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« Gold is Going Nuts! | Main | Investing in Media, Or How I Learned to Stop Worrying and Love the Internet »

Saturday, March 06, 2010


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Roger D.

And here it is. If we get a turn soon this is why.



"we could be in a continuation of the Hope Rally, one more fling up to 1200"

The Hope Rally will look then like a 5 wave from march 2009. That isn't a hope rally, that is the start of a new bull market.


Globally, it was the warmest winter on record. So, this calls into question most of what you say here.

Roger D.

This the markets way of dealing with excessive bearishness and popped stops. The outcome is still the same,sayonara Bull.




Outstanding post. It is great to read someone that has such a clear view of the back of the room. Kudos.

Did you really mean to say this?

"Without an underlying causation, elliott wave is but a complex pattern recognition system, a modern-day astrology, with no real predictive value."

While I'm no waver, I have assumed that the wave philosophy goes something like, given A, B and C, there is historically a high probability that D is next. From your comment above, I conclude that you are saying no, if you just look at the waves, it is all rear view mirror.

As you know, Prechter has started a multi EWT on what moves markets. Based on his current stance, do you think he has misjudged social mood?



Hoch, the waves may be predictive by themselves but there must be underlying causality, which prechter finds in social mood.

Roger D.

The exhaustion pattern in the Dow.



Thanks Yelnick.

Interestingly, Dent is short term bullish but still expects a bad Summer/Fall.

Here is Bill McLaren's take on the SPX:


Mamma Boom Boom

I am still of the opinion that we are putting in one of the broadest tops, ever. Which, I guess makes sense, since we came off probably the deepest oversold condition, ever.


Hock, on the second part of your question, has Prechter misjudged social mood, I would say no. The Tea Party, the political mood to throw out business-as-usual politicians, the riots in Greece and now Berkeley, etc. show it is getting worse. Where he is off is in not appreciating how the massive monetary stimulus has restarted the bubble. This is a topic for high level post. Just look at gold and oil as wll as other commodities. Implication is a prolonged topping process unlike 1930.

/dd +1 650/530-0413


Chomen, you still buy into the warmist nonsense? Doesn't it cross your mind that the very people caught manipulating the temperature data are the ones saying this was a warm year globally? Why listen to them?

Other than a sea surface el niño effect, satellite data show 2009 as average over the past 30 years.

The chief warmist of the climate cabal, Phil Jones, in an attempt to resurrect his reputation, commented that the data show no warming trend since 1995. He was more worried about challenging a clear decline since 2001 than trying to continue to argue that 2009 was one of the warmest years ever.


"The Tea Party, the political mood to throw out business-as-usual politicians, the riots in Greece and now Berkeley, etc. show it is getting worse"

The best conclusion is: his Socioeconomics theory is even wrong as his capabilities to count waves.


I have to admit i always thought the conservative denial of global warming was ridiculous given that it seemed to require a conspiracy or delusion involving a large number of well regarded climatologists! I guess it turns out the comparison between these "scientists" and our favorite e-wave pundits is spot on. As far as scientific rigor, underlying-causation is interesting, but i would prefer back-tested results. One thing i always have to question when i see people arguing over this or that elliot wave rule is whether they have themselves quantified or actually been presented with any evidence that the rule is worth anything to begin with, or just another pronouncement received from on high.


Can the market really resist the temptation to blow out every last short by taking out 1150? Anyone else excited that it looks like this will be accompanied by the cheapest puts we've seen in 2 years?


Extreme good article yelnick as your posts tends to be, in the top range of EW views

To do any kind of decision, I suppose we could remembering of some legend letters in here which help us to close it for few conclusions also you mentioned between the lines.

1) When you're practicing technical analysis, you have to be totally electic, because there will be a time when the approach you're using doesn't work. If you're not flexible, you'll self-destruct" - Ralph Acampora

2) "Technical analysts also go wrong in making dramatic predictions. The best you can do in the market is to give some very strong tendencies and some direction." - Laszlo Birinyi Jr.

3) "Whenever you think you've got a key to Wall Street, somebody comes along and changes the lock." - Walter Deemer

4) "Technical analysis excels at tops and bottoms. It's excellent at defining turning points...fundamental analysis works best in the middle of an economic cycle or in the middle of a bull market." - Gail Dudack

5) "You have to be comfortable being in the minority. If you're right about the market most of the time, you're going to be in the minority, because the majority is usually wrong." - John Murphy

6) "When you are a member of a group, the natural tendency is to abdicate responsibility. The best analyst is one who abdicates nothing. He blames or credits only himself." - Robert Prechter

Unfortunately I ended up to list those 6 brilliant guys favorite sentense, not five as theory would require, ideally - but pay attention for number 1. It is needed to accept the fact that one theory cannot offer all the time high-pays & high probability trading and investing setups for one key product like SPX futures. Having said that, 99% of all EW chart-artist do one thing only and that is breaking a few key products for waves, all the time - day after day nor matter how complex or how low probability it does have to offer to take it, as trading or investment decision.

