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Trade Trends with Bollonger Bands and Twiggs Money Flow

Archive through October 03, 2010

Chart Forum » Hilarius' Hall Of Fame » Elliott Wave Watching » Archive through October 03, 2010

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billt
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Thursday, September 30, 2010 - 02:42 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



hi Guys

An impressive 114 point drop on XJO - 'won against the head' of SPX!

With wave i being a wave length of 114, wave iii could be a 185 wave length, bringing XJO to c.4410-20 - if we turn south shortly. XJO previous low @ 4314 could be the target for the completion...early days though.

If XJO stalls at the 4480-90 level, it could be a three waver with a reversal to follow.

The strength of the impulsive wave i south suggests to me the former at this stage - particularly without an overnight lead from Wall St! There was a lot of cash heading for the exits!


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rdumas
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Thursday, September 30, 2010 - 04:08 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi MM/Bill,

Sorry guys, I had 3 hours of work in the garden that needed doing so have only just returned. A couple of possibilities as I see them in terms of initial target levels. As I expect a corrective move of relatively short duration the first scenario that I would go with is an ABC correction down. Now I have labelled the chart below with a (i) and a (ii) but for the time being in the back of my head it would be an (a) and a (b).



That would give me two likely targets (amongst many others):

1) A 100% extension of wave (a) which is 4470
2) Wave equality between waves (a) and (c) which is 4499.

The above retracements would represent levels near the 50% and 61.8% retracement of the rally that started on the 25th August which is probably about the sort of retracement that I would have expected.

Now remembering the amount of resistance at the 4500 level previously I would probably have a leaning towards scenario 2).

Now of course if things really get negative it would mean that I was looking at the wrong level wave pattern and the above 3 wave move would only be wave circle a (sorry about the circle Bill......you can use whatever labelling convention you prefer for one level up ) of a much larger 3 or 5 wave corrective move.

To keep things in context you need to keep in mind the larger pattern that I am looking at in my XJO scenario 2 count. Remember the chart that I posted in my Weekend Market Wrap (see below).





So in fact what I am looking at for this corrective move is the final wave c of wave ii. Now remember that wave 2's can give up almost all of the profits made in wave 1's so a larger corrective move is a possibility.







I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Thursday, September 30, 2010 - 04:13 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Bill,

Unfortunately my chart for $RIFIN has corrupted data so I can't see a longer term view of what you have shown in your 60 minute chart. Any chance of you throwing up a daily chart so we can see that pattern in context?


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Thursday, September 30, 2010 - 04:41 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Bill,

Re my post 4079 in which I said "We have just seen a clearly defined 5 wave move up to the recent peak. As you know up to now I have been reluctant to call a top to the rally that started on the 25th August. I have a feeling in my bladder that this may be it."


I have just found a methodology that is better than EW. It's called the 'bladder method'.

Maybe I should start up a new thread and explain the rules.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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billt
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Thursday, September 30, 2010 - 05:43 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



hi Rudy

Your 'bladder method' is just fine by me mate - forget all this EW & TA stuff, let's just go with your intestines!

It will be interesting to see if XJO stop at the 4500.

If 4500 does not hold, I will be putting your SPX@970 back as favorite - I have not discounted that at all....I realise you will not rule out your wave 2 until we clear the 4314 mark, but my own intestines are suggesting a bigger pull back...

If this correction turns into a 5 waver, with wave i being a wave length of 114, wave iii could be a 185 wave length (114 x 1.61), bringing XJO to c.4425. XJO previous low @ 4314 could be the target for the completion, or a lower level if things extend.

Here is RUT, its had a good run. Resistance there at 677 - Triple Top looks troublesome for the bulls. MA 200 still over the 50. If prices drop below 639 it will be tough going north...:





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billt
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Thursday, September 30, 2010 - 05:56 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



sorry Rudy

Posted RUT instead of RIFIN




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billt
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Thursday, September 30, 2010 - 06:05 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



RIFIN

Quadruple Top! 799, 799, 796, 795 (and there was a 789 as well..) Failed 5 times to clear 800....

MA200 over MA50!

MACD rolled over!

If RIFIN doesn't hold 710, the US markets may be toast...


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rdumas
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Thursday, September 30, 2010 - 09:24 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hey Bill,

Those last i and ii labels could turn out to be a and b. Then you would have a move up. Anyway, now that the end of the month is over perhaps we'll see some real action.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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ehmu
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Friday, October 01, 2010 - 01:37 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



A thin technical case for the bulls.
First let me describe my criteria for chosing trades:
-is the price crossing the 34ema
-is the smoothed momentum oscillator crossing zero
-is the RSI crossing 50
-is the price above or below the 233ema
The monthly chart attached shows a bullish situation
The weekly chart attached shows a bullish situation
The daily chart attached shows a bullish situation
The 60min chart attached shows an uncertain situation
The charts are marked with colored ellipse to denote the recent trading points on the SPY. Currently the prices are trading above all of the buy signals and there don't seem to be any sell signals evident on my rudimentary analysis.
I do note that there is some mild negative divergence showing on the charts with shorter time frame.

