Wednesday, February 18, 2009

Trading for Vegans


First out of the gate tonight is a Daily chart of the DJIA. I like this chart because it shows clearly where the market is coming from year-to-date and it incorporates a three-dimensional triangle (well, use your imagination for that third dimension) that has been decisively broken.

The above Daily chart shows that the entire year of 2009 has seen a descent out of a big wave 4 triangle ending the counter-trend rally from last November's lows. Before moving on to our next chart, look at how well the FBS oscillator captured the decline with a Sell signal the first week of January.

Same Daily chart of the DOW, this time with a downward sloping channel superimposed on prices. Again, look at the Daily FBS and see the horizontal black line that is just now appearing on the screen. This is signifying a down-trend in progress.

Talking about trends, below is a 30-minute Blue Wave Trading chart that reveals a beautiful short-term trend that was initiated last Friday in the final 30 minutes of trading:

Since the February 13th Sell signal, the BWT trend has remained steadfastly bearish even in light of the past couple of days of whipsaws and stop-running. None of that fooled the BWT trend, signified by the red 30 minute candlesticks. This is why when you find something that works, you buy it and use it in your trading. Blue Wave is worth the price, but if you tell Randy (BW Developer) that "Allan sent me," maybe he will discount the program. (Sorry, Randy, if you're reading).

So, where are prices going from here?

Below is my Advanced GET chart of the DJIA, scrolled all the way down to where this program is suggesting prices are headed:

Yes, that's somewhere between 4500 and 6400 on the DJIA. How accurate is this program? Very. But it's not perfect, especially when it comes to Fibonacci based projections. Nonetheless, we don't seek perfection in trading, we seek probabilities and every chart above, every technique used on every chart above and every word of this blog is designed to exploit the probable and when all is said and done, these probabilities are screaming, "Down, down, down."



mlomker said...


Futures went sideways *all* day and then in the last few minutes of the day we dropped 10 S&P points...after the cash market was closed, of course.

It's interesting how these games are played. I've missed out on a fair bit of profits this last week, but I *love* learning how to play games.

Tapan said...

Hi Allan,
Thanks for the analysis. What does the ADVANCED GET software say about GOLD or lets say GLD ETF?

Allan said...

Tapan, I guess an update on Gold is due, but there hasn't been anything new to report on, it continues to go up. Look out now for a double top on the weekly chart, from about one year ago, either Gold hits 1000 and tops, or runs through it to 1500. Looks 50-50 to me, software says it's ending 5 waves somewhere in here.

Anonymous said...

I am sorry to bring up politics but I know you were a supporter of Mr. Obama and all his save the day policies. The question I have is where does President Obama and everything that is happening now fit in? Is there anything he can do to be in the same league as President Clinton and the great bull market of the 90s?

Tapan said...

thanks Allan. Where does the software predict wave 5 will end - 1000?
Have you heard of HSdent, he predicts based on Elliot wave that gold might hit 1000 then back to 800 by later part of the year and then to record levels.

Allan said...

Re: Obama I was and am still a strong supporter of him, but he seems to have ceded power to Polaski and Reed. Left to his better instincts, I think he could at least, "do no harm." But, like an unlucky panhandler, he can't get no spare change.

Allan said...

The Red Wings beat the Predators tonight, 6-2 and dominated the game from beginning to end. This all the while two of their top players are out with injuries.
I am going to try and predict the number of goals they will score in their games using the Cycles software from the Foundation. Should be an interesting exercise, as well as quite an edge in Vegas.

Anonymous said...

Yeah, you might as well cheer for the ruin of millions of Americans since you can't cheer your limp manhood. Oh how I hope you and all your whores (I am referring to your followers) enjoy great financial success while all the other aspects of your lives crash and burn. Hooray for the crumbling market. So long as its good for me, who the hell cares how it affect everyone else!

Wayne said...

Hey Allan, the "anonymous jerk" chimes in repeatedly with nothing new to say ... same pedantic rant, won't even argue the points. If there's a way to screen out posts based solely on catch-phrases like "cheer for the ruin", I vote you screen out this noise.

Wayne (Whore of the Markets)

Anonymous said...

That Anonymous guy above ..I think I know who he really is....rhymes with GEORGE W BUSH ,Gary

Allan said...

Wayne: Sure, I can moderate Comments again, which means every Comment has to be approved by me before it appears, thus a delay while I sober up enough to answer, or, I can track down IP addresses and go that route, time consuming and a little too covert for my ethics, so, I'll tolerate as much as possible before resorting to one of those two methods.

mlomker said...

If all we manage today is the weak attempt at the 38.2% retrace then it wouldn't be, uh, very bullish.

Raven said...


Fwiw, I would think just blacklisting the sub-domain of the IP address is a better option (when you are ready for it).

Anonymous said...

I do agree with the sentiment of Marc Faber's article. But there seem to be some things happening that I don't quite understand, or am missing.

Gold is going up. Inflation is down. The DOW is going down. Oil is going down. The dollar is strong against foreign currencies.

Gold has traditionally tracked inflation, as has oil. Therefore, gold is the odd man out here. And in terms of currencies, are the other countries more screwed up and in trouble than we are?

I feel that gold is probably the more realistic indicator here, and that oil must soon follow, and so will inflation. People today simply need a certain amount of oil to function regardless of the economy. Therefore the better bet may not be gold (which I have), but oil (which seems cheap right now).

Words or wisdom or good jokes are appreciated.