Elliott Wave Theory

[Vtrader]

I have read many references to Fibonacci ratios here on ST and perhaps a little less about Elliott Wave Theory. For my own part I have just had my eyes opened by learning the fundamentals of Elliott Wave theory. Time to modify my selection/entry/exit criteria.
Back testing my recent trades I have been enlightened to see that my new knowledge would have kept me from some losing trades, and some marginal trades would have been much more profitable...
What is the enlightened oppinion of others here at ST regarding the value of EWT?

From EWI recently...
http://www.elliottwave.com/freeupdates/archives/2010/08/13/Bullish-on-the-Dollar-and-Bearish-on-Stocks-Bob-Prechter-on-Bloomberg.aspx

Please post your oppinion, both in favour and against.
Rest assured that if your post starts with "I think...", or " I believe..." or words to this effect then (no-one can) nobody should refute your comments as they are valid oppinions.

I look forward to a lively debate encompassing EWT as a part of Technical Analysis, and encourage posts from juniors through to gurus, traders and investors. I am sure many have very specific oppinions, and others are as yet unaware.

V.

[fungus pudding]

Please post your oppinion, both in favour and against.
Rest assured that if your post starts with "I think...", or " I believe..." or words to this effect then no-one can refute your comments as they are valid oppinions.

V.

To refute something means to prove it wrong. An opinion is just that and unless it is correct in fact can be refuted.

[peat]

I subscribe to some EWI publications so clearly I'm a believer -
In forex charts I see the idealized patterns occurring at all levels of degree that is on weekly charts or minute by minute charts and I sometimes use EW counts to time my trades or look for reversal patterns one of the benefits is that it often gives very clear cut off points (stop loss)

However in itself EW Theory isnt a trading strategy so even with a correct count you still need to formulate ways to apply it to trading. To take the refutation theme which fungus ripped into pretty quickly like all theories it can never be proven only disproven
The thing is you never know whether your count is right or wrong until after the event. Good wave counters always have an alternate count ready when one of the 'rules gets broken'
I'm keen to continue any discussion on this subject - the best wave counter around here was 'dumbass' but he seems to have gone very quiet lately


To head this thread out with a solid factual basis I'm going to type in some of the rules and post a picture from EWI with a classic ideal formation. (It should get peak oil theory discussed! )

Rule 1
Wave 2 never retraces more than 100% of wave 1

Rule 2
Wave 3 is never the shortest wave

Rule 3
Wave 4 never enters the territory of wave 1






Last night I saw some pretty clear 5 wave counts on the small time frame and took some advantage of them. you can see my trades as little triangles

One of the things I find quite usefule is that RSI divergence often occurs on the 5th wave whereas in the third we generally see rsi and price moving in tandem

[Vtrader]

To refute something means to prove it wrong. An opinion is just that and unless it is correct in fact can be refuted.

FP, Was that vocabulary lesson really necessary?

The intent of my initial post was an all inclusive invitation to discuss EWT.
I consider your post regarding literary detail to be off topic and intimidating to others.
Please PM me if you take exception here, so an EWT discussion may evolve in a mutually beneficial manner...
V.

[Vtrader]

Peat,
Thanks for your contribution to EWT.
8 trades in 9 hours, perhaps something to learn here also... my transactions are more like 8 trades in 9 weeks...
V.

[Phaedrus]

Robert Prechter is president of Elliott Wave International and has since 1979 been publishing the Elliott Wave Theorist. He is the author of multiple books related to the Elliott wave principle. As indicated by the name of his company and his newsletter, he relies essentially on Elliott wave analysis to forecast stock market behavior. Prechter has been making predictions for many years through his investment newsletter, Elliott Wave Financial Forecast. Newsletter tracker Mark Hulbert has been documenting Prechter's investment trading predictions and picks since 1985 so he now has a nearly 25 year long track record which can tell us whether you should trade on his predictions or not. Here's how Prechter's trading advice has done from 1/1/85 through 5/31/09 versus the broad U.S. stock market average (Wilshire 5000 index) according to Hulbert's analysis :-

