"I respect the Wave Principle in THEORY -- but does it have the PRACTICAL rules and guidelines to make it feasible for real-time trading?"
The short answer: Heck Yes!
Sunday, July 18, 2010
How The Wave Principle Can Improve Your Trading: See Charts
One of the most popular questions we field from newcomers to our site is this:
"I respect the Wave Principle in THEORY -- but does it have the PRACTICAL rules and guidelines to make it feasible for real-time trading?"
The short answer: Heck Yes!
http://www.elliottwave.com/freeupdates/archives/2010/07/16/How-The-Wave-Principle-Can-Improve-Your-Trading-See-Charts.aspx
"I respect the Wave Principle in THEORY -- but does it have the PRACTICAL rules and guidelines to make it feasible for real-time trading?"
The short answer: Heck Yes!
Is The US Stock Market Preparing For A Monsoon Drop?
The market continues upward in either a C wave or Wave 2 corrective upside re-tracement if I’m correct. In reviewing the pattern since the April top this year, we have had clear Fibonacci retracement levels of the 13 month rally. These occurred at 1040 and 1011 areas so far, 31% and 38% fibonaci re-tracement levels of the Fibonacci 13 month rally.
Some are saying the market just bottomed at 1011 at the 38% re-tracement area, but the elliott wave patterns that I rely on do not appear to me to be complete. I could still be wrong and we keep on climbing here and I get egg on my face, certainly possible. However, you don’t normally get a straight 8 of 9 days down pattern to 1011 like we just saw and then end a correction there as a C wave in an A B C pattern. C waves are made up of either 3 or 5 waves within, and that was one clear wave down. These happen in fast moving markets and lead to a rare correction pattern called a “running” correction.
In the video below, I educate and illustrate on how these look and apply it to the current state of the Market. I’m looking for the following MAX topping areas for all three indices. Dow 10450, Nasdaq 2295, and SP 500 1104-1115. We are within 1-2 % here of a nice reversal to the downside that can be played via shorting. The ultimate target remains 942 on the SP 500 index, and of course those are the 50% fibonacci downside levels of the 13 month rally, and would fit neatly into the first 180 point SP 500 drop from 1220-1040. This means 1130 is the recent major B wave top, and 180 points from there is about 950 to complete the correction pattern in this bull market.
Please review to get updated. This current rally has hit 1099 on the SP 500, past the 1092 area I saw a gap on, but below the 78% re-tracement area as well, this 7 day rally is getting long in the tooth. Options expiry week makes it even harder, reminds me of my Mid April top call in fact…
http://www.dailymarkets.com/stock/2010/07/15/is-the-us-stock-market-preparing-for-a-monsoon-drop/
Some are saying the market just bottomed at 1011 at the 38% re-tracement area, but the elliott wave patterns that I rely on do not appear to me to be complete. I could still be wrong and we keep on climbing here and I get egg on my face, certainly possible. However, you don’t normally get a straight 8 of 9 days down pattern to 1011 like we just saw and then end a correction there as a C wave in an A B C pattern. C waves are made up of either 3 or 5 waves within, and that was one clear wave down. These happen in fast moving markets and lead to a rare correction pattern called a “running” correction.
In the video below, I educate and illustrate on how these look and apply it to the current state of the Market. I’m looking for the following MAX topping areas for all three indices. Dow 10450, Nasdaq 2295, and SP 500 1104-1115. We are within 1-2 % here of a nice reversal to the downside that can be played via shorting. The ultimate target remains 942 on the SP 500 index, and of course those are the 50% fibonacci downside levels of the 13 month rally, and would fit neatly into the first 180 point SP 500 drop from 1220-1040. This means 1130 is the recent major B wave top, and 180 points from there is about 950 to complete the correction pattern in this bull market.
Please review to get updated. This current rally has hit 1099 on the SP 500, past the 1092 area I saw a gap on, but below the 78% re-tracement area as well, this 7 day rally is getting long in the tooth. Options expiry week makes it even harder, reminds me of my Mid April top call in fact…
http://www.dailymarkets.com/stock/2010/07/15/is-the-us-stock-market-preparing-for-a-monsoon-drop/
The Seven Rules for New Normal Markets
By Shah Gilani
By The push to make trading Wall Street’s biggest money-making business, while narrowing spreads to reduce risk (especially for active professional traders), and simultaneously gaming the inside track by managing and trading against order flow, is the New Reality.
And for retail investors, that’s what creates the “New Normal” - stock market returns that are much lower than the oft-quoted long-term averages of 10% or more. To avoid getting whipsawed in the New Normal markets, investors need to copy the insiders who play the game they created with these seven New Golden Rules of investing:
1. Shorten hold periods for all investments, other than those “held to maturity.”
2. Invest like a trader: Take profits regularly, and cut losses sooner.
3. Don’t be afraid to step in front of standing orders by lowering your offer price a penny, or raising your bid price a penny, to get your orders executed.
