thalestrader

Hi BT, You did alright - you had your stop and you didn't lift hoping to get back to even (thankfully). You are correct in that failure to make a new high when you are long is not bullish. Also, look at your chart (you were trading the EURJPY I believe), and there we had a fairly clear short sequence (not necessarily obvious without looking for it, but you had a pullback low after the high, and then a rally that carried close to but not quite to the previous high. That low wold have been a good place to move your stop to, if not outright stop and reverse. Also, here is a neat little trick I picked up from a JR, aka "Baldy," some years ago. The notes on the chart should be explanatory, but essentially it gives another way of "seeing" areas of possible proportion that may act as S/R levels. As for me, the drop on the 6E took me by "surprise" in that I did not get the kind of indication I was looking for at the level at which I'd have liked to have seen it occur. Best Wishes, Thales

The best laid plans ... That was too quick for me to figure out what was happening. What a day! Best Wishes, Thales

My current thoughts on how I will trade the 6E today are on the chart (chart shows spot EURUSD). Best Wishes, Thales

Here is possible ABC up: The first arrow would be the A leg, which subdivides into 5, the middle arrow is the B leg, which can subdivide into 3, and the third arrow would be a C leg where A=C, with the equality occurring at a past pivot level. Not a prediction of anything, by any means, as the unfortunate thing about EW is there are always alternate counts. But, given that the over all trend is currently down, a 123 short sequence that presents itself in the vicinity of that dotted gren line would get my attention moreso than one that occurred, say, right where price is now. Best Wishes, Thales

Uncertain to us all ... but that really is about the extent of the manner in which I use EW myself, i.e. to sort our possibilities. Of course, with five waves up, we have what could be a 1 or an A. A correction could retrace 1/3 to 2/3's of this little rally, and make another five wave advance, and still be nothing more than a rally in the over all down tend that resolves to new lows. Just follow the highs and lows, higher highs and higher lows, lower lows and lower highs. Right now this rally is getting a bit sloppy here at the highs, but it did manage to just push through PT2. I'm just watching for now. I missed the trade of the night on the 6B last night and I'm not quite sure why. I'll post that one later (after the opening 10-30 minutes of the US markets). Best Wishes, Thales

You are trading too many markets. I do as well, but my primary vehicles for my own account are the 6B, 6E, and 6J. Most of those whom I know actually to do well at this game trade one market, or if multiple markets, they are related, e.g. oil and gas, Notes and Bonds, ES and NQ, Euro and Yen. I have no idea how you are selecting your trades, but the easiest way I know to maneuver between chop and trend is to apply the long/short sequences, aka 123's, and the concept of chop zone to your S/R analysis. Whatever you are using, whether it is candlesticks, MA crossovers, astrology, etc, you can use those few PA concepts to help set you right more often than not (though it will not immunize you from losses to be sure). Best Wishes, Thales

