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By Ramki36 Comments1 Min Read
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imo, b waves are the most difficult and deceptive waves to trade of all waves. i have lost so much money trying to trade b waves in various markets its not even funny. getting stopped out often and squeezed is not worth it just trying to find the top. im staying away from equities until the dow/gold ratio is at parity or close to it. when i can buy a “share” of the dow index with one ounce of gold i’ll start investing in equities. for example, if the dow index is at 8000 and the price of gold is 8000 the ratio is 1. that is a great time to buy the dow and sell gold. in the meatime, dow at 13593 and gold at 1774 the ratio is 7.6. gold has a long way to go, and the dow has some correcting to do.
i have learned from past experience anytime a market shows an obvious chart pattern like the recent bearish wedge in the spx i think we should be very suspicious of what the market is saying. same thing with head and shoulder tops and so on. i’ve seen h&s tops fail in the index in the past.
Could you please post an update on Euro/Dollar ?
Do we have reached the Top ? With 1,3190 or 1.3250 or 1.3330 ?
I would be pleased to here from you.
thx. for this writing about SPX 500. There are only a few traders who can retrospectively openly admit they were wrong in such way as you did it! On the otherwise trading SPX 500 was in last months really difficult because the EW-picture was and still is not very clear. My quwstion on you is following: have you considered to do some intermarket correlation analysis? There used to be a good correlation between US-stocks and AUD/USD, recently lost. However the correlation between USD/CAD and SPX 500 is still very good. Would you please consider to make an EW analysis of USD/CAD? I am sure that could clarify the most probable move of SPX 500 in the near future. Sometimes is simple the EW-pattern in these with stocks high correlated currencies (AUD/USD, CAD/USD) much clearer and can help a lot. Thx for your work and the excellent book which I bought of course:-) I am sure there are many people waiting for a new one, incl. myself. I am sorry to hear there my be sort of delay with this project.
Good luck and one more time many thanks!
Hi Sinuhet, thanks for your kind comments. I haven’t done any correlation studies myself, but would look at usdcad when I return from my travels towards the end of this month. By that time, i am hoping the SNP index too would have EW patterns that one can trade.
As one of the followers of this column commented a few weeks back, I have also observed most EW analysts giving More “SELL” points than “BUY” points. I just don’t get the Logic behind waiting to Short SnP 500 @ 1435-1450(Or EURUSD 1.2685), when it fell from 1426 to 1262(or EURUSD fell from 1.3500 to 1.2070).As Ramki himself pointed in the above update, most people(esp. EW Followers) missed the whole Rally and are Now busy changing the Counts and are confused.The Best chance to Short The SnP in an Election year is ,after the Election not before(i have said this in earlier comments also). I don’t know why people expect Bear Markets every Year. This expectation itself says we have begun a New Bull Run(in Oct’11) which might have Minor Corrections(below 20%) in bewteen,but 2008 like correction(1475 to 1080 in SnP type )one can only expect in 2015-16. Also identify “BUY” points is my only request to all !!
Here is a very good Line I read somewhere on the net Last Year :
“All Bull Markets Begin with a Crisis(this time Euro zone) and End with a Bubble and not vice versa ” 🙂
Hi Samyuktha, thank you for the comments. There is much truth in what you say, but the fact is the tendency to be a perennial bull or bear is a weakness that traders in general suffer from ( not just EW analysts). Attempting to pick a top or bottom in a trending market is more dangerous than this weakness because trends do continue beyond what we often expect. The mistake tha many people make is to not realize they are wrong when the markets clearly singnal it. It is OK to be wrong. I always insist that we will all be wrong sooner or later. The successful trader is one who makes money using EWP DESPITE having a count that turns out incorrect with hindsight. Thus, in my Forbes article, although I confess being wrong on anticipating a top, there is no shame in it. I know the markets, and always realize that it is we who have to change our tactics, not the market! Best to all who read these comments.
What does Elliott Wave analysis indicate for AUD/USD (short term and long term) ?
Hi Vijaykumar, as you know wavetimes exists to teach you the techniques of EWP so you can make that assessment yourself! I am currently traveling and it will be some days before I will have access to my charts.
I have alot of respect for you for admitting you are wrong, lets be honest trading is about putting the odds in our favour and adhering to a model will ultimately make you a “net” winner and that surely is what its all about. No one is right all of the time.
