"All human activities have three distinctive features: pattern, time and ratio - all of which observe the Fibonacci Summation Series" (R.N. Elliott - "Nature's Law - the Secret of the Universe" - 1946)


Saturday, December 15, 2012

The power of the Elliott Wave Principle

 ELLIOTT WAVE and FIBONACCI RATIOS are great tools to detect with good accuracy the direction of the trend and also the potential key reversal points.

 

Do not believe it?

Read below my Elliott Wave analysis of the SPX in the last year

(limited to the junctures useful for the short term trading)

 
MY FIRST GOOD CALL JUST 19 DAYS
AFTER OPENING THIS BLOG.

 



According to my preferred scenario, in mid December 2011 
the market is in a deep correction of minute degree within
a minor uptrend of an Intermediate Uptrend.
 
In pre-market post of December 19, 2011 , 
I predict the end of the bear market on that day @ 1200 ,
and the beginning of a new uptrend.

At the end of that session, SPX bottoming @ 1202
and that day began a bull market that will last
more than 4 months with an increase of 18% !

This is my December 19, 2011 post:
 
SPX - Tomorrow could be the key reversal day, otherwise...

....1200 price area and time between the end of 19 and the early of 20 december, is magnetizing the market's action. It's hard to say that the market has bottoming; the structure seems completed... well, or tomorrow is a key reversal day to open a long position or it's necessary to look for a different scenario...





BEAUTIFUL FIBONACCI PRICE AND TIME CLUSTER!
 
HIT THE BOTTOM!  
WITH ZERO ERROR IN PRICE AND IN PERFECT TIME!
 



The next day, December 20, 2011, in the pre-market post I wrote:
 

SPX - Today the third wave starts


.... The Fibonacci's price and time clusters has worked like magic (see the purple line in 10 m and the yellow dashed line in 60 m) Targets? It's too soon to say. As of today, all balanced retracements, in terms of price / time / patterns / cycle or momentum, are good for open long positions.I think that this rally can go on for a few weeks so (today and) tomorrow may also be right to invest in ETF and in stocks selected with Canslim method of William O'Neil and The Wave Principle (always with stop loss).



 

I remain bullish for two months during which the market achive a rise to over 13%  !
in the opening session of March 5th I sell my long positionsone month before the top, but with a price error of 3.85!

 
On the market's Top of April 2, 2012
my preferred overview is still bullish;
I become bearish 7 trading days later,

with an error of - 3.77% from the Top 
 
2° GOOD CALL, with a price error of 3.77%
and a time error of 7 day!
 
in the pre-market post the April 12, 2012 I wrote:
 

SPX - NEW COUNT

.....according to my new favorite hypothesis, the last top in 1422 marks the end of the y minor wave of (w) intermediate wave. ...Possible targets: first 1340, second 1290 (Fibonacci price cluster).... I will open short positions on bounces or on bottom's breakdowns...
 
  
 

SPX reaches a second lower Top 1 May 2012
and will begin a deep correction of - 10% in a month.
 



The day after I become bearish! 
 
3° GOOD CALL, HIT THE 2nd TOP!
with zero error in price and time!
 
  
In the pre-market post of 2 May 2012 , I wrote:

SPX - Missing another downward wave

The last bullish wave began on April 23 looks like an impulsive wave, and if so,
would have ended yesterday, so it should start another bearish wave...
 
 
 
 
 
When the minor bear market ends June 4, 2012, I am still bearish,
but I become bearish 3 days later;
 



4° GREAT CALL, HIT THE BOTTOM
with a price error of 3.82% and time error of 3 days!

 
in pre-market post the June 7, I wrote: 
 
SPX - Bullish corrective wave
.....it seems also started the bullish corrective x wave of minor degree.
I wait for the pullback of wave 2/b to open a long position....
 

 
 
 
The market goes up 11% to a 1st TOP in 14 September,
and I remain bullish all the time,
and reaches a 2nd TOP Friday, October 5;
the next day, I change my outlook from bullish to bearish!
 
 
5° GOOD CALL, HIT THE 2nd TOP!
with price error of 0.92% ,
even if with a time error of 15 session (:-/)!
 
 
 
Monday, October 8, 2012, in the pre-market post, I wrote: 
 
 
SPX - Correction in uptrend
 ....friday x wave is completed ; now the market is in y wave of a complex sideways pattern.
 



The drop ends with a bottom Friday, November 16, 2012 with a decline of 8.6%
the next day,in pre-market post Monday, November 19, 2012,
my preferred count becomes bullish.

 
6°  GOOD CALL, HIT THE BOTTOM!
with a price error of 1.27% , IN PERFECT TIME ! 

 

SPX - Rebound in progress

The market is experiencing a rebound near the 0.618 Fibonacci retracement of intermediate wave (y).
.....the market has reached a bottom of intermediate degree and begins a new uptrend (wave (z)
 
 

 
 
 
 
This is proof that using the Elliott Wave Principle is possible to predict the trends and also key reversals with incredible accuracy.
 
Of course, perfection is impossible in any situation and to err is human but, as Frost and Prechter wrote ,"the Wave Principle is unparalleled in providing an overall perspective on the position of the market most of the time";
so, even if the counts will prove to be different later (we thought that a top was of minute degree instead it will be of minor degree, or we thought that a wave was an impulse 1-2-3-4-5 and after appears like a corrective triple zig-zag w-x-y-x-z), the real power is to identify the direction of the trend because     "it is often possible for an Elliott analyst to make money when he is in error".
 
Finally, one thing is to be able to predict the trend in a timely manner, another thing is to gain investing his own money.
A trader must have also the correct psycological and behavioral approach, and a good money management system.
And in some periods, we are more in tune with the market (and with ourselves), in other less.
 
 
 
 Summary.
 
In "Elliott Wave Principle", Frost & Prechter wrote:
 
" Although it is the best forecasting tool in existence, the Wave Principle is not primarly a forecasting tool; it is a detailed description of how markets behave....The primary value of the Wave Principle is that it provides a context for market analysis. This context provides both a basis for disciplined thinking and a perspective on the market's general position and outlook. At times, its accuracy in identifying, and even anticipating, changes in direction is almost unbelievable ".
 
 
THE BEST WISHES FOR YOUR TRADING .....with care ;-) !
 
ElwaveSurfer

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