules. Otherwise, you are just going to have to change it to a :3 later.

I already posted this once:

http://img404.imageshack.us/i/spxweekly4.png/

Compare those waves to any of the Impulse wave representations in Chapter 5 of MEW and tell me that looks like any of them. Or look at the Impulsive Multiwave representations in Chapter 8. None of them look ANYTHING like the rally from the March 2009 lows. There is simply too much overlap after the initial thrusts following the March 2009 and July 2009 lows. I could be a raging bull and I would say the same thing, so don't tell me that the reason I'm labeling them :3s is because I have a bearish view. That's simply psychologizing an analysis based on quantitative and visually-obvious structural factors.

Look, I don't mean to insult you or anything, but if you can't see that those waves are :3, the amount of credibility I give anything you say is :0.

nspolar

Mr. Panic ...

And SMN is in a coil. Dug might be a bit further along. HGD.to about to go up through 200 daily average. That baby has been showing divergence for weeks and weeks.

May be wrong here ....

Oil in the 30's again? Gasoline below 2 bucks again?

We shall see.

Dollar cranking up. Buco bucks been poured in the oil patch the last 5 plus years. Buco bucks. Hydrocarbons coming on line right and left. Big discoveries galore of late. All coincident with a rising dollar and dropping demand.

What comes around in the oil patch goes around. I know, been in for 30 years.

COP may be in some trouble here, being leveraged the way they are. Chavez may be in REAL trouble. If oil drops hard I don't see how that nut can survive.

ns

nspolar

uh the Great DG:

I think it is you that better go back and read carefully what I said, and then go read your Neely Bible.

I never said they were impulse waves now did I?

Not one word about impulse waves in my post.

It is you then who incorrectly seems to assume that any five wave structure as it stands all by its lonesome must be an impulse. You did not get this from Neely. You did not get this from Yelnick. You did not get this from Prechter and Frost. You did not get this from nspolar. You got it by misinterpreting the possibilities of the structure, and interpreting it the way you want it to be.

The question that remains to be answered is the move off the early '09 bottom a "3" as you have it, or a "535" yet to complete. If one goes back to Aug 2001 bottom to the early 2002 top in the SPX, I believe I see a 535 ZigZag that reduces to the :3. And your boy Neely allows for this, and if fact I think he had that wave a 535 for :3 or an abc. The first :5 is not an impulse.

Now will something similar happen here?

I think your reply, which implies no one knows the rules except Neely bear DG just increased the odds that this will in fact happen again. All you bears are gonna get lathered up good here, then get drilled and turned around. And especially the know it all EW or Neowave bears, because by GOD that has to be a :3.

You really showed us all with your knowledge of the rules here DG. Amazing. Utterly amazing.

ns

nspolar

Something else I will offer to the blog.

I have mentioned that fractal like action and 535 Zigzag correction, with respect to that period in latter half of 2001.

Now go back and check your fib retracements of that 535 ZigZag during that period, with respect to the previous wave.

SPX = 61 % exactly.

DOW = 78.6 % exactly.

Then all hell broke loose.

So if we did something similar here, where would we check our fib retracements to?

To the 2008 May top (imo). We're approaching 70 % on the DOW, but it ain't there yet. Same on the SPX. 70 % on the SPX is 1211, on the DOW it is 11207. Turns out these are pretty close to 61 % retracements to the Big Top.

We are oversold. Way oversold. So oversold any hard knock down will turn it right around and set it up for a big rebound. That is the way the TA indicators look to me.

ns

nspolar

"We are oversold. Way oversold. So oversold any hard knock down will turn it right around and set it up for a big rebound."

Excuse me, meant over bot.

Time to get some shut eye.

ns

Greg

Can someone define for my(and his/her) benefit what is "overbought" mean with a logical/heuristic/scientific basis of the definition? Please no rsi over 80% and similar statistical BS. Thanks.

Jack

yes, Carl is on at the moment and for most of the last year. But let's remember something, every dog has their day:
http://carlfutia.blogspot.com/2008/01/gushing-gloom.html

pat s

If you go back and look at futia's calls for a bottom as the market was tanking you would have been wiped out. Carl was calling the bottom for more than six months prior to the low. The bear market sell off was getting worse and worse and carl kept recommending going long. I remember it as if it were yesterday.