4. Trade and invest where you can find the deepest quotes, meaning where volume is more substantial on the bid and offer side of quotes. More is always better. If your brokerage facility doesn’t offer market quotes that are transparent, switch to one that does.
5. Whichever brokerage facility you use, find out what their execution policy is. They must have a “best practices” policy regarding execution. Make sure to get it in writing.
6. Ask what your brokerage’s policy is regarding stop-loss orders. It is critical to know how they will handle the next “flash crash,” when it comes. And believe us … it is coming.
7. Complain about bad executions. It sounds cliché, but the squeaky wheel gets the grease. The pros squawk all the time, and sometimes they get better fills.
http://moneymorning.com/
By The push to make trading Wall Street’s biggest money-making business, while narrowing spreads to reduce risk (especially for active professional traders), and simultaneously gaming the inside track by managing and trading against order flow, is the New Reality.
And for retail investors, that’s what creates the “New Normal” - stock market returns that are much lower than the oft-quoted long-term averages of 10% or more. To avoid getting whipsawed in the New Normal markets, investors need to copy the insiders who play the game they created with these seven New Golden Rules of investing:
1. Shorten hold periods for all investments, other than those “held to maturity.”
2. Invest like a trader: Take profits regularly, and cut losses sooner.
3. Don’t be afraid to step in front of standing orders by lowering your offer price a penny, or raising your bid price a penny, to get your orders executed.
4. Trade and invest where you can find the deepest quotes, meaning where volume is more substantial on the bid and offer side of quotes. More is always better. If your brokerage facility doesn’t offer market quotes that are transparent, switch to one that does.
5. Whichever brokerage facility you use, find out what their execution policy is. They must have a “best practices” policy regarding execution. Make sure to get it in writing.
6. Ask what your brokerage’s policy is regarding stop-loss orders. It is critical to know how they will handle the next “flash crash,” when it comes. And believe us … it is coming.
7. Complain about bad executions. It sounds cliché, but the squeaky wheel gets the grease. The pros squawk all the time, and sometimes they get better fills.
http://moneymorning.com/
Last Stocks Bull Standing 2011
Kress predicts that 2011 will culminate the dominance of the U.S. financial and economic system and begin a depression, the magnitude of which will be matched only by the one of 1930-1933. As such, the time between now and late 2011 will represent perhaps the last opportunity for investors to build (or rebuild) balance sheets and portfolios before the final crashing phase of Kress’s namesake 120-year cycle.
In the latest Special Edition, Kress predicts the coming 120-year cycle bottom could bring with it America’s third “great” depression, a World War III equivalent and a third (social?) revolution. The emphasis is laid on the number three, for as Kress points out, when it comes to the cycles – as well as life in generally – events typically come in threes.
Next in the order of Kress Cycles is the 60-year cycle, which is a constituent of the 120-year cycle. As Kress observes, “It equates to the average duration of the underlying economic super cycle. Since it is variable in duration, it is more appropriately referred to as the K Wave.” He goes on to point out that it comprises the gamut of economic activity from boom to bust as indicated by the stages of credit utilization – re-inflation, inflation, hyper inflation, disinflation, deflation, depression, and then the cycle begins anew. The second 60-year cycle in 1954 began the post-WWII economic expansion, peaking in 1984 and beginning the transition of the United States from a manufacturing to a service based economy. The current 60-year cycle also bottoms in 2014 along with the 120-year cycle.
http://clifdroke.com/books/Stock_Market.html
In the latest Special Edition, Kress predicts the coming 120-year cycle bottom could bring with it America’s third “great” depression, a World War III equivalent and a third (social?) revolution. The emphasis is laid on the number three, for as Kress points out, when it comes to the cycles – as well as life in generally – events typically come in threes.
Next in the order of Kress Cycles is the 60-year cycle, which is a constituent of the 120-year cycle. As Kress observes, “It equates to the average duration of the underlying economic super cycle. Since it is variable in duration, it is more appropriately referred to as the K Wave.” He goes on to point out that it comprises the gamut of economic activity from boom to bust as indicated by the stages of credit utilization – re-inflation, inflation, hyper inflation, disinflation, deflation, depression, and then the cycle begins anew. The second 60-year cycle in 1954 began the post-WWII economic expansion, peaking in 1984 and beginning the transition of the United States from a manufacturing to a service based economy. The current 60-year cycle also bottoms in 2014 along with the 120-year cycle.
http://clifdroke.com/books/Stock_Market.html
Forecasts for the Economy and Financial Markets 2010-2012
One of my first essays with forecasts was in the Spring of 2004. In that piece, I had seven specific forecasts. What were they and how have those forecasts fared? Here they are along with my commentary (keep in mind that they were made March 2004).
