Clown's 2007 outlook is work in progress

The Dutch Clown

Established member
592 11
In this thread it is welcomed to participate in discussions on different techniques based on bidirectional communication. Just dropping a question and pushing for an answer will not receive a response. If you put some effort in defining and putting together different arguments we are in for constructive discussions. If done so you will find a discussion partner in Clown on subjects like Technical Analysis both old and new school both ordinary and advanced. To start-up constructive discussions I have put together some thoughts from different angles.

One issue I would like to put up for simple Y\N discussion and that’s the used language. Requested by one or two native English traders I changed from Dutch into English but I have noticed that the response here is of primarily Dutch origin. So I am wondering if we perhaps should change to Dutch and continue in Dutch.

For quite some time now the AEX is moving trending up and if we look at the long term Cycle Analysis perspective this uptrend will continue. This of cause does not mean that a correction is out of order or even something like the four year’s cycle drop. In fact if you look at the DJIA you will find that the average 4 year’s cycle drop since 1897 is about 31% and for the time indication you will have to use the AEX bottom as reference which is in line with the 56 years cycle. Some of the market watchers want to believe that the 4 years cycle drop has already happened so do your own statistics and conclude that the supposed 4 years cycle drop in that assumption is a) way of the average 4 years cycle drop and b) even less than the smallest drop in the last 100 years of 4 years cycle history. So I only conclude that it’s a possibility rather that a fact. Even Gann did something like Cycle Analysis although I have not yet found the conclusive answers to what and how Gann did perform his Cycle Analysis. The mother of this type of analysis is the historical data chart of the DJIA which has it’s first data entry January 1897. (attachment 1) If we follow his findings – or I should say my present understanding - I end up with two different angles so if I project that we need to take in account a serious correction due in 2007 and the 2007 chart to work with looks something like attachment 2. This 2007 projection is not a Holy Grail but more something like a worksheet that needs continues work in progress specifically on the turning points and the high and low values. The very same warning you find attached to each financial product is applicable, past performance is no guarantee for future performance.

From an Elliott Wave angle we still favor – meaning that this scenario has the best overall score when reference to Mr Elliott his findings - the five wave scenario starting at 217,80 with the fifth wave up from 409,56. So this angle is allowing some additional upwards potential in both price and time. Let’s forget the challenges of this preferred scenario for now (it has been discussed in some other threads) and just focus on the direction of the highest wave label which is up. It has already been said here that the preferred Elliott scenario frequently is not the one that you will be ending up with so you will have to take alternatives into account. Or cross the results with other techniques like trend potential and put the 217-500 performance in that perspective. If we combine this with the KVKD system we find that a wave three might still be active and the picture might be different in the near future nothing to worry about right now. And this last scenario fits the extended Long Term outlook from the Cycle Analysis.

The Astro Financial Analysis still did not deliver what I would like it to contribute. It is one thing to be able to check the self-imposed Guru’s by analyzing the facts or even translate from Dow to AEX and find out that until now what I have seen are the leftovers from a Bull. The outlook of our Blond Dutch former AAB Vamp who merely translates a US view changes too often and damages the Astro Financial Analysis, I just can’t believe that it’s true that there are people paying for this service. I consider that the destructive route whereas I would like to walk the constructive route in order to use it positively. Once again I find myself walking alone on the road and this one is extremely labor intensive so I do not seem to be making any progress at all. The present direction is the crossing of Cycle and Astro Analysis because it seems to me Gann is pointing in that direction.

Last year I have developed the KVKD system which is based on basically a combination of Gann, Elliott and traditional Technical Analysis and it provides Trending Area’s including the Trend Potential. The KVKD system therefore effectively qualifies the trend and indicates potential trend reversal area’s in time and price. These potential trend reversal area’s qualify for improvement. What I am looking for is additional functionality that isolates the potential trend turning points, limits the number of them and qualifies their relevance including the level of the turn. In my humble opinion the crossing of Cycle and Astro Analysis should do the trick but the how exactly is still bothering me. So once again I find myself writing code and facing the inevitable challenges I said to myself I do not want to face anymore. Honestly I have to admit that I have learned a lot about Gann in my last programming tour so it was worth while doing any hard coding bit and I am learning again.

If we look at the wave count starting at 409,56 the best scoring scenario is one that has an impulsive wave on 498,45 and a second wave at 470,54 which implies we now have wave three up. Here we need some of the other techniques where a Negative Reversal is found in the EOD chart and the signal is still valid even Negative Divergence has been added to the picture. So unless the Negative Reversal Signal is being taken out we seriously will have to be taken in account that the second wave has not been completed yet. To complete the picture it has to be mentioned that a complex pattern does not imply that the target should take out the 470,54 it’s a possibility not necessarily. And to wrap things up the Positive Reversal signal is still alive and kicking keeping the 512 spirit amongst the GJN flock that blindly throws itself into long positions.