CarlFutia

Pat and Jack:

Yes, I missed the great bear market of 2007-09. On the other hand, my E-mini blog trades during 2008 and 2009, posted in real time, gained 86% and 89% in those two years.

So I can be "wrong" and still make a lot of money. How about you?

Carl

DG

The question that remains to be answered is the move off the early '09 bottom a "3" as you have it, or a "535" yet to complete. If one goes back to Aug 2001 bottom to the early 2002 top in the SPX, I believe I see a 535 ZigZag that reduces to the :3. And your boy Neely allows for this, and if fact I think he had that wave a 535 for :3 or an abc. The first :5 is not an impulse.

I don't care what you see, believe you see, think you see, might see, could see, may see or any other variation of the verb "to see". The rally is a bunch of :3s and there are no 5-3-5s nestled in the lower degrees either. A simple look at the Hourly charts would tell you this. After the initial thrust from the March 2009 lows, which, for a few days COULD have been the start of a :5, it became clear to anyone who can follow a set of "almost MECE" rules regarding wave structure that the wave setting up was not an Impulse. The slow and overlapping nature of the rally in early April 2009 verified this.

I think your reply, which implies no one knows the rules except Neely bear DG just increased the odds that this will in fact happen again.

Seriously? So, if I write that the market will go to a bajillion tomorrow, that means it will go to zero? Gee, why didn't I think of that? I'll just write something on a blog and take the opposite side of that trade. I'll be richer than Carlos Slim in no time.

I didn't say no one else knows the rules, I said YOU don't appear to know them.

DG

or who pulls the trigger on a trade once a month.

You don't get prizes for the frequency of your trading, so I'd be interested to know why this is a relevant point?

If someone's throwing down $500K trades once a month and making 4-5% on those trades per month, that's about $20-25K a month in profit or around $250-300K annualized. That puts you in the top 5% or so in pre-tax income in the entire US. All for a dozen trades a year.

Wags

"You don't get prizes for the frequency of your trading, so I'd be interested to know why this is a relevant point?" - DG

Understood.

But please tell me the E-Wave "blogger" who is throwing down $500,000 trades once per month, let alone $100,000 trades once per month?

I bet you'd be hard pressed to name one.

The reason why it's a relevant point is because (in my previous post) I was speaking to the E-Wave "bloggers" who spend the majority of their time trying to interpret Elliott Wave... "fitting" their bias into their analysis and jumping from one alternate count to another, and who have been more often than not, in the "perma-bear" camp over the last 12 months.

Rather than try to be as simplistic as possible and identify and confirm the TREND, the majority of the E-Waver "bloggers" have been trapped in the oh-so-dangerous game of playing "Pick the Top". Meanwhile, they have missed an 80% rally in the NASDAQ and a 75% rally in the S&P.

Carl Futia has been most successful playing the long side of this market and buying the brief "reactions" over the last 6-7 months. This is in contrast to the typical E-Waver "blogger" who spends so much time pouring over chart after chart, count after count, and indicator after indicator for the all elusive P3 . . . and yet never pulls the trigger to trade.

I am a firm believer that the market place is the best teacher. It's one thing to "blog". It's fun. It's safe. There's no capital at risk. Kind of like a hobby. But it's a totally different activity than TRADING.

There is such a huge quantum jump between "blogging" with technical analysis or E-Wave and actually putting such a methodology into an actual tradeable plan, (especially given the increased price volatility)... let alone pulling the trigger, that it's like comparing apples to turnips.

That is why I have a ton of respect for Carl Futia. He puts on a trade and lets the market place tell him whether or not he's right. The fact that he does so on a daily basis, and has done so in a successful manner during the last 6 months when every E-Wave "blogger" had turned mega-bearish is most impressive.

Moreover, given the percentage moves that have been occurring week in, and week out, in several high beta sectors of the equity market, a trader would be hard pressed to not take advantage of those opportunities.

Why would one need to only trade once per month in this market place given the amount of diversification that one can achieve on a much more frequent basis (via sectors) and the 5% moves that are occuring each week?

Let's face it.