Daily chart

Weekly chart

Monthly chart




_____ n a m a s t e

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ehmu
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Friday, October 01, 2010 - 02:12 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



The SPY, slowly rising upwards on the buoyancy of the 13ema, and tippy-toing just underneath the upward trend line towards long term resistance.

The range is being kept quite wide by the institutional traders, it must be very profitable for them even just for trading the spy. In addition, I'm sure that they're involved with all kinds of derivatives---for example sucking the life out of things like TZA which seems to lose about 1% every day that there is a deep cycle to the up side of SPY. It will be interesting to see for me if the same scalping affect occurs when the SPY is headed down.

Just to tweak your imaginations, if you look at the chart that I'm attaching for the SPY. Notice that there are two converging trendline shapes that form diamond tips on roughly the same day in the not to distant future. 1160 and 1040.

You don't think that we could gap down that far in one day, 120 points ? Nah ! Probably just means sideways.

See anything like that on your charts, Astroboy ??





_____ n a m a s t e

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ehmu
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Friday, October 01, 2010 - 02:38 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Rudy:

I want to order an advanced copy of your new bladder method.

Hope you will include a section in your rules about the pucker factor.

thanks


_____ n a m a s t e

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rdumas
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Friday, October 01, 2010 - 07:34 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Ehmu,

Excellent posts....both of them. Just as a matter of interest I thought that I would draw just one more trend line from the same peak to an earlier intersection point with the ascending trendline (see thick yellow line) on that last chart of yours to check out the validity of suggesting a drop of 120 points. I was surprised to see how close it came to picking that other bottom.



Now Bill, don't get too excited and quadruple your money on the Bear stocks. You know that people who attempt to pick bottoms often get their hands dirty.

PS: Ehmu, I'll send you the first copy of that methodology once I get the pathology test results back.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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billt
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Friday, October 01, 2010 - 08:17 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Gann emblem:

SPX made a 1010 bottom on July 01 the 90 calendar day point comes on October 1st.

July 1st was a bottom - October 1st should be a top.





Maybe we have the answer?





After the SPX made its high today, it sold-off in a nice five waves down, then went into an a-b-c correction that has retraced slightly less then 50% back to the top. An open tomorrow that break todays low would open the door for the SPX to accelerate the selling and put the uptrend in serious jeopardy.




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rdumas
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Friday, October 01, 2010 - 08:41 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Could the top be in for the S&P500?


Picking the top for the S&P500 is a national pastime in many countries and this one has been one of the more difficult tops to pick due to its complex grinding type of pattern. One of the things that indicates that a pattern is about to change is when you get two impulse waves in a row. This will occur when you are completing one pattern (a corrective wave for example) and starting a new impulse pattern.

Another thing that I have mentioned on numerous occasions is to look for wave equality in corrective patterns. The rally that commenced on the 1st July had a range of 118.33 points. The present rally that commenced on the 27th August had a low of 1039.69. Hence we would expect wave equality to take place somewhere around the 1158 level. Last night the S&P500 peaked at 1157.16.

Now looking at the latest patterns that have developed we can see that we have had two consecutive impulse wave patterns.



Now note that in fact we have 3 consecutive impulse patterns (the last one however is at one level down from the other two). The last one is the first wave in an abc corrective pattern. This would normally indicate that a Zigzag was about to form. It is for this reason that I have suggested the corrective pattern indicated by the blue lines. Note however that the 3 wave pattern encircled by the red dashed section could already be the completed corrective pattern to the impulse wave down from the peak. I am agnostic about which way it will play out as either way would indicate that a top may finally have formed for the S&P500.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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market_mad
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Friday, October 01, 2010 - 08:54 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Bill,

Yes, my count is the same - beautiful impulse move down off the highs last night in 5 clear Waves and my count looks really good for an aggressive 3rd Wave down to begin right now. My intestines are telling me so!!

On the ASX200, we have to break 4530 to confirm this isn't just a correction but is the start of Wave 3 down. First hurdle to clear is good support at 4560 and we may test that today.

Cheers
MM


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billt
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Friday, October 01, 2010 - 09:03 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Similar thoughts mate! Those drilled down 3 minute charts helps to define the pattern...

The VIX has been in an uptrend since 15 September, and the daily movements are becoming more pronounced with higher highs and higher lows.

The big question is will this big falling wedge on the VIX Weekly explode north as it did in April?

It would certainly support your Alternative Scenario Rudy for SPX@970.




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market_mad
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Friday, October 01, 2010 - 09:26 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Good Q & A with Precther - think I might post it on our friends thread on ODB just to kick things along a little;

Excerpted from Prechter's June 19, 2010, interview with Jim Puplava's Financial Sense Newshour.)

