Saturday, January 16, 2010

Navigating what lies ahead

As you should know by now, on the first day of the new year I started a private email list by subscription only in which I am publishing the status of my Trend Following Trading Models.  The most important take away for my subscribers will be to handsomely (yes, that is a current photo of me to the right) profit from identifiable trends  by monitoring and following the S&P 500 and other tradable stocks and ETF's. 

Earlier I posted some postulations from Robert Prechter and Elliott Wave International relating to imminent changes in all markets taking place right now.  They are pounding the table much the same they were in the fall of 2007.

How would my SPX Trend Model have done back then?  Lets take a look:


SPX Weekly

The above chart is a graphical view of how my SPX Weekly Model handled market timing since the fall of 2007.  I've omitted the SPX prices and the level in which the Model will next go SHORT, in fairness to my subscribers. After all, that is what they are paying for.

In the table below, I've described the returns available from following the Weekly Model in terms of the unleveraged cash SPX index.





There are but four trades in a little over two years and an average gain per year of over 50%.  That's from what Prechter is describing as just Wave 1 Down and Wave 2 Up.  He is suggesting that there will be three more waves in the years ahead and that the next one, Wave 3 Down, will be unlike anything we have experienced in our lifetimes.  The entire sequence of five major waves, or trends, are great fodder for a Trend Following Trading Model like this one, as shown by the numbers in the table for just the first 2 of the 5 total waves.

If Prechter is right, this Model will catch it all.  If instead the market continues higher, well, the Model is already Long.  Trend following doesn't buy into Elliott Waves (directly) or any other form market analysis.  It takes its cues from one source only, underlying price action. 

Whatever lies ahead, I will be using my Models to navigate through it.  There is opportunity in crisis, just as there is in nirvana.  My Models are designed to cover whatever is coming, whichever direction and however dire, or calm, those financial winds blow.

Find something that works.

Then trade it.

A

22 comments:

Anonymous said...

Hi Allan,
I'm a subscriber to EWT and to your service. What do you think of Prechter's thoughts regarding financial instruments? He has said to be careful trading because things may get so bad that the counter party may not be able to pay you. Will you be taking any precautions at some point? Also, what do you think of his stance on cash (taking out bank balances and holding greenbacks)? It's difficult to believe that things could get so bad!
Thanks,
S

Anonymous said...

THIS AIN'T LIVIN'

That Sprott article below gives me the creeps. This smart Canadian is no slouch in the market strategist dept. His track record speaks for itself.

With your guidance, I'm sure subscribers will profit.

However, since we all live in this fish bowl together, it won't be fun times ahead if he's correct.

Lucky

Allan said...

Re: financial collapse

What S is referring to is a possible closure of financial institutions, with your "money" locked in them. Or, maybe just the confiscation of your IRA's and 401 K's by the government.

By the time things get that bad, we probably will have other more pressing things and needs to be worried about.

A

Anonymous said...

* ILLATIVE-SENSE *

The Illative sense is for Newman, the intellectual counterpart of Aristotle's Phroenesis (practical knowledge), is the faculty of the human mind that closes the logic-gap in concrete situations and thus allowing for assent. [e.g., ". . . should I go short?" yes/no]

Logic/formal inference utilizes dependable processes that lead to a certain and firm conclusion in the fields in which it is applied. However, Newman maintained that in concrete life [e.g., market trading] formal incontrovertible proof in favor of a decision is not possible—the best one can achieve is converging probabilities in favor of a conclusion.

For Newman it is impossible to attain the concrete existential equivalent of logical certainty. [e.g., technical analysis only goes so far]

Thus, to close that gap between converging probabilities and full assent, we need the aid of the Illative Sense in order to attain certitude in specific situations.

(cf. An Essay in Aid of a Grammar of Assent, Cardinal John Henry Newman, 1801-1890)


To Be Or Not To Be - conscience doth make cowards of us all

Anonymous said...

ponzi scheme

hmmmmmmmm.......ponzi scheme

really need to buy some gold

would they really confiscate our IRA's ?
which of course means they would then crack down against protests with marshal law and fema camps,gulags,and blackwater .

is our government planning to be that evil?
do they have to be that evil?
Cant they just be really corrupt ,and let us keep what we have saved?

Imagine Amerika.
creeping fascism.
creeping a bit at a time.
friendly fascism(gore vidal)
youre either with us or with the enemy.
all i want to do is buy a good stock
and make a little nest egg.
why cant i do that?
what kind of country are you re-creating?
what is your objective?
why do you want a one world government?
a one world economy.
a one world currency.
a one world power structure.
total control.
control over what?
There must be something i dont know about.
is a comet going to strike the earth?
another great flood?
am i better off not knowing?

how can i help?
what is your goal?
can i still play golf?
will the fees go up?

is life going to get better?
or worse
should i just sit in my sofa chair and watch reality t.v.?
like the other 95% do.
can i plant my own garden?
will i have to pay a tax on my vegetables?
can i drive down the road after 8 pm without a permit?
are the fema camps furnished?
is the food ok?
will i want to live
after the great flood?
cant we all just get along?

whats so bad about peace love and understanding

where is the dawning of the age of Aquarius?

is This it ??!

can I have a puppy?
can I read my favorite books?
will there still be baseball?

will i want to live?

why do I feel more sad than happy
why do i feel a little afraid?
do you want me to be afraid of you?
arent we
the same?
lets go golfing.
have some of my tomatoes.
let me help you change your tire.
let me live without fear
that you will hurt me.
please dont take away my house. please dont take away my IRA.
I need it to survive.
wont you allow me to survive?

wont you allow me to survive.

Anonymous said...