Always a good idea to time your buys so as to have support from the general market. Here is an interesting article from IBD from 4 or 5 years ago that I saved (Sorry that the charts didn't save with it - I have no idea why). Best Wishes, Thales Even 'Secular Bear' Will Still Have Time For Nice Bull Runs Author: DAVID SAITO-CHUNG Section: The Big Picture Date: 6/8/2005 The Nasdaq has risen as much as 98% since a powerful market rally began 2 1/2 years ago. Many growth stocks have logged triple-digit gains. Yet the media might have you thinking otherwise. U.S. newspapers and magazines have used the phrase "secular bear market" as if it were dogma. Since the major indexes posted a huge follow-through on Oct. 15, 2002, IBD has counted more than 100 articles using the phrase. The small-cap S&P 600 has gained 99% and made all-time highs as early as October 2003. Yet on cable TV news shows, announcers and pundits have uttered "secular bear market" in 75 separate occasions, a search of Nexis.com shows. Over that time, the U.S. economy has grown at a steady pace, corporate earnings have hit record levels and hundreds of companies have successfully braved the IPO waters. So why the "glass is half empty" mentality? Dow Struggles, Leaders Soar One could blame in part the public's infatuation with the Dow Jones industrial average, which remains the first-mentioned index in many market reports. The 30-stock Dow is made up of huge, well-established, profitable companies. But the Dow has gained virtually squat since it broke 10,000 in March 1999. Compare that with the Dow's heady run of the 1990s, in which it raced up more than fourfold, and many have concluded that the 2000s are simply the start of a long secular bear period. That's why journalists and pundits have compared the market's recent action to the so-called lean years of 1966 to 1982. But ask successful money managers whether they've made gains during these "rocky" periods, and the answer is a resounding yes. Why? They've latched on early to young, innovative companies with outstanding growth numbers at the start of fresh market uptrends, then sold when the stock gave topping signals and the market headed into periods of fierce selling. "It is true that the Dow went nowhere from 1966 to 1982," said Fred Fern, chairman of Los Angeles-based Churchill Management Group, which invests $1.8 billion. "That said, as investors, you and I should be worrying about the cyclicals, not the secular. What you want to do is to define the end of bear markets and play the cycle." Sideways, But Not Flat As the accompanying chart shows, the declines during that 16-year period slammed plenty of investors. From December 1968 to May 1970, the Dow fell 37%. From January 1973 to the end of 1974, the Dow slid 47%. Those harsh waves down forced some Wall Street brokers to throw in the towel. There were plenty of reasons to be scared at the time. Recessions hit the economy in 1970, 1974, part of 1980 and 1981-82. The Vietnam War demoralized the country. Inflation spiked, thanks to oil shocks by OPEC. In 1981, the prime lending rate hit a record 21.5%. But the spirit of free enterprise, a stable system of government and tax cuts also helped spawn bull rallies during that difficult period. Plenty of new companies with revolutionary technologies attracted heavy buying by institutional investors and staged gains of 200%, 300% and more. The 1966-82 period was similar to the aftermath of the 1929-32 bear, in which the economy, even during the Great Depression, produced life-changing inventions such as the TV and more efficient cars. Microsoft, the world's largest software company, was incorporated in 1975. Wal-Mart, which now has $294 billion in sales, came public in 1971. After the Dow slid 27% in just nine months from its February 1966 peak of 1011, the market bottomed on Oct. 11 that year. Six sessions later on Oct. 19, the Dow gained 1.7% on higher volume, confirming a new uptrend was in place. That follow-through gave the green light to astute investors to find leading stocks. Winning Stocks Indeed, there were scores of great winners. Just two days after that follow-through, movie studio giant Metro-Goldwyn-Mayer broke out of its base and began a 138% price run that lasted through October 1967. Less than three months later, Holiday Inn broke out and posted a 151% increase. Many other companies produced even larger gains, including Digital Equipment (351% gain from January to December 1967), Bausch & Lomb (44 to 160 in 1971), Loews Corp. (up 819% from April 1967 to February 1969) and Disney (fourfold gain from 1968 to 1971). "There were tremendous opportunities to make a lot of money, and we did," Fern said. The value of the major indexes at key market tops has little relevance to the bull market cycles that later take place. The Nasdaq's March 2000 top at 5132 reflects the peak of speculative froth in a select group of companies. Many of them went on to lose 95% of their market value or go bankrupt - JDS Uniphase, WorldCom and CMGI Inc., to name a few. Despite the strong gains since early 2003, the Nasdaq still sits thousands of points below that bubble peak. But like the 1966-82 period, plenty of big market winners have made triple-digit gains for those who understand how to use charts to spot signs of strength. Many of them are recent new issues such as Chicago Mercantile Exchange and Coach. Meanwhile, Apple Computer and others have reinvented themselves with new products or new management. Indeed, it's hard to call the past three years tough times. Over that period, there's been a tech rally. The Nasdaq rose 50% in 2003, its second best showing ever. Internet, chip, wireless and biotech stocks have also joined in the leadership, breaking out of good bases and marking 52-week and all-time highs. Major Sector Rallies Home builders began their big climb as early as the second half of 2000. And during the past 2 1/2 years, investors have witnessed an energy rally, a health care rally, a steel and metal processing rally and an Asia rally. "Sector rotation is an important component of our asset modeling work," said Valentine Capital Retirement Group, a San Ramon, Calif., firm with nearly $1 billion under management. "We continually monitor the market for leading industry groups and signs of sector strength. Being aware of increasing wholesale prices the past four or five quarters has helped us gain exposure to outperforming sectors like health care and raw materials." In a secular bull market, the rallies tend to last longer. Fern, who has been a professional money manager since the 1960s, warns that during slower periods, bull rallies tend to be shorter. A Maturing Cycle? He calls the current bull market, which is now two years, seven months old, "mature." Fern also warned that the cash position among mutual funds is at its lowest level since two other key market junctures: early 2000 and May 1972. Managers, just like individuals, are susceptible to the herd mentality, and the crowd is always wrong at market extremes. The Federal Reserve has also made its mark on the market's recent landscape. "Greenspan has been the chairman of the Federal Reserve since August 1987, and his style has always been to raise the fed funds rate until he causes some crisis, or until the economy goes into a stall, and then very quickly ease again," wrote Don Hays, a veteran market strategist and head of HaysAdvisory.com, in a recent note to clients. The 1995-2000 period was the only time when rates weren't being ratcheted up and down in a wide band. So when the next top comes, Fern said, investors should go light and reduce risk "because you can make so much in a cyclical bull market."