Here is Part I. We will be posting a new part every business day, so come back tomorrow for more.


--------------------------------------------------------------------------------

Jim Puplava: Stocks roared from the March lows of last year, and now we've seen a nice correction since the April high. Is it just an interim correction as the bulls would argue, or does something worse lie ahead? Joining us on the program is Bob Prechter, author and head of Elliott Wave International. Bob, I want to pick up from last September. Since then we've had several quarters of positive economic growth. Asset classes rose substantially, CPI turned positive, gold a new record, oil is close to $80 a barrel. I guess a lot of our listeners would like to know, have these events altered your views on deflation?

Robert Prechter: No, because we forecasted these events, and we forecasted them at the bottom in March and April of 2009. On February 23 in the Elliott Wave Theorist, I said that we were almost at the bottom; that ideally the S&P should get down in the 600s before turning up; and that the Dow was going to rally from that low up to about 10,000. We put that target out a few days after the low. The main thing we said at the time was that it was going to be only a partial retracement, in other words a bear market rally. By the end of it, we said people would be bullish on the economy, there would be positive economic numbers, investors would think we have made the turn, the Fed would take credit for having saved the financial system, and there would be optimism across the board. All of this has happened. And going into April 2010, few people in the fundamentalist or technical camp were looking for a downturn.

The final thing I said was that Obama's popularity would rise into that peak, and on that one I was wrong. His ratings couldn't even bounce during that period, which I found very surprising. But both Obama and George Bush’s popularity trends followed the real value of stocks, not the inflated dollar price of the stock market, which I find interesting.

As far as inflation and deflation go, we had deflation during the down cycle in 2008. Commodities fell hard, the stock market fell hard and real estate fell hard. But the recovery that we were looking for in the first quarter of 2009 was expected to be a reflationary, and it was. You saw a decline in credit spreads. You saw a rise from the lows in commodity prices and stock prices. All of that is perfectly normal. These are just waves ebbing and flowing. But the long-term trend is still down, and as this cycle matures we are going to see more and more evidence of deflation.

JP: During this time, we've seen private sector credit contract while at the same time government credit expanded, which offset private sector contraction. But overall, credit has grown within the U.S. economy. In your opinion, can government, fiscal and monetary policies combined offset your deflationary scenario?

RP: First of all, I don't think credit has increased in the economy. M3 has got a negative rate of change right now. That means lending is really drying up. The Fed has monetized about 1.4 trillion dollars worth of IOUs. I think that, behind the scenes, about that amount of IOUs is slowly disappearing and losing value. Certainly mortgages are losing value even though they're still marked at the original value. I think true values are falling substantially.

Let's look at a couple of other indicators; and remember, these readings are despite the fact that we have been in a reflationary environment for the past 13-14 months: We've had the dollar rally against other currencies. None of the inflationists predicted that one. We've had a very weak recovery in the CRB commodity index. The high was 474 in 2008, it fell down to 200 in early 2009, and it's sitting in the mid-200s right now. It's still down 50 percent from two years ago, and that's despite massive bailout schemes by the federal government and massive monetization by the Fed.

If the inflationists’ arguments were correct, we should be in a hyperinflationary mode right now, with commodities flying, stocks flying and the money supply zooming. And none of that is going on. When you look at the rates of change in the Producer Price Index and Consumer Price Index of the last couple of years, they've been basically at zero. They went negative and now they're positive, but they're basically oscillating around zero. That's not runaway inflation. And even though gold just made another new high, it's by a very small amount for the past six months. Meanwhile the XAU index of gold stocks has made several lower peaks since 2008. It hasn't even taken out the 2008 high. Neither has platinum, and neither has silver. In an inflationary environment -- certainly in a hyperinflation or runaway inflation -- you get a monolithic move in everything. You're not getting that here; it's a very fractured situation.

[to be continued]


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skyhawk
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Friday, October 01, 2010 - 09:28 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi guys,

Nice thread. Rudy great initiative for starting it.

Some sort of high was expected in the SPX in late September
from a cyclical perspective.... Perhaps a temporary one before
the next leg. As some tentative timing I think we should be looking
by the 3rd week of Oct for a low in the SPX

Cheers


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rdumas
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Friday, October 01, 2010 - 09:38 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Skyhawk,

Welcome aboard. That's about the timing that I had for a bottom to what I believe will be corrective move also.

Hi Bill,

Sorry that I had not read your post before I posted mine. It takes so long to prepare those charts of mine that you must have posted whilst I was in the midst of preparing my post. We were obviously on the same wave length.

I haven't thrown out my more bearish count but have it as a lower probability at present.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Friday, October 01, 2010 - 10:31 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Billy Boy,

Well so far our holding doggedly onto ETF GOLD has not hurt us. It has been like watching grass grow but so far so good.

Looking at the charts of both the POG and AUD we can see that they are both holding their respective channels.