Annualized Return: Wilshire 5000 Index + 9.7%
Prechter's Trading Advice -15.4%

Total Return: Wilshire 5000 Index + 857%
Prechter's Trading Advice - 98.3%

$100,000 Invested (1/1/85-5/31/09): Wilshire 5000 Index $957,100
Prechter's Trading Advice $1,700

Source :- http://www.erictyson.com/articles/20090616

[Phaedrus]

Here is a recent ranking of investment gurus based on the accuracy of their "calls".

http://i602.photobucket.com/albums/tt102/PhaedrusPB/GuruRanking.gif

Source :- http://www.cxoadvisory.com/individual-gurus

[Phaedrus]

This chart shows some typical Prechter EW based comments. Judge their accuracy for yourself.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/DOWPrechter.gif

Exactly how much Elliot Wave forecast fans have lost depends on whether they actually went short the market when Prechter turned bearish. If they did, they are in a very deep hole - down 99% over the last 15 years. The stock market yielded a 398% gain over the same period.
Source :- http://www.marketwatch.com/story/robert-prechter-remains-superbear

I utilised Elliot Wave principles intensively for almost 2 years. I found that using EW in isolation I was unable to make consistent profits. Using it to supplement my usual approach resulted in lowered profits.
It didn't work for me - and it doesn't work for Robert Prechter!

[peat]

not sure about all your quotes Phaedrus - expect some could be out of context
my understanding is that RP issued a major call to cover shorts and to expect upside surprises in late Feb 2009 a couple of weeks before the lows

[peat]

Phaedrus seemed to kill this thread but I like to remind the Original Poster that its been 18 days since 8-Aug when I posted about the diagonal triangle on the SP500 thread (that was alerted to me by Elliot Wave International's Short Term Update) http://www.sharetrader.co.nz/showthread.php?7257-Daily-S-amp-P-500-INDEX-TRACKER&p=314460&viewfull=1#post314460

Market down 70 points since then = 6.25%. see attached picture since that date.

Prechter sent out his Theorist on the 10th saying 'the rally is over' and 'wedge shapes are usually terminal' the very day before the 45 point fall and all this bearishness kicked in.
Yes stopped clocks are right twice a day... but I've noticed the monthly publication has been well timed as regards picking these type of turning points.

Maybe there is something to their analysis ??

[Hoop]

Phaedrus seemed to kill this thread but I like to remind the Original Poster that its been 18 days since 8-Aug when I posted about the diagonal triangle on the SP500 thread (that was alerted to me by Elliot Wave International's Short Term Update) http://www.sharetrader.co.nz/showthread.php?7257-Daily-S-amp-P-500-INDEX-TRACKER&p=314460&viewfull=1#post314460

Market down 70 points since then = 6.25%. see attached picture since that date.

Prechter sent out his Theorist on the 10th saying 'the rally is over' and 'wedge shapes are usually terminal' the very day before the 45 point fall and all this bearishness kicked in.
Yes stopped clocks are right twice a day... but I've noticed the monthly publication has been well timed as regards picking these type of turning points.

Maybe there is something to their analysis ??

To be fair Peat most of the other TA instruments, Theories and Principles have also foreseen this weakness as well. EW principles were not unique in foreseeing this current weakness event. Personally, it is much better using an group of TA instruments, as well as other networked leading indicators and let them confirm each other rather than relying on one principle.

EW has its place in TA... but it is not the Holy Grail of TA

[Vtrader]

Thanks for those who have posted here.
Short and sharp. Some believe, and some believe less. No-one has outright dismissed the EWT as rubbish.
For now I am more a believer than opposer. Do not think I will ever be an opposer, like P says he used EWT for 2 years, and chose to use other methods.

Hoop sums up well with "EW has its place in TA... but it is not the Holy Grail of TA"

For ongoing EWT discussion, or for wave count perspective, PM me or post here.
Regards
V.