Of cource it makes sense since that one product then one day offers with your timeframe very delicious case with high risk-reward ratio to take as trading decision you need to understand fully where that product could be standing meaning several different EW degrees. And of cource if it SP futures or Eurodollar direction is solved for so many other assetts, most often 80% of the other assetts follow it meaning individual stock movement direction is most often solved after SPX, NDQ or Russell2000 direction is solved out.

However, it makes me slightly wonder why peoble do not look more. Firstly, it is not necessary to run all the possible EW scenarios all the time for that one SP. In fact, some of the world best trading setups and softwares (which are mostly not available for public) traders only one pattern or a very few and that concerns also EW patterns. There is individual EW pattern setups which runs with 82% accuraty without any oscillators and when it comes these certain setups it is not anymore one product family alone like SP which offers it, in fact one could need to wait even several months or years before it would offer such a case.

Take a one or just a few best EW patterns from Prechter book, order accurate and precise code for them - then run it over entire market like NYSE database regulary via scanner with timeframes you prefer. It is impossible to handle complete theory all the time, because it is at "alternate" mode most of the time. As mirror image, this complex theory called waves offers in fact most high probability setups when both alternates pinpoint for same direction, but that one you knew allready.

I am just saying, it is not alone SP which moves on there and it is not necessary to get a good call for one product all the time, in fact once a year is enough for one product.

Enjoy your weekend and thanx for your great posts,




6) "When you are a member of a group, the natural tendency is to abdicate responsibility. The best analyst is one who abdicates nothing. He BLAMES or credits only himself." - Robert Prechter

It'is getting time....


spent all weekend analysing the asx 200... have posted charts if anyone is interested :-)


Yelnick, you seem like an intelligent person and a hard worker, too. I really think you should leave this elliott crud alone. It's bs. I suspect that you realize it but won't admit it's bs since you've put so much time and effort into it but be rational. Don't let sunk costs affect future decisions.


sorry cjary,

just because you didn't make money off it, doesn't mean that it don't work :-)


Things that make money are quickly exploited, particularly ideas that require no more than a bit of startup cash and a brokerage account. If you could make pretty reliable money off of a theory it would catch on... and probably undo itself, too.

This is baloney. I have a sort of OCD so I check this site addictively as I do many other websites. I would guess many of you are the same way. I would also guess few of you have much money and that, if you looked at the returns of people who attempt to apply "Elliott" to trading --even intelligent, careful, "prudent" people-- you would find they lose money (because they pay commissions and compete against people with hard insider information) over time.

Some of the most elegant models are useless if just a small assumption they make is wrong. Elliott is just the sort of religion that appeals to a kind of Asberger's stereotypically male absorption with details and complicated procedures. It is useless garbage that will waste your life as it zooms by.

The economy isn't great, but you can find something productive to do and try not to be lured into this junk. Ug.


The EW bears have been used as Soylent Green by the bulls all year..another sharp drop coming at the end of next week..but just another buying chance...fade Precther .....easy money doing that

Hank Wernicki

cjary, females also trade ... << note

( male absorption ? ) sorry , it's the english teacher in me :-)



You make some interesting pschological points, that we need religion and science in our lives. Our investigative nature is balanced by belief in a set of principles or dogmas. In the world are many schools and institutions that vie for our attention. Choices are made according to our own interests or we are coerced into joining by stronger counterparts. Point being, we are all free to choose our own disciplines and do. Even atheists have a belief system. Markets are the best reflection of all of these variables and to study its complexity is to study the science of psychology.

And with that step taken who doesn't want to venture into past, present and future. History repeats and technical analysis is a means to making connections between all points. There is a common belief that markets are manipulated through extraordinary buying and selling. But it is done through psychology and sentiment plays the largest role. Waves are everywhere and real enough to the seer. They are a tell to the underlying forces at work and IMO worthy of study.


Note the third paragraph.

Elliott Hater

My weekend rant:

Nice summary, except yet again you are giving undue importance to STU, Neely and Mr.P (I mean pig head).
My weekend started with burning all Elliott Wave literature I have including books. This counting waves is clearly losers game, I mean changing counts every 10 minutes. IMO, to change wave counts every 10 minutes one must be a true moron. How can anyone make money changing counts all the time.

