一个笨蛋的股指交易记录-------地狱级炒手

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EQUITY MARKETS APPROACH CRITICAL MASS
by Joseph Russo
ElliottWaveTechnology.com
September 14, 2006Critical Mass:
[Origin: 1940–45]
Function: noun

A size, number, or amount large enough to produce a particular result The minimum amount (of something) required to start or maintain a venture An amount or level needed for a specific result or new action to occur
• The number of people needed to trigger a phenomenon by exchange of ideas

On a time/price relative basis, the Dow Jones Industrial Average is rapidly approaching a tipping point toward igniting either a positive Critical Mass, or succumbing to a Late Majority Plateau. Such events may unexpectedly rocket the Dow toward the 20,000 level – or incite a crushing cyclical bear market. It is also remains quite plausible that we get a rather challenging dose of both.
Before we present our long-view chart analysis relative to Critical Mass, we thought it prudent to share a bit more background on the concepts surrounding this rather unique phenomenon.
Example: Government policy will change when the number of protesters reaches a critical mass.


More about Critical Mass
(Emphasis text is ours)
In 1962, Everett Rogers wrote a book titled “The Diffusion of Innovations,” a piece that introduced many concepts that are widely used today (i.e. the classic bell curve of adoption, the notion of adopters segments [early adopters, early majority, laggards, etc.] including the concept of the “tipping point.”

Within his work, Everett Rogers defines “critical mass” as the “point at which enough individuals have adopted an innovation (or a belief paradigm) so that the innovation’s further rate of adoption becomes self-sustaining.” He also notes that his concept is grounded in social scientific scholarship, most notably economics. Rogers offers an extensive analysis of the concept of critical mass, as well as several examples of how the concept may best be put to use.
When something reaches critical mass, an unstoppable shift takes place. For instance, when an electron is increasing in vibration, the moment it reaches critical mass, the entire electron is pulled up into the higher frequency, and nothing can stop it.
For those of you who are fans of “The Tipping Point,” you will find it interesting that Rogers explains critical mass as “a kind of tipping point of social threshold in the diffusion process” This was 1962, decades before social theorists and the business community latched on to the ‘tipping point’ concept.
Valente (1995) notes that critical mass is achieved when about 10 to 20 percent of the population has adopted the innovation. When this level has been reached, the innovation (belief paradigm) can be spread to the rest of the social system.

Is the current world order, together with the global financial sphere approaching another plateau, or are they both on path toward igniting a fresh bubble-like manic episode of critical mass – perhaps on route to rebirthing an entirely new paradigm for the 21st Century ?

Diffusion of Innovations Theory:
Diffusion of Innovations is a theory that analyzes, as well as helps explain, the adaptation of innovations. In other words, it helps to explain the process of social change. An innovation is an idea, practice, or object perceived as new by an individual or other unit of adoption. The perceived newness of the idea for the individual determines his/her reaction to it (Rogers, 1995). In addition, diffusion is the process by which innovations are communicated through certain channels over time among the members of a social system. Thus, the four main elements of the theory are the innovation, communication channels, time, and the social system.
Critical Mass and Financial Markets:
We must remain cognizant that critical mass, relative to social and economic paradigms can work both ways. That is to say, tipping points leading to critical mass can be either bullish, or bearish. Determining which bias and the severity thereof is contingent upon two key elements. The first is the prevailing Cyclical Degree of Trend and secondly being the level of maturity within the Elliott Wave Pattern. Accurately assessing The Dynamic Degree of Trend in concert with proper identification of the sequentially designated Terminal Structures within the Elliott Wave Sequence is essential in evaluating the directional bias at which critical mass begins to advance, plateau, or regress.

The Ultimate Chart of Industrial Progress
Below, we have highlighted a rarely observed yearly bar chart of the Dow Jones Industrial Average. We have noted time references pointing toward potential ignition points in the past that have incited conditions of critical mass and the subsequent areas of plateau and regess that follow. We go on to speculate what the immediate and long-term future may hold relative to the current condition and future progress of humankind.
Elliott Wave Technology offers various levels of subscription service for those who are interested in more precise analyses and market forecasts that go beyond that which this article permits.
Is the Dow Jones Industrial Average on the verge of a BULLISH, critical mass event ? Or, might the approach and apparent arrival of such an event simply be marking time with yet another late majority plateau ?
Elliott Wave Technology’s subscriber services guarantee to provide outstanding competitive advantage for the following groups:

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Industry Professionals
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Active Traders
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Self-Directed Index Investors
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Long-Term Index Investors

In addition to interpreting a host of Traditional Chart Patterns and Sentiment Indicators, Elliott Wave Technology’s detailed analytics include:

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Dynamic Sequential Elliott Wave Identification
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Cyclical Degree of Trend Analysis
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Turn Pivot Analysis
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Specific Price Target Windows
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Projected Price Path Postulations
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Strategic Long-Term Market Timing
1913
The first notable date on our chart is without question the quintessential “big bang” catalyst for both financial markets and the early restructuring of the current World Order. In 1913, President Woodrow Wilson signed the Federal Reserve Act into law.

To this very day, there remains formidable controversy as to whether the adoption of this act was in accordance with the Constitution of the United States of America. Nonetheless, on that date in 1913, the foundations for a new paradigm was seeded.
War of the Words
In this piece, we shall not delve too deeply into the virtuous or virulent effects that the Federal Reserve System may or may not have imposed on humankind.
The Big Bang’s Epicenter …the Corporate Military Industrial Complex is born


We trust that readers can easily obtain vast amounts of empirical research and argument that has been, and will continue to be aggressively debated relative to the efficacy of Global Central Banking Cartels in tandem with Transnational Corporate Entities. We encourage readers to pursue a comprehensive understanding of all such varied opinions in order to draw their own conclusions.
Aside from the rich fabric, and at often times bittersweet history engulfing the timeline of our study, we will further focus from a chartist’s point of view, upon the visually compelling cyclical underpinnings surrounding the technical aspects of this long-standing paradigms progression.
Our chart depicts the remarkable progress of humanity in concert with its unmistakably imbalanced and periodically misguided shortcomings. The price pattern from 1896 shows a sustained and rather robust upward path of growth accompanied only by a few such bouts of notable regress.
Illusions of Grandeur
What is void from accurate representation in our chart however is the profound and negative impact relative to the loss of purchasing power of the currency unit ($USD) under the fiduciary stewardship of the Federal Reserve. By now, it should be common knowledge that since 1913, the United States currency unit has lost more than 95% of its purchasing power. If truths surrounding such knowledge are not yet sufficiently common, they may soon become so, perhaps reaching a critical mass of their own.
Dollar Purchasing Power from 1896 Dow Jones Industrial Average from 1896



1929
Allow us to speculate that within the sixteen short years from its inception, the Federal Reserve System in concert with the economic conditions and social orders of that time, likely experimented with their long reach of facilitating incentive traps through control of the supply of money issued and credit granted. In the eight years from the 1921 market cycle low to the 1929 print high, the Dow Jones Industrials had just witnessed its first Bubble Top of the 20th Century. That and the pursuant deflationary crash that followed was in large part a by-product of the financial alchemy practiced by the Federal Reserve along side other Managers of State.



There can be no doubt that a negative tipping point of Critical Mass ignited at some point during 1929. The DJIA began to plummet feverishly, and was unable to stop until three years later in 1932. After much trial, and mostly error, we again speculate those in power at the time had finally figured it out. “EUREKA! IT IS OUR MONOPOLY BABY!” and as such… “Those who controlled the Money and Banking System had at their complete disposal the most robust and full spectrum instrument of power with which to control the course of the World Societies, and their inherent Internationally Trade Based Economies.” If such revelations were not born of a sincere crisis related, solution based moment of recognition; one has only to assume that such motives were far more sinister and willfully engineered. If so, the architecture for such egregious covert plans was likely to have been drafted with the most horrific of ulterior motives well before to the actual 1913 signing of the act itself. The Fed in concert with then Managers of State, quickly donned their “Jim Dandy to the rescue suits”, or “Sheep’s Clothing” as it were; in patient anticipation of cashing in from the epic plunder and subsequent bounties. The immense transfer of such concentrations of wealth and power were likely by design, engineered with intent to preserve and perpetuate exclusive reservation of such powers for the most fortunate of elites and their descendants for generations to come.
WMD’s, Wars, Destruction & Economic BOOMS War is good for the economy?

1942-1943
After an impressive five-year rally off the 1929 low, the Dow plummeted once again answering the five-year rally with a five-year decline into the low of 1942.
Thirteen years from its peak, the Dow broke out from a secondary base in 1943 and never looked back. The tide had turned as we engaged in yet another “new era,” or paradigm belief system. Technically, we can view this positive tipping point of critical mass as having occurred upon the bullish price breakouts in 1943, and again in 1950.
Critical Mass breaks up in 1950 (red arrow)


Idyllic Single Income Families of the ‘50’s …. Morph to Bouts with Civil Unrest in the '60's


1932-1965/66
Thirty-Four years from the depths of the depression market low, the seemingly unstoppable critical mass that had propelled the Dow to such magnificent heights had finally reached its crest in 1966. There was clearly a sustained negative tipping point of critical mass that occurred sometime between 1965 and 1966. If a majority of critical mass were convinced “Father Did NOT Know Best,” perhaps “Big Brother” could capitalize on such opportunity to further engender its precious monopoly in the delivery of its branded paradigms of solution.
Four Waves of Cyclical Advance From 1932

Sign of the "Times"

1971
Since cresting in ’65 – ’66, it was apparent that not all was going well with the American Dream as sold to its citizenry. After roughly five years of no forward progress, and for a host of other reasons, it became necessary for the United States to abandon its currency from any link to Gold whatsoever. Many have inferred that in effect, the United States claimed a quasi bankruptcy or default in doing so. Three years later, the regress associated with such necessity further accelerated the ravaging bear market toward its low, which printed in 1974. Through 1982, stagflation would reign supreme for eight more years, patiently marking time prior to the next bullish tipping point of critical mass.
Multiple Episodes of Critical Mass A Fifth Wave of Cyclical Advance


Since abandoning the Gold Standard in 1971, The Federal Reserve has issued nothing but “make believe” worthless units of pure fiat debt/credit, vs any reasonable facsimile of “hard asset backed money.” As such, dollars as we know them are not truly valid representative measures of wealth; rather they simply represent the current medium of exchange for essential goods and services as commanded by Government fiat. The more dollar (debt) units of exchange that are available, the less valuable they become. This is a flat out Debauchery of Sovereign Currency, camouflaged under the propaganda paradigm of inflation. The 1971 event was likely a second “big bang” catalyst following the initial adoption of the Fed and fractional reserve banking in 1913. At the end of the day, we are all in effect playing one big game of monopoly at the house of the spoiled rich kid who owns the game, always gets his way, insists on making up his own rules, always has to win, and who is always in charge of the money. Considering the stark reality and implication of such simple analogy is rather disturbing. Trouble is, it’s the only game in town, and we have no choice but to participate. As such, until something better arrives, we might as well participate intelligently, and with full knowledge of how the game is played.
“A consistently winning analyst must firmly embrace the notion that all market outcomes are possible all of the time. In doing so, we in essence become the market. “

Joseph Russo Publisher and Chief Technical Analyst, Elliottwave Technology.com

1974-1999
The tipping point toward critical mass in this time period occurred amid the closing highs of ‘82 and follow-through break out in ‘83. This tipping point marks the third bullish thrust of critical mass since 1896. After more than 100 years of Super Power Status, one might reasonably assume that the ultimate battle for Empire has been long since won. We suspect the ruling authorities presumably embrace such hubris assumptions. More frightening however, are the prospects that they are correct in this assumption. It is common knowledge in both the financial and political communities that there is an overabundance of largely intractable fiscal and geopolitical minefields weighing upon the present and future landscape of Globalization as presently structured. As such, we shall continue to presume that easily manipulated illusory benchmarks of unequal measures alongside well managed maligned reporting of official statistics is likely attributable to rapidly diminishing levels of plausible denial rather than representative of any legitimate milestones of merit toward achieving a greater good.
Extension of Cyclical Advance From 1974

Big Bang Bigger Bang



The Asian Currency Crisis of ’97 and September 11, 2001
Some twenty odd years since the last Big Bang, the policy response in the wake of both these recent events has evoked the spawning of yet another Big Bang catalyst. This latest reflationary effort, though epic in scope, is predisposed to failure in that its necessity has arrived way too soon to bank on a “fourth” such attempt toward inciting a sustainable instance of positive critical mass. Further, a lasting bullish outcome is in direct contrast relative to the markets current position within its Secular Cycle and sequential Elliott Wave structure. Nevertheless, anything and everything remain possible under the residual paradigm dynamics spilling over from the early 20th Century. Are you ready?

Scapegoats, Patsy’s, and Fall Guys:
It is rather convenient to cast the Federal Reserve System along with Bloated Imperial minded Governments and Transnational Corporations as fully responsible for such imprudent malfeasance.
However, equally responsible, and to the very delight of the “world order” mind you, is the sheer majority of ignorance residing amid the Global Citizenry. The present majority of whom inadvertently clamor for, base their politics on, and become temporarily satiated by the very policies that ultimately locks in a self perpetuating trailing stop, insuring their ongoing enslavement and dependency to the very questionable concentrations of power that they have elected to serve their best interest. Go figure.
Who is at fault then? Is it Large Covert Imperial Governments propagandizing the masses with false incentive traps? Or, is it perhaps the fault of ignorance and complacency on the part of the citizenry itself for allowing their elected stewards to foster and propagate such policies? The Short Answer: All are to blame.
Whaddaya gonna do:
Despite the vast array of formidable challenges each of us face in our individual and collective efforts to foster positive change in the world around us; we must maintain a steadfast and strident resolve toward affecting this valiant and patriotic pursuit. In the interim, we must also take steps to prevail and prosper in present and future environments so that we remain vital to voicing sound contribution of measurable consequence for the benefit of ourselves, and future generations.
Once we lock our radar onto an index, the future course of price progression has no chance in escaping the dynamic paths revealed to us through our disciplines.

