Message from Allan

Actually, all these blogs are messages from me, so what's so special about this one?

I've been receiving a lot of questions these past few days about what to do and specifically, has some sort of low been set and is a new bull market in the making. Feedback has also made the point that these charts, Blue Wave and Elliott are nice to look at but they don't know what it all means, i.e. is the market going up or down?

Maybe this will help explain what I am trying to do here. First, the Elliott Wave charts are pattern recognition puzzles, where by labeling the past I am trying to forecast the future. This is possible because the Elliott Wave Principle is a set of rules and guidelines. By plugging in the patterns of the immediate past and then applying those rules and guidelines, we can sometimes make high probability forecasts for the immediate future.

Not every high probability forecast pans out, but enough of them do to make the exercise very much worthwhile, especially when the forecast can be confirmed with other, independent technical analysis techniques.

The Blue Wave charts are one of those other technical analysis techniques. Unlike Elliott Wave, Blue Wave's forte is identifying tradable trends early enough to ride the trend to a profitable resolution. The time frames, Weekly, Daily, 120 minute, 60 minute and so on are all independent systems that allow the user to trade as often or as infrequently as is comfortable. The incredible overriding characteristic of each and every trend, long or short, is that they all work. I try to show different time lengths in my blogs on Blue Wave as a way of illustrating how well the basic underlying algorithm works.

As with Blue Wave, the Trade Triangles are also a rule based trend following system, simply trading in the direction of a, "three period high or low." Yes, you can simulate this without joining Market Club, but my suggestion is that by paying for it you will be more likely to use it. There is nothing like an up or down arrow (or triangle in this case) to motivate a trader.

Each one of these trading systems has costs associated with using them, both in time and in money. My time is worth a lot to me, so I don't mind spending money to help me trade without working 18 hours a day figuring all this stuff out. As an example, being short earlier this week paid for Blue Wave, as did being long today. Same with Triangles and Elliott, if they generate profitable trading, what difference does it make how much it costs?

Finally, a word about what's coming next. Both EW and Weekly Blue Wave are steadfast that much lower prices are coming. As I said recently, the market has up to about a 100 point rally in it before those forecasts may be threatened. My own opinion is that the rally is more then half over, maybe a lot more then half over. When the longer term BW bars (120 minutes are higher) flip back to red-Sells, I suspect a decline to new lows will be at hand. If I am right, then the profits that can be made from that decline will drarf any gains being missed by not being long during this rally.

I hope this adds some perspective on what I have been posting recently. The links and advertisements for Market Club (Trade Triangles), Blue Wave Trading and Elliott Wave International are for your convenience, if any of you want to give these products a spin. If you have the time, you could possibly figure much of this out by devising your own rule based trading system without buying any of these systems or services. But will you? To each his or her own, but rest assured, these services wouldn't be on my blog if they didn't work.

As for the rest of 2009, the best is yet to come.

A