The Elliott Wave Analysis Thread

[wavepicker]

For those interested in Elliott Wave and Cycles Analysis, I am posting my take on the markets at this Juncture.

Please refer to Word document in cojunction with the charts and excel files attached both in this post and my next posts(s)


Regards

Wavepicker

 

[wavepicker]

These files should be used together with my last post

 

[wavepicker]

These files to be read together with my previous 2 posts on this thread

 

[wavepicker]

sorry, unable to post last chart on DJIA Cyclic Analysis due to size limitations.
Will try again in another post.

Cheers

 

[Rudy]

XAO

Next Steps
Breaking beyond 3300 would invalidate this analysis as wave '4' cannot overlap into the price range of wave '2'. If a break beyond 3300 does occur I would be inclined to label the triangle (iv) scenario (in light green) as wave '4' instead - thus completing a very significant 5 waves down on the XAO. However this very small wave '4' triangle and thus a very small wave '5' seems too small compared with the bigger structure and the wave '2' flat, hence it's a very unlikely possibility. The good news is: We'll know very soon.


OWG.

Hi OWG,

Well the XAO had an intraday high of 3002.1 today thus breaching the price range of wave 2. I would just like to clarify your comment above. Are you suggesting that your wave currently labeled 3 will in fact now be wave 5 and that waves 4 and 5 were very small?? They do appear to be out of proportion to the rest of the pattern.

This would also suggest that we have entered our multi-month rally at this stage which I have some doubts about.

Cheers

 

[Frank D]

WOR Monthly

I don't want to stick my head in this thread, but this is just a follow up to the WOR posting that was discussed.

$17.65 precise top on the March highs

If you think WOR is going to go down, then keep an eye on the
April 50% level currently $15.55, as price needs to be trading below that to confirm any weakness in the 2nd Quarter.

Otherwise WOR is moving towards the 2nd stop @ $22.40

 

[OzWaveGuy]

Hi OWG,

Well the XAO had an intraday high of 3002.1 today thus breaching the price range of wave 2. I would just like to clarify your comment above. Are you suggesting that your wave currently labeled 3 will in fact now be wave 5 and that waves 4 and 5 were very small?? They do appear to be out of proportion to the rest of the pattern.

This would also suggest that we have entered our multi-month rally at this stage which I have some doubts about.

Cheers

It's a dilemma So let's look at the evidence at hand:

The proposed wave 4 has penetrated into the price range of wave 2 - not allowed, so our plans for the XAO have been foiled and something else is going on :

I would count the recent push up as a completed 3 wave move with both legs almost being equal and this leg up has finished almost spot on the 50% retracement of the previous leg down. A reversal can happen very easily as 3300 is a solid resistance level also - a reasonable assumption at this point. I would allow upto a 61.8% retracement to occur, but any more than that and I would suggest another count is unfolding.

So what are the options:

1. A bigger wave (4) triangle playing out? Possibly, not enough evidence as yet and a solid break of 3300 is needed.
2. A bottom in place? No evidence whatsoever of that. As you point out trying to fit the smaller waves into the larger count is a very tough ask (what was I thinking yesterday).
3. An ending diagonal? I doubt it as the wave down from the wave (4) end point is a 5 wave move - not 3. Unless there's a very big ending diagonal occuring then I don't give much weight for this scenario
4. Another subdivision of the leg down? Highly likely, considering wave (1) lasted for a very long time (~94 days) and subdivided substantially more than this wave (5) down - this would be my preferred count as the evidence here outweighs the other options at the moment. This could also imply that the recent wave 2 isn't a flat but made up of two separate waves (but won't count it in yet)

Either way, a break down from the current levels now is really needed to confirm further sub-division to complete wave (5) down.

Additionally, should further subdivision downwards start to unfold, then this would imply a very bearish stance on the XAO. A break of the 2700 level may indeed occur, and perhaps a reason that wave (4) ended sooner than expected?

We should find out a lot more in the next few trading days.

Good luck.

Cheers OWG.

 

[Cartman]

re your WOR analysis ---- i did read it ---- and its fine if it works for u ---- personally i would not be shorting it at the moment even if it does drop cause ( and it prob will) -- the last cycle up had too much momentum behind it ----

----- i dont trade long term and i dont do stocks, but i reckon youll see $16 + before u see $12 minus on WOR ----

Also not trying to look like a smart @rse ---- but i made those calls way b4 the mood of the market changed ----

as Tech points out (and I agree with him) --- its not about being right or wrong ---- but perhaps the 'simplistic' laymans view should be given more creedence than the esoteric longer term (and slightly lagging due to the prove/disprove necessity of E/W) -----

again, no disrespect intended to E/W's ---- i think the methodology is fine --- I think that sometimes the application may need a little fine tuning for entries/exits ----- that was really the only point i was trying to make (amongst all the crap i was carrying on with lol)

WOR Monthly

I don't want to stick my head in this thread, but this is just a follow up to the WOR posting that was discussed.