“We’ll Be Back” …with more to follow
Elliott Wave Technology will continue to hone and offer its proprietary brand of technical analysis across the entire financial sphere. We consider ourselves amongst the fortunate

few in having acquired a resident knowledge to impose a rather unique and highly proficient technical fix on all of the major price series’.
Until next time,
"Hasta la vista, baby"

© 2006 Joseph Russo
Editorial Archive

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SCALING PERCEPTIONS AMID THE GLOBAL EQUITY BOOM by Joseph Russo
ElliottWaveTechnology.com
November 15, 2006

LONG TERM TREND CHANNELS

Price Channel Analysis is a highly effective method by which to monitor key pivot points, trajectories, and the general boundaries within a given trend. No matter the time frame, from 60-minutes to 60-years, applying price channel analysis yields accurate account of trend integrity.
Channeling price data also happens to be one of the essential components of Elliott Wave Theory. Channeling is the only way in which to monitor the classic five-wave impulse pattern identified by Elliott.

PERCEPTIONS

Value is clearly a subjective perception. General investment postures (long, short, or flat) are contingent upon an (assumed accurate) perception that future values will continue to rise, go nowhere, or fall.
As such, price charts are essential in monitoring the present and historical nature in which the marketplace collectively perceives value. In this vain, it is critical to be aware of how the chart data under observation has been scaled. This is especially critical when studying longer-term price series. In many instances, the difference between arithmetic, and log scaled data will have profound effect on the general historical perceptions portrayed by the series.

DEGREES OF TREND

Further, such significant differences pose a great threat of inaccuracy to the Elliott Wave analyst, or chartist who fails to study trend channels and wave structures resident in both series.
Unique to Elliott Wave Theory, are several designations noting specific degrees of trend. The smaller fractal trends accumulate in advancing harmony to comprise the larger Primary, or long-term trends.
Incorporating dual scaling into ones analysis will provide broader perception as to the potential longer-term intent of the market.

EQUAL WEIGHTS AND MEASURES

We can view price data in either arithmetic, or log scale. Arithmetic scale measures the progressions from the lowest data point on a chart to the highest in equal increments.
In contrast, the log scale measures the lowest to highest data points in percentage terms. To attain the broadest perspective of past and current price behavior, both studies are essential to observe.

HOW DO MANY OF THE GLOBAL INDICES STACK UP?

Shortly, we shall present some brief examples of our proprietary Elliott Wave Analysis. We have included a number of international indices that are participating heavily in the global equity boom. We will look at each monthly chart TWICE, from the two different scaling perspectives. The charts on the left plotted in Log scale, and those on the right in Arithmetic scale.

DOTTING THE “I’s” AND CROSSING THE “T’s”

In studying both series, we have made strident effort to crosscheck and reconcile the analysis collectively. In doing so, the wave structures perceived in both scales are in harmony.
Failure to take both price scales under collective study, may lead to flawed perceptions in wave counts, and trend channels. More importantly, failure to observe both may dramatically skew assessments relative to the degrees of trend currently in force.
At the end of the day, the goal of this piece is to assist in broadening perspectives of general perception relative to amplitudes, durations, and numerous degrees of trend currently at work in the global market place.

Before we get to our charts, let us first explore some insights on both scaling and channeling from the very founder of Elliott Wave Theory, R.N. Elliott.

TIPPING THE SCALES OF PERCEPTION

AUSTRALIA Monthly LOG SCALE AUSTRALIA Monthly ARITHMETIC SCALE

Exclusive use of the log chart on the left would persuade general perception toward fitting the upward choppy price action from ’97 through the ‘03 low as that of a “third” and “fourth wave” terminals of sorts. In fact, this was our prevailing view prior to taking the arithmetic scale under collective observation.
Since we do not yet have fourth waves with which to connect the 2-4 data points for channeling purposes, we simply connect the anticipated 1-3 data points until a 4 wave invariably materializes and is confirmed.
The arithmetic chart on the right goes a long way in helping define degree of trend. From the ’91 low, both scales show five smaller degree waves (the fifth of which extended). In the both charts, the terminal to this extended fifth in ’97, at the time, conveyed a very real perception that the preceding five waves up comprised a potential “end” to the entire cyclical bull market. We can see how such a wide spread perception may have tried to manifest in observing the big decline that followed into the “w” wave low.
Fast forward toward 2000 using either scale, we are still likely to assume an ending diagonal to the larger move, or that wave three is extending in some fashion. It is not until well into the explosive recovery from the 2003 lows that the arithmetic scale (right) puts the count in a fresh perspective. The arithmetic chart clearly reveals the nature of the power thrust from the ’03 lows as that of a “third wave.” Given the tendency of alternation in corrective waves, we can assume with reasonably good chance that the (4) wave down to come is going to be sharp and potentially deep.
Contingent that our degree of trend analysis is generally correct, and that equity markets are not in some type of “blow-off” top similar to the NASDAQ in ’99, once (3) tops, we can expect (4) down to last at least 16 months or more. This is a minimum .236 duration response to the time span of the long and sideways (2) wave correction.
The most recent correction in May lasted only two months, and trimmed just 11.69% off the index. Within four months from the May low, the market is already back up printing fresh historic highs. Such a quick and rapid recovery leaves the door open to a blow-off upon continuation of general parabolic advancement.

INDIA Monthly LOG SCALE INDIA Monthly ARITHMETIC SCALE

Because we have both charts labeled uniformly, India’s BSE does not appear to show that much discrepancy in comparative scaling at first glance. However, if the arithmetic scale were absent in the analysis, one could clearly see how the log chart (left) may persuade the observer to count the first leg up off the ’01 low as a first wave up vs a –d- wave within the larger 4 wave down.
Another notable difference is the perception of severity relative to the crash like 30% decline to (4) occurring in April and May of ’06. The decline to (2) in ’04 was a tad more severe, lasting a total of five months, and registering declines of 32%. However, the “number of points” lost in the (4) decline were far greater as illustrated via the arithmetic chart.
In total, from the 2001 low, the BSE has risen over 400%. Given this amplitude percentage advance, in concert with time maturity off the ‘01 cycle lows, odds favor the primary or intermediate bullish advance is nearing an end vs a new beginning.
According to R.N. Elliott, wave (5) will typically end at the top of the trend channel when the arithmetic scale is used. Should (5) exceed or throw over substantially prior to completing all required subdivisions, then use of the log scale is preferred. Further, if inflation is present (together with a glut of global liquidity in our present situation) wave (5) on the log scale (left) should too reach its upper trend channel boundary. Such projections would take the BSE up toward the 16,000 level.
As we can see by the arithmetic chart, the sharp parabolic ascent in the BSE is much closer to touching the upper channel than the log scale. In fact, if we were to slightly lower the upper channel line to the high in March vs the April top, the BSE would be within striking distance of the upper channel as of this writing.

RUSSIA Monthly LOG SCALE RUSSIA Monthly ARITHMETIC SCALE

Russia presents the most startling comparative contrast in observing arithmetic vs log scaling. From the 1998 lows, the RTS is up an astounding 4,500% in just eight short years! The log scale left is deceiving in that at first glance, it appears the most recent highs are just marginally above the 569 levels attained in 1997.
The ’98 Primary “C” wave crash low occurred inside of 14 months, and destroyed the market entirely with a 93.2% wipeout. The famous US crash in 1929 of similar destruction took over twenty years to reclaim its former highs. The Russians did it in just five. Given the immense amplitude of the relatively short eight-year advance from a virtual “starting over” point, we must assume the RTS is putting in a first wave of cyclical advance.
This is where the arithmetic scale comes in quite handy relative to observing “degrees of trend” in proper perspective. When we view the chart on the right, we can follow five waves up of intermediate degree to the crest in 2004 marking Primary Wave 1. Thereafter, what would otherwise appear in log scale to be a fourth wave triangle in 2005 instead marks the base of Primary 2. The immense power and parabolic thrust of the ensuing Primary 3 is unmistakable in the arithmetic chart.
More importantly, it puts the context of any future correction of magnitude in proper perspective. Note the horizontal yellow band we have placed on the log scale. Visually, it would appear that if the RTS were to correct down into that band, that it would not be such a big deal. On the contrary, a touch down into that band would represent a formidable bear market to the tune of 50-60%. In contrast, the powder blue horizontal fibonacci retracements located on the right within the arithmetic chart shows just how devastating a 50% or 60% retracement would be.
Similar to India, the Russian bourse lost over 30% in the two-month period of May/June 2006. The RTS has yet to better its historic May high as of this 11-13-2006 writing.

BRAZIL Monthly LOG SCALE BRAZIL Monthly ARITHMETIC SCALE

Brazil is another scale comparison that does not change perceptions all that much. One rather subtle but quite notable advantage offered by the arithmetic scale is its trend channeling attributes.
Thus far, the Bovespa appears to be ensconced in an extended x(5) wave of intermediate degree. Connecting the (2) – (4) touch points on the arithmetic scale appears to capture the bullish uptrend from 2002 much more efficiently than log scale.
The Bovespa is also up in excess of 400% from the 2002 lows. We suspect fair chance for a turn point of significance in March, April, or May of ’07. These three months mark 55-months (+ / -) from the previous cycle lows.
The arithmetic scale has already thrown over the upper channel once, and is not that far from a second attempt. Of interest in the log scale, is the “back test” of the underside of its (2) – (4) channel line concurrent with the arithmetic scales “throw-over.”
Another general advantage of incorporating arithmetic charts is the ability accurately measure pattern targets. We have noted a large inverse head and shoulder pattern on the arithmetic chart. We have drawn its slightly rising neckline in dotted green. From the arithmetic chart, it is easy to graphically measure the price objective for the pattern, and project it on the chart with proper reference perspective.
Per this patterns measuring objective, the Bovespa has breached this target intra-month for the second time. This first time was in May ‘06, and the second in November of ’06. Thus far, the market has not yet bested its May high, nor has it been able to register a monthly close above the H&S patterns minimum target.

MEXICO Monthly LOG SCALE MEXICO Monthly ARITHMETIC SCALE

Second only to Russia, the Mexican Bolsa represents another stark example of how log vs arithmetic scaling may skew perceptions. In eleven years, the Bolsa is up over 1,500% from its 1995 lows.
Similar to Australia’s scale comparison, one may have been inclined to perceive the sideways movement from 2000 – 2003 on the log scale as that of a fourth wave triangle of sorts.
When looking more closely at the channeling attributes resident in the five waves of minor degree comprising the larger x(3), the arithmetic scale is at or near a boundary touch of the upper channel. Since the first wave of this Minor degree subdivision appears to have itself extended, the corresponding 5 in progress should not.
No doubt, the past eleven years have posted stellar gains for this market. It is undeniable however, not to sense a parabolic blow-off top in progress due to the lion’s share of those gains coming in just three short years from 2003 – 2006. Such rapid parabolic excesses are not readily visible in the log scale hence the benefits of observing both.

DOW JONES WORLD STOCK INDEX Monthly ARITHMETIC SCALE

We thought it prudent to end with a composite of all the worlds’ major stock indices in attempt to garnish a diversified and balanced view of the Global Equity Boom.
Like most individual Country Indices, the DJW also appears to be advancing off a 4th wave of primary degree. Here too, we are looking for a potential turn point in March, April, or May of ’07. We have noted upside price targets based on fibonacci projections and pattern objectives.
Do keep in mind that all such turn markers may represent either potential highs or lows of varying degrees.
“We’ll Be Back” …
Elliott Wave Technology will continue to hone and offer its proprietary brand of technical analysis across the entire financial sphere. We consider ourselves amongst the fortunate few in having acquired the resident knowledge to impose a rather unique and highly proficient technical fix on all of the major price series’.

Until next time,
Joe

© 2006 Joseph Russo
Editorial Archive

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THE POWER OF CHART ANALYTICS AND PRICE FORECASTING by Joseph Russo
ElliottWaveTechnology.com
March 5, 2007In the highly competitive and at times controversial, rough and tumble financial forecasting sphere, maintaining resident impartial disciplines, and “getting it right more often than not,” is virtually the closest possible reality toward capturing the Holy Grail that we know of.

Trading, investing, and managing any sum of money is an inherently risky but highly rewarding endeavor.
Traders and Managers of all stripes have “big money” on the line every day, year after year.
Exposed in equal measure, open positions are continually subject to both inherent risks and substantial opportunities that evolve with the passage of time.
Time is critical to this equation and waits for no one.
Other than by way of mere chance, time is completely void of accommodation in facilitating individual outcome preferences.
Time and price evolve dynamically irrespective of participants’ collective time horizons or tolerance for risk.
Given this, adopting a reliable primary or secondary financial forecasting source would check risk and balance profits in all time frames.