Now everyone keeps talking about the 'strength of the AUD' and the amazing strength in the POG but in actual fact it really is neither of these. The reality is that because both of these are related to the USD, the real driver is the weakening USD.



The same story relates to the equities market. Whilst ever that USD weakens the other 3 will go up. The fact that they are all showing signs of peaking also tells us that the USD is about to strengthen. Whether our ETF GOLD makes any real money for us will depend entirely on which of the POG and AUD falls the fastest. My analysis indicates to me that we will make some money between now and the time that the equities market bottoms in October. It remains to be seen how good that analysis will be.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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market_mad
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Friday, October 01, 2010 - 11:08 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Rudy,

I totally agree with you re the weak USD. It's not only gold but every risk asset that has shot up on the back of the weak USD.

Given the US has just had the best September in 71 years and I heard some clown on CNBC saying last night when it was trading at 1157 that it would have been the best month on record not just September. Surely that coulsdn't have been right? I would have thought there would have been other months in the past that would have returned more than 10% - but maybe not. Anyway, as you said, it is primed for a decent sell off over the coming weeks.

Cheers
MM


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skyhawk
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Friday, October 01, 2010 - 11:50 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Rudy,

I am out of ETF Gold ATM. My analysis
suggests that any rally at this point in time
will only be small, and that ultimately
we will see more attractive prices in the weeks
ahead.

In this particular instance the AUDUSD and
Gold in USD have moved up at relatively
the sane rate in fact the momentum of the
Aussie has been greater.
Looking at the weekly or monthly chart of
ETF Gold, it suggests it has been in some
sort of W4 since 2008. Perhaps a developing
contracting triangle. If so we would
be about 50% into subwave C down of that
Wave 4 triangle. Perhaps even tracing out wave
b of that wave C down at this time....

Cheers

Andrew


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billt
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Friday, October 01, 2010 - 11:58 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Welcome Skylark!

Hey Rud'meister,

Let's hope the $AUD & POG does the honest thing....with our luck the $AUD & POG will both plummet, and we will 'flat line' once again! A 20% correction on SPX might produce a 20% correction on the $AUD back to 80cents, and a 20% surge on POG....ETF Gold might even beat TZA! (..just dreaming)

Your more 'bearish count' Rudy produces a revised target of SPX@978:

1157.16 (if that was the high) - 179.10 (april/may wave length) = 978.06

Remember Rudy, your initial 'gut instinct' very often comes true...so I'm keeping your 'initial idea' firmly front & centre! You might head off on some other tack, but I stay with your initial idea - it works regularly, if you haven't noticed?

Your 'equal wave length reminder' in post 4090 just shows how often it occurs...perhaps you need to change the title of the thread to 'Equal Wave Length Watching'!

With those two waves of equal length off the 1010 low, doesn't that give a very big probability to an ABC correction off the 1010 low? Perhaps Red Wave C might be a length of Red Wave A 208.89, dropping us from 1157.16 to 948.27 - a trip to the lower channel line??




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rdumas
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Friday, October 01, 2010 - 01:00 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Andrew,

I was aware that you were out of ETF GOLD and based on what's been happening it certainly seems like the sensible approach. As I said earlier it has been like watching grass grow but did not seem to be in any danger of a dramatically quick fall either. Below is the weekly chart of the stock. As you can see the 50 day SMA and rising trend line is there for support at the LBB.

I think that Bill and I had both been holding onto it until we saw what happened once the POG and AUD started a decline.




I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Hi Bill,

Skyhawk is the 4th Musketeer so a bit of respect there if you want him to teach you anything about cycle analysis.

By the way, it's great to see that you have well and truly got the hang of that wave equality stuff. You will find it a very handy tool to have in your box of tricks.

By the way, as for the POG doing the honest thing. If the USD gets a rocket under it for any reason what makes you think that the POG will head in the same direction. On the contrary, it is way overbought at present and when it starts to fall it will plummet like a stone. Whilst I am a gold bull in the long term, in the shorter term it is due for a 30~40% fall over the period that the equities are rallying. So once it starts to fall, expect it to keep doing so for a few months.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Friday, October 01, 2010 - 04:29 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



XJO Price Action Today

It's still early days but at this stage it looks like the 3rd wave is extending.





What is extremely interesting is that the W%R indicator is already at -96.54% and the price action is close to the LBB and the 50 day SMA both of which should give it support in the short term.





I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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billt
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Friday, October 01, 2010 - 04:35 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



What took you so long Andrew!

I have been patiently waiting to learn all about your Cycle Stuff! Rudy has told me it 'in pieces', but unless there are ABC's or WYZ's involved - he just glazes over...

We all know you're the 'brains' behind the scene of the 4Ms, so don't hold back posting your words of wisdom.

You need a little emblem in your title block, so here is 'Skyhawk' - he fits well with 'Astro Boy'!




