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« The Baton is Passed from CleanTech to the Social Mobile Web | Main | Will the Poor Unemployment Report Kill the Santa Rally? »

Thursday, December 02, 2010

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Hockthefarm

Goldman looking for 20 to 25 percent increase in the SPX in 2011:

http://pragcap.com/goldman-top-5-ways-play-2011-bull-market

Let's get Prechter, Neely and Dent's calls for 2011 up against GS and see how it goes.

For the record, Dent missed the Aug/Sept/Oct months of 2010 by 3 converted touchdowns and a field goal. He called for a crash from mid August and couldn't have been more wrong if he made the calls completely in hind sight.

Today he says the markets are on crack. It is going to be an interesting 2011. A lot of garbage is going to get cleared from the road one way or the other. Crack or no crack,for me it will be about the tools used and whether they really can be used to tell shlit from shineola. The "Oh Well" stuff is getting a bit long in the tooth. GS sees gold at 1600 next year. How long has the STU been calling for a top in gold? 2 years? At some point you have to do the accounting.

Hock

Hock

Hock

Whacked

You have a ...but instead of a bout.

Then again we do like imaginative butts to look at downunder!

Account Deleted

ES Before opening bell
http://niftychartsandpatterns.blogspot.com/2010/12/s-500-futures-before-opening-bell.html

Patrick Dugan

How about Silicon Rio in Buenos Aires and Montevideo!

yelnick

whacked, nice catch, thanks!

Edwin

if indeed Gov't would begin some austerity measures,that could instill sufficient confidence to corporate America to start investing in the economy. Sure, 20-25% increase in 2011 is possible.

JT

"Let's get Prechter, Neely and Dent's calls for 2011 up against GS and see how it goes."- Hock

Why bother?

Seriously, Prechter, Neely, Dent, and all of the other wave "artists" in the blogosphere like Binve, Daneric, Kenny, and that other perma-bear David at "Trading to Win (Lose)" have been ripped to shreds.

Carl Futia has nailed this rally.
He was calling for 1200 SPX back in mid-August.

He's been a BULL for quite some time and not wavered from buying the pullbacks. He's been RIGHT and all of those other charlatons have been wrong.

Maybe it has something to do with the FACT that he actually TRADES for a living and has some skin in the game... while all of those "others" have a day job and play with EWave as a hobby.


Idol-Smasher

Here's your hero Carl Futia's track record viewed objectively:

http://www.cxoadvisory.com/individual-gurus/carl-futia/

Seems to me that his performance over the past 18 months is just a perma-bull catching a bull market. What's that saying about confusing brains and a bull market?

Hockthefarm

Idol Smasher:

"What's that saying about confusing brains and a bull market?"

While I hear you, I guess I'd ask you "What has brains got to do with it"?

I'm sure there are countless stories like this but here is one that I know about:

A family relation was a broker in his early 40's when 1990 rolled around. He rode the tech boom and retired at the end of the 90's. He didn't quit the game because he saw the end coming, he quit because he had made so much money. Retired the family in Italy and just enjoys life. He's a good guy, but he would be the first to tell you that he was always a bit slow on the uptake. So I'd be careful linking brains to stock market profits. Look no further than those quant arseholes that put us on the mat. Big, powerful brains was a common feature among them.

If we tack on 25 percent by the end of 2011, my conclusion will not be that Prechter and Dent are stupid (they are clearly bright people), my take away will be more along the lines that the work they do has little relation to the financial markets.

Hock

Account Deleted

S&P 500 Weekend Update
http://niftychartsandpatterns.blogspot.com/2010/12/s-500-analysis-after-closing-bell_04.html

trendlines

H&S in H&S?
Head & Shoulders in Hang Seng & Straits Times Indicies?

Last post on the Hang Seng, called for a rebound towards 21600 based on the suggested parallel channel. That's exactly what transpired, and the index did a quick about turn as of Friday's close. The Straits Times Index is executing a similar pattern, which has potential for a short-term Head & Shoulders top. However, note that the RSIs are still relatively oversold on the daily chart, and right shoulders not fully formed in symmetry. An eventual move below the necklines, if it does happen, will offer targets just under 21000 on the HSI & around 2910 on the STI. A break above the shoulder line will negate this picture.

http://trendlines618.blogspot.com/2010/12/h-in-h.html

trendlines

Vietnam may go Vertical.