Every once in a while I find myself struggling with an overload of information generated by the many techniques I use. Even straight forward ones like Negative and Positive Reversal Signals seem to fall in that category, there are simply too many signals, of course providing one is able to find the signals. This has become my call to change the use of the used technique by integrating a validation and qualification process. Wondering why this Range Rule works in situation a) but does not work in situation b) assuming that I am able to identify a) and b) anyway.

As opposed to some limited views I do prefer to anticipate on movements and turns in direction simply because it provides me the up most ideal trading signals according to Rule number 1 out of Clown’s Trading Almanac. It has to be said that the facts will have to rule and not the wishes, hopes and expectations in order do perform the trades to win. It’s just the difference between the Analyst who gets paid to just analyze and the Trader who makes his money trading the markets. The entry point of a trade is the most important since if calculated correctly provides the Trade to Win each and every time.

Think about it and remember to Trade to Win.

Disclaimer:
This contribution is for educational purposes only.

Attachments:

1. The DJIA historical data file.
2. The 2007 projected work chart version December 2006.
 

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gogo27

Junior member
37 0
Clown's view...

Nice writing, although I suspect you are struggling between 2 views... To make things short, we have Clown as an analyser and we have Clown as a trader !
The analyser wants to know where the market is going too, a trader takes a position and makes money. This attitude requires different techniques...Elliott is not Gann ! Different techniques of course because of different views ! The analyst vs. the trader .
Therefore I'm sometime confused and surprised how you combine the 2 ! Let's take an example to state my point of view:
1. As an analyst in Elliott , I can affirm that we are in short momentum till 445 (underside of actual uptrend channel)
2. As a trader I see a short till 491 (MA daily 20 were I expect a bounce )...move up till 498 (MA 5 )

And there we differ so much as an analyst and a trader... because we know it goes down but we don't know how...So we try to develop techniques as Gann ... We are all in a quest of trading signals and we are not investors... Unfortunately I did not found the good mix ... How to trade with tools used by analysts? What is a good mix?...An answer to this problem should resume the discussion on this thread!

Let's hope we can all together find a solution : the 'trader's mix' ...

Regards

Gogo

P.S. 1.A good example of the problem is GJN columns... an excellent tool for the swing trader, but absolutely bad for day-trading... most of time... :cheesy:

2. I really like this Icon...

3. het 'ijsberen' ...dat was toch goed gevonden, hé... de polen die smelten...beren gevoel...etc...waf...waf...

UPDATE 08 jan

Today trade consist of the use of the MA technique.

Short when aex broke the MA 5 (498) , close on AEX reaching 491 ...
Now we are expecting a bounce to the new MA (5) around 296... (eod)
The trend is down. i'll not go for a long position ...

(I made my next city trip ... )

Plus: works on markets in movement
Neg: you never take it all , margin is small
 
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Pacito

Active member
186 2
A nice piece of work clown. I'm going to study every part of it. Be sure that I will put in some work. See if we can work out a working system. About the language: I prefer english, just because I think it will keep out the nasty postings we suffer at IEX. Attached a chart that I made just to see if it comes anywhere near reality this year.
Pacito

PS In your DOW chart, the possibility exists that the red roman figures are wrong. Maybe the period from 65 to 75 can be seen as a IV. Its not that clear in the chart you use because its not linear. That means V is over and we are in an ABC. In fact that doesn't change the coming direction we are heading for.
 

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yubaba

Newbie
4 0
I will follow this tread again with much attention. It seems quit difficult to me, but at the end of 2007 I hope, i"ll understand more of the methods of Gann and Elliot. thanks

yubaba

:eek:
 

Pacito

Active member
186 2
First part: cycle analysis
Kondratieff tops: 1814-1864-1920(1929)-1970(1965)-2020
bottoms 1790-1840-1940-2000-2060
This term is too long and therefore not suitable
Benner-Fibonacci: tops 1983-1991-2000-2010
deep bottoms: 1987-2003-2021
dips between: 1957-1975-1995-2011
The dip of 2011 is situated after the top of 2010 so we are after the deep bottom of 2003 in a bull market. There's no garantee that there will be no dips in between.
Bottoms cq dips in the AEX: okt97-sept98-sept00-march01-sept01-sept02-march03-sept03-aug04-apr05-okt05-may06-nov06. This is almost every half year. The next dip would be at it lowest point in may07. The second next sept-okt07. Before 2000 in a bull market the dips were about a year apart, so I reckon that the sept-okt dip has a bigger probability than the dip in may07. These data are fully consistent with Gann in time and price.
Tops are a different story.. In my last posting there was an attachment with tops that were about 206 days apart. The last top of november should predict a new one starting june. .
Conclusion: according to my cycle analysis a dip in may, a top in june and a dip in sept-okt.
 

