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Interesting point Waveslider. I too have noticed the sustained 2 day relative strength of the small caps. During the large down moves of last year and earlier this year the Russell always underperformed the large caps. In fact, I can't think of a single 200 point Dow selloff where the Russell outperformed the Dow. Well, until yesterday, and again today that is.

 

Pull up a 2 min chart of ER2 and look at the action for 5/20/2008. Note the huge spike down volume bar that marked the low of the day (13:20 cdt). It was the highest volume 2 minute bar on my 30 day chart- not a day session open/close, no discernable news, or anything that would typically yield high volume. But the fact remains that the smart money clearly was buying that extreme volume spike lower. So your point about the volume increasing late in the day today and near the lows does not necessarily carry the bearish implications that many are suggesting and hoping.

 

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>?

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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.

 

Waveslider,

I don't really trade the Wolfe Waves either. I do look at them among other things. I do look at tick pattern on the lower timeframe. I am somewhat secretive about what I do because it is too easy to find this site by doing a google. and you know how many hedge funds are out there .;)

BTW, didn't you previousely mentioned you are related to a hedge fund of some sort? See what I mean /:haha:

As far as the adrenaline of short-term trading goes, yes on somedays I am like a Top Gun pilot, give them everything but the kitchen sink. On other days i can simply choose to relax and just pick the low-hanging fruits.

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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!

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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!

 

Yes, Waveslider, I am one paranoid nut I guess. The lower the time frame the more difficult it gets, and extremely competitive like the Indy 500 race I am watching now on this nice memorial weekend. Definitely not for the fainthearted.:o

Also just beause I trade the short-term doesn't mean I don't trade longer term. Far from it, but my tiny drawdown on my long-term positions would be the envy of many large hedgefund managers.

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Can Waveslider or someone else answer this question ?

 

What is the other technique to estimate the ETA point apart from the 1-3-5 and 2-4 lines intersection. Measuring point 2 to point 4 time and doubling it work ?

Or is it some fibonacci projection of 2 to 4 ?

 

Thanks in Advance .

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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.

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And one on the Russell leading up, very constructive over next several months. Blasted to new multi-month highs today even as S&P and financials were lagging miserably.

 

 

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.

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same old longer term chart.. looks like a potential ww developing. and btw, my trendlines sometimes 'slide' a bit after opening and closing the workspace so bear with me if you notice they are off.

ES_june3.png.9f4f4d2204b83b76fe1505b1170959fe.png

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Thanks for all the charts guys, keep up the good work.

 

EWZ, the ETF for Brazilian stocks may decline from here due to inflation concerns and frothy commodities prices

The Brazilian interest rate may go up to 12.25%.

 

If you believe commodities will be "much, much weaker" as Dennis Gartman does, this Ww may be worth taking a look. This coincides with a bearish Wolfe wave setup, target around 60s with initial supports near 85 and 70.

 

Hope this doesn't turn out as badly as this other short oil and EWZ idea in late January 08, but they didn't have the benefit of a Ww setup :)http://www.themoneyblogs.com/morpheustrading/my.blog/international-and-oil-etfs-ready-for-short-selling.html

5aa70e7100497_EWZbearishtarget60s2008-06-04_115044.gif.c096f14c5a2acdda96c6d2eb350cb185.gif

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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..

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Every other fund seems to be doing the same thing, pile into commodities with the news and technicals, especially in oil, and short the equities.

 

The attached chart showed that every oil trader and their brother were probably looking to go long at the last major swing low in crude oil. This coincided with a Wolfe wave long and together with some 'news' resulted in the largest ever price jump of more than $10 gain in crude as shown here in the mini crude QM. Using Wolfewave_NEN indicator from MT4 in this chart. Note that this indicator is slow in drawing the next Ww formation - usually only after the next line in the zigzag is drawn.

5aa70e72c34c7_WwQM2008-06-07_123551.gif.916e16bf2127869ad16352c11e9d0fd4.gif

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thanks ws, that is a nice example.

 

here's the 1 i have been watching for several days (see earlier screenshot). it looks like it has potential..and i have seen a few of these longer term patterns succeed, but we'll see. anyone have any thoughts on playing a longer term pattern such as this?

sameOld.png.92b428ea5d4456064373a1b166cf7116.png

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Probably, and also other numbers but if you apply the same numbers consistently - you will see instances where it worked...

 

The thing I see happen ALL the time are matching moves. Incredibly accurate.

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cool observation OAC. i had actually seen the pattern, but on the 60 minute. funny, i never noticed it on tick / volume charts.. I should recheck maybe.

 

the fib extensions.. requires a special tool (indicator) to draw?

thanks for posting the chart

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the fib extensions.. requires a special tool (indicator) to draw?

No, it is the same tool as Fib Retracement, except the levels are greater 100%.

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