The HO chi minh Stock Exchange (HOSE), after its euphoria rally of 2007 towards 1175, gave it all up in the next couple of years. As the world recovered in 2009, the HOSE rallied in Wave A to the 600 level from its low of 250, a 38% retrace. As seen in the chart, a lengthy triangular Wave B consolidation followed, retracing almost 50% of the rise. A medium-term bull market in Wave C might be right ahead, to retest the Wave A highs. Longer-term, the HOSE is in a bear market and is likely to re-test the lows. A sustained break below the lower support line will negate this scenario.

http://trendlines618.blogspot.com/2010/12/vietnam-may-go-vertical.html

trendlines

S&P500: Wave 5 underway

Last post on the SPX called for another wave up to finish this medium-term rally. Wave 4 is most likely complete with last week's sharp rally. We are now at recent highs once again, and can expect some consolidation. A breakout above 1227 will turn it into a support level instead, and offer a near-term target of 1255. Also, lookout for the upper trendline of the wedge. I will be posting the 15-year spx chart at an opportune time in the future.

Sentiment - Reason for Caution longer-term

While the rally and recovery news fills investors with optimism, it may be prudent to take a look at the longer-term picture here. If the 2008-09 decline was impulsive (in 5 waves), - and this is the view of the folks at EWI - we're currently looking at wave C of an A-B-C style rally. This is likely to be followed by another impulsive decline to re-test the lows.

Here's the sentiment picture. Compare it with the highs of 2007, and you will see that we're not far.

http://trendlines618.blogspot.com/2010/12/s-wave-5-underway.html

Idol-Smasher

So I'd be careful linking brains to stock market profits.

I'm actually not. I'm saying that Futia is a perma-bull, so of course he'll do well in a bull market. Not because he's smart, but because he's a bull. I agree with CXO that he's "average", at best, over the long haul.

Carl is world-class if you're comparing him to people like Kenny, but most of us don't care about Kenny, so we don't take him as our benchmark.

Hockthefarm

trendlines:

Interesting chart.

I can tell you of 2 people that have their mouths wide open and their hands in their pockets when they look at the chart below:

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=3&mn=0&dy=0&id=p40956856545

Subscription fees and lost money are not really an issue. It is the mind set and opportunity cost that follows that is the real killer. If the spx is up 25% come January 2012, I'll be reading different materials. Even a fish on land has enough brains to flop. It may not know where it is going but it knows that it can't stay put.

Hock

Hockthefarm

Idol:

Fair enough.

Hock

Hockthefarm

Go Iceland:

GDP and wages vs Ireland:

http://www.financialsense.com/contributors/john-mauldin/texas-ireland-and-ten-little-indians

I think it is high time that it became politically correct to tell people to fuck off. Particularly governments.

If you lent 500 k$ to someone who in turn lent it to a guy to buy a house (that had no real job and couldn't read or write), you should get nothing back.

Hock

yelnick

Hock, this is fascinating. Iceland vs Ireland provides a great case study, a rare event in economics.

It says: we have to eradicate great swathes of debt to grow again.

It happened in 1931-1932 and then the US economy could bottom. All the hoopla over the New Deal misses that the timing was everything - the debt deflation spiral had run its course.

DG

Subscription fees and lost money are not really an issue. It is the mind set and opportunity cost that follows that is the real killer. If the spx is up 25% come January 2012, I'll be reading different materials.

Seems to me that you need to develop your own trading strategy and before January 2012.

Re-read the story of Livermore and Percy Thomas and how listening to Thomas nearly busted Livermore due to a failed cotton trade. Has one of my favorite lines in the book (and one that probably applies to many EWI subscribers), when Livermore says "At the conclusion of that trade, I had fewer hundreds of thousands of dollars than I had millions before it". In other words, he took over a 90% hit.