If I come across a person like Mr.P (I mean a pig head), I will slap on the face for touting some outrageously stupid ideas.

Roger D.

This is the VXX a ETF that mirrors the VIX. I call it the "Bernanke coil".

Now I probably am another poor ignorant EWT SOB, but if you think this chart is bullish,there's some beautiful sand just north of me that I'll sell you for 100K a acre.


Elliot Hater

Good luck with your charts. IMHO, it is pure waste of time.
The Bull train has just left station, you have still sometime to catch it, only if you are willing to dump your EWT baggage and run fast.

DOW is going to new highs and beyond because of massive printing and negative interest rates.
People claiming to be experts and collecting money for publishing junk research can't even figure what drives stocks and speculation - it is cheap money, plenty of it worldwide.


Very good Yelnik as usual. I think the Jan to Feb 2010 decline is wave A of a triangle. We are near the top of wave B. Next week will be C, and ongoing to E with consecutive higher lows. The series could be an ending triangle or a wave 4 of the entire rally.


I don't know to what extent you are kept informed about the Iceland default problem. Basically the Iceland Government are in default to the British and Dutch Governements in the wake of the collapse of the Icesave Bank. The capital sums are small, but there again so is the country and there is a real fear of 'debt enslavery' for the people. The whole situation seems to be one of the people acting against the will of the Government who sponsored the repayment terms. What with Greece and all, is this the thin end of the wedge? I am not defending Prechter's EW counts or timing which have cost me a small fortune over recent months (lol), but I think he may have a point on his thesis about the social implications of deflationary depression.


Greek Crisis - the terrible truth



Does the current rally change your intermediate and long term prospective. It appears the the volume on this rally has significantly declined.

Thanks again for your perspective,


And yet again you fail to quote the person who was smong the first to suggest a huge bear squeeze:


Yelnick, great post there! Let's face it - nobody and nothing in this world can predict the future 100%. Elliott Wave is but a theory - helps to describe and fit collective human emotion into repeating & 'similar' patterns - not exact! If any tool or theory were to be 100% precise, or even 99% - in predicting the future -, there'd be no markets, no trade, no people, no world!

As long as we accept that every tool and theory is imperfect, thus accomodate alternate setups as they emerge, and have the discipline to take advantage of those setups - we've reached the holy grail.

Keep up the good work & here's my thoughts for Monday's trading:


Yelnick - Good stuff as usual.

$RUT (666)- Bumping up against resistance from the DN trendline 7/07 - 9/08 and the 200 weekly moving average (671).

Nasdaq (2326)- Resistance from the DN trendline 3/00 - 10/07 (~ 2350) and the UP trendline 10/90 - 10/02(~ 2400).

Mamma Boom Boom

Goldman Sachs: Bloggers Ruining Our "Business"


Mama Boom Boom,

it is cuz too many look and post like you! Meant as a compliment.


Wave Rust

In a sustained up trend, overbought markets are quickly relieved of the excess by quick down moves. Then the markets resume the up trend. The basics rarely fail.

Blow off up tomorrow morning and reverse down would be normal. Relieve the excess bullishness. Then reverse back up later in the week, like Thursday.

Roger D,
I agree that vix is short term bearish for the indices. Vix just covered a long standing gap at 17.58, so the reaction could be initially dramatic but fizzle out quickly. That would repeat the same pattern since the extreme highs in 2008.

But, imho, the 88% retrace of the 2006 to 2008 high is a loaded gun aimed at the bullish scenario. vix doesn't have to retest the highs now because it will likely base at higher levels, and then later in the year begin a move up followed by the vix bubble spike to maybe 50.

you might add a channel to your chart from the october low and the november high. the bottom may be rounding instead of spiking. just another possible. ;]

maybe i'm just 'talking my intermediate bullish book'. ;]

wave rust


Duncan, when you discuss fundamentals, you're at your best, and it's the reason I read this blog. Without the ew analysis, this blog deserves syndication in any of the leading news sites. But, any techinical analysis is at best a post facto explanation of the results. It's closer to a cult than science. Keep the views on China, employment, money flows, and other important investment themes coming.


The ew analysis is good too, especially from a sentiment perspective.

We can now sense from the 'Weekend Rant' that da bears are totally turned around, hedging their bets now, hopping from one foot to the other, and well questioning their very existence. That is just what we should see at a major top.

I give it about a week max, and we then should see another big blow (down).

I think the last high in both the SPX and the Dow hit major fibs. What fib could that be now?