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Pacito

Active member
186 2
As far as the Elliot wave is concerned. There is a possiblity that wave 5 still in charge. On the other hand wave 5 could have ended in november and we are in an ABC. A already set, B probably, and now C.
There's still the possibility of an extended wave 3, and we just might see a turn into 4. That's not my favorite scenario, but it's a possibility. Seeing the form of wave to compared to what I think is wave 4 fits perfectly in the description of waves 2 and 4 in an uptrend. So, in the following order:
1 Wave 5 has ended, we are in ABC, probably in C.
2 Wave 5 has noot ended yet, and will continue till 530 or even 550.
3 Wave 3 is still in charge and we just try to see when it will turn into 4
Pacito

2 in accordance with DAX, CAC40 and S&P
 

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Pacito

Active member
186 2
I'm not even a beginner on the Astro Financial Analysis, so you walk there alone as far as I'm concerned.
For the last part where the wave counting started at 409,56 there's another possibility. (see picture) The implication of this count is probably that there are two waves 5 ending at the same time. ( number 2 of my previous posting, but now it has ended). I don't have to tell you what that would mean.(see first thumbnail on previous posting, but without the a and b, but the 5 instead of the b).
Pacito
 

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gogo27

Junior member
37 0
UPDATE 08 jan

Today's trade consist of the use of the MA technique.

Short when aex broke the MA 5 (498) , close on AEX reaching 491 ...
Now we are expecting a bounce to the new MA (5) around 496... (eod)
The trend is down. i'll not go for a long position ...

(I made my next city trip ... ) :cheesy:

Plus: works on markets in movement
Neg: you never take it all , margin is small
 
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gogo27

Junior member
37 0
Can anybody give me his Gann analysis in the actual situation... The purpose is to find an entry point closer to the break and 'optimalise' the trade... :cheesy:
 

The Dutch Clown

Established member
592 11
ach wat zal ik eens van zeggen.... NR bv?!...

Gogo,

It’s my firm/strong conviction that a Trader must use a vision or plan to perform and I feel strongly about using Technical Analysis to create such a plan. Each and every time I pointed out that a Trader looks totally different towards the Analysis and primarily the Trader makes his money trading where as the Analyst just provides his report for his/her monthly paycheck. My point is and always has been, that a Trader can use Elliott and other techniques but the way one should look at it is totally different and just using Elliott is not going to meet the objective to only Trade to Win. Crossing techniques has been my game for a number of years now and the Brown book was a confirmation of that route. The KVKD system is based on the crossing of different techniques and has performed excellent last year. Mind you Gann was not just a Trader he was an Analyst too and the presented AEX 2007 projection is based on Gann analysis. So I have provided you the result of the 2007 roadmap in post 1 with some of the foundation if you read the map you can immediately see what my trading positions are and even when they alter or at least are being under revision. If you have really read and understood the posts in the other thread you should have known the exact entry point and even the next one should be known to you, in my book that’s pure trading nothing else.

If you use Elliott his definitions and you should realize that there are a number of interpretations around that are not Elliott in its purest form, the AEX scenario that scores best when referenced to the pure Elliott definitions implies an impulse wave one on 498,45 and a corrective wave on 470,54 as described in post 1 above here. This implicates that wave 3 has started at 470,54 and is moving to the higher targets so I do not understand your Elliott findings at all. Like Brown I do not use moving averages and her position as explained in the book did not make me want to invest time immediately in that area simply be course moving averages are no turn on. Be my guest and prove otherwise.

Written in post 1 you will find several arguments to question the wave 2 on 470,54 and there is even an other route which I have not yet described but this was only recently backed by my new work on the Long Term Cycles and turning points. For now I will stick to my 2007 projection and will trade accordingly until the next potential turning area which has been defined backed by several used techniques. Don’t get me wrong here, I do not expect the projected 2007 chart to be the actual 2007 chart when we have moved into 2008 it’s like the title of this thread: “ work in progress”. Whatever happens the first one is already in.

As stated I fully understand the Technical Analysis used to create the GJN column and also the weaknesses as I have already demonstrated several times last year. If one uses the column for trading without understanding the merits of the analysis that’s what I consider stupid. An Analyst with a monthly paycheck can afford not anticipating on a trend to change since he gets his money anyway. A trader will have to use a different approach in order to make some money. And lastly if the Analyst does not see the signals in the chart all bets are off, serious money goes down the drain.