Anyway, I still think Neely's methods are the best wave methods out there and I only wish he applied them more rigorously. I know there are people who post here who are skeptical of that statement but I don't give a f*ck about their opinions because I've never seen them state one FACT in support of it, while I have almost 5 years of data of actual trades. Even so, this past year I did FAR better than any of these guys trading my own NeoWave-based strategy. What I do now is basically "wave theory without wave counts", based on observations I've made of price behavior and codified into rules which apply across all markets and at all times. I'm pretty sure I've figured out the logic of market fluctuations and it doesn't depend on any mystical Fib mumbo-jumbo, technical indicators, cycle crap or even wave counts. I still do wave counts but no longer have any trepidation about shorting in a bullish wave structure or going long in a bearish one. Why? Because counts are less important than price behavior. Counts are hypothetical, price behavior is real. Sometimes the two match up, sometimes they don't. The market "fluctuates", but does so according to very specific rules. I've searched all over the trading sites online to see if anyone else is doing anything similar and can't find anyone doing anything even remotely the same, which is great because it either means that this is something that only people who don't post online are doing, i.e. something professionals or otherwise successful traders do and keep to themselves, or it means I've got the field to myself and no one else will dilute away the profit potential. I'm only right 61% of the time, but that's more than enough to make as much money as you could ever want, especially since my winners are larger than my losers. While I still struggle with the philosophical question of whether or not I could improve upon that 61%, I'm not sure it matters in any practical sense, so I'm pretty much done with the development of my trading approach.

Point is, you can't wait for someone else to make you wealthy, you have to go out and figure it out for yourself. In retrospect, I'm glad Neely held on to his bearish bias during the rally in 2009 because if he hadn't, I might not have become dissatisfied with his trading methods and wouldn't have developed my own. Using Neely as a base had me on very solid footing, though, and for that I am grateful to him. But, I did my homework, too, by reading "Mastering Elliott Wave" more than a dozen times, to the point where I understood it and could build upon it, just like Neely built upon earlier wave theorists. I wish I'd been able to see the same things I saw in late 2009 in 2006-2007, after the last string of failed Neely short trades against a rally, but, unfortunately, knowledge and insight come on their own timetable.

And, just as a footnote to address your comment about January 2012, my method NEVER makes a prediction about how far the market could go in the direction I'd like to see it go, but it does require that the trade be managed according to very specific rules. The only things I know when I get in a trade are where my stop is and at what price I will first be able to raise it. Everything else in in the hands of the market. If I'm long, I get out as soon as the market shows "weakness" according to my definition of weakness and vice versa if I'm short. That's not to say I don't find the whole process of developing a wave count and figuring out what it implies to be interesting and a good exercise of discipline, but I would never again let a wave count determine my trading on a day-to-day basis. If you develop the right strategy, you'll be in the market for the big moves ("big" being relative to the timeframe you're trading) because your rules will force you to get in, even if you don't want to. If your strategy doesn't force you in before the big moves happen, what f*cking good is it? You'll always end up chasing the market's tail and being "dumb money", going long when the play is short and vice versa.

Anyway, man, don't waste another year reading Prechter. Spend that time reading "Mastering Elliott Wave" instead. It might not be as scintillating as reading about mega-apocalyptic doom and gloom, but it will be much better for your trading results.

Hank Wernicki

Amen !

MT

DG,
HOW MUCH ARE YOU UP SINCE YOU HAVE BEEN USING YOUR NEW METHOD??

Hockthefarm

Y

"All the hoopla over the New Deal misses that the timing was everything - the debt deflation spiral had run its course."

Right on. And when the price mechanism was allowed to function to determine what a unit of labor should cost, guess what....people went back to work because there were jobs at those lower hourly rates.

Hock

Hockthefarm

DG:

I read your message 3 or 4 times. Thanks.

"Seems to me that you need to develop your own trading strategy and before January 2012."

Truth is, I have a job and it is a lot of work. My guess is that I average 50 to 60 hours a week on average. I get paid fairly well and enjoy it. Another 5 years and my pension will be in the 60's with frozen medical dues for the rest of my life. I ain't stopping now.

I have nothing against trading, in fact I think traders are the only ones with a good shot at making money in the next 5 years. That said, I just don't have the time to do it justice. Maybe in my late 50's when I downshift a bit.