What follows are chronicled price charts of the Dow Jones Industrial Average leading up to the market meltdown of Feb-27, 2007:


Chart Journal Entries:
Thursday February 8, 2007 - 12-Trading Sessions before the Meltdown:
Our reflective journal entries begin with our short-term traders’ chart presented in Elliott Wave Technology’s Near Term Outlook and Day Traders Perspective for Friday February 9, 2007:
Note the 12794.30 upper price target set off to the right of the chart almost two weeks in advance of the key pivot
high:
NOTE: The intraday price high prior to the meltdown occurred 12 days hence on Tuesday February 20th at 12,795.93, just 1.63 pts above the upper price target of 12794.30 cited above.
Leading up to the chart above, we had just come off a profitable short-term bullish signal issued back on January 30th from the 12460 level. The last chart issued prior to the one above was delivered on Friday February 2nd alerting traders to take profits on previous longs and to reverse short against the 12683 high.
We issued that short signal despite the fact that minimum entry to our upside price capture window at 12695.39 had yet to be achieved.
As it turned out, from the sell alert issued on Friday the 2nd, the Dow was still in what then appeared to be a smaller fourth wave decline.
By Thursday February 7th, this smaller fourth wave down concluded and reversed the Dow higher up to a fresh intraday high of 12,700.28 by the close.
As long as traders left more than 18-pts cushion above the sell signal as a buy-stop, they remained positioned to the short side fading the 12700 spike high.
The February 9th forecast provided further confirmation that short-term traders should remain bearish the previous days push higher.
Such guidance also provided short-term traders another opportunity to “sell” the market if they had not done so the week prior.


Friday February 9, 2007 - 11-Trading Sessions before the Meltdown:
This journal entry prepared traders to take profits on recent shorts and reverse long via the below chart presented in Elliott Wave Technology’s Near Term Outlook and Day Traders Perspective for Monday February 12, 2007:


Holding bearish posture and maintaining short positions that were triggered from the 12680 level on February 2nd, this fresh leg down on Friday the 9th placed open trades in 100-pts profit. Notable in the forecast for February 12th is the achievement of a ST> TLB downside risk target at 12550.
The intraday low was 12545.10 and the session closed at 12580.83.
Such advance-targeted guidance measures routinely provide short-term traders with the option of presetting exit targets accordingly or in this example, booking 100-pts in profit on the trade. Those remaining short over that weekend took comfort in the confirming print low noted at Friday’s session.
Regardless of the tentative wave counts in this time frame, the market had become quite oversold.
As such, we immediately began preparing traders for an imminent reversal higher.
We suggested that traders who remained short over the weekend prepare to take profits on shorts and go long on a high probability tactical follow through low the following Monday.

Tuesday February 13, 2007 - 9-Trading Sessions before the Meltdown:
Our next journal entry highlights the chart presented in Elliott Wave Technology’s Near Term Outlook and Day Traders Perspective for Wednesday February 14, 2007
signaling confirmation of a ST long
position which eventually captured
the last 240-pt upside push prior to the big meltdown.

In the forecast for February 14th we identify “buy-side” confirmation against the tactical low mentioned in our prior report.
On Monday February 12, the Dow printed a marginal new low of 12536.21 signaling a ST/IP Buy alert.
Prepared well in advance, our short-term traders were now positioned long the market.
Though quite useful, it is clear that tentative and alternate wave counts do not drive our short-term navigational guidance.
Traders now long, have three upside targets with which to calculate risk vs reward levels relative to their individual trading strategies, and risk management protocols.
The targets presented were 12730.63, 12748, with an outlier upside target of 12794.30.


Thursday February 15, 2007 - 7-Trading Sessions before the Meltdown:
In the next journal entry, the chart presented in Elliott Wave Technology’s Near Term Outlook and Day Traders Perspective for Friday February 16, 2007:
alerted traders to take profits on recent longs and reverse to the short side of the market.
The forecast guidance contained in this journal positioned traders on the right side of the market in advance of the sizeable one-day meltdown.

In the forecast for February 16th, one session prior to the 12795.83 print high, we alerted traders that the previous session high on February 15th of 12779.03 generated a signal to take profits on longs, and reverse short.
(As an aside, short-term traders have access to our satellite charts running in real time at StockCharts.com.
Though void of annotation, these satellite charts enable our traders to monitor and adjust to intraday developments and all price action that takes place between forecasts.)
At the time, although we were expecting a key pivot high, we could not be certain that one was firmly in place.
Observe how the tentative and alternate short-term wave counts dynamically adjust to the price action with each passing chart.
Uncertain that a key pivotal high had passed, we made it clear to our readers that a smaller four wave down might still be unfolding with a marginal new high to follow.
We noted its possible base area below S-1 at the .382 retracement level of the last leg up.
Practicing our discipline as a routine matter of course, we issued a sell probe alert to our clients regardless of such possibility.
Further reason to take profits on longs and reverse short was that the Dow had achieved most of the resting upside price targets with the exception of the highest outlier. We noted with added interest that Thursday’s price action provided us with a fresh new upside price target of 12783.
We further noted that so long as trade remained above the S-1 level, the new 12783 price target and the resting 12794 outlier remained fair game.
Regular guidance parameters such as these routinely provide our clients with extraordinary competitive advantage in setting stops, and placing exit order limits.
Our traders were now short per February 16ths guidance, armed with advance knowledge that risk to short positions should be assessed from levels sufficiently above the 12794 outlier.
In addition, strident bulls that may have elected to stay long despite our guidance now had two additional exit targets from which to elect taking profits.

Tuesday February 20, 2007:
THE DAY OF THE PRINT HIGH;

5-Trading Sessions before the Meltdown:

The next journal captures the day of the key print high with a
chart presented in Elliott Wave Technology’s Near Term Outlook and Day Traders Perspective for Wednesday February 21, 2007:


Notable
in
the forecast penned for Wednesday February 21st, is the highlighted achievement in reaching the most recent upside price target of 12783.
Though somehow lost in translation between reports, the resting upside outlier target of 12794.30 forecasted early in the month was also achieved on this chart.
Although the market seemed as if it would never go down, we maintained bearish guidance and restated a secondary sell probe fading the intraday top tic of 12795.93

Friday February 23, 2007:
2-Trading Sessions before the Meltdown:
In addition to guiding position traders and active investors toward reducing size into Februarys rally, we also advised swing traders to remain short.
The next journal entry captures a cautionary buy probe directed toward the most aggressive of short-term traders.
The following chart presented in Elliott Wave Technology’s Near Term Outlook and Day Traders Perspective for Monday February 26, 2007
displays our prudent commitment toward consistency in guidance
for each style of trader/investor.

In the forecast for February 26th, we advised swing traders maintain short positions against any reaction rallies which did not exceed 12707.25, or the rising trend line resistance at R-2.
Still uncertain that a final top was in, we penned out the last remaining alternate count (purple labels) as contingency for a final thrust higher.
We alerted the most aggressive of short-term traders that a first downside target had been captured at the 12634 level.
We advised aggressive traders who took profits and held long over the weekend about key resistance levels just above the market at R-1.
We stressed in this report that a short-term sell trigger had been elected on Friday citing 12492 as first minimum downside target.
Despite this, we stuck to our disciplines and issued a very aggressive short-term buy probe against Fridays 12628 lows in anticipation of a bounce the following Monday.
Of additional key relevance, was our guidance in conveying the key overlap level of 12707.25.
This was a concise measure in drawing the line between bearish downward impulse vs a ST bullish corrective decline.
We advised that if Fridays 12628 low held bottom and the market printed above 12707.25 on Monday, then the recent moves down were likely corrective and new highs would follow.
We further clarified, that any reaction rally rejected from below this key overlap reversing the market back down below Fridays print low of 12628.02, would confirm a solid impulsive decline coming off an eight month bullish run.
With such routine guidance, even the most aggressive of trade set-ups contain actionable boundaries from which to formulate targets, stops, and evaluate risk/reward.


Tuesday February 27, 2007:
THE MINI GRAY DAY OF RECKONING:
The next journal captures the day of the big meltdown with a
chart presented in Elliott Wave Technology’s Near Term Outlook and Day Traders Perspective for Wednesday February 28, 2007:









































In the aftermath of Tuesday’s big meltdown, the chart for February 28th shows a spike high of 12697.23 occurring on the Monday prior.
We trust that our very aggressive short-term traders holding longs on Monday were extremely cautious when Mondays spike high began to reverse sharply shy of the previously cited 12707-overlap boundary. We trust our most astute traders (aggressive enough to take Fridays long probe in the first place) would have been keen on taking any open profits on Monday’s 69-pt intraday bounce off Fridays low and reversed back to the short side rejoining their swing trading counterparts.
Likewise, we trust that aggressive traders not so quick on the draw would have had resting sell stops in place to close out longs and reverse back short on the key lower boundary breach of Fridays previous low.
We had recently reminded all of our clients of the potential severity in decline associated with a decisive breach in the lower boundary line of a long observed rising wedge pattern developed from the start of the year.
After printing a bearish intraday impulse low of 12608.47, over 19-pts below the previous Friday’s key low, the Dow closed Monday’s session down -15.22 at 12632.26.
Those who failed to heed concise boundary parameters, warnings, and general guidance simply got what they deserved on Gray Tuesday.
Since we did not receive one single piece of negative feedback surrounding the aggressive long probe on the 23rd, we can only surmise that all of our traders were well prepared and “did the right thing” in properly positioning themselves well out of harms way by the close of trade on Monday.

The last chart of our journal appears exclusively in the Near Term Outlook.
Daily charts offer a slightly larger view, adding depth and perspective for longer-term position traders and investors.

Tuesday February 27, 2007:
THE MINI GRAY DAY OF RECKONING:
Our last chart journal captures Gray Tuesdays big market meltdown with a
chart presented from Elliott Wave Technology’s Near Term Outlook for Wednesday February 28, 2007:


The daily chart above speaks quite clearly on its own.

Supplying individual traders and professional money managers with timely access to consistent and accurate price forecasting is a “mission critical” guidance responsibility we take very seriously.
You might have the body armor, air support, and ammo, but without checks & balances, good intelligence, and rock-solid navigational guidance, all the weapons and technology in the world will likely fall short of getting the job done, and may potentially cause serious casualties.


Part science, part art, in concert with intense passion and rigorous labor; the chart journals above graphically depict the arresting nature and immense power that properly channeled forecasting disciplines are capable of producing.

There is no better time than present to acquire a fresh alternative forecasting perspective.
Do ally with us in fighting the good fight in a never-ending war that has recently escalated substantially.

The charts above depict but one of many broad based indices similarly covered in the Near Term Outlook.
In addition to the Dow, the Near Term Outlook delivers unrivaled forecasting coverage for the US dollar, S&P500, Gold, Crude Oil, the HUI, and the NDX!

Profits Up,
Joseph Russo

© 2007 Joseph Russo
Editorial Archive

hefeiddd

NAVIGATING THE OIL PITS by Joseph Russo
ElliottWaveTechnology.com
March 12, 2007After a wild ride from the July ’06 top, what lies ahead for Crude Oil prices?
We’ll get to the bottom of that rather “deep well” in our last price chart and closing comments. First, let’s back up and take a look at what’s happened to the price of Crude Oil from the near $80.00 spike high back in July of ‘06. This will give us a sense of price history, and will also reveal just how Elliott Wave Technology has been making clients HUGE PROFITS ever since. From July 13, 2006 through March 2, 2007, position traders’ using our analysis could have made a minimum of $38,000.00 per oil contract!

From Elliott Wave Technology’s Near Term Outlook July, 2006

July 13, 2006: Impartial Warnings for Investors, Position, Swing, and Short-Term Traders:
The longer-term weekly chart above shows our preferred wave count for crude oil. The alternate count (tan) portrays crude nearing a top of much greater significance. Our preferred (4) down was positioned near the 55.00 level and scheduled to arrive somewhere in late 2006. Given the maturity of the advance, sell signals were beginning to surface and we had advised our clients to get defensive. Of added interest is our chart notation referring to our concurrent and similar anticipation for a July ’06 key pivot bottom in the NDX.

From Elliott Wave Technology’s Near Term Outlook July, 2006

July 14, 2006; a SELL ALERT is ISSUED for Investors, Position, Swing, and Short-Term Traders:
In the following update, daily charts were back, and with them came a secondary sell signal for all time horizons. Note that our wave count contingency calling for a move above 80.00 failed to materialize. It is important to point out, that such contingencies do not drive our guidance. As impartial analysts, we care only that our guidance and forecasting are accurate. Although Elliott Wave Theory is an essential part of our discipline, under no circumstance does it ever take precedence over the cumulative aspects of our broad market analysis. For position traders getting an early jump in reversing to the short side of the market, an earlier sell signal against the 75.40 level on July 5 was stopped-out. Just $4.00 from the eventual top, USO “long only” fund investors took massive profits and stepped out of the way. For shorter-term traders, the July 5 signal was a profitable one. By July 14, we issued a broad based secondary sell signal fading the 79.86 intraday high for all time horizons.

Next, we’ll fast forward nearly four months to see what happened through November.

Price Chart from Elliott Wave Technology’s Near Term Outlook November 2006

October 24, 2006; a BUY ALERT is Issued for Swing, and Short Term Traders:
Fast forward to Thursday November 2, and you will note that position shorts are deep, deep, in the money by at least $18.00 or $18,000.00 per full size futures contract! Although swing traders were whipsawed on a few early long probes from the early October lows, shorter-term traders did well amid those swings. By October 24, we were on our fourth buy probe against fresh 57.05 lows for shorter duration traders. This one turned out to be an outstanding “money shot” for swing traders.

Next, we’ll advance a month in time to see how this shorter duration guidance panned out.

Price Chart from Elliott Wave Technology’s Near Term Outlook December 2006

December 1, 2006; Impartial Dynamic Navigational Guidance for Swing, and Short-Term Traders:
Fast forward to December 1, after our fourth try in buying a bottom, the October 24 $57.05 low finally stuck! Nearly a month later in early December, we became defensive and warned that a potential retest or marginal new low was plausible. As usual, we had fresh downside contingency targets already in place. The downside capture window opened at 56.39 and closed all the way down to 49.32. Half way down the window rested a pattern target of 53.17. All such targets were very real levels of risk to longs. Conversely, our very fat and happy position traders were all over this in anticipation of adding to their already incredibly profitable short positions!