$17.65 precise top on the March highs

If you think WOR is going to go down, then keep an eye on the
April 50% level currently $15.55, as price needs to be trading below that to confirm any weakness in the 2nd Quarter.

Otherwise WOR is moving towards the 2nd stop @ $22.40

Frank ---- much respect ---- and much more specific than my "general" view ---- nevertheless, a "general" confluence of opinion ----

ps Nicks original "short" target was never hit so his analysis was fine ---- but, had the market had one more day of "iffiness" the target prob would have been hit and the trade would have ended a crapper ---

my point a few posts back about the 'confirmation' of the trade based on shorter time frame momentum was only to point out that 'secondary' confirmation is much more important than the first apparent move, or any initial 'gut feel' ------

E/W is a fine tool --- but u dont use a chainsaw to build a kitchen bench !!


PS Sorry OZ -- i had no intention of being a pain ----- this in no way undermines yr analysis etc ---- just a minor point that i think the average punter needs to be aware of --- regardless of whether they utilize E/W or not ------

PPS --- i'll go away again now lol -----

 

[OzWaveGuy]

E/W is a fine tool --- but u dont use a chainsaw to build a kitchen bench !!

No problems Cartman. Let me make a very simple point about EW - I'm not aware of any other methodology that one can use to analyze stocks and indexes at any time frame and use a set of predefined rules and pattern definitions consistently. It is for this reason that many choose to adopt EW (+fib) as a 'swiss army knife' in their toolbox.

I agree that some may not feel EW will help them as they are taking small amounts from a high volume of trades - fair enough, if the system works and is proven, then why change it. However, many folks will trade on longer time frames - so an understanding of the most probable direction will be an advantage.

Hopefully now that we have that out the way, we can continue to surf

 

[OzWaveGuy]

WOR Monthly

I don't want to stick my head in this thread, but this is just a follow up to the WOR posting that was discussed.

$17.65 precise top on the March highs

If you think WOR is going to go down, then keep an eye on the
April 50% level currently $15.55, as price needs to be trading below that to confirm any weakness in the 2nd Quarter.

Otherwise WOR is moving towards the 2nd stop @ $22.40

No problems Frank, I think u and Nick have made solid calls here. From and EW standpoint, a flat has unfolded and the last leg (5 waves up) now appears to be finished. A resumption of the downward trend appears to be the next move (or possibly a more complex correction needs to unfold before the underlying trend resumes).

 

[Cartman]

No problems Cartman. Let me make a very simple point about EW - I'm not aware of any other methodology that one can use to analyze stocks and indexes at any time frame and use a set of predefined rules and pattern definitions consistently. It is for this reason that many choose to adopt EW (+fib) as a 'swiss army knife' in their toolbox.

I agree that some may not feel EW will help them as they are taking small amounts from a high volume of trades - fair enough, if the system works and is proven, then why change it. However, many folks will trade on longer time frames - so an understanding of the most probable direction will be an advantage.

Hopefully now that we have that out the way, we can continue to surf

no more arguments from me OZ ----- i've probably annoyed enuff people on this thread by now, which was not my original intention ---- as i said, i respect yr knowledge and application of same ----

when its all said and done, all forms of analysis are adaptations of Momentum in my view -------- its really up to the individual to find what suits them best

please continue surfing

 

[nunthewiser]

NOT a post to intentiolly cause discomfort or reason for snotness

MY OPINION ONLY

no offense to EW users /preachers/swear by it people

PERSONALLY been following a few calls/Analysis re direction and timeframes i have noticed that longer term calls and directions seem to suit better


i trade using a number of wild and floozy methods and EW is not one ExCEPT when it comes to investment and longer timeframes

no offense intenedd but the EW methods / anylasis posted here has been merely a snapshot of what they may happen give or take 5 sceanrios , which is great when dilly dathering al;l day but for us hopeless quick traders we count and punt the likeliest outcome with or without a wave of aproval

 

[nunthewiser]

Please do not respond to my last post as "you dont understand EW.blah blha blah"

i understand what i see

 

[tech/a]

I'm not aware of any other methodology that one can use to analyze stocks and indexes at any time frame and use a set of predefined rules and pattern definitions consistently.

Frank would disagree with his methodology.
Peter Steidlmayer probably would as well.(Market Profile)
Wyckoff would probably also be in the mix (Point and Figure).

 

[wavepicker]

Frank would disagree with his methodology.
Peter Steidlmayer probably would as well.(Market Profile)
Wyckoff would probably also be in the mix (Point and Figure).

Agreed tech,

EW is not the be all and end all of market studies. At times it offers opportunities if applied correctly that other methodoligies don't. But it also has flaws as do most other strategies do. That is why the likes of Glen Neely and others made up new additinal rules and guidelines and moved away somewhat from the traditional application.

Having used EW for over 10 years now I can say from personal experience that there are other methodolgies out there that are equivalent(and easier) to apply in terms of rules and guidelines. Used together with EW in the toolbox, can be a very powerfull combination.

