Thursday, February 19, 2009

Something in the way it works

I keep thinking that this journey we are on is going to turn on us one of these days and prove all the Pollyanna bulls are right, that stocks are cheap, that markets always return to the long term upwards slope of the mean and that there is something just plain un-American about forecasting a continuing bearish trend.

This market tested my faith Thursday morning when it gapped up and put my substantial short position in jeopardy. But I looked at my charts, my indicators, the patterns and wave counts we have been following for the past six months and said to myself, "Buy more puts." Which I did.

As Thursday's trading unfolded, my faith in what I have come to rely on as a pretty damn good set of indicators was rewarded, as it has been so many times in this treacherous market. So my advice to all who wish to have success in trading remains:

FIND SOMETHING THAT WORKS AND USE IT!



Sixty-Minute Elliott Wave Count




Projections for End of Wave 5




Blue Wave Indicators



Cycles




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17 comments:

Anonymous said...

Alan,

Do you ever look at bonds?

It looks like the bond market is moving down in impluse fashion.

What do you think?

Alex

Allan said...

Alex: I'm long TBT with calls, for as long as it keeps running. (TBT= Double beta SHORT US Treasury Bonds).

Mike said...

Nice navigating.

Very glad for you.

Hard work pays.

Thanks for posting,

-Mike

Anonymous said...

The bond market is the major issue here. The US gov't is holding up the stock market, but if rates start to rise because of the attack on the currency by Uncle Sam, we'll see the lower downside targets.

Looking at my charts, I still have a target in the 6800 to 7187 range. The slowing momentum indicates to me primary 5 should end somewhere down there.

Alex

David said...

Allan: What is your opinion of moving averages as trading tools? I notice you never seem to use any in your charts or analysis.

Allan said...

David,

I lean toward predictive tools, which excludes moving averages.

Anonymous said...

Allan, If you had to choose,for an amateur trader, which would you recommend advanced get or blue wave trader? Thanks for your reply. Thanks for sharing your expertise!
ATL Doug

mlomker said...

"Target in the 6800 to 7187 range. The slowing momentum indicates to me primary 5"

That would be a reasonable target for wave 3 of (5) but that isn't the end of the downside. I'm thinking the "big" Fib at 602 on the S&P is where it'll actually end.

Prechter calls this Intermediate (5) and the whole move Primary (1).

Anonymous said...

Hooray!!!! Bring on the DOW 6500!! I want it to happen now! BLACK HOLE MONDAY!! DOW DOWN 1000 POINTS in one day! That would be freeging awesome.

Allan said...

Doug: Blue Wave is more intuitive and can be mastered in a few days; Advanced GET is more subjective, would be useful immediately, but would take months to fully integrate into your trading. So if you can only buy one at the onset, I'd go with Blue Wave and then use your profits to go with GET later.

Anonymous said...

Anonymous jerk above still confuses predicting a decline with wishing for a decline. Yeah buddy, that's what we want - our children to come of age in a once proud economy now brought to it's knees.
You're a putz and if you can't figure out what Allan and people who read his blog are about, you should go elsewhere. Its not like you will change anyone's mind here, and its clear that reading Allan only upsets you. Do yourself and us a favor and go somewhere else. Or, you could do yourself a favor and partially (possibly completely)reverse the decline in your portfolio by buying NNVC.
Adam

Anonymous said...

THE DOW DECLINE TO THE 6000-6500 IS INEVITABLE SO I AM JUMPING ON YOUR BANDWAGON AND PULLING FOR IT SOONER THAN LATER.

Anonymous said...

Mike,

Primary 1 of the Grand Super Cycle, I guess.

We are in 3 of intermedidate (5). The (5) = (1) target is 6558.

How is everyone gettting a target lower than that? What are your EWT measurements?

I got out of my 401K at 13,400, and I'm going to be looking to back in again in my target zone of 6800 to 7187.

Heck, talk me out of it if you have some good EWT projections.

Alex

David said...

Here is my EW count on the S&P. I'm a rookie so this could be way off so be forewarned. :)

http://i44.tinypic.com/2epul2e.jpg

If we're going to talk about it in terms of Dow points then wave 1 of 5 went from 9100 to 7900, a 1200 pt decline. Wave 3 should be at least as long as Wave 1 (preferably longer, right?) and since it started at 8300 then at a minimum it should take us to 7100, and we haven't even got to fractal 5 that will complete the pattern. So I think the 6800-7100 range might be the target for fractal 3, with fractal 5 taking us lower.

A more bearish scenario would be that the whole decline from Dow 8300 (S&P 870) is fractal 1 and we haven't even got to fractal 3 yet.

Anyway, that's my take. Feel free to tell me if you think I'm wrong.

David said...

OK, I don't know if I was entirely clear with what I said above.

I meant 7100-6800 seems a good target for 3 of 3 of (5). We still have 5 of 3 of (5) which will take us deeper into the 6000's. So I'm thinking 3 of (5) could end in the 6000-6500 range. And we still haven't got to 5 of (5).

To recap Wave 5 action so far, here are the start and end points of the fractals of this Wave 5:
1 of 5: Dow 9300-7900, S&P 945-805.
2 of 5: Dow 7900-8300, S&P 805-875.
3 of 5: Dow 8300-??, S&P 875-??

it's possible 3 of 3 of (5) ended Friday and we'll now have 4 of 3 of (5) rally before 5 of 3 of (5) plunges down to complete 3 of (5).

Does this make sense?

Anonymous said...

David, it sure does...as clear as the Blue Sky!!!

Anonymous said...

David, good analysis. I think that makes a lot of sense, looking at the hourly chart.

I tend to put more weight on the charts that are longer term. E.g., I put more weight on the weekly than what the daily is saying, and I put more weight on the daily than the hourly.

I'm looking at the daily chart to get my intermediate 5 = 1 target of 6588. Due to other methods, I have targets in the 6800 to 7187 area.

Does any one have EWT targets using the daily chart?

Alex