Elliott Wave and the XAO

[Porper]

You have labelled this as an impulse but are you sure it is? Looking at the bigger picture may suggest the broadening top of the last decade maybe completing. This looks like a big wave 4 expanding triangle. It remains to be seen if this bull can sustain it's run into 2016. Personally I believe we will start a major decline between now and October as major indices world wide are blowing off at present. Time will tell))

I can't comment on the posts by Rimtas as he is on ignore but can see his chart in your reply. That count i.m.o. is just wrong as he has impulses labelled as corrections as well as wave (2) taking longer to unfold than the larger degree wave 2 which is a common theme in his interpretation of Elliott Wave. When I have more time I'll post up a chart.

 

[rimtas]

You have labelled this as an impulse but are you sure it is?

No I am not sure. Because Impulse wave is not complete. I will be sure when I see five waves complete. But at this point it will be too late, right?
Until then, everyone and everywhere can keep their bearish scenarios alive, because after all, EW magic lies only at the point of reversal, i.e only when pattern is complete.
And while a bigger five wave advance is developing, you can see bearish patterns along the way, starting from 2010. It was first Primary wave 2 of ABC, then WXY in 2012, then it morphed into triple ZZ near 2007 top, then a magic thing happened-2007 highs where breached and P2 become Cycle Wave b.
And everyone were(and still are) pointing to "shocking" fundamentals. But the market keeps on going, it is up to you whether you wait another few years till it sports "a five" ,or just keep on shorting it.

 

[rimtas]

as wave (2) taking longer to unfold than the larger degree wave 2 which is a common theme in his interpretation of Elliott Wave..

Smaller degree correction can be larger in time and price more often than not. I am not arguing here with you, I am applying my observations in real time and due to this I am more right than wrong. The guidelines of wave formations are not written in stone. Good luck waiting for the market to be textbook.

By the way, Elliott was an observer. You know, even good observers can miss something if they don't have enough data. You better make Wave Principle work for you rather blindly applying few guidelines extracted from 50 years of data. EW is the best approach to the market if you consider 4 main rules. The rest is like changing whether in Melbourne.

 

[rimtas]

If you go this link and then at the bottom of the page there are comments, the first one is most funny. Just take a look at the date, it is written after the last year-end crash...(crashes makes people bearish)

http://www.investing.com/indices/australia-200-futures-advanced-chart

sterling intentions Nov 03, 2014 12:57AM GMT
Certain information has just been released to a select few concerning devastating economic factors in both the US and EU that may not be made public for a while. Estimated release of data is 7 November at 3PM ET, US. We have liquidated ALL long holdings Worldwide on Friday 31 October and are now short 50% hoping for those in control to make an effort to keep markets afloat until Friday, where we will be 100% short, all holdings, all nations. Extremely limited upside potential followed by tremendous downside potential and possible collapse. Greed kills, take profits NOW. When the move comes, you will not be able to get out fast enough.


This remainds me that some folks want to be cool, but end up as usuall...

 

[rimtas]

Here is one more EW setup. From the mid March bottom TTS has risen in "five"(as LD) and now small wave (ii) is developing. It could go down/sideways a bit more, but the ascending Channel is the ultimate support here as TTS is in the strongest wave sequence. If Channel is breached down, the expectations needs to be adjusted accordingly.
I Expect another 10% rise Impulsively in the months to come using this as an operative and tradable count presenting a low risk entry.

 

[gartley]

Short term subdivisions proved that BHP is on the run in an Intermediate Wave (D), which should take the rest of the year and Top in the $45-50 range before the (E) wave crash. I will use any correction as a BUY, I am confident that ~27 bottom will not be breached. With Iron Ore bottoming(for a dead cat bounce), and market overall in a positive wave, BHP should sport another wave for a long term Triangle pattern.


View attachment 61827

Rimtas. You still working with the triangle?

 

[rimtas]

Yes, longer term my main preference is a Triangle, with waves D and E missing, which should take a few more years. It is amazing to see how BHP is holding strong in the face of crashing Iron Ore.

Logic tells me that I should avoid buying it, but from the bottom BHP sported an Impulsive advance, which is basically a sign that another leg (up) of Triangle has started. Usually when I follow a logic I miss good opportunities and when I follow waves I make money(in most cases). So I decided to wait for a perfect setup that the ongoing correction should provide in the weeks to come. I'll post an entry chart if I see it.

 

[rimtas]

I want to return to TLS, which is forcing to think me harder because I realized a first loss in a year and still holding another position which is in the grean (entry at 5,60).