A good analyst will point out both short and long-term opportunities along with risks you may not have previously considered.

Price Chart from Elliott Wave Technology’s Near Term Outlook December 2006

December 15, 2006; a SELL ALERT is Issued for Swing and Short-Term Traders:
Two weeks later, after a very bullish run up into Mid-December, we issued a Short Term Interim Pivot sell probe against the 64.15 high. Do take note that this high was IMPULSIVE! Although our alternate count could justify the impulse as 1 of 5 of ‘c’ up, our preferred count read this correctly as a wave (z) of ‘4’ up terminal.

Concise impartial forecasting provides clear targets and parameters from which to develop highly profitable, low risk trade and investment strategies.


Now we’ll fast forward about a month or so, to January of 2007 to see how this guidance delivered.

Price Chart from Elliott Wave Technology’s Near Term Outlook January 2007



January 11, 2007; ADVANCE WARNING for Investors, Position, Swing, and Short-Term Traders:
In less than a month, from the 64.15 ‘4’ wave terminal; Crude Oil was spiraling out of control to the downside. A mega bearish neckline had breached, and for very good reason, many were anticipating a move to $35.00 Crude. By January 11, we began issuing advance warning guidance for all time horizons, that aggressive “buy” probes fading the death spiral were imminent.

Free of emotion and desire for specific outcomes, a consistently accurate and impartial forecaster/analyst can provide essential checks and balances against your open or prospective positions.

Price Chart from Elliott Wave Technology’s Near Term Outlook January 2007

January 16, 2007; a BUY PROBE ALERT is issued for Investors, Position, Swing, and Short-Term Traders:
By January 13, our “buy” probes began in earnest. By January 16, we were now on our third aggressive “buy” probe against the session low of 51.39. Our position traders just got a whole lot fatter and happier! They added at least another $10,000.00 per contract for a total of $28,000 in profits, and that’s assuming they did not add to shorts, and simply held one full size contract! We have now guided them back to the long side of the market along with general long-only USO fund investors. We assure you that our short-term traders were biting their nails, pulling their hair out, and worrying dearly about the prospects of $35.00 oil. Our guidance remained steadfast. Long Crude against the 51.39 low.

The moment an analyst acquires financial stake and emotional involvement in a particular trade’s outcome, price forecasting becomes tainted and biased. In contrast to accepting blind trade recommendations, traders embracing impartial, adept navigational guidance develop superior trading and investment skills that last a lifetime!

Price Chart from Elliott Wave Technology’s Near Term Outlook January 2007


January 17, 2007; impartial unwavering guidance to stay with persistent signals in the face of intense emotional adversity:

On January 17, the market printed yet another intraday low! This one was .36 cents below the previous and (you guessed it) prompted us to reiterate our FOURTH buy probe against it! Of added note on the chart are two longer-term downside price targets that we imported from our Monthly and Weekly charts. The resting long-term targets were 51.76, 51.06, and highlighted in blue. The print low on January 17 was 51.03!

We now fast forward to March 2, 2007. In the next chart below, the measurable benefits in securing impartial forecasting guidance as part of ones trading arsenal becomes abundantly clear. In reversing long, Position traders captured another $10.00 move, widening their profits to an astounding $38,000.00 per contract!

“Impartiality is absolute freedom from emotion. Freedom from emotion fosters clarity.”

Our last follow up chart and closing comments answers the question:
“What comes next for Crude Oil prices?”

Price Chart from Elliott Wave Technology’s Near Term Outlook March 2007

WHAT NEXT…
Hmmm, let’s take a look… The Longer-Term Trend remains up. The Intermediate Trend is still down, and, the Short-Term trend is up, but appears to be topping. As of yet, there is no confirmation of a lasting bottom. Price action has been very constructive since the January lows however; the market has reached substantial levels of overbought. Short of a geopolitical event, or major supply disruption, price levels will likely need to consolidate for a time. How and when they do so is critical in determining our ongoing guidance. Our general assessment to date is that a retest or fresh low is still plausible though not very likely.

We are sorry to disappoint, though proud to disclose that we do not predict markets; instead, we take ownership of the dynamic price action as it unfolds, and do so in such a way that no black-box algorithm could possibly match. Doing so impartially, allows us to anticipate direction then formulate astute and unrivaled guidance based on the daily evolution of price. As evidenced in this arresting presentation, the resulting competitive edge is compelling and immeasurable!

Joseph Russo

© 2007 Joseph Russo
Editorial Archive

hefeiddd

NAVIGATING THE OIL PITS by Joseph Russo
ElliottWaveTechnology.com
March 12, 2007After a wild ride from the July ’06 top, what lies ahead for Crude Oil prices?
We’ll get to the bottom of that rather “deep well” in our last price chart and closing comments. First, let’s back up and take a look at what’s happened to the price of Crude Oil from the near $80.00 spike high back in July of ‘06. This will give us a sense of price history, and will also reveal just how Elliott Wave Technology has been making clients HUGE PROFITS ever since. From July 13, 2006 through March 2, 2007, position traders’ using our analysis could have made a minimum of $38,000.00 per oil contract!

From Elliott Wave Technology’s Near Term Outlook July, 2006

July 13, 2006: Impartial Warnings for Investors, Position, Swing, and Short-Term Traders:
The longer-term weekly chart above shows our preferred wave count for crude oil. The alternate count (tan) portrays crude nearing a top of much greater significance. Our preferred (4) down was positioned near the 55.00 level and scheduled to arrive somewhere in late 2006. Given the maturity of the advance, sell signals were beginning to surface and we had advised our clients to get defensive. Of added interest is our chart notation referring to our concurrent and similar anticipation for a July ’06 key pivot bottom in the NDX.

From Elliott Wave Technology’s Near Term Outlook July, 2006

July 14, 2006; a SELL ALERT is ISSUED for Investors, Position, Swing, and Short-Term Traders:
In the following update, daily charts were back, and with them came a secondary sell signal for all time horizons. Note that our wave count contingency calling for a move above 80.00 failed to materialize. It is important to point out, that such contingencies do not drive our guidance. As impartial analysts, we care only that our guidance and forecasting are accurate. Although Elliott Wave Theory is an essential part of our discipline, under no circumstance does it ever take precedence over the cumulative aspects of our broad market analysis. For position traders getting an early jump in reversing to the short side of the market, an earlier sell signal against the 75.40 level on July 5 was stopped-out. Just $4.00 from the eventual top, USO “long only” fund investors took massive profits and stepped out of the way. For shorter-term traders, the July 5 signal was a profitable one. By July 14, we issued a broad based secondary sell signal fading the 79.86 intraday high for all time horizons.

Next, we’ll fast forward nearly four months to see what happened through November.

Price Chart from Elliott Wave Technology’s Near Term Outlook November 2006

October 24, 2006; a BUY ALERT is Issued for Swing, and Short Term Traders:
Fast forward to Thursday November 2, and you will note that position shorts are deep, deep, in the money by at least $18.00 or $18,000.00 per full size futures contract! Although swing traders were whipsawed on a few early long probes from the early October lows, shorter-term traders did well amid those swings. By October 24, we were on our fourth buy probe against fresh 57.05 lows for shorter duration traders. This one turned out to be an outstanding “money shot” for swing traders.

Next, we’ll advance a month in time to see how this shorter duration guidance panned out.

Price Chart from Elliott Wave Technology’s Near Term Outlook December 2006

December 1, 2006; Impartial Dynamic Navigational Guidance for Swing, and Short-Term Traders:
Fast forward to December 1, after our fourth try in buying a bottom, the October 24 $57.05 low finally stuck! Nearly a month later in early December, we became defensive and warned that a potential retest or marginal new low was plausible. As usual, we had fresh downside contingency targets already in place. The downside capture window opened at 56.39 and closed all the way down to 49.32. Half way down the window rested a pattern target of 53.17. All such targets were very real levels of risk to longs. Conversely, our very fat and happy position traders were all over this in anticipation of adding to their already incredibly profitable short positions!

A good analyst will point out both short and long-term opportunities along with risks you may not have previously considered.

Price Chart from Elliott Wave Technology’s Near Term Outlook December 2006

December 15, 2006; a SELL ALERT is Issued for Swing and Short-Term Traders:
Two weeks later, after a very bullish run up into Mid-December, we issued a Short Term Interim Pivot sell probe against the 64.15 high. Do take note that this high was IMPULSIVE! Although our alternate count could justify the impulse as 1 of 5 of ‘c’ up, our preferred count read this correctly as a wave (z) of ‘4’ up terminal.

Concise impartial forecasting provides clear targets and parameters from which to develop highly profitable, low risk trade and investment strategies.


Now we’ll fast forward about a month or so, to January of 2007 to see how this guidance delivered.

Price Chart from Elliott Wave Technology’s Near Term Outlook January 2007



January 11, 2007; ADVANCE WARNING for Investors, Position, Swing, and Short-Term Traders:
In less than a month, from the 64.15 ‘4’ wave terminal; Crude Oil was spiraling out of control to the downside. A mega bearish neckline had breached, and for very good reason, many were anticipating a move to $35.00 Crude. By January 11, we began issuing advance warning guidance for all time horizons, that aggressive “buy” probes fading the death spiral were imminent.

Free of emotion and desire for specific outcomes, a consistently accurate and impartial forecaster/analyst can provide essential checks and balances against your open or prospective positions.

Price Chart from Elliott Wave Technology’s Near Term Outlook January 2007

January 16, 2007; a BUY PROBE ALERT is issued for Investors, Position, Swing, and Short-Term Traders:
By January 13, our “buy” probes began in earnest. By January 16, we were now on our third aggressive “buy” probe against the session low of 51.39. Our position traders just got a whole lot fatter and happier! They added at least another $10,000.00 per contract for a total of $28,000 in profits, and that’s assuming they did not add to shorts, and simply held one full size contract! We have now guided them back to the long side of the market along with general long-only USO fund investors. We assure you that our short-term traders were biting their nails, pulling their hair out, and worrying dearly about the prospects of $35.00 oil. Our guidance remained steadfast. Long Crude against the 51.39 low.

The moment an analyst acquires financial stake and emotional involvement in a particular trade’s outcome, price forecasting becomes tainted and biased. In contrast to accepting blind trade recommendations, traders embracing impartial, adept navigational guidance develop superior trading and investment skills that last a lifetime!

Price Chart from Elliott Wave Technology’s Near Term Outlook January 2007


January 17, 2007; impartial unwavering guidance to stay with persistent signals in the face of intense emotional adversity:

On January 17, the market printed yet another intraday low! This one was .36 cents below the previous and (you guessed it) prompted us to reiterate our FOURTH buy probe against it! Of added note on the chart are two longer-term downside price targets that we imported from our Monthly and Weekly charts. The resting long-term targets were 51.76, 51.06, and highlighted in blue. The print low on January 17 was 51.03!

We now fast forward to March 2, 2007. In the next chart below, the measurable benefits in securing impartial forecasting guidance as part of ones trading arsenal becomes abundantly clear. In reversing long, Position traders captured another $10.00 move, widening their profits to an astounding $38,000.00 per contract!

“Impartiality is absolute freedom from emotion. Freedom from emotion fosters clarity.”

Our last follow up chart and closing comments answers the question:
“What comes next for Crude Oil prices?”

Price Chart from Elliott Wave Technology’s Near Term Outlook March 2007

WHAT NEXT…
Hmmm, let’s take a look… The Longer-Term Trend remains up. The Intermediate Trend is still down, and, the Short-Term trend is up, but appears to be topping. As of yet, there is no confirmation of a lasting bottom. Price action has been very constructive since the January lows however; the market has reached substantial levels of overbought. Short of a geopolitical event, or major supply disruption, price levels will likely need to consolidate for a time. How and when they do so is critical in determining our ongoing guidance. Our general assessment to date is that a retest or fresh low is still plausible though not very likely.

We are sorry to disappoint, though proud to disclose that we do not predict markets; instead, we take ownership of the dynamic price action as it unfolds, and do so in such a way that no black-box algorithm could possibly match. Doing so impartially, allows us to anticipate direction then formulate astute and unrivaled guidance based on the daily evolution of price. As evidenced in this arresting presentation, the resulting competitive edge is compelling and immeasurable!

Joseph Russo

© 2007 Joseph Russo
Editorial Archive

hefeiddd

TRADE LIKE A SPARTAN WARRIOR by Joseph Russo
ElliottWaveTechnology.com
March 19, 2007Making a conscious decision to trade financial markets is the same as engaging in battle with the most cunning and merciless of adversaries. It is not only possible, but also essential to engage markets with the skills and instincts of an elite warrior.

Odds of success can be insurmountable.
In order to prevail, one must be equally cunning.
Before committing to battle, it is essential that one is adequately prepared. In this article, we will outline three essential attributes one must acquire prior to engagement.
300 is a 2007 film adaptation of the graphic novel 300 by Frank Miller, about the Battle of Thermopylae in 480 BC.
In this battle, an alliance of Greek city-states fought the invading Persian Empire army at the pass of Thermopylae in central Greece. Vastly outnumbered, the Greeks held back the Persians for three days in one of history's most famous last stands.
As a city-state devoted to military training, Sparta possessed the most formidable army in the Greek world.
The Spartan Warriors possessed extraordinary strength, courage, and ingenuity. When brute strength did not suffice, they used their wits to prevail over their adversaries.
Short-term S&P traders utilizing advance market guidance from Elliott Wave Technology’s Near Term Outlook
have captured a minimum of 130-pts profit in just 3-weeks time.