Once again thanks for a great read/post and i eagerly await the next few months one thing is for sure it will a interesting time!
I admire your courage in accepting that you were wrong in trying to find the top, which shows the strength of your character. Also your consistent teachings like –a trader without a stop loss is like a gambler, EWP is just another tool for trading which basically guides you about the path ahead and a trader should not depend on it totally, market is always dynamic because even during the sideways price action like in a contracting triangle when the trader looses his interest in the market it can often be the ultimate cause for excitement and pro action because once the pattern is finished it expands in a powerful move, always identify the low risk trade set ups, identify the bigger trend, look for a correction by counting the waves and the Fibonacci relations in between the waves and evaluate the technicals like the momentum indicators are in sync with the price action and so many other principles.
Thank you dear Ramki for all these teachings which are a must for being a successful trader.Wish you a very happy journey, Bon voyage !
Hi Dr Sanjay, thank you for your kind comments.
Good Morning Dear Ramki. I would like to remind you about the present price action of RCOM. In your update on RCOM you had requested to remind you when RCOM reaches 43/44 levels. As per your counts it made a low of 46.55( 2 or 3 points here and there does not matter in EW counting that is my opinion) on 30/08/12.. It was in an Ending Diagonal Pattern in the vthof the 5th wave and I had sent you the chart via mail. on 11/09/12 saying that it has given a Break Out of the E.D. pattern closing at 51.55 supported with high volumes and Bullish Candle Stick Pattern and other positive Momentum Indicators.
Yesterday RCOM closed at 57.05, a fantastic rise of 10.50 bucks in just 12 trading days. You had stated that RCOM will recover swiftly to 185 as the extended 5th wave is prone for double retracement. I firmly believe in your E.W. analysis and RCOM is one of the examples of your expert and experienced analysis.
Please share your views and I think that we have still not missed this low risk entry level train.
NESTLEIND closed at 4400.80 yesterday.
Thanks and regards.
I’ve been following your posts on spx and I felt that the Fed announcement of QE3
changed the dynamics of your forecasts. I don’t think you were totally in error, but wave 5, due to external forces is going to extend much longer that we thought. How far can it go?
Hi Jim, thanks for writing. I know that I was following the true spirit of EWP, all it’s rules and guidelines. Hence, when the markets changed, I had to humbly accept the need to go back to the drawing board, in a manner of speaking. For those who visit WaveTimes to learn how to use Elliot waves to profit, this would have been an invaluable experience. No one could have honestly quarreled with my counts at that time. Sure a different count is always possible. But to say one count is correct when compared to another count before being proved wrong is not being faithful to the craft. Thanks to you, and all others who appreciate this fact.
Maybe you were hasty in your current bullish call, it seems 1475 is the top?
Hitesh, The main goal of wavetimes is to share my knowledge and experience of Elliott waves. When trying to illustrate, I choose an index, stock or commodity…anything that interests me at that time. The aim is NOT MAKING A CALL, but sometimes I express what I feel at that time. Hence, I am certainly not being hasty, slow or stubborn with any comment…. I say all this so that readers such as you, all of whom I consider my friends in the market, share my genuine passion for EWP, and prosper by learning the nuances. The real time experience you get here should be what makes you come back, not just because it is all free and I am not selling anything here ( not even my book!) good luck
once in a while there can always be a no ball. No regrets.
Hi Ramki,have you considered that your call on the S&P may not be wrong at all and that 1475 cited on several of your charts as the target level has held .Keep up the good work.Regards Willem
Hi Willem, thanks for writing. Even the fact that it paused there is gratifying.
Is elliott wave analysis applicable when intraday or even daily price bars are extreme? How does one count wave structure when extremes are noted during certain waves?
Keep up the good work—perhaps you have examples of exuberant price swings.
Hi Ron, I guess you would have noticed that my goal is to get our club members to learn the “how to trade” using Elliott waves rather than “how to count”. However, as you correctly figured out, it is useful to know how to count. I wonder if you had a chance to read FWTFF. Of course, you could learn the wave counting from any of the good books in the market, and you will see that there are some waves in a 5 wave sequence that have a tendency to move relatively large distances…these are called extended waves.
Thank you for response. I have purchased your book and trying to learn by your examples. However, I was not thinking of extended waves but volatile price swings within certain waves.
Again thank you so much for your analyses and commentaries and may you be rewarded with the highest distinction and esteem as an analyst.
