Week 41.
For a number of reasons including using different techniques I do not agree with the analyst view that would implicate the end of the economic society as we currently have. The primary reason for that dramatic view is based on an Impulse wave count for the 563,98 – 479,49 fractal, in order to get some feel for where the serious Bear people are coming from I have attached an Elliott Wave count on the DJIA datafile (starting in 1897 until last Friday), which I by the way, at least not at this stage, can’t qualify as best scoring scenario. Just to get some respect for the things the human race has accomplished the last hundred years or so and more specifically the post WOII generation.
The wave count 563,98 – 479,49 has a corrective structure and the best scoring wave pattern is called TripleZigZagC and since this pattern has five corrective waves I can imagine the alleged impulsive character found by people why only look at it from a distance without utilizing the power of the Elliott Wave Principle. The more interesting part is the beyond 479,49 bit and to start with the more exciting part the vary same applies to this wave analysis. At a first glance one might find an impulsive wave structure, also since one would expect it at there when labeling 563,98 as the third wave and 479,49 as the fourth wave in the wave starting at 217,80. In order for this wave part to be a fifth wave it will have to be impulsive.
The Elliott Wave Principle is founded on Rules and Guidelines and there is for instance no rule which tells you that a second wave is not allowed to retrace 80% of the first wave in an impulsive wave pattern. For corrective wave patterns there are Rules and Guidelines for a number of different wave pattern families you can find in the literature. A corrective second wave might retrace 100% or even substantially more in a number of wave pattern options. And when trading one has a completely different angle since the P is dominating everything you do. A reservation will have to be made here I think since markets today are operating a bit different just look at what the FED caused in August. What I am considering is that even though the actual pattern is corrective (you can see a three stroke in your own chart) one should perhaps discard that since it was externally forced upon the market.
So given the fact that the wave structure beyond 479,49 is corrective I utilized each and every pause in that move and hit the exit including the most recent one last week. Officially the last one has not yet violated the 80% boundary so I might have an other go at it next week when a new entry is triggered. When we look at the wave structure and want to stick a pattern to the part beyond 479,49 a DoubleZigZagC pattern comes close even though both price and time have run out a bit. The next pattern possibility is probably going to be a TrippleZigZagC pattern although at this point in time the suspected fourth wave has factual challenges.
The GJN taught trending methodology modus remains negative and the Technical Analysis New School already provided it’s price target. However it must be mentioned that the August/September correction also provided a number of Bull targets so from an Analysts point of view the sequence of events is going to be the differentiator. The K.I.S.S. trending methodology continues to show higher highs and lows although this is not going to last. If you recall the first rule in the Clowns Trading Almanac you understand why I am looking at what trading positions. It’s not just sticking to a view no matter what happens it’s merely the risk/reward based getting those P’s in until proven otherwise.
The Astro Finance Analysis track I am currently pursuing does include the major market moves however the time indication fades a bit and I am still figuring out how to more accurately implement this. It looks like there is a level of delay involved but this is something I will have to study a bit further before concluding. October was/is a low in the AFA and if the decline we have seen in August/September has been completed the next high is January 2008. Needless to say what if not.
Have fun trading to WIN.