The conservative profit estimates summarized in the above chart reflect the Spartan nature in which Elliott Wave Technology’s adept guidance breeds success in applying the three essential attributes necessary to prevail in a highly adversarial trading environment.

DEVELOP STRATEGIES WHICH IDENTIFY SPECIFIC TRADE PARAMETERS
First, one needs to develop a well-conceived trading plan or tactical strategy.
Such plans should be consistent with ones’ objectives, time horizon, account size, and tolerance for risk.
It is essential that traders not confuse “planned strategy” with technical analysis, chart study, or any other method by which market direction is forecast. Although entry triggers may spawn from such analysis, by no means does such analysis comprise a complete trading plan.
Strategy and tactics must also include Spartan-like management of a position once elected.
As such, having a clear exit strategy prior to engagement is of vital importance. The key question one must repeatedly answer in sizing up and managing a trade is “what if.”
Preparing in advance how one will respond should price action exhibit x, y, or z, is the cornerstone of a successful trading plan.


USE PRUDENT RISK & PROFIT ASSESSMENTS TO GOVERN STRATEGY
Before placing an order, prospective trades must first pass a risk and profit assessment. Outlining entry, exit, stop loss, and profit target contingencies in advance, allows traders to determine if various outcomes are within appropriate boundaries relative to the specific risk and profit management guidelines which they have decidedly embraced.
Once passed, and a position opened, the battle is on.
In the heat battle, pondering over chart analysis must now take a distinct back seat to a heightened sense of tactical awareness.
In placing central focus on the “trade plan as a whole,” traders minimize emotion immensely.
A newly elected trade is merely one of many that will comprise and define overall success of ones’ “plan.”
Once a trade is “on”, it is essential to focus on imposing the cold and calculated protocols that now govern trade plan tactics.


SECURE A COMPETITIVE ADVANTAGE FROM WHICH TO PLAN AND EXECUTE
The last essential element is to acquire a consistent competitive advantage.
Competitive advantage is some form of adept navigational guidance, knowledge, or other reliable method by which one (more often than not) correctly anticipates market direction. With the third essential element in place, one can now develop, assess, and execute tactical trade strategies with the highest level of confidence and profit.

Elliott Wave Technology’s Near Term Outlook recap
for Friday March 9, 2007



Above is an example of our March 9 tactical guidance amid recently changing market conditions. In the past month, Elliott Wave Technology has relayed guidance for five outstanding short-term trading opportunities in the S&P 500 index.
Having access to this competitive navigational advantage, our clients had adequate time to develop their trade strategies, mitigate risk, and profit accordingly.


Elliott Wave Technology’s Near Term Outlook guidancefor Wednesday March 14, 2007

  


The chart above illustrates outcome of previous guidance, and new directives for the March 14 guidance.
After enduring another Tuesday air pocket just one week after the Dow’s 400-pt loss the previous Tuesday, Elliott Wave Technology’s short-term guidance for Wednesday, March 14, was preparing broad market index traders to anticipate a fresh low for the move. We suggested in advance, that clients evaluate contrarian long side trading opportunities for all of the major equity indices.
Before Wednesday’s opening bell, a portion of our concise guidance for the S&P was the following:

From Elliott Wave Technology’s Near Term Outlook for Wednesday March 14
”A marginal new low testing the S-3 trendline should be anticipated as part of a near term basing process. However, an outright failure at S-3 opens the floodgates to a move toward 1282. Although a contrarian, bullish stance is most appropriate short-term, we must respect the possibility for another big fall-out ahead. Any fresh longs initiated upon a marginal new low on Wednesday, should consider risks associated with trailing initial sell stops sufficiently below S-3 to allow the market room enough to base.”

Friday’s follow up report included the following:
“Navigational guidance cannot get much better than the above. What lies ahead for the major equity indices is up for grabs at this stage. If you positioned long basis Wednesday’s guidance, consider taking profits outright, or trailing a profit-locking stop. Whatever you do, do not let the hard-earned bounty slip away. Take a breather, pat your self on the back, and celebrate if you must. Should you remain “engaged,” stay sharp, keep calm, and remain on plan. As with the Dow, too many short-term possibilities lie dead ahead which prevents us from issuing high confidence short-term guidance at this time."

In the balance of Friday’s report, we outlined very explicit guidance for three immediate price path contingencies for the benefit of those clients still engaged in the market.


In closing, it is important to understand that we do not predict markets; instead, we take ownership of the dynamic price action as it unfolds and do so in such a way that no black box algorithm could possibly match.
Doing so impartially, allows us to anticipate direction then formulate astute and unrivaled guidance based on the daily evolution of price.
As further evidenced in this presentation, the resultant competitive edge is most compelling.

© 2007 Joseph Russo
Editorial Archive

hefeiddd

GRAND STRATEGY by Joseph Russo
ElliottWaveTechnology.com
March 26, 2007As follow up to our previous article, Trade Like a Spartan Warrior, we thought it wise to dig a little deeper, and provide additional clarity relative to aligning ones’ specific objectives with fitting strategies.

It is not difficult to draw the analogy of war into the financial sphere. Long wars comprise a series of minor and major battles. More often than not, one war leads to another.

One glance at a long-term price chart and one quickly realizes that the peaks, troughs, and the sharp jagged edges defining it, exemplify a “war without end.”

This is the first in a series of articles that will assist both traders and investors alike, in recognizing how and where they are best suited to engage.

First, we will outline a basic grand strategy overview. The balance of the series will explore strategy and tactical simulations from the vantage point of the four distinct areas of participation that follow.

SELECTING SUITABLE TOURS OF DUTY
THERE ARE FOUR BROAD MARKET PARTICIPANTS IN THEATER. THEY ARE:
• Long-Term Investors
• Position Traders
• Swing Traders
• Short-Term Traders

To launch successful campaigns, one must first reconcile the basic characteristics inherent to each of the four disciplines, and develop their strategies accordingly.

We will illustrate how participants in each of these four areas may go about sizing up a market, assembling strategies, identifying risk, and managing tactical campaigns through a completed trade or investment cycle.

Before we do this, we will address how to go about developing an astute long-view market opinion.

TAKING EVERYTHING INTO ACCOUNT
INVESTMENT ACCOUNTS: RETIREMENT ACCOUNTS: TRADING ACCOUNTS: SPECULATIVE ACCOUNTS:
We trust there are quite a few top guns in the field, deploying calibrated munitions across the full spectrum of account types listed above. It is important that all such funds are earmarked and apportioned prudently.

To provide a level of continuity throughout the series, the broad market under study will be the NASDAQ 100.

GRAND STRATEGY

Grand strategy encompasses the effective management of ones’ total resources in the conduct of investment and speculation.

CENTRAL PLANNING
ADVERSARIAL TERRAIN: THE NASDAQ 100
To form an opinion, develop strategy, and deploy funds in any time frame, one must first size up the big picture landscape, then work one’s way down to gain optimal competitive advantage.

In the charts that follow, we have applied rigorous study in arriving at three contingent positions, and potential paths for the Nasdaq 100.

NASDAQ 100 Monthly Bars:


Quick Read: The long-term trend is down, the intermediate-term trend is up, and the shorter-term trend is up but approaching significant overhead resistance.

In our first assessment, the Nasdaq 100 is in the process of terminating a first wave of advance at minor degree, en-route toward a primary “B” wave retaliatory response to the devastation endured from 2000 through 2002.

At this stage, the bullish minor degree advance is susceptible to a minor set back prior to launching its next significant offensive.

At stake is temporary forfeiture of 50% to 60% of the most recent advance from the base established in July of 2006. Such forfeiture would equate to an 11% - 13% decline from current levels.

If the Bullish contingent were able to sustain adequate momentum, the current campaigns most optimistic target would be the recapture of 2/3rds its prior losses. Such success would equate to a near 80% advance from current levels.

Grand strategy charts like the one above, are in abundance throughout Elliott Wave Technology’s Millennium Wave Quarterly Report.

NASDAQ 100 Monthly Bars:


In our second assessment, the Nasdaq 100 is in the process of terminating an (a) wave advance of intermediate degree.

At this stage, the intermediate bullish degree advance is rather mature, and susceptible to a more significant set back prior to launching its next significant offensive.

At stake is forfeiture of 100% of the most recent advance from the lows established in 2004 and 2006. Such forfeiture could equate to a 20% - 30% decline from current levels.

Should such an outcome prevail, the current campaigns optimal target would be reduced to the recapture of 1/2 its prior losses. Such recovery would equate to a near 50% advance from current levels.

Developments of lucid grand strategy perspectives like these are critical to the design and formation of smaller scale campaigns’.

Our Millennium Wave Quarterly publication clearly illustrates that no other form of market analysis is able to establish meaningful price path contingencies more succinctly than properly applied Elliott Wave Theory.

Because of its immense forecasting prowess, Elliott Wave Analysis is the cornerstone to our longer-term forecasting discipline.

NASDAQ 100 Monthly Bars:


In just two short years upon the onset of the new millennium, five crushing waves down destroyed the NASDAQ 100, beyond all recognition.

The Bearish contingent claimed unequivocal victory upon capturing 83% of the opposing forces advance.

Such complete and utter devastation has the potential to cripple a market for years to come. Events such as these often mark key primary terminals whose turning points become part of the historical record for decades.

In this our last assessment, the Nasdaq 100 is also in process of terminating an (a) wave advance of intermediate degree.

At this stage, the intermediate bullish degree advance is rather mature, and in this scenario, susceptible to a serious event-risk set back. Much is at stake should this occur.

In this setting, the NASDAQ 100 is vulnerable to complete forfeiture of all progress made from the October 2002 bear market lows. Such a set back would equate to a near 60% decline from current levels.

Should such an event unfold, the current campaigns optimal target would be the same as where it stands today, the recapture of 1/3 its prior losses. Such recovery would equate to progress of little merit from current levels.

Recognizing that all outcomes are plausible, one can now dig deeper into smaller time frames, establish working preference parameters, and approach the market with respect.

In our next article, “RULES OF ENGAGEMENT” we will explore principles of strategy and tactics from the vantage point of long-term investors.

The series will continue with strategy and rules of engagement for each of the following:
• Position Traders
• Swing Traders &
• Short-Term Traders

As the above framework shows, Elliott Wave Technology does not predict markets; instead, we respectfully take ownership of the dynamic price action as it unfolds.

Doing so impartially, with adept discipline, enables us to anticipate direction, and then formulate astute, unrivaled guidance based on the continual evolution of price.

© 2007 Joseph Russo
Editorial Archive

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RULES OF ENGAGEMENT
(for the long haul) by Joseph Russo
ElliottWaveTechnology.com
April 2, 2007
In this, our last article in the public series, we will focus our attention on long-term broad market strategies for self-directed index investors. The Traders’ Series is in development, and will be available on our website soon.
In addition to inviting index investors’ to realize the power and convenience of Elliott Wave Technology’s Interim Monthly Forecast, this article will present:

• 
  The premise and composition for three types of long-term investment strategies
• 
  Simple guidelines to which one must adhere in effectively deploying each
• 
  Pitfalls and risks if strategy disciplines are not implemented
• 
  Long-Term Charts of the Japanese Nikkei and the NASDAQ Composite Index from 1982 through present
• 
  An opening graphical summary of charts illustrating the results of Elliott Wave Technology’s Pro-Active Long-Term Investment Strategy for the NASDAQ 100 from 1994 to present
• 
  The easiest and most effective way for self-directed index investors to monitor, and automatically track EWT’s ongoing Pro-Active investment strategies

ELLIOTT WAVE TECHNOLOGY’S, PRO-ACTIVE / LONG TERM INVESTMENT RESULTS:
This series began with a Grand Strategy overview of the NASDAQ 100, as such; we shall conclude with it. Although the NASDAQ 100 is not a large broad based market, it will serve as a prime example in illustrating the profit capturing strategy of Elliott Wave Technology’s long-haul investment discipline.
Below is a performance summary illustrating the difference between practicing a modest level of strategic control, a purely passive (always long) strategy, and adhering to Elliott Wave Technology’s “easy to follow” Pro-Active Strategy.


In the table above, the Modestly Controlled, or (mostly passive strategy) has banked $212,771 dollars in realized profit, and is positioned long the market with open profits of 7.14% from its last 90 share purchase, re-entering a full position back in September of 2006.
In contrast, a Purely Passive (always long) Strategy has booked zero in profits, and remains long the original 90 shares purchased at 397.90 back in August of 1994. The purely passive strategy has unrealized open paper profits of $123,701 per the market close on March 30, 2007 - $89,070 dollars less than the Modestly Controlled Strategy has already taken to the bank!


Elliott Wave Technology’s Pro-Active Strategy has banked $271,835 dollars in realized profit, and is positioned long the market with open profits of 34.06% from its current 60-share exposure as of September of 2006.

In contrast, a Purely Passive (always long) Strategy has booked zero in profits, and remains long the original 90 shares purchased at 397.90 back in August of 1994. The purely passive strategy has unrealized open paper profits of $123,701 per the market close on March 30, 2007 - $148,134 dollars less than the Pro-Active Strategy has already taken to the bank!

In further contrast, our Pro-Active Strategy has outperformed the Modestly Controlled Strategy by $59,063 dollars or 27%, has less current market exposure, and open profit of 34% vs 7% on shares held.

