Tuesday, March 13, 2012

Stocks Float Higher; Euro Struggling

I'm not posting any stock charts tonight.  EWP has not been accurate in forecasting stocks the past several weeks and some people have expressed anger and great frustration with EWP and me, and judging by the hate mail I've been getting I think most of them simply look at the charts and don't read what I say.  So I'm going to only post words for stocks tonight.  This anger and frustration some people are feeling is usually because they are new to trading and fail to understand that no analysis is 100% accurate all the time, and it's up to the trader to determine when the probabilities, along with risk/reward ratios, are in their favor to determine when a trade is worth making.  Professional and successful traders don't have to always have a trade in place, and don't have to always know which direction the market is going.  Trading is about probabilities and risk/reward ratios, and when they're in your favor then you trade, when they're not in your favor you stay away.  Right now, EWP is not in our favor for stocks, so I'm staying away until a nice reversal pattern forms.  EWP's accuracy for stocks will return, and I'll continue to make money on swing trades when it does.

Now EWP and basic technical analysis has been much more accurate with the euro lately so that's why I've been actively trading it and am currently short right now.  The euro has declined impulsively from its high at 1.3485, and so I will bearish until price goes above that level.

There are two wave count options I see for the euro right now.  The first is posted above where wave ((i)) has completed and it is about to undergo wave (c) rally within a "flat" correction for wave ((ii)).  The story here overall is still bearish, it's only in the very short term I have to expect a sharp wave (c) rally to around the 1.3200 level before it tops and reverses.

The other option is that wave ((ii)) has already completed, and a big strong wave ((iii)) down is now underway.  If correct, the euro will not hestitate to shoot lower this week.  If correct, this is a move I don't want to miss, so I have sell stops in place to catch a break out to the downside.  Utlimately risk is capped for the bears at 1.3485.



Johncostin said...

Excellent sensible analysis. I always enjoy reading your views. Any sensible trader can learn a lot from your posts. Keep up the good work.

animal said...

A thought, more like a conspracy theory, what if the PPP is actviely engaged in targeting EW failure points in the stockmarket.  For example, in the past the PPP would have targeted 0.5% pop in the daily close, now they would target 0.52% just to make the 4th wave exceed the 1st wave down to invalidate the higher order impulse down pattern.  Exposing such PPP activity would legitimize EW across across a broader spectrum of industry professionals. In the mean time such activity would make the normally tempered broad stock indices analogous to highly volatile commodity markets which according to EW don't necessarily follow the EW rules so iron claddly.

Seeing invaildations by 1 or 2 points on close in a 13000 point size market is frustrating.

TAfool said...

Take that hate mail and toss it in the trash. Most likely from those that want to be spoon fed everything.

I've been trading over 20 years now and your site is one of the very few I visit. Don't let the haters get to you, I always look forward to your views.

I'm sure you remember I've been calling for S&P 1390 for a long-long time. Got hit and I see no reason for it to stop here. For now initial impression is a triple top coming, 1558 yikes! Have to give it a few days and see how it shapes up. Ramp the market into November? Gee, why would that happen?

On the conspiracy front, USD up massively today, S&P up, and gold was drifting up. Somebody is lying and won't get away with it for long. I'm long EUR/USD $1.3050 for a scalp but plan to flip within the week. Before the 22nd for sure.

I sent you a chart link to your email. It's a timing chart that has been pretty amazing. I would be interested in what you think of it.

SpikerJ said...

Liquidity has definitely distorted this market.  Sorry that readers have been taking their anger at the market out on you.  It comes with the territory sometimes, so I guess you have to filter out the bad to enjoy the good.

PrincipleAnalysis_Blogspot_Com said...

Indeed, comes with the territory.  Thanks for the note.

PrincipleAnalysis_Blogspot_Com said...

Hey TA, good to hear from you again.  I do remember you calling for 1390 a while back, good job.  However I must part from you when you say a triple top is coming.  I have rarely seen a triple top.  Usually the market just punches right through.  But I'm not playing it either way, I'm a bit disappointed I didn't catch all this upside, but on the other hand I'm glad I was prudent enough to not short into the rally either.  I'm not comfortable getting long right now with volume so light and momentum diverging from price on numerous fronts.  So I'm waiting for a reversal pattern and I'll jump in for at least a short term short position.  Are you expecting 1558 to be tested then TA?

And I agree, it's highly unusual that the dollar and stocks are moving together.  Haven't seen that in looooong time.  As for your timing chart, it looks pretty amazing.  Did you write the code for the indicator yourself?  What are the dots based on?  In other words, what is calculated to put them in the position they're in?  Looks like a high percentage of accuracy so far.  Have you done further backtesting on it?

PrincipleAnalysis_Blogspot_Com said...

Yes, those type of invalidations are frustrating but you can always "tweak" things a bit if other markets and indicators are still following EWP rules and guidelines.....like using charts on a closing basis instead of an intraday basis.  Sometimes that will keep the EWP count intact.  But this is only recommended when you have hefty other evidence suggesting that you should retain the count. 

PrincipleAnalysis_Blogspot_Com said...

Thanks John!

Jaylen Watkins said...

Thanks for this brilliant post market analysis.


Shivakkumar Vadiveyl said...

Elliott Waves is contrarian in nature. It works best when everyone is against it and worst when everyone is using it. Probably it had gained a lot of following recently, which started to work against it. When you start having a lot of people hating it, it would then probably start to work like a charm.

PrincipleAnalysis_Blogspot_Com said...

Although not scientific, I can conclude that EWP is quite unpopular right now.  Now would be a great time for a big reversal and selloff.  I'm looking at the 1400-1410 range in the S&P cash for that reversal.

PrincipleAnalysis_Blogspot_Com said...