waveslider

Hi Thrunner, Would you be interested in taking this trade? I would have a hard time rationalizing it personally. EWZ has been one of the strongest ETFs around for months.. not saying that can't change, but using fundamentals to get into a trade usually gets you in way too early. .. It looks like trying to pick a top. I don't trust WW pattern enough to just go for it. ONe to watch though. True the ethanol thing has gone way too crazy, and brazil has always had inflation issues. I wonder how many "smart guys" were shorting EWZ because of the problems with ethanol as a fuel source. I bet they've covered by now, hope so..

Here's a little update on the cycles/wave timing.

There is a trendline that is proving itself over and over again as support/resist. Should it hold this time, targets are much higher. Check it:

I see the same thing.

hi justlurkin, there was a bug. If you are interested, I have a better version. PM me. I'm in hawaii so there might be a tropical lag.

hey blowfish, it is obvious stuff. But as you probably know, obvious does work. The key to making $ is not this stuff, its risk management - and discipline. You've been around enough to know that I'm sure. Making $ is trivial and obvious, if you have the proper lens to see the market through... heehee, not that I'm rich...

big point value for ES is $50. so one contract X 20 points is $1000. Plus margin requirement +/- $4500 (overnight margin) 2% is a VERY conservative risk with futures since they are leveraged so much. Also, futures e-mini markets don't get halted often (I haven't seen it). As far as hedging goes: If you are position trading the contract - ie. you have a signal on a daily chart that says go long - you open up your position. As long as the signal is valid (you decide this, maybe say if it is above/below the close of the entry day) you let the trade work. If it goes against you, use some other product to hedge. The idea is to let the technical signal work for you in the ES contract, because theoretically the statistics should back the trade. I think Palatine has a point that usually you would only hedge positions that aren't so liquid intraday (normally a stock position), or something you want to hold for the long term for tax purposes. Personally, I use the leveraged ETFs (QID,QLD,SSO,SDS) to hedge positions (not futures positions). These ETFs have good volume and percentage movements. futures markets like ES are so liquid that the best idea is just to exit your position (have tighter stops) rather than hedge. Either that, or double the max historical drawdown of your entry signal, add that to the margin requirement and that would be a good min. account size. hope that helps!

My opinion is that the holy grail is 1. Self discipline to adhere to trading plan 2. Money management (position sizing and proper scaling) My biggest problem has been self discipline also, James. I can know what I am doing is wrong and watch myself place a trade against the plan. Its just too easy. What has helped me the most is to keep a notebook nearby, and write down everytime I am tempted, and the time. Lots of times I am just trading out of boredom or the need to be right. Taking the time to write down my temptation usually de-fuses the situation. Its worth a try.

you're right on the money bh. Be nice to have a step pull back in the next few weeks.

duzntmatr - there are many timing methods out there, none of them are solid and dependable because of the distortions that occur in the markets. If you are interested in timing, check out the post I have going called "timing methods", it'll at least get you started. Russell continues to outperform its brothers (or sisters). A retest of recent daily lows would likely be a good buy point for just about anything.

Thanks OAC that's a good point, from the momentum standpoint - - the highest they can push the close is what is important to position traders. Intraday highs and lows are just noise.

Here's a chart of ES with the next turning point coming in today or tomorrow. The last one came in on time and called the high well. There are 2 timing signals on this chart. A longer term cycle of 30 bars is signaled for tomorrow. If this is not a turning point, it is an inflection or "inversion" which I mentioned above, where price will travel another approx. 50% in the current direction (down). That would take it down to 1326 area.

you got it MKP. the WW timing actually worked on that one.

BHtrade- Good point and observations of yours. I agree that smart money is buying this leg lower. High volume bars like that are either accumulation or distribution, sometimes its hard to tell - but the fact that there was no blow off top, coupled with the RS of small caps gives some good clues.. OAC -- haha! I'm not giving anysecrets away -not even close. Yes I do run a fund that has nothing to do with wolfe waves. Know what you mean about the low hanging fruits.. I guess that waiting time is what brings me to TL (boring=patience).. watch out for the evil hedge fund lurkers who spend all day on message boards trying to squeeze ideas out of guys trying to trade one lot e-mini! Beautiful day in BC, I'm going camping - enjoy the holiday all!

OAC - -> # of trade opportunities doesn't necessarily = trade profits!. Right? I trade off of 10 minute charts and daily charts, and I hedge using QLD on the 300 and 900 tick. I don't even trade WWs, but I do watch them to understand market structure. When you say proficiency with WWs as far as experience - you're rite about quantity of trading. Personally, when I overtrade I lose money. I also get into some weird kinda mesmerization... I prefer to relax and let the opportunities come on the higher time frames, then zero in. You know? But if you can watch those tick patterns form on the low time frames, you must like the adrenaline.

Ha ha ! (I look at 300 tick) Good point, and the market will do whatever it does - whenever it wants for whatever reason. Usually to make the majority lose money! It was time for volatility to start cycling back into this market. It's starting to get interesting again.

but isn't that almost certainly priced into the market by now? Seems like it has been discussed quite a bit. There is the possibility of bigger players taking out stops. Highest volume today in almost 2 months. Nice steep channel created a great short trade today, hope some of you caught that... Wonder if that was a capitulation, or just the start of the action? Check this out - 2 wide range bars right in the same spot. Wonder what that means? Where are the candle junkies?