Below are the charts that drive Elliott Wave Technology’s long-term approach:
Typical Broad Market / Long-Term Investment Analysis Included with EWT’s Interim Monthly Forecast

Chart Highlights:

• 
  Here we see all three strategies long the market in August of 1994
• 
  Note the long six-year span prior to any actionable signals
• 
  We also keep tabs on currency values, inflation, and the gold price in the upper panel
• 
  The indicators in the lower panel of our chart track early warning signals and monitors the integrity of the Primary trend in force
• 
  We define Wave Labels identifying the maturity of trend as price action evolves
  

Typical Broad Market / Long-Term Investment Analysis Included with EWT’s Interim Monthly Forecast


Chart highlights:

• 
  Note how our Pro-Active Strategy begins taking profits at higher price levels
• 
  The Modestly Controlled Strategy waits for a FULL EXIT ALERT to go to cash
• 
  After more than six-years without a signal, how many investors maintained the discipline, and patience in monitoring such events, and actually went to a full cash position in November of 2000?
• 
  Note how our Pro-Active Strategy begins fishing for a bottom in October of 2002
• 
  Properly interpreting Elliott Wave structures, in combination with directional and early alert indicators, sets our Pro-Active long-term Investment Strategy far ahead of all other methods in managing exposure to broad based market indices

Typical Broad Market Long-Term Investment Analysis Included with EWT’s Interim Monthly Forecast
Chart highlights:

• 
  Note how wave structure evolution is governed by our Grand Strategy
  view of the market under study
• 
  Of added note is the increase in signal and caution frequency vs the goldilocks runaway bull from 1994 -2000
• 
  Note how our strategy stands pat amid the seven-month 16.5 % correction from late 2003 through the summer of 2004.

Let’s talk Strategy:
We shall limit our strategy discussions to the three most common categories of self-directed index investors.Three general types of long-term investment strategies are:

• 
  Purely Passive Strategy
• 
  Mostly Passive Strategy
• 
  Pro-Active Strategy
  

The basic objective:
To let profits run, and remain exposed to long-term cyclical trends amid a diversified mix of broad market indices.
The general exit strategy:
To cash out when the invested funds are needed to serve a specific purpose at a designated time in the future.
Purely Passive strategy:
The Purely Passive Investment Strategy is a rather simple one. Its simplicity and brilliance is most compelling, and has broad universal appeal.
This strategy involves no effort at all. Its singular objective is to cash out when the funds invested are required for their intended purpose at a predetermined future date i.e. retirement, college, home purchase, etc.
Caveat:
In order to adhere to this simple strategy, one must be totally immune from emotional, or knee-jerk reaction to market crashes, recessions, depressions, wars, hyperinflation, deflation, acts of terror, natural disasters, currency crisis’, and all other imaginable market shaking events.
The Strategy:
Stay fully invested under all market conditions. Dollar cost average, or invest regular amounts of capital into the markets overtime, and one should come out on top when one needs the funds for their intended purpose.
The only aspect of this strategy that needs management is to define ones’ timeline for exit.
The premise of this strategy is that markets always rise over the long run. The appeal lies in its simplicity and effectiveness amid long trending bull markets.
Is this a valid premise?
In numerous instances, history has shown the answer is yes. Large Stock Exchanges must “go up” to attract investment. That is precisely why they exist.
Unbelievably, this seemingly “asleep at the wheel” strategy has worked (in nominal terms) for decades in select broad market indices. Unless the current paradigm shifts, purely passive investment strategy should selectively continue to perform.
Tactical Considerations:
It is essential that one diversify when employing a purely passive investment strategy.
One must ask and answer the following questions:
1.
Within what specific time horizon does one generally expect to “cash out?”
2.
What are the anticipated annual returns vs. risk-free alternatives?
3.
What mix of broad markets will most likely achieve this objective?
General:
When we refer to “nominal terms”, we are referring to the returns calculated from the broad index itself. Nominal returns do not take into account fluctuations in the underlying purchasing power of the currency from which the broad market index is derived.
Another way to describe the enduring success of purely passive investment is to say that in select indices, paper claims on future corporate earnings (stocks) have been a good hedge against the eroding purchasing power of fiat currencies for quite some time.
A large part of this strategy’s on going success hinges upon governments continually increasing supplies of money, thus eroding the value of currencies relative to their respective equity indices. Simply put, this strategy relies heavily on continued inflation.
By themselves, inflation, and deflation (a strengthening currency - less money and credit in circulation) are relatively benign and quite natural supply/demand responses to prevailing free market conditions.
However, the financial sphere is in large part, a tangent manifestation of the political process. The natural ebb and flow of free markets are often intervened upon by governments’ central control over the supply of money and credit.
Right or wrong, by decree, governments or quasi agents thereof, have control of managing sovereign fiscal affairs and imposing a desired rate of inflation or deflation to accommodate the prevailing mandate of the times.
Risk imbalances and the potential for dislocations escalate when inflation or deflation approach extreme, unsustainable levels for prolonged periods. Risk also surfaces in the short term, should there be a rapid, unanticipated rate of change in the prevailing inflation or deflation expectation.
The deep-rooted paradigm, is that a steady and controlled inflation will persist indefinitely into the future without interruption or consequence. This paradigm provides a powerful incentive, fostering confidence in forever-rising stock prices, real estate prices, and therefore the general cost of living.
Until this long-standing paradigm shifts, purely passive investment strategies will no doubt remain viable in select indices.
Risk:
Given ones’ broad market selection, level of diversification, and time horizon for “cashing out,” a purely passive strategy may not always work out as planned.
Do the broad markets always “come back?” The short answer is generally yes; larger broad markets do eventually bounce back, and maintain an inherent upward bias over time.
However, one must recognize that there can be unusually long periods of extended flat, volatile, or downward regress in markets as well.
The possibility of one’s long-term time horizon coinciding with an extended flat, volatile, or down cycle, presents the greatest risk to this strategy achieving its intended objective.
The Japanese Nikkei Index is a clear and recent illustration of such timing risk. Had one adhered to a purely passive investment strategy in the Nikkei over the past 20-years, one would more or less be right where one started.
The longer a market continues advancing in an unchecked parabolic fashion, the higher the odds of reaching an inevitable and lasting crest.
Such extremes can lead to longer-term sideways or potentially devastating bear markets, similar to that which the Japanese market struggles with today, 18 years from its peak.
After a 13-year bear market slaughter from 1989 -2002, it has taken the Nikkei 5-years to reclaim only 30% of all the gains lost since 1989.
Tokyo’s Nikkei Stock Market: 1982 - 2007

Typical Broad Market / Long-Term Investment Analysis Included with EWT’s Interim Monthly Forecast
Chart Notes:
·
From a larger perspective, it is clear that from 1982, that Japans fiscal posture has engendered a long-term deflationary environment
·
Real Inflation, as measured by the Yens value relative to that of Gold, has been on the rise since 1999, and continues to accelerate sharply in the 2005-2007 period
The Nasdaq 100 experienced a similar massacre; however, the 80% loss in the NASDAQ took place over a 2-year period. It is interesting to note that similar to the Nikkei, the NASDAQ is also in the midst of struggle to reclaim 30% of its losses, 5-years after bottoming.

The NASDAQ Stock Market: 1982 - 2007

Typical Broad Market / Long-Term Investment Analysis Included with EWT’s Interim Monthly Forecast

Chart Notes:

• 
  From a much larger perspective, it is abundantly clear that since the inception of the Federal Reserve System in 1913, that the United States fiscal posture has fostered a long-term inflationary environment
• 
  Real Inflation, as measured by the Dollars value relative to that of Gold, has been in perpetual rise from the turn of our last century, and continues to accelerate sharply from the 2001-2007 period
  

Those who elect to embrace the purely passive investment strategy should do so knowing that the odds of a sustained long-term down, flat, or volatile sideways market will increase with each passing year amid a maturing secular, or runaway bull market.
Mostly-Passive (modestly controlled) strategy:
This strategy may fair better, or worse than the purely passive approach.
Depending on reactions to various market conditions, such investors may be scared out of the markets right near the bottom of a deep correction, or become overly exuberant when markets are in their latter stages of a topping process.
To acquire just a modest level of control, one must adhere to a disciplined strategic approach.

The Strategy:
This strategy is very similar to the purely passive approach, but contains two essential differences.
1.
In addition to setting a specific time horizon for exit, this strategy also involves monthly trailing exit stops in order to maintain engagement.
2.
The strategy also incorporates a monthly trailing re-entry provision in the event an exit level breaches.

Key points:

• 
  Secure a competitive advantage to provide regular checks and balances
• 
  Have discipline to monitor monthly closing price levels
• 
  Maintain consistency in adhering to all aspects of management and execution
• 
  Keep plans as simple as is needed to accomplish each task
• 
  Maintain confidence even in the face of setbacks
  

Tactical Considerations:
Defining ones’ exit and re-entry triggers should be simple, and maintain adequate alignment with ones’ long-term objectives.
A monthly moving average that has held numerous closes at key pivotal lows over an extended period is a good indicator with which to monitor the health and integrity of longer-term uptrends.
This strategy will NOT get one out near major tops, nor get them back in near major bottoms.
The strategy’s Long-term exit triggers intend to protect the lion’s share of amassed profit, and move one out of harms way and into a full cash position.
Likewise, re-entry triggers intend to assure the longer-term trend has returned to a more favorable climate, fostering confident redeployment of funds.
Risk:
In a word, “whipsaw.” Whipsaw is a term describing a choppy or volatile non-trending market that is stuck in a narrow or wide trading range for an extended period. Such conditions may trigger a succession of exit, and re-entries of no apparent value.
Key Point:z
·
Consider a flexible strategy so one can adapt to changing conditions
elliott wave technology’s pro-Active strategy:
The Pro-Active Investor segment is subject to the same pitfalls as the previous. Perhaps more so, in that active investors may be inclined to try to time, or side-step markets more frequently.
To take such a level of proactive control, one must adhere to a much higher level of both patience and discipline.
The Strategy:
This strategy is very similar to the last, but contains two additional parameters.
In addition to dynamic monthly exit and re-entry stops, this strategy intends to:
1.
Begin reducing exposure near critical market highs
2.
Begin adding back exposure near critical market lows
Key points:

• 
  Secure competitive advantage for checks and balances
• 
  Discipline to monitor price chart indicators on a regular basis
• 
  Maintain consistency in adhering to all aspects of management and execution
• 
  Keep plans as simple as is needed to accomplish each task
• 
  Maintain confidence even in the face of setbacks
  

Tactical Considerations:
In monitoring a combination of wave structures and indicators, this strategy intends to reduce exposure by 1/3, taking high-level profits when early warning indicators and maturing wave structures warn in confluence.
Should the market continue down, and breach a full exit warning, this strategy will either disengage and go to a full cash position, or further reduce exposure, maintaining a 1/3 long exposure, contingent upon the cycle maturity of the Elliott Wave structures.
Should the market continue to fall hard for an extended period, this strategy will monitor indicators and wave structure for signs of a lasting bottom. When such elements are in confluence, the strategy intends to begin building back in a 1/3 position size near market lows.
Risk:
“Whipsaw,” once again Whipsaw is a term describing a choppy or volatile non-trending market that is stuck in a narrow or wide trading range for an extended period. Such conditions may trigger a succession of exit, and re-entries of no apparent value.
Key Point:

• Consider a flexible strategy so you can adapt to changing conditions
  

To summarize, one must identify what type of investor one is, or wishes to become. Once decided, one must then be accountable, and disciplined enough in managing the responsibilities associated with their objectives.
Any strategies more complex than these would fall under the classification of trading vs long-term investing.
Until next time…
Trade Better/Invest Smarter,
Joseph Russo

© 2007 Joseph Russo
Editorial Archive

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GOLD BOOM / DOLLAR BUST by Joseph Russo
ElliottWaveTechnology.com
April 16, 2007
Introduction
After a short tirade inspired by the financial alchemy surrounding the world’s reserve currency, we will quickly shift our focus to more stable realities.
Through a briefing of price charts, we will speculate on just how far the dollar can fall, and to what heights Gold may climb.
In addition, Elliott Wave Technology will share with readers precisely how we have kept our trading clientele on the right side of a rather challenging Gold market from the print high of 730.40 in May 2006, through the violent, and choppy, year-long consolidation experienced since.
Gold Boom / Dollar Bust
As the U.S dollar threatens a two-year double-bottom re-test of its 2004 low, it serves as a timely reminder that the dollar remains firmly entrenched in a century long secular bear market.
Some 15-years ago in 1992, the dollar hit it lowest levels striking prints south of 78.50. Last week, it slipped back below 82.00 breaching lows most recently recorded last year in December of 2006.

The Dollar Index has approached and tested the 80 level five times in the past thirty-years: 1978, 1990, 1992, 1995, and 2004. Unless the situation turns truly horrific, the long-term dollar chart above, suggests that a tradable bottom may be forthcoming in the not too distant future.

Since the start of the Federal Reserve System in 1913, the U.S dollar has lost more than 95% of its purchasing power. One can only conclude that the Federal Reserve System evolved not to tame inflation, but rather to control “faith” in an ever-valueless unit of exchange to which it has significant share of monopoly advantage.
Faith as such, is apparently in abundance along with its cohort liquidity. This shall remain “standard fair” until the financial spheres’ growing monopoly on money and credit creation either implodes, or somehow spawns a formidable alternate competitive force. Until then, the current system assures the world of an endless supply of continually depreciating paper and debt.