The most recent decline from ~$6.70 top is too big already to be any part of the wave that started in Oct 2014. It can still be part of the wave that started in January 2014, but in this case in should shoot straight to new highs and never look back into sub 6 territory again, confirming that larger degree third wave is in progress, which should top close to 1999 highs.

But when you look at monthly and weekly charts, there is a strong "feel" and "look" that the advance from 2010 bottom is a Five wave rally, which is complete. TLS retraced the exact 61.8% decline from 1999 top, which is another evidence that prices can encounter a resistance to rise any further.

Sticking to the count(in previous page) that generate loses is not a way how you can make money, so in this case I am dropping my bullish stance on TLS and placing a protective exit on the remaining position at $5.90, which if executed leaves me with a small profit and last dividends paid.

The most important signal that the trend in TLS is turning would be
1) break of the ascending Impulse Channel which runs ~$5.9 in April and a bit higher later.
2) The price will decline to ~$5.65 area. In this case it is the classic reversal sign when the price retraces the "fifth" wave to it's second wave.
Basically those two signs will be a strong evidence for reversal, but to confirm them we need the most Important one-a decline from the top should sport five waves down. It looks like five now, but only at the smaller degree, price is still in the Channel, so it is too early to panic and sell, unless entry was above $6.4.

I may change my thinking again, but at this stage I will not be putting any fresh money into TLS before the count resolves itself to the point where new entry signal is generated. The rise above $6.7 would be return to bullish count, and the drop below $5.90 is a bear signal for the entire rise from 2010.

 

[rimtas]

I was not looking much at the All Ords recently because I believe the ongoing correction is still in progress. At this stage there is no confidence to say that the Shape and size of the pattern is complete. Still too many alternatives remains, though it already took 6 weeks to drift sideways.

My main focus is that wave ((iv)) is developing and after one more push down to ~5700 levels the final wave to new highs will follow. I am not ruling out the posible Triangle pattern, which could take another 4 weeks or more to develop. If I am able to identify the end of wave ((iv)) bottom, I'll post a chart.

One more way to look at the bigger picture is that the entire rise from the end 2014 is only another first wave in a series of 1'st and 2'nd waves, thus a deeper correction can occur.

Bearish News, RBA actions and analyst consensus opinions confirms that the bull trend is in the works. The talks about recesion started to resume recently again, saying that sideways market movement is maturing.





Most recently the Entire Asian Pacific Region posted a big gains that took everyone by surprise. From 2010 it was mostly the sideways movement for the Index, but India, Taiwan and China broke out early in this period, putting a positive presure on the remaining countries-constituents.
The most likely scenario is that the strongest and longest bull wave (Primary 3) has started in the Region which should last years and post the biggest gains.

As an Example I'll post the Hong Kong's Wave Count which strongly consides with Asia Pacific Index.
A good anectotal evidence was recently cathed by media when few analysts returned from China and said that It is doomed for decline. This mesage spreaded like a plaque among financial channels, but China rallied instead sporting the biggest advance in the last 5 years. Widely spread bearish pinions are a good fuel for the market to lift off. Afraid, thus long.

 

[gartley]

This market is struggling. This is a terminal pattern in progress not a wave 4. I stand by my analysis of some weeks ago that a correction is imminent starting this week and terminating into June. We will see 5100-5200 before we see your expected 6150. I will post more analysis that adds weight to this later.

Relying only on Elliott waves is not high probability as there can be many possible wave counts at any given degree of trend. In isolation it's simply not enough to build a case for a high probability entry.

 

[Porper]

Relying only on Elliott waves is not high probability as there can be many possible wave counts at any given degree of trend. In isolation it's simply not enough to build a case for a high probability entry.

Although I am an Elliott enthusiast I totally agree. The Wave theory is best used in conjunction with other techniques/patterns to confirm or cast doubt on the wave count. I tend to use time analysis but anything that works for you will suffice. That said I disagree that we are going to retrace immediately but we'll know soon enough.

 

[rimtas]

Thanks for your critique guys, but I am resistant to it. If you need any other methods to use with EW, it is your choice. I don't.

After reaching lower range at 61,8 retracement, OIL is developing a new wave. I am looking for another five wave advance towards ~70, unless it crashes from here forming a wave that is part of the bigger correction.
Oil stocks and BHP should do well if you consider there is a correlation between oil and energy stocks.

