- 金币:
-
- 奖励:
-
- 热心:
-
- 注册时间:
- 2006-7-3
|
|
楼主 |
发表于 2009-3-22 17:59
|
显示全部楼层
Elliott Wave Count on the 10 Year Note and Yield
December 7th, 2008 by Corey Rosenbloom
A reader asked for my take on a potential Elliott Wave count for the 10-Year T-Note and here is my current interpretation of the possible Elliott Wave structure building there. Let’s look at the yield chart and then the price chart (which are of course inverse).
10-Year T-Note Yield:
The longer timeframe Elliott count is far more difficult (in terms of a monthly count) but perhaps the weekly count is a little more clear - at least this possible interpretation.
I’ve subdivided corresponding waves down into their logical fractals which meet the guidelines of EWT, confirming the count as best I can.
Wave 1 terminated in late 2006 to the 4.40% area, while Wave 2 retraced almost the whole amount of Wave 1, topping just shy of 5.20%.
Wave 3 is currently the largest wave, though the current Fifth Wave might rival it in length. Three began at 5.20% and then terminated just below 3.40% before embarking on an “ABC” corrective Wave 4. Notice the numerous positive momentum divergences that occurred during the Third Wave. From a Fibonacci standpoint, Wave 4 retraced exactly 50.0% of the prior Wave 3.
So if this count is correct, we’re currently in fractal wave 3 (I would actually suggest fractal sub-wave 4, based on the daily chart possibly) of the larger Wave 5 move down. Notice the significant new momentum low that formed on this fractal 3rd wave - that’s what we’d expect… only new momentum lows often occur in the larger third wave of the complete impulse. It’s possible that we could be in for a rather ‘nasty’ final fifth wave if the structure continues.
Rates may begin to rise soon into the corrective fractal (small-scale) ABC up into the fractal 4th wave which could take us to but not much beyond 3.20% (yield is currently at 2.65%). Afterwards, the final fractal fifth wave may take us down beneath the current 2.65% yield, but let’s see how and if the fractal fourth wave correction takes place.
To confirm the count - and for a little more perspective - let’s look at the 10-Year Note Price, which is unsurprisingly the inverse of the note price.
10-Year T-Note Price:
I simplified the count to only the most basic Elliott Count for clarity - compare this to the more detailed Price chart above.
In terms of the price, if Wave 5 is equal to Wave 3, then that would give us a terminal price target around $128 (Wave 3 being $16.00 which is added to the bottom of Wave 4 being $112.00).
Of course, in classical Elliott, if Wave 3 is the longest, we can expect Wave 5 to be equal to Wave 1, which has already surpassed that target. Let’s let the common target be Wave 5 equality to Wave 3, and if that is surpassed, we’ll move to look at other Fibonacci targets and ratios.
Beyond that, just keep managing risk and looking for low-risk, high reward opportunities out there.
Corey Rosenbloom
Afraid to Trade.com
Take advantage of a special two-month free trial to join Market Club (limited time).
No Comments | add comment
Note Prices Soar While Yields Plunge
December 6th, 2008 by Corey Rosenbloom
File this under “In case you missed it.” The 10-Year Treasury Note price has surged 12% in just over a month, as investors surge to the safety of treasuries. Subsequently, yeilds in these safe investment vehicles has plunged dramatically. Let’s look at the 10 year note price, and then see the 5-year note and 3-month bill yields.
10-Year T-Note Prices:
Though I haven’t explicitly labeled it, it would seem the recent surge from $114 to $127 is a potential Elliott Wave 3 in perhaps a larger fractal Wave (Wave 1 being from $112 to $116 after a quick “ABC” corrective phase took place).
I don’t want to get too deep into the intricacies of analysis on these markets, but I did want to point out this sudden and perhaps significant development which is potentially going unnoticed by a vast number of traders. Bloomberg has an excellent post on why this may be occurring which is worth a read.
The article begins as such: “Yields on two-, 10- and 30-year securities fell to the lowest levels since the Treasury began regular sales of the debt.”
Not an encouraging report.
Analyst/Manager Jamie Jackson states, ““You’ve rallied to points that are unprecedented from T- bills to 30-year bonds…. That’s obviously pricing in a pretty dire economic environment.”
Portfolio Manager Richard Schlanger sums it up a little… less tactfully: ““People are just flocking to Treasuries…. All you can say is, ‘My God.’ Things are going to get progressively worse.”
Let’s move on to see these falling yields on the 5-Year T-Note.
5-Year T-Note Yield:
Yields have fallen to 1.60% after breaking key support about the 2.40% level. Take a look at a longer, monthly chart for more insight into the pervasive, multi-year downtrend in rates.
Finally, let’s see a shorter timeframe yield via the 3-month T-bills.