At first thought, one might assume that the system keeps extending itself, making larger and larger promises, with no intention of truly making good on them.
From another perspective however, there are vast numbers of individuals and corporate beneficiaries who are rather complicit in this grand illusory ponzi-like charade.
Amid an unprecedented tripling of home values since 1999, “Joe-Homeowner”, aka “consumer-Joe,” is one such beneficiary. As long as he purchased his home prior to the price-surge post 2003, he is sitting pretty with huge unrealized profits, and has plenty of downside cushion to break-even should he need it.
If the surge stops here, real estate purchases made after 2005 will no longer appreciate, and possibly depreciate considerably over time. Soon after, designs on buying real estate for investment or future wealth effects will become passé.
It many aspects, it is the very demise of the reserve fiat dollar, which continues to feed bull markets of every stripe around the globe.
Record levels of debt, equities (public and private), real estate, and commodity values, as well as never-ending wars, are all beneficiaries financed by the slow-motion, multi-generational ongoing dollar bust.

It is with sheer disbelief, and utter amazement that the real world accepts such an empty unit of exchange to start with. To fathom a possible reason for such collective behavior, one need not go any further than studying the experiment of Pavlov and his dogs.
More astonishingly, the entire world, which has been built and financed from such empty illusions of exchange, will require exponential infusions of the same, with every imaginable variant accelerator to keep faith alive, and the ponzi-scheme on sound footing.
All this begs the grand philosophical question of who is fooling whom, and who really cares? The answer is quite simple. Nobody cares so long as the majority feels no pain. So long as the global system alongside the majority of its citizenry remains flush with the sensation of wealth, everything else sells itself.

Gold has awakened from a 21-year bear market, which ended with a double bottom in 1999 and 2001. Remarkably, amid the dollars three crashes into the 1990, 1992, and 1995 lows, Gold was miraculously subdued and eerily dormant.

Nearly two months ago, the Dow Jones Industrial average dropped just 3% from all-time historic highs, and the calls for bailouts, interest rate cuts, and rescue packages for the US real estate market rang loud and clear. The last time we checked, U.S home values have declined just modestly on balance, and nowhere near back to their 2003, or 1999 “break-even” values.
In our view, this type of hair-trigger fear, and persistent pessimism, resonates due to the flawed systems necessity for sustained perpetual growth with minimal and preferably no interruptions.
For the system to continue sustaining itself, debt, and money creation must continue to accelerate at ever-faster rates simply to maintain balance and neutrality.
Frankly, we are quite done with attempts at making sense of this age-old madness. It is very old hat, and “is what it is.” Until the paradigm shifts, we play the hand as dealt.

On to the Charts…
We will now shift our focus to the charts and our variant perceptions as to the long-term future prospects for both the Dollar and Gold.
First, we’ll provide a quick grand strategy overview of each of the markets, and then we will share some archived charts from Elliott Wave Technology’s Near Term Outlook.
Broke-Back Dollar:

We begin counting the century old dollar bear at the Super Cycle B wave crest in 1985. , In our view, the most fitting and likely “flexible” pattern for managing the faith of a fiat currency (whose ultimate destiny is its intrinsic value of $0.00) would be that of a massive ending diagonal. In this case, the “ending” part of the diagonal may become a quite literal description. The massive pattern we describe is not visible in this short 25-year span. Instead, this chart captures the essence of Cycle Waves A and B, terminating respectively in 1991 and 2001. The Cycle Degree Pattern is that of a descending triangle. Since the crest in 2001, the dollar is in process of descending toward Cycle wave C. Cycle wave A took 6-years, Cycle wave B 10-years, and we are now into our sixth year of Cycle wave C. There is no certainty as to when Cycle C will terminate. It can occur as early as 2007, or it may stretch into the next decade or beyond. The larger Super-Cycle C wave down, could also morph into five vs three waves at Cycle Degree, adding a D and E wave to the current Cycle Dimension. Such a prolonged pattern would likely be viewed as the most preferred, least painful, and most “flexible” manner in which to manage the total destruction of a sovereign fiat currency. In the best case scenario, if managed with supreme luck and total efficiency, by the time (2325-3000AD) Super Cycle E gets around to collapsing the currency, we could be looking at a 100,000 Dow, $8000 Gold, median home prices of 5-million dollars, and fuel costs for personal transportation at around 500 dollars per fueling. To get there, the dollar will have “halved” numerous times, and likely be trading under 8.00 vs the 80.00 level. More immediately however, the current Cycle wave down can terminate anywhere between 80.00 and 45.00

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The Gold Case File:

The case for Gold begins with the print high of $875 in 1980. We are viewing this as the crest of Wave A at Cycle Dimension. Of particular note is an inverted synchronization of the Dollar and Gold upon their respective Cycle Degree B wave terminals in 2001. The PRIMARY DEGREE bear market in Gold lasted 21-years. We are now into year six of Cycle Wave C. Apart from the natural retest of the $875 high, the current wave at Cycle dimension can launch Gold north of $1500 before all is said and done. If aligned with the postulated collapse of the dollar, we’d be looking at a $7000-$8000 Gold price. To get blow by blow interpretation for the dynamic evolution of wave structures as they unfold, subscribe to Elliott Wave Technology’s Near Term Outlook.

The Gold charts that follow come from the archives of Elliott Wave Technology’s Near Term Outlook. They represent a brief cross-section of our market guidance and forecasting services.
No guidance, technical analysis, or forecasting method is flawless. Any inference of “perfection” at every twist and wiggle of a price series is likely not an accurate account of the real world trading experience.
Elliott Wave Technology’s approach to markets is a contrarian one. We provide traders with unrivaled navigational guidance as to low risk entry and exit levels for counter-trend trade set-ups.
Yes, we try to catch tops and bottoms. We do it all the time. Sometimes we get lucky and grab them on the first go, but more often than not, it requires a managed campaign of multiple offensives to get the big pay-offs. This is especially true for a market like Gold, which has been in a wide consolidating trading range for nearly a year.
What makes or breaks traders, is first the adoption of good strategy, followed by the prudent management of trading campaigns. It is our job to provide a sound road map from which traders can profitably navigate, manage risk, and book profits.
As you follow the charts below, you will note that wave counts rarely remain fixed. Particularly in shorter periods, wave structures like markets, evolve dynamically. As the markets adjust, so does our guidance and interpretations.
From Elliott Wave technology’s near Term outlook Tuesday May 9 2006

At this juncture, Gold had been trading near vertical for over two months. We were near about done counting the last sub-divisions of the spike, and began issuing our first counter trend sell probe notifications when gold moved above the 700 level. For position traders, early accumulation is a pillar of success. Those with shorter time horizons, are advised to take measured bets when attempting to launch counter trend offensives. This was an “early” stab at catching a top. Note the 628, 590, and 545 levels at the right. They are pre-determined support targets for the imminently anticipated reversal.

From Elliott Wave technology’s near Term outlook Thursday May 11, 2006

Two days later, Gold continued its parabolic run- tacking on another $26.00 from our recent sell signal. The persistent spike revealed some shorter-term confirmations, but the larger readings continued to warn of exhaustion. Note the last extended fifth wave of our smallest and only remaining sub division. Though we held additional targets above the 744 level, at this stage the move was getting so insane, and impressive, it appeared as though it had done all it could possibly do. If it moved higher any faster, it would have gone backwards! As such, we issued a secondary sell probe against the 726 high.

From Elliott Wave technology’s near Term outlook friday may 12, 2006

Just when we thought, we had seen a top, Gold continued to press higher by another $3.75. This move did little to impress, and provided additional evidence that the move had possibly exhausted. This was the third and final probe, which caught the top in Gold at the May ’06 high of 730.40

From Elliott Wave technology’s near Term outlook friday may 19, 2006

Within a week’s time from our third attempt in grabbing top, Gold showed clear signs it was beginning to surrender. The first of four viable downside targets had been achieved with the breach below 671. Four power up trend lines were staunchly in place to support the remaining three downside capture targets. Note the momentum support level in the lower panel. It is here that we are expecting Gold to find a bottom, and possibly make a quick run back up to print another fresh high.

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From Elliott Wave technology’s near Term outlook thursday june 8, 2006

One-month later two things occurred. First, Gold breached our second level downside target at 618, and secondly, the momentum support line we anticipated showed signs of failing. This in concert with the smaller wave structures, suggested Gold had high probability of entering our downside capture window between 571 and 513 before a tradable bottom would occur. Note only three power up trend lines remain. Again, rarely fixed at shorter-term intervals, we continually attempt to adapt potential degrees to major wave terminals.

From Elliott Wave technology’s near Term outlook Tuesday june 13, 2006

A couple of days later, Gold gives way big time to the downside. Down $38.80 and 6.42% on the DAY! At this point, with only two power-up trendline supports remaining, and the market nearing full on oversold, we began to advise subscribers of a pending bottom. The last remaining common retracement level of 560.40 was still not captured!

From Elliott Wave technology’s near Term outlook Thursday june 15, 2006

Within a day or two, the bottom was in. Our 560.40 target achieved, and only one remaining power uptrend line remained to hold the 542.27 low.

From Elliott Wave technology’s near Term outlook thursday sep 28 2006

This chart provides example of shorter-term trade set-ups within heavily congested markets. Here we highlighted a short-term bullish pattern buy trigger at 582 with a predefined upside capture target between 601.98 and 607. Take note of the high and low for the day. Not bad for a quick $20 move up in the Gold price. You can see how we are beginning to carve trendline parameters over the price action. All of which provide ongoing visual guidance to key support and resistance levels along with price targets attached to many of them.

From Elliott Wave technology’s near Term outlook Friday october 6, 2006

In early October, we issued a clear buy signal against the 559.30 low. We hit this particular low on the first go round. PS. Note what the market did post the last pattern buy signal containing the 601-607 price targets. It dropped like a stone from the 607 level! Upon doing so, we were in “buy” mode all over again.

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From Elliott Wave technology’s near Term outlook tuesday nov 28, 2006

Nearly two months after the buy signal from $559, Gold was up nearly $100 and looking overbought. Earlier that week we issued an sell alert from the 648 level. This one proved to be early in very short order.

From Elliott Wave technology’s near Term outlook thursday nov 30, 2006

Within a couple of days after our first sell probe, Gold tacked on another $10.00 striking above a smaller 5th wave price projection. It did so upon a bullish break out pattern targeting $712 on the upside however, a commonly missed “price” divergence occurred in process. Despite this and an upside capture window of 686-724, we advised traders to fade the 654 high with a secondary sell probe. Note the changing evolution of the wave labels and associated “degrees” as time and price unfolds.

From Elliott Wave technology’s near Term outlook tuesday jan 9, 2007

In a little over a month, the previous guidance to fade the 654 high paid off handsomely! By January 9, Gold touched down below 607 into a resting capture window. Another “price” divergence flagged a fresh “buy probe” against the 603 in January of 2007. Note the introduction of concurrent alternate counts in the faded color labels.

From Elliott Wave technology’s near Term outlook friday feb 23, 2006

Our long position guidance against the 603 low at the start of 2007 was performing brilliantly into February. At a retest of the July high in early February, we were again early with a sell probe from the 680 level. This guidance gave some quick downside to the tune of 10.00, but popped right back up to fresh highs within a day’s trade! Shortly thereafter, we issued another sell alert against the 691 high. This one turned out to be the money shot.

From Elliott Wave technology’s near Term outlook Friday mar 2, 2007

Our last chart shows the market did print a marginal high above the 691 sell signal on 2-23, but by less than a dollar. Within five days of our guidance, Gold was off its signal high by nearly $50.00! NOTE: Do be advised; though the above chart is fairly recent, THE NEAR TERM COUNT HAS CHANGED significantly.

In closing, it is important to recognize that we do not “predict markets;” instead, we take ownership of the dynamic price action as it unfolds, and do so in such a way that no black box algorithm could possibly match. Doing so impartially, allows us to anticipate direction and formulate astute and measured guidance based on the daily evolution of price. As evidenced in the above presentation, the resultant competitive advantage is priceless.

© 2007 Joseph Russo
Editorial Archive

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NAVIGATING THE HUI (Gold Bugs Index) by Joseph Russo
ElliottWaveTechnology.com
April 23, 2007Introduction
Providing a consistently accurate road map for traders and investors is both a rewarding and challenging responsibility that we passionately embrace. We approach our calling as though legally bound by the highest of fiduciary standards.
Although it is clearly impossible for one to know with any level of certainty how and when prices will move within a given series, this article will provide testament that it is indeed plausible to attain a distinct advantage, and actionable level of foreknowledge relative to dynamic price evolution in both time and amplitude.
Success in the two separate endeavors of trading and analysis is by no means failsafe or a sure thing.
To the contrary, trading losses, and failed forecasting signals generously populate the real life experience of the most successful traders and analysts.
In this business, no individual, method, or system can get things right all of the time.
Within the chart archives below, we will provide such examples of real-world challenges and triumphs

The HUI’s Long-Term Wave Structure:
Our monthly analysis plots the price action from the low in 2000 at 35.31, labeled as terminal to Primary 5 of a larger degree bear market [C] wave terminal.
One must recognize that Elliott Wave Theory along with the balance of technical analysis is mostly subjective, and open to variant perceptions.
For example, one can interpret the five wave advance to our preferred (3) terminal as a completed first wave. Doing so places the May ’06 high as ALT:
(3) Both views are valid.
Although continuously subject to changing dynamics, for the moment, our preferred and first alternate views interpret the larger degree HUI wave structures as labeled.
Bare in mind, no single form of analysis should take precedence over the price action itself.