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rdumas
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Friday, October 01, 2010 - 04:54 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hey Bill,

That's amazing. Take off the wings and darken the hair a little and that's exactly what Andrew looks like.

By the way, check out the ETF GOLD chart. It's not rocketing off into space but it has passed a major hurdle today. It got through the declining trend line and remains above the ascending trend line. It also has support from the 20, 50 and 150 day SMAs.





I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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billt
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Friday, October 01, 2010 - 05:44 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



hi Rudy

"If the USD gets a rocket under it for any reason what makes you think that the POG will head in the same direction".

There has been a number of times in the past few years when they have both gone north.

If there is a rush of capital out of the stock market, the choice will be to US Treasuries or something else.

The $USD continues debasement by the Fed. There is some possibility that the Fed will add QE2 anytime soon further debasing the $USD.

If there is a strong pullback in the SPX, some money will enter into US Treasuries with a subsequent strengthening of the $USD.

A considerable amount may also head into Gold. That occurred in April & May 2010, and back in January 2009.

China is a seller of US Treasuries, and both China & India are net buyers of gold.

In a moment of heightened economic risk, what would you rather hold - $USD or Gold? In April & May 2010 a lot of investors bought Gold as the $USD surged north....In July 2010 during the $USD rally from 80.08 to 83.56, POG continued its climb north without a moment of hesitation.

My 'gut feeling' is that POG may go parabolic if a sell off on the markets gets a head of steam. It will be a 'flight to safety' like no other.

If the stock markets produce a repeat of April & May 2010, this is what I am expecting:

POG >usd$1500; $AUD 80 cents; $USD 88 = ETF GOLD +40%....thats why I'm holding.. for now!






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skyhawk
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Hello Bill,

Have stayed away from forums for a while as I have been overseas for the last 3 months.

Thanks for the compliment re the 4M's, but I am only a very small cog on the 4M mechanism. The bulk of the daily input comes from Rudy, Barry, and Randall....

As for cycles, I will try to post as much as I can (size permitting on these boards). Otherwise I can send them privately.

I have attached the cycles analysis pic for the SPX as of last weekend. This is the Cycles Analysis of 8Hr closing prices.

I will go into more explanations on later posts but as can be seen on the excel chart, in the upper pane we have price action in the blue, a nominal trendline in pink, and 3 std deviations of % price change away from the pink nominal line
above and below the nominal trendline. At first glance the outer boundaries above and below resemble BB's. However they are nothing like BB's as BB's are lagging. These are foward looking in that they are 'in phase' with price.

The theory behind it is quite simple. Price action makes "excursions" above and below the pink nominal trendline. The excursions usually reach the 3rd upper or lower curvilinear boundaries whereby they only have a low probability of staying at such price levels. This is a mean reversion concept and at a minimum price to revert back to the pink nominal trendline.

IF price action stays within a channel of the pink trendline plus or minus 2 std deviations, then most likely the trend will persist until an extreme or climax is reached. This being 3 std deviations OR more.

The second component is the that I have decomposed the 3 major cycles for the price action, ( which are usually harmonics of each other) and these aid in determining when a trend will reverse or persist. In this case on Monday 27th Sep we can see the a 3 cycles I look at for the SPX in the 8hr bars timeframe, had all crossed above the centreline and reached levels where previous peaks had occurred. The 86 Bar cycle which is most important, had actually topped and was headed down. This SUGGESTS that a near term peak is imminent. By imminent I mean 3 -4 days away but it can be longer.

I must stress this is not precision timing but rather, is designed to help keep me on the right side of the trend.
application/octet-stream
cycles analysis 270910.xls (341.0 k)


The word document shows the number of regular and inverted cycles running through the SPX lately. These cycles are not fixed, (like the earlier cycles analysis) but are dynamic. For example you can see we have had anything from 21,66, and 35 bar cycles in the last 10 months. The last cycle was 35 bars and I was expecting another 35 bar rhythm. It may not have been, it could change again to something different. What I try to look for is confluence between the cycles analysis, conti cycles action, EW and other forms of cycles I use(which I will not go into detail now).



This approach is not set in concrete,it has flaws and limitations, but it is how I work.
I started with Elliott Wave 11 years ago. I found that it is great in terms of working with pattern and to some extent price level. But it is missing the important element of time and a confluence of all three is what is needed to take high probability trades


Cheers
PS I hope you like the pic!! It ain't me :-)
application/octet-stream
spx conti cyclic action.doc (208.9 k)



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billt
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Friday, October 01, 2010 - 06:02 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



hi Rudy

If we get a repeat of the April/May Wave A XJO/SPX event, I suggest ETF Gold will do a similar path as it did then.

$AUD & POG may contribute more individually, as the $AUD is coming off a higher base, and, POG is already in a wave iii event with no overhead resistance....