Given the liquidity driven market environment that we have been in, there are huge percentage moves that occur every week, with almost limitless arbitrage and pairs-trading opportunities.

To sit on one's "hands" trying to fit an E-Wave count on the VIX is so far from putting together an actionable trading plan that it would be a severe stretch to assume that these types of "bloggers" could even begin to pull the trigger more than once a month.

Interestingly enough, I find that most of these "bloggers" (and their followers) then resort and subscribe to just about every market manipulation and "conspiracy" theory in the book. Rather than let the market tell them whether they are right or wrong, they are overhwlmed by their "perma-bear" bias which leads them even further astray.

For example, over the last month we have seen a major asset-allocation shift out of bonds and into US equities (most likely from the Euros). The equity market behavior here in the US has been quite reflective of this, and even has a fairly strong correlation to overseas market hours. But leave it to the E-Waver "blogger" to come up with every Federal Reserve / Obama / Goldman Sachs / Plunge Protection Team / conspiracy theory known to mankind.

Carl Futia has kept it simple and made money. He has documented his trades and his performance.

The E-Waver "bloggers" have done nothing else but document their inability to make money.

nspolar

Wags, right on and LMAO .... me thinks 'they' got stuck in the overlaps!

What a hoot eh?

ns

DG

Why would one need to only trade once per month in this market place given the amount of diversification that one can achieve on a much more frequent basis (via sectors) and the 5% moves that are occuring each week?

I'm not saying one would need to limit one to a trade a month, but that it's a legitimate strategy.

I don't have any love for the e-wave bloggers you like to deride and I do feel badly for those who've followed them and been truly hurt financially, even beyond the loss of opportunity.

marketman

Good points all the way around Wags!

I also wonder why bloggers like "Daneric" continue to place such a big emphasis on an indicator like the VIX ( even to the point of trying to chart it with an Elliott Wave count ) when it is clear that a lot of players are not making the big bets that they were making a year ago, and many of the options volatility players have folded.

Daneric continues to chart the VIX as if it has a high degree of predictive value, yet he doesn't seem to understand what exactly the VIX is really reflecting at this time.

Roger D.

With complete confusion taking over in EW land,have no fear the market top is next week. This EDT pattern in the valueline 60 minute should complete by the mid next week and fit nicely with another topping tail candle on the weekly chart,there are now 2.

http://content.screencast.com/users/parisgnome/folders/Default/media/1383cfa0-7b44-439f-a5e7-30708b39371d/2010-03-26_1338.png

DG

By the way, CARL FUTIA is the ONLY blogger that I know of out of the one's that Yelnick has mentioned above that actually TRADES for a living, and posts his E-Mini trades on the S&P real-time on his blog.

Incidentally, in some reading I was doing today, I ended up on Carl's blog and checked out his long term track record, going back to when he started posting his trades real-time, which was October 2007. Since then, he's made 527 points, according to his own records here:

http://carlfutia.blogspot.com/2009/03/blog-trading-record.html

Now, first of all, total points is an OK metric, but not perfect, but since Carl does a standard two-contract trade size, it's fine. Over that time, Carl's made 527 ES points. Great. By the way, that includes his performance during the rally from the March 2009 lows, which has, according to some posters here, been the greatest trading performance in the history of mankind or something.

Well, lo and behold, over the same time period Neely's Weekly trades, which are the ones I have been saying are the ones to follow, have made 850 ES points!

Carl's "high-water mark" ES points-wise, was 534, in January 2010. Neely's was 1039 in March 2009.

It's hilarious. You guys praise Carl like he's the Second Coming and rip on Neely like he's a monkey throwing darts at a board, yet, over the long-term Neely's doing about 60% better than Carl, with a high-water mark twice as good as Carl's!!!

Man, I just wish I'd taken 5 minutes to check out Carl's long-term track record before this so I could point this out earlier.

BTW, this is in no way meant as a put-down of Carl. He has his method, he's very net positive over the long-term and he has traded the past year better than Neely.

It's meant as a put-down of the "sockpuppet chorus" that comes here on a daily basis ripping on Neely for not getting the last year right and basically ignoring what I've said all along, which is that one year's returns do not tell the whole story.

As the saying goes, "You can't make this stuff up".

Hilarious.

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