Have Fun I know I will. lol
 

gogo27

Junior member
37 0
ELLIOTT 's view

Clown

To shorten things, I may assume that

1. the AEX is in a Zigzag started in 2.. in spring 2003
2. an Ending Diagonal started in 32... in autumn 2004
3. wave 3 of this ED is now set at 502 in jan 2007!

So we expect now wave 4 is to be set... range from 470 to 420. According to the 'trend line rules' 450 is more likely ... :cheesy:

In the 15' graph I came to the conclusion that C is set and that we are now looking for a 4b or even a new 5... According to your Gann's technique I may assume 4b is more likely?

But on the daily is the RSI still not overbought... and that bothers me !

Fine evening

Gogo


P.S. MA technique is used for targetting ...
 

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The Dutch Clown

Established member
592 11
who let the dog out?!

Gogo,

An assumption is something completely different than actual facts and for the last time I will point out that any Elliott count is something static and if the original Elliott findings are used there can not be that much discussion about different wave counts. And as a matter of fact I did spend some time getting the original Elliott patterns right so I can use them as a reference against the actual index data. The thing though is that you need to find the wave count that will survive all the alternatives in the end. My adagio has always been “ do not assume “ know for a fact!! When you use only your Elliott wave count for trading you better know for sure that it is the right count from my own experience I can tell you that you will not only trade to win.

The corrective nature as opposed to an impulsive nature of the wave structure starting at 217,80 has been of some concern since the implicit message is not something that one would realistically like to see happening if at all feasible. So my view has been for quite a while that this will change due to future index movement and once again look at other techniques like Cycle Analysis to get your picture straightened.

The Negative Reversal Signal as pointed out to you some time ago did perform it’s job perfectly and the price target is not met yet. The next issue to clear are several Negative Divergence extensions that might serve as initial support and later accelerator. And when we are coming towards the decision phase the Positive Reversal Signal will force influence. Only when the Positive Reversal has been taken out the 2007 projection has to be adjusted. Also notice that the short term trending direction as thought by GJN is negative and this might serve as the thing to watch closely over the next couple of day’s since it has many functions. When not short already you might want to use it as entry point; when already short you might you is as accumulation point ; when trend change it is your exit.

Finally you can see yourself what kind of movement the AEX shows today.
 

gogo27

Junior member
37 0
Dear Clown,

An answer in between the soup and the potatoes... As expected ,according to the MA rules, the index bounced back on MA 20 and goes to hit the 498...I don't have my tools here, but look for yourself the MA 5 eod 08 jan... This level is also confirmed by the fibo rules...and GJ ! Now everything depends on the DJI... Shall we have a breakthrough in the following days...

Nice afternoon,

Gogo
P.S. see my previous updated : ...'The trend is down. i'll not go for a long position ... ' :cheesy:
 
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gogo27

Junior member
37 0
Dear Clown,

I was in a stand-by position this morning because the situation in the US was not that clear...Different indices were out of phase...
May be the break trough will come faster than expected...

Nice evening :cheesy:

Gogo
 

The Dutch Clown

Established member
592 11
Pacito,

The DJIA mother chart is a backbone reference chart, the Elliott count in it is as always static and most likely the next moves will change the wave count. For now, until proven otherwise, my calculated guess is that the red V will be placed higher at a later date most likely in conjunction with the 56 years cycle. It provides some indication on a projected 4 year’s cycle drop. But do not put to much focus on the detailed wave labeling since it’s just to get the overall picture and use as a reference.

As I mentioned the Astro Financial Analysis sort of bothered me since I could not find a form that worked properly and was not a huge workload to create. Basically what I am looking for is a crossing between the Astro Analysis and the Cycle Analysis, simply put, the planets move in ellipses in the universe and this is also known as a cycle. So I am looking for a way to create cycles based upon the planets that match the stock market cycles in such a way that trend changes are indicated and if at all possible a bit more. The main lot of coding has been done and I ended up with a sort of oscillator of which I have assembled the level of trend turn probability used on different timeframes so I have called the indicator in a presentable form the: Clowndicator. Geintje meneer Sonnenberg.

Attached you will find the Clowndicator for January 2007 and as you can see the 6 used time
frames are included and have different colors in the chart. Reeks 1 (yellow) is the shortest
time frame and Reeks 6 (red) is the longest timeframe. As you probably know I resent the
back testing congregate but in this case I have a more practical objection and that’s the time
spend so I stick to my own testing scenario and that’s on-line with real money in this case as
an add-on to present systems.

Have Fun.
 

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