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rdumas
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Friday, October 01, 2010 - 08:38 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Bill,

I hope that you are right about the POG and AUD. The fact that I am still holding ETF GOLD against Andrew's advice must be an indication that somewhere in the deep recesses of my mind I believe that there is a chance that you are. I have gone against Andrew's advice in the past to my regret.

There are a lot EW exponents who believe that the POG is ready to drop 30~40%. I know that I will drop it like a hot cake if I sense that it is going to go south. Unfortunately when a commodity is in a parabolic wave 5, the retracement can be supersonic and devastating.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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skyhawk
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Friday, October 01, 2010 - 09:16 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hello Rudy,

You could be right, let's see where the pattern
goes from here.
The cycles although a good guide are very dynamic
and sensitive to price action changes.

I will do another 8hr bars (short term) and
weekly (longer term) cycles analysis tomorrow
to see if any changes look lime happening.

Cheers


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billt
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Saturday, October 02, 2010 - 07:33 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Rudy

Entry from Trader Dan on POG:

"That brings us to gold which continues to rise as the Dollar continues to fall. It set yet another all time high in today’s session with the bullion bank barrier at $1,315 giving way. Yesterday’s rebound from the session low indicated good levels of buying continue to surface on dips preventing the shorts from getting any downside traction. Their short covering combined with another influx of fresh money resulted in a surge to $1,322. If the previous pattern holds true, we can expect the bullion banks to retreat towards $1,330 and make yet another stand near that level. Downside support remains near $1,300."


"I think we have solved the mystery of the falling open interest in gold over the last few days. As suspected, it has been the October contract which is the culprit. The total number of contracts still open in there dropped a whopping 5,200 in yesterday’s trade meaning we have seen nearly 23,000 closed out of that month in the last three days time. It is now apparent that the shorts are terrified of delivery issues and are getting out. Because they are NOT ROLLING into the December, they have tipped their hand. This is a most welcome development. We have long stated here at the site that the only way to beat back the short sellers in this market is to force them to either come up with the gold to deliver or refuse to be stampeded and call their bluff. The longs look as if they are doing just that. The result, shorts are running to avoid having to “stand and deliver”.

A mere 1300 contracts left open in the October is miniscule for a month heading into the delivery process. "


Rudy, that sounds like good news....


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rdumas
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Saturday, October 02, 2010 - 07:38 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Andrew,

That will be interesting to see.

The document below is the one you sent me two weeks ago for the weekly cycles. Now whilst the 44 week cycle appeared to be heading down, the 11 and 22 week cycles looked like they were thinking about going up.

application/vnd.openxmlformats-officedocument.wordprocessingml.document
etf gold.docx (130.8 k)



I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Hi Bill,

I'm not entirely sure of what that all means but it does have a good ring to it doesn't it.


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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ken
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Saturday, October 02, 2010 - 10:07 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Rudy and others,

I'm having trouble opening your zipped files. It opens in my browser as a list of files and folders - doesn't appear as a docx Word 2007 document.

Ken


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rdumas
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Saturday, October 02, 2010 - 10:13 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Ken,

I'll attach a Word document of an earlier vintage. See if that works.

application/msword
etf gold.doc (144.4 k)



I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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ehmu
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Saturday, October 02, 2010 - 11:35 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Eh team:

Interesting, how some are making money on this micro-churning activity.

Attaching a chart of the SPY again. For what it's worth, I think that the price needs to at least touch the down trend resistance. That could be a guess of 5 trading days if the current action persists.

For those with better math than mine---the 100pt gap down that I was imagining could rather be a very rapid drop instead. The weekly volatility stop is around that 1055 area, and happens to be roughly 2 std deviations on the weekly chart.

Note that $116 is half way between the 200ma (110) and the next resistance (122) if it heads north instead.

With that kind of energy coiled in the markets, ready to breakdown or breakout, we are about to witness some huge gains on the triple derivatives, and some agonizing mistakes.




On the other hand, this churning could continue indefinitely, death by a thousand cuts. Wouldn't that be fun.


_____ n a m a s t e

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billt
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Saturday, October 02, 2010 - 01:36 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



hi Rudy

Could you give me your thoughts as to why this is not crying out as an ABC correction - wave equality rules!! It looks so obvious??




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rdumas
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Saturday, October 02, 2010 - 01:46 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Bill,

There is absolutely no good reason why it couldn't be an ABC correction. I would probably label it one level down so that I could label the decline from 26 April to 1 July as wave A, the peak of the current rally as wave B which would lead to a wave C that (based on wave equality)would terminate around 948.27.

It is a perfectly good scenario that breaks no EW rules. If we went below the 1010.91 that would be the obvious scenario in play.

It is my next most favoured scenario.