 

[tech/a]

No arguement here.

Waves you still in the US?

 

[wavepicker]

No tech I am here in Oz.

Apart from what Nick has been kind enough to post, lately there has been little emphasis on this thread with regard to the application of EW in real trading setups, which is what most traders would like to see IMO.

Just to get the ball rolling again I will post my most recent trades based on EW in isolation. Hopefully a few of the others will do likewise so that we can perhaps share any possible opportunities as it's hard to look at everything.

I will start with financial stocks. Back in October of 2007, I posted a chart in response to garpal I think it was on ANZ. This chart of ANZ was very bearish back then(although most thought it was bullish being in a bull market for so many years). The consensus then was we don't short Financial stocks. I actually made a mistake back then because I thought we were at red 3 and a red wave 4 correction was about to be made. In hindsight it was actually red 5. Rfer post:-

https://www.aussiestockforums.com/forums/showpost.php?p=215962&postcount=49

It didn't matter because ANZ got smashed shortly after making that post and it was my best short trade that year.

A few weeks ago I made another trade in ANZ. Looking at the weekly EW chart IMO this has completed an Ending Diagonal(one of my favourite patterns) anf IF correct has started a fast rally upside. We also have 2 other variables here that confirm this, weekly volume has been waning during the tracing out of the Ending Diagonal and this in itself is a confirmation of the Ending Diagonal. The other is that red waves a and c zigzag are equal in length(refer weekly chart)

After the count was complete at $11.83, I waited for confirmation(a higher low) with a stop under the low of $11.83. ANZ has been trending sideways the last few weeks and a break above the upper boundary of the sideways channel confirmed the move.


The other stock which I traded was CBA, another great setup. On the weekly chart we had a nice zigzag down from the alltime high @ $62.16. Red waves A and C are approximately equal in length.
Moving to the daily chart we had a nice runup(dividend run?) from the lows which WAS impulsive. That was the confirmation and giveaway that red waves abc were complete. The move down from $31.40 has been corrective, a nice abc. Another clue, it finsished at 0.618 retracement of the impulse up. I went long this stock on the higher low as well as indicted of the chart at $27.30 with a stop @26.43


So once again 2 high probability trades offering great RR using Ew in isolation.
Once again I say Ew is not the be all and end all of trading strategies, but at time sit does offer some good opportunities if applied correctly. This won't be apparent on every stock, but it will on some The same can be said for any other methodology

Cheers

 

[tech/a]

Have CBA from $27.97
SUN from $5.12

Elliott played a part as in where is the stock now.

 

[Frank D]

I’ve always said EW has too many important components that are missing
as part of it’s Methodology:- Support/resistance & Time.

There has to be an introduction of different filtering techniques based
on statistical probability that makes sense to the layman, so that
support and resistance is clearly labeled, reversals of trends are known
in advance, and understand where trends originate from and where they
are going.

Without TIME as part of the core methodology it becomes a Haphazard approach.

E-Wave doesn’t have a generic template, therefore you end up with
E-wavers with different counts and with different views, simply because
one of the most important components is missing:- the TIME variable
of shifting support and resistance.

But unless you have ‘time’ as part of the core model then the majority of
EW will get the timing wrong and have to rely on standardized trading
set-ups of ‘breakout’ patterns or other variables.

Wavepicker has demonstrated why he went long on banks using certain
daily set-ups, that probably has less to do with EW than he makes out. It had to do with Volume and other minor patterns to make the decision.

But if you are going long on banks around the March lows on the
Financials was the place to go, because statistically that’s the most
robust level to go long from, as pointed out a couple of months ago.

And as seen with Index markets.

A generic template at least gives every trader using the same view
and where to go long from and how long to hold the trade from and
where to exit the trade.

If holding banks you would look to partial exit or exit all around the April 50% level.

If you think banks are going higher and this is the low, then Financials
should continue above the April 50% level and continue towards 3600 on
the Index.

If you think banks are going lower, then exit and move into the next
BUY zones at lower statistical levels.

you don't need to label evey minor wave structure and then say
" that was a nice confirmation and giveaway that read ABC
were complete"

That's simply illusionary to the individual analyst and probably missed
by most

 

[wavepicker]

Wavepicker has demonstrated why he went long on banks using certain
daily set-ups, that probably has less to do with EW than he makes out. It had to do with Volume and other minor patterns to make the decision.
[/B]

Wrong. RN Elliott used volume along with wave counts a s a confirming mechanism. Minor patterns/ Elliott wave analysis IS pattern Analysis

you don't need to label evey minor wave structure and then say
" that was a nice confirmation and giveaway that read ABC
were complete"
[/B]

Your right, I didn't need to number minor waves- just did it for those interested in learning to count Elliott Waves

That's simply illusionary to the individual analyst and probably missed
by most

Was it an illusion in October in 2007, when the AMT methodology was telling us to go long ANZ when Ew was saying it was a screaming short? Your gonna have to put up a better argument Frank