1. The Dow will go below 6,000.
As of July 2010, this one was wrong.
2. The dollar will drop at least another 25%.
This one came true by early 2008.
3. Gold will hit $1,000 an ounce.
This also came true in early 2008.
4. Silver will hit $50 an ounce.
I was way off on this one but I will consider this forecast as a “work in progress” since I ultimately expect it to hit (and exceed) $50.
5. The real estate/ mortgage bubble will pop.
This is a “big hit”.The real estate market will not have a healthy recovery for at least a few years.
6. We will have a severe recession.
This is also a hit; the recession that became termed “the Great Recession” actually started in December of 2007 and was not considered technically done until 2009.
7. We will surpass 2 million bankruptcies & foreclosures.
This forecast was also a “hit” as we passed 2 million bankruptcies and foreclosures in 2007.
Of the 7 forecasts, 5 were very accurate, one was very close and one was not. All things considered, not a bad forecasting record. When you add in the public forecasts from my national seminars (such as the sub-prime crisis and the commodities bull market), the accuracy rate is actually much higher.
In 2008, I did another forecast article and provided 6 forecasts; here they are again:
1. You will see an inflationary depression that will be evident by 2010-11.
2. Unemployment in the private sector will soar into double-digits by 2010.
3. State and municipal governments will be federal bailout candidates during 2010-2011.
4. Commodities will start the next leg of their long-term bull market starting in 2009.
5. We will see oil hit $200 as Peak oil becomes obvious to all during 2009-2012.
6. International conflicts over natural resources will hit the headlines during 2009-12.
Here is a partial list of my forecasts (the full list appeared in this month’s Prosperity Alert newsletter):
1. Gold will head to $2,000 and beyond during the next three years
2. Silver will hit $25 during the next 12 months and soar to $100 by 2012
3. Oil will be $100 by 2011 and onward to $200 by 2012-2013.
4. IF THE TAX CUTS EXPIRE…we will have a “greater depression” start by 2011.
5. The Federal deficit will hit $2 TRILLION during 2011-2013.
Paul Mladjenovic, CFP is a financial seminar leader, author of Stock Investing for Dummies and the editor of the Prosperity Alert newsletter. His main website is www.SuperMoneyLinks.com and you can follow Paul at www.twitter.com/PaulMlad.
© 2010 Copyright Paul Mladjenovic - All Rights Reserved Disclaimer.
1. The Dow will go below 6,000.
As of July 2010, this one was wrong.
2. The dollar will drop at least another 25%.
This one came true by early 2008.
3. Gold will hit $1,000 an ounce.
This also came true in early 2008.
4. Silver will hit $50 an ounce.
I was way off on this one but I will consider this forecast as a “work in progress” since I ultimately expect it to hit (and exceed) $50.
5. The real estate/ mortgage bubble will pop.
This is a “big hit”.The real estate market will not have a healthy recovery for at least a few years.
6. We will have a severe recession.
This is also a hit; the recession that became termed “the Great Recession” actually started in December of 2007 and was not considered technically done until 2009.
7. We will surpass 2 million bankruptcies & foreclosures.
This forecast was also a “hit” as we passed 2 million bankruptcies and foreclosures in 2007.
Of the 7 forecasts, 5 were very accurate, one was very close and one was not. All things considered, not a bad forecasting record. When you add in the public forecasts from my national seminars (such as the sub-prime crisis and the commodities bull market), the accuracy rate is actually much higher.
In 2008, I did another forecast article and provided 6 forecasts; here they are again:
1. You will see an inflationary depression that will be evident by 2010-11.
2. Unemployment in the private sector will soar into double-digits by 2010.
3. State and municipal governments will be federal bailout candidates during 2010-2011.
4. Commodities will start the next leg of their long-term bull market starting in 2009.
5. We will see oil hit $200 as Peak oil becomes obvious to all during 2009-2012.
6. International conflicts over natural resources will hit the headlines during 2009-12.
Here is a partial list of my forecasts (the full list appeared in this month’s Prosperity Alert newsletter):
1. Gold will head to $2,000 and beyond during the next three years
2. Silver will hit $25 during the next 12 months and soar to $100 by 2012
3. Oil will be $100 by 2011 and onward to $200 by 2012-2013.
4. IF THE TAX CUTS EXPIRE…we will have a “greater depression” start by 2011.
5. The Federal deficit will hit $2 TRILLION during 2011-2013.
Paul Mladjenovic, CFP is a financial seminar leader, author of Stock Investing for Dummies and the editor of the Prosperity Alert newsletter. His main website is www.SuperMoneyLinks.com and you can follow Paul at www.twitter.com/PaulMlad.
© 2010 Copyright Paul Mladjenovic - All Rights Reserved Disclaimer.
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