(Message edited by rdumas on October 02, 2010)


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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skyhawk
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Saturday, October 02, 2010 - 02:05 pm:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hello Bill,

It can be an ABC correction leading to a bearish move, it could also
be a 1-2,1-2 nesting pattern in a bull or even an ABC component
of double zigzag upward move.
The point is could be this or it could be that!!! What is needed is a
way to quantify these EW such that we can throw our $$ on the highest
probability pattern before it becomes obvious which pattern is in play
and we miss a big junk of the move.

So what does one do when confronted with this situation when relying
on EW in isolation? NOTHING.
What until all your EW scenarios all point in the same direction. :-)

Cheers


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billt
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Sunday, October 03, 2010 - 08:11 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



hi guys

Thanks for that....'Wait until all your EW scenarios all point in the same direction' is one approach that I have been strongly following Andrew, it certainly reduces the risk!

My particular point on a possible ABC pattern was the wave equality between waves A & C. It could of course be lots of things - but hitting the 'wave equality' on the button gives, to me, a higher probability that it might be a ABC pattern that has emerged. This, of course, is Rudy's next most favoured scenario.

Thanks Andrew for your earlier 'cycle' post too - I'll spend some time studying it and get back to you..

bill


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billt
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Sunday, October 03, 2010 - 08:24 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Time's Up!




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rdumas
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Sunday, October 03, 2010 - 08:35 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Bill,

You get the week's E'Dubya award for "Most Improved EW Student". You have learnt the valuable lesson of 'wave equality'. Well done.




I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Sunday, October 03, 2010 - 08:39 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Some Important Reading

I found this article rather interesting. Refer link below.

http://www.zerohedge.com/article/guest-post-prediction-things-will-unravel-faste r-you-think


An extract from the article was:

"We happen to live in a non-linear world; a core concept of the Crash Course. But far too many people expect events to unfold in a more or less orderly manner, with plenty of time to adjust along the way. In other words, linearly. The world does not always cooperate, and my concern rests on the observation that we still face the convergence of multiple trends, each of which alone has the power to permanently transform our economic landscape and standards of living.

Three such trends (out of the many I track) that will shape our immediate future are:

* Peak Oil
* Sovereign insolvency
* Currency debasement

Individually, these worry me quite a bit; collectively, they have my full attention."



I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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skyhawk
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Sunday, October 03, 2010 - 08:45 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hello Rudy,

The situation on the 8Hr Cycles for ETF Gold has changed since that last chart I sent you (1 week ago). These charts are sensitive to price change and ideally should be plotted once a day not once a week which is all I have time for due to other commitments.

I have attached the 8Hr bars and weekly bars analysis. I did mention one week ago I was out of the market because the cycles in both these timeframes were pointed down.
I should stress that by 'pointed down' it suggests either a sideways OR down market and unfortunately it's not possible to determine which.

At this current juncture the 8Hr cycles cycles suggesta $4-5 move up from current levels. The cycles pic can change on a dime, but at this point in time that is what is being suggested.
The weekly cycles show the 11 and 22 week cycles to have bottomed and rising. The is reflected by the 8hr cycles bottom. However the largest cycle, the 44 week cycle is still hard down. Whether this stays this way time will tell, but present it still suggests a net sideways market in the longer term since the $150 peak from 2 years back.

So at this stage I will join you guys on Monday, but I think we need to be careful of this move being only a temporary $4-5 move.

Cheers
application/vnd.ms-excel
etf gold 8hr bars cycles analysis031010.xls (302.6 k)
application/vnd.ms-excel
etf gold weekly cycles analysis031010.xls (371.7 k)



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rdumas
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Sunday, October 03, 2010 - 10:07 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Hi Andrew,

I want to briefly discuss the concept of your cycles analysis and then ask questions at the bottom of this post. As Bill has rightly mentioned, I have not fully comprehended the way to interpret your cycles analysis yet which is why I have always left the interpretations up to you.

When I was making an attempt to explain your cycle analysis methodology to Bill in my own simplistic way I said that the market cycle was made up of 100's if not 1000's of individual cycles but that for each time frame one could reduce that quantity of individual cycles into 3 primary cycles. You use Fourier Analysis to deconstruct the complex market cycle into the 3 primary cycles operating at a particular time frame.

Now these primary cycles are not pure sine waves as they are each made up of 100's of individual cycles. Hence whilst you may call them an 86 bar cycle, in fact the actual periodicity of this primary cycle would vary somewhat from the pure 86 bar sine wave which theoretically would have a period of 86 bars.

I use your 86 bar cycle for ETF GOLD as an example. I have made up a 'measuring stick' which I have shown on two locations on your 86 bar cycle chart below to assist in accurately measuring the cycle period.

Note that the period of the cycle actually varies within the time period shown from around 100 bars to 123 bars. This is the reason why you say that the cycles need to be monitored constantly because the price variations greatly affect the periodicity of the cycles.





Now we can see from the above example that I have taken the period of the cycles based on the lows of each cycle. Had I taken the highs of each cycle the period would have been different again. For this reason you carefully monitor each cycle to note when a top or bottom has taken place to determine when the price action will change.

