Friday, May 15, 2009

Cosmos Topper


We have been nursing this Weekly chart of the S&P 500 Index since the early March, 2009 major low in the index. As the Elliott Oscillator on the bottom of the chart indicates, the oscillator has finally reached the zero line.

At the same time, the False Bar Stochastic, shown below, has crossed over while in it's overbought area.


Finally, on the chart below, I've attached the Blue Wave Precision CCI to the bottom of the chart. To make a long story short, just look at the position of the CCI indicator now, compared to the last time it was this high and turning down, circa Summer of 2008, the kick off to a 50% drop in the S&P index.


Is the Wave 4 top in?

I don't know. My suspicion is it is going to take one or two more Weekly bars, right up to touching the top channel line, maybe even breaking above it for a day, before Armageddon, Part II is triggered.

At this point in time and space, we are close enough to a Top, the Top, to take seriously all shorter term Sell signals. We don't have to catch top tick, just get ready to jump aboard that southbound train as it is leaving the station.


A




3 comments:

David said...

I was going over some old posts, in Nov 2004 you wrote:

OK, this is how a day-trader prepares for the next day's trading, or at least how this day-trader prepares: We went out for Thai food. Ginger chicken and Thai fried rice. "Why no chart's," you ask? We don't need no stinkin' charts. For twenty years I slaved over charts, night after night, looking at everything from neural nets to oscillators to Elliott Waves and back again. It's like going to Hebrew school as a kid in Detroit. You did it because you were "Jewish." So if you fancy yourself a "Trader," you look at charts at night. If you go to a place like stockcharts.com, you see hundreds of charts analyzed by well-meaning individuals who still believe that there is some predictive power in chart analysis. I did it dutifully for years and years until it occured to me in the depths of the 2000-2002 bear market that all I had been doing right was buying stocks in a bull market, the mother of all bull markets. A rising tide lifts all wannabe traders. It wasn't the charts at all.I've heard of many traders who made huge profits and then lost them. They were confronted with the humbling realization that their success was simply a result of being lucky enough to be in the right sector at the right time, not their trading skills. But the true winners always seem to be able to pick themselves up, learn from the mistakes, and come back even better. Maybe that's part of the journey for all us.

It seems you've modified your stance on the usefulness of charts. Now, 5 years later, do think any differently when you look back on your experiences in the dotcom bear?

As always, enjoy reading your blog.

Allan said...

David,

In the past two years, I've added a trend following model to my arsenal of tools. It identifies tradable trends via chart-based TA. So along with my intraday model, the one that is described in my Profile and is the basis of all my success, I now utilize this trend model as an adjunct to my other technique.

The concept here was born out of necessity, as 2007 was a pivotal year in the markets, skewing the effectiveness of my original model. It's not that trades stopped working, it's that they simply dried up. You will see in my archive of blogs that charts only recently made their appearance here, perhaps the past 18 months. As John Ehlers put's on the cover of his books, "Adapt and Survive."

Anonymous said...

Allan,

Thanks for the charts and commentary. Your analysis is brief and concise. I agree we are close enough to the top that I sold on Friday for some nice gains.

LB