Thursday, September 2, 2010

Elliott Wave Update

Today's chart is basically yesterday's chart. The 5th wave did happen as I expected and it closed a hair over the 1089(1090.10) level I had projected on the chart. And now we will put Elliott Wave Theory to a test, since the structure is complete we should see a retracement tomorrow. But since tomorrow is no regular day due to the job numbers being announced, we're in for either a big sell off in a 5 wave impulsive Minute wave or we get a zig zag Fib retracement which will translate into 1131 being challenged again by another bullish Minute wave. And obviously, if the numbers are so good tomorrow we keep on going up without retracing tben the 5th will be extending but sooner rather than later a Fib retracement will be coming.

This week's rally has many "orthodox" EW practitioners scrambling for new counts and which count is the right one in the larger scheme of things is really anyone's guess. As a trader I focus on Minute waves and try to label impulse and corrective waves only. Trying to label waves of higher degrees makes people develop a bias and I don't think EW would be as useful as a trading tool used in this manner (That's what MA and EMAs are for). This thinking goes against the whole "fractal" theory of the Elliott Wave Principle and this is where I differ with pretty much everyone I know of practicing Elliott Wave Counting. I believe EW is a predictor of human emotion and NOT a predictor of prices, they are both co-related but it would be wrong to assume that emotional panics of the same degrees that are years, decades apart, would result in the same prices. Economic and social conditions have to be factored in and that is why I don't agree with higher degree labeling. One of these days I'll get into this subject when I find the time.

With that said, we continue to be in a bear market and I am now fully leveraged short until we get an answer of what the next Minute wave has in store for us.

Portfolio 1:

100% SDS

Portoflio 2:

100% SDS

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