Now purely as a rough guide, I noticed that last time the new high formed around 50 bars from the low. Using this as an example I have nominated a possible high for your 86 bar cycle. Now using this rough guide, we would expect that the top would come somewhere around the 770 bar time period. As we are already close to the 750 bar time period that would suggest that the top should come in around 20 bars time.

Naturally enough when the 86 bar cycle 'tops out' that does not necessarily mean that the market will top out because it will depend on what the 22 and 43 bar cycles are doing.


Questions

1) Is my explanation of your cycle labelling correct? That is to say that the 22, 43 and 86 bar cycles are nominal periods only because they are variable?

2) I note that based on the chart for the ETF GOLD shown it appears to reflect about 6 months worth of data and yet the number of bars covering that period is around 400 bars and each bar is supposedly 8 hours. If we do the maths that would equate to around 400x8=3200 hours to cover a period of around 6 months.

To the best of my knowledge ETF GOLD trades 5 days a week for around 6 hours/day. I would have thought that 5 (days/week)x6 (hours/day) x26 (weeks in 6 months time period)=780 hours. Am I doing something wrong here?

The reason for the above question is I am attempting to determine what period the that 20 bars represents so that I can determine roughly when the 86 bar cycle will top out.

3) Am I correct in assuming that you determine that there is roughly $4~$5 worth of gain left in this stock because we are currently sitting on the median line (pink line) and 3 standard deviations up is around $4~$5?

(Message edited by rdumas on October 03, 2010)


I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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rdumas
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Sunday, October 03, 2010 - 11:32 am:Edit Post Delete Post Print Post    View Post/Check IP (Moderator/Admin only) Ban Poster IP (Moderator/Admin only) Move Post (Moderator/Admin Only)



Unfinished Business

In my post 4068 of the 27th September I raised the possibility of BPT perhaps getting ready for a breakout. Not that I think that it is proving to be such a great stock but I did not want to leave it up in the air.

I do wish to raise a few issues. First of all is the problem that not all stocks are suitable for EW analysis. The only way to determine whether they are or not is to actually analyse them and see if they do adhere to the EW patterns. At this early stage it does appear as though BPT may be suitable but it's still early days.

Here is an updated intraday chart of the stock to show what has transpired since the last post.




In my earlier post I had expected that BPT would form a simple abc corrective pattern but it would appear that this was not to be as it is still clearly in a corrective pattern.

Subsequent to my previous post my friend Dolphin suggested that he would prefer to wait until a breakout into the low 70's took place before he would be interested. Whilst confirmation is always worth while it should be noted that the range of the preceding impulse wave was 10 cents. If we happened to have a wave equality scenario take place on any break out it would mean that we would have a target of around 76 cents. Hence to wait for a breakout of >70 cents from the 66 cent level would greatly intrude into the potential profits of the trade.

The things that I do like about the stock

First of all is that we have a 'bullish flag' in play at the moment. Now traditionally we like to see a flag that droops against the prior trend but parallel flags are still bullish from my experience.

Secondly is that we are currently in a corrective pattern. Corrective patterns occur against the prevailing trend therefore logic dictates that the trend that was in play prior to the corrective move must eventually continue. That trend was up.

The chart below shows the 3 day, 14 day and weekly W%R indicators. Note that the longer term weekly W%R is on an upward trend. The 14 day W%R indicator has come from an oversold territory and hanging around just above that area. The 3 day @%R indicator is showing some hesitation as the price action approaches the UBB.

Note that the BBs are starting to compress so an explosive move is in the offering in the near future.

Note how strong the 66.5 cent level has been for some time now. In my view that has formed a pretty solid base from which to attempt a move up. The upward crossing of the 20 day SMA above the 50 day SMA is also encouraging. The 150 day SMA (not shown) is currently still falling slowly but is showing a tendency towards flattening.




My only concern at present is what the overall market will do in the coming week or two and the effect that any drop will have on this stock. I do note however that when the XJO commenced its fall on the 15 April, BPT actually went up!!!

I should indicate that I did take a small position in this stock around the time of my earlier post.







I've given you my view based on what I know now. In another 5 minutes that view might change because of additional information. It's the best I can do - Rudy

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skyhawk
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Hello Rudy,

That is pretty fair explanation. I am not sure if I have 
mentioned before that the cycles charts I use are not exactly
of ETF Gold. They are of the 8hr continuous spot prices of Gold and the AUD.(24 hr markets)
This is actually a better measure because that is what ETF Gold prices are based on.

As such 20 bars is 20x 8hrs or 160hrs, which is 6.67 traded days.  The cycle might extend though  and might end up being longer than the median you calculated and price can move a long way in one day.

The 4-7 dollars move is the displacement that each of the cycles has to move to reach previous similar peaks from their current positions for each cycle and then adding all these 
individual displacements up.

Hope this helps

 
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