"Some of the most elegant models are useless if just a small assumption they make is wrong. Elliott is just the sort of religion that appeals to a kind of Asberger's stereotypically male absorption with details and complicated procedures. It is useless garbage that will waste your life as it zooms by."

Gee, don't tell that to our beloved Neely fanboy, DG. He LOVES all of those "sophisticated" and complicated procedures . . . cause it massages his immense EGO and makes him feel SPECIAL!



Does anyone have current employment numbers from Trimtab? The BLS numbers are BS and I will never figure why the market cares about their numbers. Also, does anyone have current insider Buy and Sell numbers? The last 3 or 4 months have shown record sales by the insiders and hardly any buying. I guess the insiders are now the dumb money!!!


have just finished a detailed long and short term analysis for the SPX if anyone is interested.



"Hock, on the second part of your question, has Prechter misjudged social mood, I would say no. The Tea Party, the political mood to throw out business-as-usual politicians, the riots in Greece and now Berkeley, etc. show it is getting worse. Where he is off is in not appreciating how the massive monetary stimulus has restarted the bubble."

Thanks. I'm inclined to agree. The reflation quickly sends a pure price x time waver like Tony C to the bullish side. He is not into social mood or any type of causation as far as I know.

But Prechter and Dent have really bitten off a lot here. If they are wrong for another year (two tops) I don't think they will be taken seriously again in my life time. Both have laid their cards on the table and you can only operate is shuffle mode for so long.
In 2003 Prechter told us that reflation would occur and that it would fail badly. If he is right, we should start to feel massive dislocations this year.



Hock, I agree re Prechter better get this one right. My view is he is off by about a year, meaning the next crisis comes in 2011 not this year. Could be 2000-09 was a flat, and we are in an X wave until the next correction. Implication is we don't go much lower (complex corrections tend to be horizontal).


``we could be in a continuation of the Hope Rally, one more fling up to 1200"

The Hope Rally will look then like a 5 wave from march 2009. That isn't a hope rally, that is the start of a new bull market.``

... or

Primary wave A of cycle wave B off the 03/09 lows. We are in the 5th wave of A wave.

The chart that I find most intriguing is the Nikkei. They topped in 1989, we topped in 2000.

I think they completed their cycle wave A in 2003 as a much more nasty ABC cycle wave than ours. From that point they began cycle wave B.
They completed primary A of cycle B from 2003-2007, had a primary B down in 2008-2009, and are now in primary wave C up of cycle B.

This should retrace the entire fall from the highs of 2007 as an ABC flat.

Then they transition to the dreaded cycle wave C to end the super cycle bear.

Alternatively the super cycle bear ended in Japan.

Either way Japan is a strong buy for the intermediate to longer term.


Chris, thanks for the kind words. My intention is not to add to the fulsome noise, but report on it.


Chuck, I may be proven wrong tomorrow about this, but my current view is that (1) the retracement means this is no wave 2, and something else is going on, but (2) volume says this is not the start of a new bull. My view for 2010 is in my predictions post back in Jan. It includes (a) high for the year in Q1 and (b) we do not break the Mar2009 low this year. The wave pattern is increasing the odds of (b) being right, but decreasing the odds of (a), since we may have more to go in the Hope Rally, and if so it likely lasts another 3 months into May.


Re global warming: discrediting someone's reputation is far easier than having to defend that reputation - given the scope of the allegations it could take a very long time to answer fully the issues raised. And at the end of that process will anyone care - the damage is done and these scientists are now being deflected from their work - what a brilliant outcome if your aim was to derail the process of analysis.

As for global warming being a fiction - cooling is a part of the process and predicted for northern Europe as the themohaline conveyor weakens. The onset of ice sheet collapse in the Antarctic is further threatening the sub-ducted current flows. Should this cycle stop it will cause a ice age in Europe and major climatic shifts pretty much everywhere.

Is this debate moot? No, whether the effect is man made or natural does matter because if it is man made then we bear the responsibility for the consequences of our actions and we therefore morally have the duty to act to prevent these changes for our future generations. If on the other hand its a natural cycle then we can shrug our shoulders and relieve ourselves of the guilt, but more ominously it probably means we have no way of altering its course and therefore we are along for the ride whether we like it or not.

Personally I think its absolutely obvious that we're having an impact but should you have any doubt then the precautionary approach is the safest approach for you and me and our children.

Mamma Boom Boom

nspolar, I didn't exactly follow you on that one, but if you say it's a compliment then I say thank you.

bob m

Hey Mamma B.B,

Nuts STILL off gold - market to follow?

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