Hi Allan,
Hope you'll remember to provide the strategies to trade your hourly, daily and weekly signals this week! :)

Your strategy to use your trend system to provide the trigger with EW providing the background implication of each move is excellent.

I had a tough time, like many, following just the EW analysis. Pretcher issued an emergency update back then in August and I think it got many into serious trouble!!

Best Regards,
LD

Anonymous said...

yup, if Pretcher is thick-skin enough, it's a no-brainer he'll be RIGHT one day. The trick he use is to get his staff to commit to the count and when he is eventually right, he "come out" and take all the credit.

That's how he becomes famous and still is. He has no problem getting strong following. There's always someone around to fill up those who have left. All he need to do is to go on the Tele and declares that he has nailed the TOP again :).

To be famous and to have a big following, you need just 2 thing: be SHAMELESS and HIRED lots of SCAPEGOATS!! :)

Trade carefully. Follow Tony from Elloit Wave Lives ON. He does a more consistent count than "GURU" shameless Pretcher and it's FREE!! :)

Allan said...

I'm not going to get into a debate about Prechter. He went short in the fall of 2007 and covered his short in late February, 2009 for 800 S&P points. He then correctly expected a Wave 2 rally, but did not go long for it. Yes, he started going short this time a little early as the market went, what, 6% higher still. Now he's back to 200% short and pounding the table. Which one of us has done a better job of forecasting these past two years?

When I was an attorney in Atlanta, I had visited his offices in Gainesville, had friends working for Prechter and visited his offices. I even met him, talked with him about markets and trading. He is a brilliant guy and has a contagious passion for his work, for trading, for financial markets and analysis. Remind you of anyone else? (------>).

A lot of you are students of all of the above, Prechter is a colleague, whether you agree with his analysis or not. He's one of us gang, chill out and learn what you can from him, his record is a whole lot better then most think and most importantly, what can he do for us now? We will know soon enough.

A

StanTrenton said...

Allan,
Will you please post any comments you have on what I'm saying here?
Here's what I'm going to do:
1) Ignore all predictions.
2) Wait for the breakout signal.
3) Whatever time-frame I'm using, I'll wait for the end of that to place my trade, i.e., if I'm trading the Daily, I'll wait until the close to open my position. Next day, if it reverses and closes back thru the breakout line again, I'll simply reverse along with it. Otherwise, I'll just check it each day at the close for any new signal.
4) When the breakout occurs, I'll go in with 100% of the funds I've allocated for that trade.
5) I realize there's no way to eliminate all risk. I'll just accept the pain of holding thru drawdowns in accordance with the system signals.
6) I'll always remember to keep it simple. I want to get rich, not smart.
Stan

Allan said...

Stan,

I'm working on a subscriber letter right now and with your permission, I'd like to include your trading plan as a perfect example of how to effectively use the trading models.

Does that answer your question?

A

StanTrenton said...

Thanks Allan, Yes, please use it. In fact, I am flattered that you would choose to use my comment.
Stan

Mike said...

Stan's the Man

-Mike
http://www.youtube.com/watch?v=u9-v-49qBMM

Anonymous said...

the only news besides Haiti:

Former Barack Obama supporter, Jim Cramer (CNBC) says:

"Brown win in Mass. election on Tuesday would cause huge stock rally"

1. uh, if Brown is to bring more fiscal conservatism, then the stimuli driven SMkt should plunge on his election.

2. anyone who was dumb enough to vote for a fleabag Marxist like Obama has no business running a TV show on capital investing.


Lisa Ono - Salade de Fruits

T said...

Nice job,Stan....

I gotta write all that down

Mike said...

>I gotta write all that down

"let it be written..let it be done"

-Mike
http://www.youtube.com/watch?v=jz7IjXu0DfQ

Anonymous said...

Hi Allan

I trade index CFD's. Therefore I wanted to know if you will be providing SPX triggers for your subscribers??

Anonymous said...

.
a CNN story includes this ominous quote: "I find this astonishing these doctors left," he said. "People are scared of the poor."

1. we should all watch Haiti developments because the Federal Reserve has made Haitians of all Americans--only it is just not yet apparent. America is the most indebted nation on the planet.

also, the quote can be read in two other ways:

2. Obamacare will destroy American healthcare; so this scene (above) is prognostic of American future.

3. surely bankers will come to fear the people they have impoverished in America thru the use of OTC-derivatives and the Fed printing press, etc.

be-aware and trade accordingly

Anonymous said...

I'm not following the Haiti tragedy too much. except a detail the mainstream media is 'leaving out' that most of the doctors in Haiti on the scene way before anyone else are Cuban MD's . wouldnt want any good publicity for Cuba now, would they.

Anonymous said...

The China/Africa connection – a major opportunity

China + Africa vs. Prechterianism?

Not so fast. With an African extension, China is not in a bubble. . . . Prechter may be correct about US market (which is Japan-1990s deja' vu), and this China trend be also correct (diverge) just like how US stocks vs Japan stocks in 1990s.

Ubreako said...

What is your view on holding psysical bullion during the wave 3 ? will gold be smashed up so badly that its best to just stay in dollars and wait to load up gold when the weak players have liquidated to cover margin calls ??

Important question, i guess to ask.

Anonymous said...

YOMAMA TO DELIVER STATE OF THE UNION ON JANUARY 27...

the PTB will be working overtime to prop the SMkt into this gala event


ps. why is it that all the 'word verification' words to here post are same as the ladies' names of Sheri's Ranch, Nevada?

Mike said...

>the PTB will be working overtime to prop the SMkt into this gala event

nothin wrong with that....

parabolic has gotta pivot at some point.

-Mike