View attachment 62300


View attachment 62301



All Ords has a nice looking Triangle here as wave ((iv)), so if market shoots up to new highs, consider this is a valid pattern. The decline below 5866 from here would say that something other is developing, but in the end I am looking for one more wave to new highs where I drop a few stocks from my portfolio and lock in some nice profit that accumulated from Dec 2014.



View attachment 62302

 

[Boggo]

All Ords has a nice looking Triangle here as wave ((iv)), so if market shoots up to new highs, consider this is a valid pattern. The decline below 5866 from here would say that something other is developing, but in the end I am looking for one more wave to new highs where I drop a few stocks from my portfolio and lock in some nice profit that accumulated from Dec 2014.

Wave 4 still in progress, no real change from this post of the daily XJO
https://www.aussiestockforums.com/f...=15355&page=20&p=863316&viewfull=1#post863316

Sub 5700 still on the cards

 

[rimtas]

Agree. Financials and Mid Cap50 index shows that we are probably half way through wave ((iv)), so a bit of a drop should shake out some more bulishness to keep the trend going up later.
Mid Cap50 even looks like the correction has just started, but first I will be looking for the prices to reach the lower channel line, where some sort of terminal pattern should emerge.

 

[rimtas]

BHP has a nice three wave correction at this stage, so probabilities for a next leg of advance are very high. If prices take out the extreme of the (b) wave Triangle (31,50 pivot), most likely they will shoot higher, and if previous top of 34,3 is taken, then we have a confirmation that wave ((iii)) is in progress, which should advance at least towards $38 levels.
Alternatively, the decline below 28,75 from here most likely find a bottom at ~27,7 sporting another valid corrective pattern for wave ((ii)).

 

[rimtas]

BHP took out the important level today, opening the door to the next pivot of 34,30, which when breached, confirms that third wave (of A) is in progress. I expect Wave A to top somewhere in the 40 area sometimes later in the year.

 

[rimtas]

There are more and more evidence that the ongoing correction can take the shape of the Triangle. Since the begining of March Market is moving in "threes", making higher lows. For the pattern to be complete Market must crash now into 5850-5800 area, completing the 8 week correction.
As (e) waves in the Triangle are terminal movements, basicaly like fifth waves, they carry a lot of momentum and sentiment gets very low at the end, many bulls capitulate and news gets gloomy.

Triangles in most cases generate a powerfull Thrust, like explosion to the upside, in this case I would expect 6200 area to be reached in a short run.





There are still a number of scenarios probable appart from Triangle, (with 3-3-5 flat next most likely) but at this stage the terminal move down has the highest probability.
If market rises from here to new highs, the probabilities for an expected wave ((iv)) will turn slimm, making an even more bulish case than I expect short term.

 

[rimtas]

A few days ago I noticed that both retailers WES and WOW were sitting nicely near the long term trendlines, and then bounced to the upside , confirming that market sees those supports important for the rising trend.








WES has a clearer picture than WOW in terms of EW pattern short term. It completed a nice three wave correction and sported a small five wave upside movement, which confirms that the trend has changed. If price manage to take out the pivot of 44,7 of previous wave (b) , it would build a strong case for the next bull wave to ATH, which would be a third wave and carry to at least 55 in the months to come.

WOW needs to overcome more strugle in order to build a bullish case-it needs to take out 34,70 and sport some sort of Impulsive pattern to confirm that the decline is over. If WOW declines and lingers well below 28, I would lean towards long term bearish case (towards 20) which I discuss if this event materializes. But for now I am long WOW and looking towards higher levels.





Looking at the banks wave subdivisions, it doesn't look very shiny, so I believe the next leg of advance would come from mining, energy stocks and retailers.

 

[gartley]

rimtas, looks like your wave 4 will be a non event. The way I see it, wave completed already and wave 5 was a truncation.

The long term Gartley pattern I posted indicating a multi month decline is about to start was triggered this week at the 0.786 retracement. There was too much confluence there from fibonacci, pattern, cycles and even EW making it a good bet.

We are bearish at least until mid June and more likely into the months following that.

 

[rimtas]

rimtas, looks like your wave

Well, it's not mine... Market tells the story, you read it. Many people read market in different languages, so the outcome is different to everyone. EW, Gartley, MA, Stoch, Fundamentals -they all tell different stories.

By the way, Your Gartley pattern could be correct-Prechter just issued interim report saying that Dow Top occurred yesterday, and the biggest bear market in history has just started. So tighten your seatbels, mates...All Ords will crash to 1000 till 2016.