I wish you all the success you deserve for your hard work, MK. If you don't feel it would "give too much away," I'd hope you would share some of your trades with us as you become more comfortable with your approach. Best Wishes, Thales

I would imagine that this should carry to the second PT, though nothing says that price cannot reverses before PT. Best Wishes, Thales

I am no EW expert, that's for sure, but these diagonals, I have found, are especially common in the currencies. You were right in that when one occurs in an impulse that it indicates an end to a larger degree move,but that move need only be larger by 1 degree. You also will sometimes see them appear seemingly out of no where, in which case one of two things is happening: 1) the ending diagonal is appearing as the "C" of an ABC correction, or 2) sometimes, though rarely, in the "A" wave of a zig zag. I usually do not try to drill down further and subdivide the waves within a diagonal, I just look for the diagonal itself to form and reverse. Best Wishes, Thales

Nice, Marko! Very good eye. You called it quickly based upon what was likely the very first indication price gave that a bounce was immanent. Even if someone did not have your eye, the ensuing price action certainly gave notice that at least a small but tradbale rally was in the offing. I was not watching at the time, but I think anyone who has been reading this thread would agree that this long sequence on the EU would have been easy to see in real time. Best Wishes, Thales

Ending diagonals are actually very common at all degrees of trend, and can be the fifth wave of any of the 3 motive waves. Best Wishes, Thales

Current look at the ES shows it going to PT2 on its couldawouldashoulda rally ... Best Wishes, Thales