3-month T-Bill Yield (rate):
If I asked you to give me your money and I would hold it safe for 3-months and pay you virtually nothing for it, would you do it? Yet fear and other complicated reasons is driving investors and institutions to take that deal because - for lack of a better explanation - they’re terrified that anywhere else they put it would lose money. Thus, they’re willing to accept virtually no return on their capital for the exchange of complete safety.
Commodities are being crushed, the stock market is being crushed, foreign currencies are being crushed. Gold is not holding up as the ’store of value’ it is expected to be in uncertain times. The US Dollar Index is surging, but mainly because foreign currencies are falling faster relative to the dollar - isn’t not necessarily a sign of US or the Dollar’s strength.
As everyone rushes into safety in US backed Treasury Bonds, Bills, and Notes, that drives prices higher and yields lower. Unfortunately, it’s driven yields to all-time lows in some markets, meaning yes, you’ll probably be safe, but no you won’t get very much for it.
Study further into these developments and what they might mean going forward.
Corey Rosenbloom
Afraid to Trade.com
6 Comments | add comment
Gotta Watch Those Rounded Reversal Days
December 5th, 2008 by Corey Rosenbloom
They’ll get you every time. Today’s intraday stock market action was an excellent example of the “rounded reversal” day concept in action. Let’s see it in the DIA and how we might have managed risk and traded it.
DIA 5-min chart:
The day started with the news that the market moving “Jobs Report” showed a loss of over 500,000 US jobs, indicating that the economy continues to deteriorate steadily - unemployment in November stood at 6.7%. You would expect a market freefall, right? I mean, how could the market end higher on such a day? It’s funny going and reading some official reports of the trading day vs the news - they’re looking for explanations as to why such an odd occurrence happened.
If you’ve been trading for any length of time, you know that it’s often best to ignore the expected direction we think certain major news reports will take us. I don’t mean run out and fade the news blindly, but don’t let yourself get emotionally hurt and suffer unnecessary losses by fighting the tape on a day such as this that goes beyond all normal instincts.
That being said, the day began with a downside gap that made a run to the upside to ‘fill the gap,’ but fell just short before price plunged - expectantly - to new lows on the day near $81.50 (Dow 8,150). Then the market did something… unexpected by many newer (and some seasoned) traders.
The new lows just prior to 11:00 EST formed on a distinct positive momentum divergence. The proper play was to short the market as it tested the falling 20 period EMA at 11:00am, particularly with the confluence of dojis at EMA resistance.
But the market didn’t fall. Stops should have been placed just above the green EMA (green arrow) and taken not long after the market breached that area. For me, there wasn’t enough to get bullish at that level, but it was enough to cause bearish pause and adopt a “Hmm. This is interesting - let’s wait and see” attitude.
Price then found solid resistance at the falling 50 period EMA and made a quick, 1-bar move lower… before reversing again and taking out any shorts who placed entries and stops just above this blue average.
Finally, when price found support at the confluence of the 20 and 50 period EMAs, and more importantly when these EMAs crossed ‘bullishly’ (green highlighted arrow), that was your signal that all bearish bets were officially off the table and to get long the market for a potential ’rounded reversal’ swing into at least yesterday’s close (dotted line) which occurred suddenly.
At this point, the second pullback around 2:30 was the golden entry, as price had proven itself by forming a series of higher highs and higher lows and finding support two times at the rising EMAs. Buyers were rewarded by a quick, surging market as remaining shorts threw in the towel and helped force price higher into the close.
It was a slightly irritating day in some senses, but bulls can end the week satisfied, given the turmoil caused in this week’s trading.
Let’s look just a bit closer at the intraday price structure to see something that was available only to the most astute traders and seasoned intraday Elliotticians.
DIA 5-min chart with Elliott Waves:
The purpose of looking at these charts is to build your pattern recognition skills so that you can more easily identify patterns in real-time as they form and take advantage of them.
First Waves are usually known as “disbelief” waves that are seen as a reason to - in this case - get short again. Wave 1 terminated around noon into EMA resistance. First waves often form on positive momentum divergences as well, which we saw.
Second waves often are known as “gotcha” waves or are periods when - in this case - short sellers say “Ha - I told you so” but price fails to make new lows (remember Wave 2 cannot retrace 100% of Wave 1).
Third Waves often begin in confusion, as short-sellers slowly take their stops and price forms the “Sweet Spot” reversal structure (in terms of higher highs and lows) and price often crests above key EMAs at this point, and usually moving average crossovers occur in third waves. People begin to see price as rising and short sellers capitulate into the newly rising and strengthening up-trend.
Fourth Waves tend to be rather orderly (sometimes) and are seen as profit-taking waves and also places to re-establish (or enter fresh) positions to the long side - whether or not you’re looking at price from an Elliott Wave perspective - they just feel good (in terms of a retracement entry sense).
Finally, the Fifth Wave is where aggressive longs who have been holding since lower levels take their profits and latecomers enter the market, hoping for endless gains. Fifth waves often end in negative momentum divergences and on weaker momentum/volume readings.
