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Monday, November 9, 2009

Free Week Trashed the Wave

I've heard it said that whenever EWI has a Free Week the Elliott Wave fails to perform.
But I'll be honest. I'm loosing my confidence in Elliott Wave Theory, and I've been a Elliottian since the early 1980's.

The chart above shows the point at which MoneySpy would have us Long or Short. The points at which to take profits is less defined. While it is always a gainful trade to exit at the turning point, that method often misses a good portion of the run. The current state of MoneySpy appears to be close to issuing a Short , but until the line is crossed it only shows that money is coming out of the market.

But I'll ask you; what's better? EW which even after the wave is complete leaves the pros debating, or a system with a high percentage of profitable trades with clear cut entry and exit points? I used to put all my faith in EW, but now I'd rather make small profits on a regular basis instead of consistently loosing money, and telling myself I'll do better next time. OK I'm feeling bitter about my recent performace. But the biggest problem I have with EW is that the stops keep getting moved. It always appears that there is another scenario that will work out.

Anyhow I've numbered this chart with what I see as a possible EW count. I'll be looking forward to Kenny, Pedram, and Rich's counts. Of course the stop is at the recent high of 1099 /ES. By then I'll be broke. Just kidding but I will be painful.

The Andrews Pitchfork and MoneySpy. Stochastics, MACD ADX/DMI and Moving averages are something you can depend on, and are clear cut, with no interpretation required.

We are now at the top of the Pitchfork. This indicates that wehave a VERY high reliability factor that the market will turn down, but until the lower trend line has been significantly breached, shorts will be a high risk position.

The Ichimoku continues to be bullish with Price 25 points above the M60 Kumo. Even the Ichimoku would have out performed the Elliott wave over the past few months. This is basically a long term indicator, but for currencies I like to use 5 minute charts. For FAZ and FAS I like to use 60 minute charts.

Analysis presented on this Blog has only informational, and educational purpose, and does not represent a proposal for buying or selling currency contracts.


  1. I share your frustration with the EW count, the thing to remember is that corrective waves are extremely hard to label. I am currently short as well, but have to be objective, the internals were extremely bullish today and my short position is seeing a lot of red. lol.

    Trade what is making money for you, if your system is making money then trade it and only trade ew when you have a high degree of confidence.

  2. I find this comment quite odd, "...I'm loosing my confidence in Elliott Wave Theory, and I've been a Elliottian since the early 1980's." for someone who's been in the markets for such a long time (I assume that you've been actively trading since then) and has experienced quite a few rides!

    So in all these years, it is only now that EW has stopped working for you? I would find that hard to believe...

    I'm not an Elliotitian myself (or surfer as I like to call you guys!) but my method also appears to not work at times. This is a necessary fact for markets to wok efficiently. If there were a TA system that worked flawlessly all of the time, we would all be spectacularly rich. Or would we? Financial markets are a zero sum game. To every winner there must be a looser, and not necessarily in equal proportions. It ultimately boils down to demand and supply. Wherever the greatest strength or weight lies, the market will move in that direction. As long as a system can give you an edge most of the time (and EW does) then with good money management (the only real holy graal of trading) then one will be ok over the long run

  3. I have come to the conclusion that there are not many systems working. I think the market controllers have figured out a way around these systems. My methods have not worked for since this up turn started. I think that the market boyz have been given free range to do what ever as long as this market stays up. It is getting to the point where you have to buy on sell signals and visa versa. When GS had one of there employees arrested for stealing their trading system, and stating "in the wrong hands someone could manipulate the market", it tells you what you are up against. By the way, has anyone ever heard the conclusion to that saga, or did they make it go away?

  4. To leocec,
    Sorry I did not notice your comment. I used to trade full future contracts, My broker Dean Whitter lost two of my orders. They had a record of the orders, but lost them somehow. According to the fine print they were not responsible. Well it cost me $30,000 and so I quit trading for thirty years. I'm just getting back into it, but over the years I would count the waves. Once you start, it becomes a habit.

    The thing is this market has been impossible to predict with Elliott Wave. I needed something new, something that works, and MoneySpy has been proving itself. So my relationship with EW is on the rocks.

    It's a lot like breaking up. Hard feelings, anger, and still you keep thinking about the relationship.

    To Anonymous,
    You're right, we never did hear any more about the guy who stole the GS trading software. He's probably in a torture chamber far far away.


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