Current look at the Dollar Index (daily) ... Best Wishes, Thales

Hi Folks, Two charts of the 6A (AUDUSD futures). This is not one I follow, but I was prompted to open it up today in response to zt's posts, and I had an idea of how I might be able to illustrate the concept of degre of swing or trend for those who are trying to understand it. I used a software called MTPredictor to identify three degres of swing (I've mentioned MTP here before, and I know daedalus also owns it or has access to it - this is in no way meant to be an endorsement of the product, I am using it as a tool - a very expensive tool - to illustrate a point). MTP is an Elliot Wave software, and it has the capacity to fous upon thre levels of trend which it calls major, intermediate, and minor. This first chart is the 15 minute 6A. I know it may be difficult to make out, but the notes on the chart should help you see how the same price action can be cut up or bundled into groups of moves of various sizes, i.e. swings of differing degree. I select one swing to illustrate this concept in the above chart. As you can see, the software identifies one major swing that it breaks down into seven intermediate swings, and thirteen minor swings. Each of these degrees can be traded. But nothing says you must trade each. Some traders, for example, daedalus, tend to focus on the minor swing level. I tend to look at the intermediate swing level. My daughter, for what its worth, is usually using the major swing levels to get her into intermediate degree moves. I mentioned my friend Mark yesterday, and he trades only the major swing levels, and pays no attention to what is occurring at the minor or intermediate swing level. This will make a difference in the number of opportunities a trader finds, as well as the extent, in terms of both magnitude of price movement and amount of time in a trade. Look at the following chart of the 6A. In this case, I used a 34 minute chart (an old favorite of mine that I still look to from time to time, but not nearly as often as I should). In this chart, you can see where a trader trading the major swings would have gotten long at the 123 at the lower left hand corner of the chart, and would have stopped and reversed to short on the first short sequence of major swing degre at the far right hand corner. In the meantime, traders trading the intermediate and minor swings would have been quite busy during both the uptrend and the nascent downtrend. The tricky part, of course, is apparently learning to distinguish these degrees from one another. I think that perhaps being conscious of the concept may be half (or more) of the battle. I hope this helps. Best Wishes, Thales

Here is how that ES couldawouldashoulda trade looks as we near the Globex close. It will be interesting to see where it picks up and goes to when Globex re-opens. Best Wishes, Thales

I usually just have one PT, and it is either a SL or PT trade. I have used trailing stops with bracket orders on my broker's platform, but I usually end up with a less than desired result (after all, a trailing stop has to trail by a number of ticks, and it is itself "dumb" and unable to set itself to S/R and natural stop levels). The big benefit to trading overnight is that I am not there to mess with the trade. As I have said before, I do my best trading when I am asleep. Best Wishes, Thales

You seem to have much better results when you trade less. Don't be discouraged when you have a day with just 1 or 2 trades and both lose. It happens. Nice job! Best Wishes, Thales

69 cents will get you any size you want at McDonald's, MM. I usually post at least a trade or two every day, and I try to very clear as to whether I am taking the trade or just posting a chart. I know that you know where you can find me. You have posted a comment or two there yourself, but you are welcome to post your trades there as well. Quite a few of us do, you know. As for the rest, I was simply responding to a comment you made about Jon. That is how a forum works, isn't it? Or are you supposed to be allowed free swings while we stand around and clap? Best Wishes, Thales You know where to find me, MM. Best Wishes, Thales

No, I'm pretty much directing the entire show from this thread. Best Wishes, Thales But in all seriousness, I think it is not a coincidence. I think that fib levels do somehow touch upon a natural sense of, and if not sense, at least a desire for proportion we wonderful human creatures possess - a sense that extends from our recognition of beauty to movements on a price chart.

ES ... the couldawouldashoulda that keeps couldawouldashoulda-ing ... I extended the green PT's back in time to show how they match up with S/R levels. PT1, for example, is below the 1.618 as S/R is itself below that level. The other two line up pretty well with the 2.618 and 4.23 fib levels. Best Wishes, Thales

First, no need to apologize unless you do something rude. You did nothing of the sort, so I cannot accept your apology, and you can save it for later, just in case you need it in the future (though I doubt you will have occasion to need to use it). If I understand your example, then I would say yes, you applied the fib tool to swings of like degree between S/R, and out of that generated target(s) of like degree. If that is what you were doing, then I would say, yes, exactly like that. Best Wishes, Thales

I didn't trade this either, Forrest, but I marked it off since I already had the blueredgreengreen lines from earlier. You could still get filled right this second at the 1130 buy point if you wer so inclined. I am not so inclined at the moment. Best Wishes, Thales

I think I may need a few words from you regarding just to what "something like this" refers. Best Wishes, Thales

Well said! Best Wishes, Thales