That journey takes you in a little bit into some of the psychology behind a classic Elliott Wave impulse, one of which occurred today in the face of so much opposition (virtually everyone to whom I spoke before noon said the market was going to capitulate into the weekend - I didn’t disagree).
But ultimately, the market respects its own opinion, and the forces of supply and demand rule the day no matter what the headline news might be.
Take today’s action as an educational lesson, annotate the intraday charts in your own way, and enjoy the weekend upon us!
I wanted to take a moment and remind you that the Market Club is offering a two-month trial period to test-drive the full capabilities of their software/service. If you’ve wanted to see what the Market Club and Adam Hewison’s (and team) is all about and how it can benefit you, take a moment to browse over there and sign-up.
Corey Rosenbloom
Afraid to Trade.com
9 Comments | add comment
Chicos Fashion CHS - Long Elliott Wave Analysis
December 5th, 2008 by Corey Rosenbloom
Chicos Fashion (CHS) was an ‘on-fire’ and in-demand stock a few years ago, but recently, the stock has soured along with the broader retail sector, driving many stocks to multi-year lows and wiping some out of the market completely. Let’s take a look at CHS to note the full Elliott Wave progression, and then compare the arithmetic chart to a logarithmic chart to note chart-type differences.
Chicos Fashion (CHS) Monthly:
Price began the decade around the $2.50 per share level and it looks to be ending 2008 at that same level, but not after reaching a price high above $47.50 which could have given investors amazing profits. Once again, which investors exited at the top?
Taking the principles of Elliott Wave into account, we see Wave 1 was a lengthy process that topped early 2002 before giving way to a standard “ABC” correction, none of which pierced the rising 20 month EMA (a sign of price strength).
Wave 3 was also relatively normal, and I’ve subdivided the waves into their appropriate fractals, complete with the also standard “ABC” correction in Wave 4 (also, which didn’t pierce the rising 20 EMA).
Wave 5 was extraordinary, taking price from $17.50 to $47.50, rewarding investors with a relatively clean and sustained advance into a final fractal fifth wave which formed on a negative momentum divergence… and the impulse (bull move) was over.
The recent ABC large-scale corrective phase has been extraordinarily damaging for investors, shattering their wealth almost completely. Of interesting note in terms of the Corrective Waves is the clean “Bear Flag” which formed throughout most of 2007, suckering in investors who tried to call a potential bottom at that time.
Price was only able to touch the falling 20 month EMA before careening over the cliff as price plunged into a fresh “C-Wave” down as the EMAs crossed in a classic “death cross” (once again, if you waited for this signal, you were too late).
The bear flag has met its target and there’s a positive momentum divergence, but technical analysis can’t help if the company goes bankrupt, and some analysts claim that if Chicos fails to have a stellar holiday season, it most likely will file bankruptcy - but that’s another story.
I’ve been asked why I continue to use Arithmetic (default) charts when looking at long-term or large-price change data. The answer? I prefer analyzing pure price moves over percentage moves, and in addition, I feel more recent data (which is obscured by log-charts) is more important (to me at least) than past data (in terms of visualization).
Why do I stubbornly cling to my arithmetic charts? Compare the exact same stock and exact same period below on a logarithmic chart with the arithmetic chart above.
Chicos Fashion (CHS) Monthly Log-Scale:
In fact, Chicos traded around $0.50 in 1998 which deeply compresses the chart as price reached all-time highs near $50.00, to a factor of 100 (in terms of price compression).
Logarithmic charts give extra emphasis to smaller (dollar) price changes and compresses price changes (dollar values) as the price continues higher.
From the looks of the chart, I’ve violated one of Elliott’s key three principles - that Wave 3 can never be the shortest - not to mention, the notion of wave proportionality is grossly distorted at first glance.
You have to sort of ‘over-rule’ the chart (visually at least) and realize that Wave 1 was roughly $10.00 in price change, Wave 3 was roughly $25.00 in change, and Wave 5 was almost $30.00 in dollar differences. To me, it’s extremely difficult to ascertain that from a log-chart.
I emphasize that this is my personal opinion and my chosen way to conduct price analysis - I’m not trying to win you over, but to explain my preference. It’s best to use both types of charts, and not to abandon either, for each has its advantages and disadvantates, which become more pronounced as you stretch out the time period and observe large price differences over time.
Chicos (CHS) and - as one reader observed - many stocks are showing similar Elliott patterns worth noting and interpreting. We’re in very interesting times, and the potential for the genesis of fresh Elliott impulses remains just around the corner - for companies that survive this recession.
Corey Rosenbloom
Afraid to Trade.com
Take advantage of a special two-month free trial to join Market Club (limited time).
No Comments | add comment
« Previous Page — Next Page » |
|
|
[复制链接]