I hope your system really works out for you. Sounds to me like you deserve it.

Hock

DG

Hock,

Then develop something on the Weekly timeframe or follow Neely's Weekly trade recommendations, which have quite a nice track record (up 30%+ since August 2006 in a flat market)

There is even a new brokerage called eoption which allows you to link your account to a specific service and trades the services recommendations for you.

DG

MT,

107% annualized. That's just the tip of the iceberg of what can be accomplished, though, because I made mistakes in implementation which decreased returns. Not that I will give myself a pass on those, but it was my first year implementing it, so I made some "rookie mistakes" with it.

Account Deleted

Dow Jones Weekend update
http://niftychartsandpatterns.blogspot.com/2010/12/dow-jones-weekend-update.html

Hockthefarm

DG:

Yes, it is the type of thing I'd like to move toward.

What caught my eye about your brief description of the approach you use is that you seem to look for a high probability set-up based on experience. You make your bet and then switch over to general market indicators and use general market strength / weakness to dictate your next move. Conceptually very simple in the broad sense, which says a lot imo. Second, you are not out flogging a how to book or video. You seem content making money "doing it" rather than by telling people how to do it. That speaks volumes.

In my family, growing up, you did a 5 year plan with annual updates starting when you turned 12. In hindsight, that was the tool my dad used to pass on his life experiences. The tradition has stuck.

By most standards, I think we are fairly well off, certainly cumphy. Our problem is that our financial assets are not growing anywhere close to plan since the downturn.

We probably lost 10% of our net worth when the downturn hit and moved quickly to a trenchback position of low risk. Today, it is like our financial clocks have stopped. Growth comes from savings, not earnings. And our life clocks are busy humming away.

It is not that we will end up fishing for plastic in OPG, but the villa in Italy is starting to fade.

Hock

PL

DG

What instrument do you use to trade? I think I saw reference to the SPY in one of your posts for a long position, but don't really recall.

For a short, do you do puts on the SPY, short the SPY, or buy some other ETF that's the inverse of the SPY?

Thx

DG

PL,

It's all either SPY, calls/puts on SPY or 3X ETFs based on the SPX.

I should start using the ES, though, because some of the entries and exits which have triggered lately are coming outside of normal market hours. I never really used to bother with after-hours sessions too much because they aren't used in NeoWave charting and wave counting, but they can be used with this strategy, if I wanted.

I would hypothesize that the logic would work for any of the markets Neely tracks (Euro, gold, ES or Bonds) because all of them fluctuate according to changes in mass psychology.

DG

Conceptually very simple in the broad sense, which says a lot imo.

It is. Fundamentally, it's akin to the wave theory distinction between Impulse and Corrective waves without all of the additional complexity relating to the multiple structures those waves can take. Really boiling it down to the essentials.

Second, you are not out flogging a how to book or video.

No, I'm not interested in that. I've told the people who had access to my blog about the strategy in some detail when I first developed it, but that's it.

To be honest, I could never sell it for as much as I think it's worth over the long haul, so there's no point in trying. The proof will be in the gains or losses I make in my own account.

DG

Neely's count is coming close to being busted, which will happen above 1240.38, by my estimate. Here is an alternative that makes sense. Target's ~1340. Could the actual count be bearish, even if we go above 1240.38? Yes, but until the market actually shows weakness, why would you force a bearish wave count on to it?

http://yfrog.com/0pspxdailydecember1p

Hockthefarm

I've been hard on Prechter and Dent lately. The attached gives them a lot of credence imo:

http://pragcap.com/is-america-following-the-same-path-as-japan

Why more folks are not walking around in Tee Shirts with a big leathery rat inscribed with Greenspan's face on them is beyond me. What a clueless fuck that guy was.

Hock

JT

"Seems to me that his performance over the past 18 months is just a perma-bull catching a bull market. What's that saying about confusing brains and a bull market?" - Idol Smasher

You have an awful lot to learn about making money in the financial markets...

You sould like one of those guys that creams his pants every single time David Rosenberg sends out his weekly research piece from Gluskin-Sheff. You probably think ( as he mistakenly does ) that there is a high correlation between the Economy and stock prices.

Good Luck with that approach.
:)


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