[peat]

EWI are offering a free week till Sep 10th for their Asian-Pacific and European Short Term Updates.
you need to sign up (which does attract email) but you will see their subscriber output for this week at no cost, so it offers an opportunity to evaluate risk free analysis of the Nikkei, ASX, Hang Seng, Shanghai Composite, DAX, FTSE, CAC 40, Euro Stoxx 50

[Hoop]

EWI are offering a free week till Sep 10th for their Asian-Pacific and European Short Term Updates.
you need to sign up (which does attract email) but you will see their subscriber output for this week at no cost, so it offers an opportunity to evaluate risk free analysis of the Nikkei, ASX, Hang Seng, Shanghai Composite, DAX, FTSE, CAC 40, Euro Stoxx 50

Thxs Peat

[peat]

Hoop
did you look at their output at all
I didnt much

[Hoop]

Hoop
did you look at their output at all
I didnt much
No Peat I didn't in the end
Went to the front page though..seemed to be newsletters + 3 indicator program ..I guess it is another short term trading based platform, and after the week they want $49/month from you to carry on....

The web page wanted log in name password. I mucked around looking for my free subscriber login stuff... couldn't find it. There was a button on the web page about lost passwords and logins but by that stage I had lost interest and moved on as I get pestered with short term trading platforms in my emails...and this smelt like another one.

Was that what it was Peat....and only 3 indicator trial program??

oh well....

[peat]

you do have to be a member of the site (free) which means you have a login
and you will get some spammish emails from that - not too many though I wouldnt call it painful
but no obligations other than that.
I got the first couple of free outputs as pdf but I cant attach them as they are ever so slightly over the file size limit for pdfs on this site. A week old now anyway....

If you can handle one or two marketing emails a week I think its worthwhile being a free member of their site - their free emails tend to give away their view, so its like getting something for nothing and then there is the occasional free week access.
To avoid the pain of forgetting logins make sure you use the 'remember' option in your browser.

[Vtrader]

A counting exercise from EWT.
2933
The EWT count is available on the web. I will post it soon.
V.

[peat]

A counting exercise from EWT.
2933
The EWT count is available on the web. I will post it soon.
V.
I cant see the attachment Vtrader....

[Vtrader]

Peat,
Hope you can see this.
http://i949.photobucket.com/albums/ad333/VtraderNZ/EWT-test1.jpg
I now have the EWT version also, and was heartened to see the same as my initial count.
Was going to post the solution tonight, but will wait a few days
V.

[Vtrader]

Anyone care to offer a different count for 10 year Gold...
Prudent to have an alternative count...
http://i949.photobucket.com/albums/ad333/VtraderNZ/EWTGold3650.jpg

V.

[Vtrader]

Anyone care to offer a different count for 1 year gold?
Prudent to have an alternative count...
http://i949.photobucket.com/albums/ad333/VtraderNZ/EWTGold365.jpg
V.

[peat]

heres the official count of Steve Hochberg
but hes been bearish for a long time so, as many criticize , elliot wave is not always a useful predictive theory.

[elZorro]

It might also pay to keep a very close eye on this chart, a link posted by Airdale. http://quotes.ino.com/chart/index.html?s=NYBOT_dx&t=&a=&w=&v=s
If you're only looking at the US$ cost of gold, that depends a lot on how the US$ is going against a basket of currencies. Not so well at the moment, and it could get worse. In turn, this chart affected by many news announcements and in particular, any talk of QE sends it spiralling downwards.

[Vtrader]

EWT count.
http://i949.photobucket.com/albums/ad333/VtraderNZ/EWT-solution1.jpg
They sure are speaking like bears
V.

[peat]

Vtrader from what I'm reading EWI are quite unsure about bond prices, they are saying
"It is still not clear in which direction the next significant bond move will occur"
however I tend to think that with their overall deflationary perspective it wouldnt be unreasonable to assume that they see bond prices rising and yields falling - though of course that has happened a fair bit already. It is hard to see interest rates lower but as Phaedrus said in the IFT thread, the halt of a trend doesnt mean absolutely that there will be a trend in the opposite direction.

Robert Prechters monthly issue out today - he talks about revived junk bond popularity with issuance at all time highs "The public is chasing a large return on capital without considering return of it. "