Interesting stuff going on in the markets. Everyone is sooo eager to jump in and short, the move up was done on such OBVIOUSLY low volume.. But what we've seen is these expansion patterns suggesting volatility is increasing. The point I'd like to make is regarding the inter-market relationships between mid-caps and small caps vs. the S&P. I know this is slightly off topic of wolfe waves, but I'll bring her back around.. Check this chart and notice that on this last move higher, the RUT is showing relative strength to the SPX. The MACD of this relationship is trending higher. Today in particular, small caps were outperforming. Small caps are usually the first to go in a sell off, as the flight to quality moves money to big cap dividend payers. Looking at the difference between the Russell and the other indices is striking.. This is a major red flag folks. There was a lot of volume in all markets this afternoon, and while the Russell is in a confirmed downward sloping channel (red), there is a potential WW here. I am using a slightly modified 1-4 line as I believe the spike through it was a distortion. I like to use trendline points that have low volatility. The 1-3 line is a point where the market should have accelerated even further. It might be a little early to call this a buying op, my systems are saying buy. Comments>?

I just found the reason - full moon! The moonies did it! :doh:

Someone else noticed these cycles recently, this is from a tradestation forum. Similar idea.

Hi Kiwi, you make some interesting points. I think an e engineer would understand the concept of inversions just from exposure in their business to cycles (waves). Inverters are common products changing DC to AC, sounds like there could be some similarities. I think we got mixed up in symantics with waves vs. cycles. I would rather talk about waves anyday! (hence my screen name). In fact I would love to talk about waves on the Gold coast where you're from. Anywhere but here in Canada where it is very windy during spring. Anyway, I would agree that most traders do not rely on cycles, because they are always changing and combining with one another. So do waves. However there is cycle analysis that works. If you are interested check out John Elhers work. The man designed R-MESA which is one of the most (if not the most) successful mechanical systems in history. Elhers uses Hilbert transforms I believe, others have studies Fourier and quite a few other processing methods. As for your last statement, all you need is an experienced eye to see where a market is trending or ranging. This is where humans excel, in pattern identification. However : "the first principle is that you must not fool yourself - and you are the easiest person to fool!" - Richard Feynmann "We don't see things as they are, we see them as we are" - Anais Nin It is good to have some kind of structured "rules" to help define "range" or "trend". I have introduced a tool that some traders will find absolutely worthless. That is because they are not inclined to "see" market waves. Once you start seeing waves (or cycles - whatever) you can see where big ones crash into each other and "double up" (in surf speak). You have to train your mind on what to look for. This is a timing method, as the title of the thread suggests. I would not recommend it as a primary signal for entry, but instead as a tool to see underlying structure in the timing aspect of the market. I don't understand your last statement "Also you don't need cycles to tell that a market is ranging in congestion before reversing or gathering sufficient steam to continue onwards." If traders had a sure-fire way of differentiating exactly what phase the market was in, then they would be able know exactly when to use what systems. This is an art more than a science, and while Elhers method is good, it is not sure-fire. There is enough interference and distortion in the markets to annihilate most markets. The holy grail is money management. Thanks for your comments.

OAC, these are basic wave dynamics which happen everywhere in nature. In the ocean when 2 waves come together and create a single wave double in size, it is called a "rogue" wave. The inverse of a normal cycle is a circle, so naturally when an inversion occurs the cycle continues another 50% in the same direction instead of reversing and going the other way. I'll bet that if Stevenson was an electrical engineer, then he observed this in the way energy waves move and probably incorporated into his thinking. He would have to because markets do not oscillate all the time. So inversions occur in a trend at the point where the end of a cycle occurs. I have been taught this, and I have observed this. It's probably not the way many technical traders term it, but if they are able to discern where markets make a transition from cycling to trending, then they have seen it. Cycle analysis is perhaps the most important part of technical analysis because as traders we need to know if the market is trending or cycling. In trends you buy breakouts, in cycles you fade breakouts.

OAC, Crane's book has been on my to do for a while. There's another one that deals with this by an author named Stevenson I would like to read. So I'm not really familiar with these, can you add some color to these observations? In answer to your question, no its not an AB=CD really. It is a period where volatility dies and trend occurs instead of oscillation. When you use the timing method to find these points you can normally mark where the wave will end. In this case, the cycle ended on the 22rd. The 23rd was an "inside day" and marked the approx. 50% mark of this minor wave (in yellow on this chart). The following day was when price broke out, and this is where the new wave began. I marked the 50% time line which shows this observation. Incidently, there is a cycle top due today, it is more clear on this chart - which includes overnight session.

here's one, it appears ok on the nasdaq also, but I like it better in ER2

They've been speculating the fed is done raising interest rates for weeks now. I suspect that the tinder was dry, there was a lot of it, and then a spark came... or you could just call it a snowball. A big hint was an attempt higher that turned into a bearish engulfing pattern on the 10 minute chart.