Hi Ron, when a move in unfolding as an impulse wave, we don’t normally see volatile action against the trend. My view of such a development would initially be to suspect the “liquidity” available for that instrument. If it is a thinly traded stock, for example, where one or two big players can push the price around, then such movements are possible. However, we should not apply Elliott wave principle to these stocks because EWP depends on mass psychology. It works best in well traded markets and instruments.
ramkiji…i think s&p will correct by 100 pts now..the top was made at 1475.please see the charts when you get time off.we just did an ending diag
Request you to please post an update on Nifty. Guess, this time, we all depend on your analysis more than ever
Could you please do an elliott wave analysis of VXX? (since it is the most common instrument to trade volatility)
As per my wave count, we seem to completing the fifth wave on the weekly chart. (the first wave downwards starts at 145). It is trading near an all time low. I understand that we could see it go down another 30-40% in the near term.
I would appreciate it if you could take a look at the VXX chart when you get some time.
HI Karan, thanks for writing. I will add this to the growing list of pending requests… time is in such short supply! In the meantime, be bold and complete your counts. Write down your expecatation in a notebook, alongside the current chart. In a few days/ weeks you can see how things turned out. Good luck
You should not have bailed on your S&P call. Many forecasters are forecasting a 400 point drop on the SPX in October. Martin Armstrong predicts the volatility is going to rise in the month of October. ECRI Lakshman Atchuthan is forecasting that we are in recession already. Some event in October is going to push us over.
HI Suren, Thanks for writing. WHen I wrote my S&P comments back in March, I pointed out 1475 as the top. I don’t know if that level was discussed by others because I don’t read others’ comments regularly. It is best to do one’s own analysis. About giving up my bearish call, I do that because there are some people who blindly follow what I recommend despite my repeated warnings in my writings that I have also been wrong! It is to protect these people that I sometimes publish a note to announce that something could be going wrong. I dont do this after the markets have run away to ruinous levels. For example, when I wrote that mea culpa, the index was just about 15 points away from the 1450 level. My approach to the markets is to capture large moves with minimum risk. So what if the S&P index tops out at 1475, and I pulled the bear plug ahead of a big move? We can always get back on board the bear train once it starts, can’t we? This is why members of wavetimes club (including you) appreciate what I write. We should never fear to get out of a trade that looks suspect, and more importantly, we should be flexible enough to get right back into the trade. Every single chart that I have posted in WaveTimes have been faithful to the tenets of R.N. Elliot’s work. If some trades go wrong, it is because the markets changed. Our method was not at fault. This is what I want readers to appreciate. Once again, thanks for posting.
Strange,being bull in Gold in 1999-2000-2003 i could not find many bulls,gold went up and few investors really benefited,but in 2003-2004 was correction which took almost most gold shares even lower that in 1998-2000,SVM.TO,NAK was trading at pennies and my broker was to much scared able to invest even 10k into garantied buy.Now I hardly see any bear and I see how distantly far people to get it:when Dow or SP500 going to 5000 and 500 accordinally-the gold will be at its 600-800$ at best,all of you forgot how hard had crashed all gold bugs back just in 2008,what I’m affraid is that most banks will sell gold as usually in most unappropriate moment,while many thinking banks so stupid so they accumulate gold!Many uninformed that before any junior like NAK,NG is rising capital the banks getting their future production,thats why many of you do not see that banks selling gold or accumulating without any specific reason,but to profit-they will do it againt,I guess at dow 10000,so I expect Gold first going 900-1000 and even may be lower before we see any skyrocket rise-too much bulls.
Welcome back. I am about half way through your book. I still believe you were correct on the S & P. Price to book is around 3.8, the 4th highest in the world. This compared to Italy at 1.25, Japan 1.27, near the low end. This looks bearish to me.
Thanks Jim, The ability and willingness to state that I could be wrong has freed me up to approach the markets without any bias. I won’t hesitate to call a top once it is confirmed.
When can we expect to see an updated wave analysis chart on S&P? It is around pre QE3 levels now. It will be interesting to see what your analysis say..
Thank you very Much!
HI VIsh, Thanks for posting. There are several requests for various instruments..I just dont seem to find the time…
Is it possible for those of your readers trading SP500 using FWTFF book to come together on a blog discussing direction totally based on technical info from the book
Job, sure but why don’t you start a google blog yourself and I will point people there…something like FWTFF fan club.