The HUI’s meteoric rise
From its Cycle Degree print low of 35.31 in November of 2000- measured to its print high in May 2006 at 401.69, the HUI has skyrocketed more than 1037% in 5½ years!
In contrast, the Gold price itself has only appreciated 192% in the same peak to trough period.
In our view, the HUI’s meteoric rise has topped, or remains in progress of terminating a first leg up of Primary dimension. Consolidations to date have yet to correct the 1037% Primary Degree advance in corresponding proportion.
We suspect a proportionate correction may either take place later this year, or out as far as 2009 in confluence with a potential eight-year cycle low due in Gold.
navigating the hui
Below is an archived account of Elliott Wave Technology’s real time analysis of the HUI.
The archived works will show how we have dynamically adjusted to the evolving price action in arriving at our most current interpretation as represented in the monthly chart above.
As the
guidance will illustrate, “it matters not that our current “wave count” is correct, or set in stone, but rather that we interpret the price action in such a way so that our clients can profit as the count works itself out however it so chooses.”
From Elliott Wave technology’s near Term outlook
may 11,
2006
We open the archives as the HUI prints its terminal high of 401.60. Note the deep oversold condition highlighted at the 4-wave low of 278 the previous March 10.
Looking back to March of 2006, our guidance suggested clients adopt a bullish bias toward the HUI. By early April, we positioned an upside capture window above the market between 369 and 398.
From our March 2006 guidance, the HUI had advanced some 41% in two months time.
By May 11, price had surpassed our upside capture window. By that time, we had already issued our second sell probe-advising clients to adopt a bearish posture against the fresh highs.
From Elliott Wave technology’s near Term outlook
June 13, 2006
The next chart from our archive shows the devastating decline that took place in just over a month.
From the 401.60 high in May, the HUI had plummeted 131 points, losing more than 30% of its value.
Chart highlights include the capture of a smaller interim counter trend b wave rally into early June. That rally terminated between 335-354 prior to the HUI succumbing to its next leg down.
Although our downside targets failed to elect, the severity of decline, level of oversold readings, and the prospect of a 4th
wave down basing, prompted us to begin guiding clients to reversing trading bias from bearish to bullish by mid-June.

  

From Elliott Wave technology’s near Term outlook
June 30,
2006
By the end of June, our previous mid-month guidance reversing bias to the bullish side was paying off brilliantly.
The HUI was now trading 24% above its lows from just two weeks prior.
This chart highlights the evolution of our dynamic wave interpretation as it unfolds against the price action.
At that time, our preferred view was that the HUI was in process of topping a smaller degree a wave en-route toward a larger b wave terminal.
Our first alternate view suggested that the b wave was already in process of topping.
From Elliott Wave technology’s near Term outlook
Sept 5, 2006
Our next archived chart fast-forwards two months from the previous.
Much had transpired in these two months.
We successfully guided traders to fade the –a- wave high and protect profits appropriately upon the basing of –b- in July.
After that, the environment became extremely challenging, and we made some bad calls.
On August 23rd (see black arrows) we incorrectly, and prematurely assumed that the larger b wave had terminated upon the 354.16 high. Our premature August 23rd guidance toward a bearish stance provided immediate, but very short lived results.
After falling nearly 20 pts in four days, price action whipsawed, and the August guidance was in drawdown of nearly 4% by the time this b wave finally topped some 15 points above our bearish call.
Despite that adversity, we issued a secondary sell probe against the September 5th 366 high.
The HUI topped one day later at 369.68

  

From Elliott Wave technology’s near Term outlook
oct 5, 2006
After taking our lumps, maintaining a stiff upper lip paid off. By the time mid-October rolled around, our secondary “sell probe” against 366 was well in profit as the HUI was down more than 20%.
On September 25th, (and once again too early on the draw) we suggested clients consider taking profits on shorts and initiate “buy” probes against the 285 low.
Another short-lived move in our direction violently whipsawed against us.
After moving up 24 pts in five days, the HUI did a complete about face, plunging to fresh lows 3% below our entry guidance before putting in a final bottom on October 4th at 274.72.
In similar fashion, that fresh new low only served in prompting us to issue secondary long side guidance against it.
After licking our wounds, that 275 low marked bottom for the move.
We had now adopted a long bias toward the HUI.
From Elliott Wave technology’s near Term outlook
nov 2,
2006
From our bullish stance against the 285 - 275 levels in early October, the HUI was now trading in the 320 area some four weeks later. After a 13% move up, we began to “size-up” and measure the next interim pivot high.
Our work on Thursday November 2 cited an upside target window between 338 and 342 to gauge such a pivot

From Elliott Wave technology’s near Term outlook
nov 9, 2006
Within a week’s time, the HUI managed to spike up as high as 341.31, just .69 cents shy of the top end to our capture window.
This in concert with an overbought “price” divergence prompted us to issue guidance to take profits on longs and reverse to the short side of the market.
This high would prove to be profitable over the next two weeks, but come back to haunt us with another major upside whipsaw.
From Elliott Wave technology’s near Term outlook
nov 28, 2006
Within one week from our short probe against the 341 level, the HUI was trading nearly 6% lower under the 320 level. At that juncture, we assumed all was going according to plan; that is until the HUI decided to throw us some serious curve balls.
By Tuesday November 28, all short side profits had totally evaporated.
We suspect many clients aborted campaigns on the bullish pattern breakout above the inverted H&S neckline, or upon individual break-even levels, somewhere near the 335-340 handles.
Staying with our discipline, we issued a secondary sell signal against fresh 343 highs on November 24.
This signal ended up erroneous as well. This is the real world market environment.
To engage it, one must graciously accept losses along with the gains.

From Elliott Wave technology’s near Term outlook
dec 5, 2006
After getting our clocks sufficiently cleaned, we humbly maintained our confidence and disciplines in the face of such adversity, and continued with our work as usual.
On Tuesday December 5, a second, and much more pronounced “price” divergence registered against the 362 high.
With it, we now suspected that price was at or nearing its last leg up toward the preferred d wave in question.
At this time, we issued guidance suggesting clients assume a bearish trading bias toward the HUI against this 362 high.
From Elliott Wave technology’s near Term outlook
jan 9, 2007
Buy January 9th of the New Year, the bearish guidance delivered against the previous Decembers 362 high was now 50 points, or 13% in the black.
This guidance went a long way in healing most all of the wounds incurred from our most recent rough patch.
The battle scars remain however, and serve a very good cause.
Such scars are constant reminders that taking losses, recognizing bad trades and prudently abandoning them, are as much a part of the real world experience as booking profits.
Risk is always to be respected, and above all else, protecting one’s trading stake takes precedence above all else.

  

from Elliott Wave technology’s near Term outlook
jan 11, 2007
After the impressive bullish run following the c wave lows in October, we were as convinced as one could be that the HUI would not trade in a straight line to the lower triangle boundary toward our then anticipated (a) wave terminal.
As such, we began looking for reasons to lift the short bias, and reverse posture to the long side of the market.
On January 11, the HUI was nearing a full oversold condition.
The chart was also displaying a short-term “pattern buy” set- up. Cognizant that not all pivots require similar confirmations, we expressed bullish guidance for a potential interim pivot a wave low upon upside breakout of this impending bullish chart pattern.
From Elliott Wave technology’s near Term outlook
feb 22, 2007
Results from the pattern buy signal- Frankly, our intuition paid off, and we got lucky as well.
After breaking the pattern to the upside, following a brief retest, the HUI just kept moving higher.
By February 22, though price was well shy of our then postulated upper boundary projection for the d wave; price reached underlying resistance while the HUI approached full on levels of overbought.
With this, we issued guidance for clients to lift their bullish bias, and resume a bearish stance against February 22’s 359 high.
Notice the evolving and dynamic nature in which we adapt wave interpretations relative to the ongoing price action.

  

From Elliott Wave technology’s near Term outlook
feb 23, 2007
One session following our bearish reversal guidance, the HUI pressed higher above underlying resistance, printing an intra-day high of 362.58 on the 23rd.
Bearish guidance however, remained steadfast against this high as well. The 362.58 high ended up marking a rather profitable high pivot.
from Elliott Wave technology’s near Term outlook
mar 9, 2007
By early March, we found ourselves right back to anticipating the very same dynamics as in the previous January 11 analysis.
Once again, we suspected that the anticipated (a) terminal would not arrive in a straight line.
With this, we again began sizing up and measuring for counter move long positions off another intervening a wave pivot low.
The take away is- So long as guidance remains on the correct side of most interim or key pivots, it matters not whether our anticipated larger wave labels prove to be correct.
We use them to guide variant perception as to what may occur however, evolving market dynamics compel us to vary perception as price unfolds.
In the mean time, we are free to navigate clients profitably throughout most pivots- whether the count dynamics change, or prove to be correct as originally perceived.

  

from Elliott Wave technology’s near Term outlook
mar 16, 2007
Our last chart in this presentation shows guidance reversing from a bearish to a bullish posture on March 14th against the 312 low.
This brings us to the present. Prior to pulling back last week, the HUI recently registered prints just north of 369. The HUI closed out last week’s trade at 356.16, some 44 points or 14% above our mid-March bullish guidance.
Since posting this chart on March 16, the count and labeling has changed significantly.
It is readily apparent that our approach to forecasting is by no means arcane.
We do not
“predict prices;” nor become reliant upon previously stated predictions coming true; instead, we adapt to the dynamic price action as it unfolds, and do so in such a way that no black box algorithm could possibly match.
Doing this impartially, allows us to anticipate direction and formulate astute and measured guidance based on the daily evolution of price.
As evidenced in this fair and balanced real-world presentation, the resultant competitive advantages remain abundantly clear.
Trade Better / Invest Smarter…

© 2007 Joseph Russo
Editorial Archive

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RE-SCALING GLOBAL PERCEPTION by Joseph Russo
ElliottWaveTechnology.com
April 30, 2007
backdrop

In April of 2006, we were quite aware of the parabolic price movements taking place amid numerous global equity markets. We weighed in on the matter with a piece entitled Global Contagion.
On September 14, 2006 with the Dow trading at the 11,500 level, Elliott Wave Technology forecast an imminent critical mass building within the Industrial Average. At the time, we shared those observations in our presenting Equity Markets Approach Critical Mass.
Throughout our chronicling the decisive capture of the sudden 6% decline in March through the power of chart analytics, we were fully anticipating fresh historic highs for the Dow Jones Industrial Average well north of 13K.

Economic coup d'état
After decades of monetary alchemy and overbearing influence, the aging global financial sphere continues to play out one of its most overt campaigns of economic coup d'état of the past 100-years. One may surmise that by design, lack of fiduciary oversight, or both, that the aging sphere has in effect, usurped all of the world’s central banks along with their respective sovereign governments. In order to preserve itself, it now appears to have discreetly acquired a full-spectrum control of all things financial.
Financial Sphere’s Slam-Dunk Victory catapults U.S Equities toward 7-year highs
The global financial sphere has indeed taken on a life of its own, perhaps subsuming that of the real economy itself. Held to account only by the ability to sustain itself, it has morphed into a most fragile, highly addictive paradigm, requiring ever-frequent fixes to avoid the slightest measure of interruption to which the mere hint, would engender the excruciating pangs of tumultuous withdrawal.
One could speculate that to maintain viability, the aging sphere is fighting for its very survival and has resorted to anointing itself both the driver and buyer of every resort. With unfettered grip on the economic baton, it appears quite capable of shaping perception relative to the strength and integrity of financial markets around the globe.
It is becoming abundantly clear that the United States is no longer the epicenter to this rather old and maturing dynamic center of global trade and influence. The USA remains a key player however, and at present, maintains monopoly on the worlds reserve fiat currency.
With the king fiat nearing multi year lows, many global equity markets have hyper-extended their already parabolic bullish advances. From their lows in March, the U.S markets have suddenly awakened with a renewed sense of exuberance toward equities.



Chart 2: The Russian Trading System
Chart 3: The Mexican Bolsa
On balance, global equity indices remain extraordinarily bullish in nominal terms. At times of such extreme exuberance, it is critical for traders and investors to respect elevated risks as markets enter or extend near vertical price advances. Complacency and overconfidence that fresh new highs will follow each and every correction amounts to nothing more than a recipe for watching massive paper profits vanish.
Alternately, one does not want to be short equities, or in cash as markets continue rising amid a most spectacular bullish run, especially as one’s ones fiat currency falls in value relative to the price of Gold. Those who have yet to engage the long side of equities face growing risk of doing so with each phenomenal new record high. Caution goes out to such individuals who may be salivating with envy of not having boarded the runaway party train sooner. The later one boards, the more assertive ones method of entry and subsequent defense must be in lieu of potential derailment.
Elliott Wave Technology has been monitoring this fantastic global equity boom diligently, and with great interest for some time now. In addition, we are closely monitoring the recent resurgence in U.S equities. Recognizing the financial markets current vigor, while remaining fully cognizant as to the effects that “real” monetary inflation can have on equities, we are compelled in the best interest of our readership, to begin monitoring a broad array of global indices.
We are monitoring global markets for long-term structural integrity. Our trusted brand of analysis will blanket the market action to reveal early fracture points, and danger zones warranting investor and trader attention. Moreover, we will be providing price targets for the intermediate and larger degrees of trend.
To address the “real” monetary inflation effectsaffects of a nation’snations fiat currency vs the value of Gold, when available, we shall plot the host country’s currency vs the value of Gold, behind that of its major equity index. This visual anchor will be of tremendous value in assessing the masked inflation deeply embedded, and relied upon across the entire financial sphere.
Elliott Wave Technology has earmarked the following markets for such coverage:
Australia’s ASX, China’s Shanghai Stock Exchange, The Russian Trading System, India’s Bombay Stock Exchange, Brazilian Bovespa, Mexican Bolsa, Tokyo Nikkei Average, London Financial Times Index, French CAC 40 Index, German DAX, Dow Jones Industrial Average,
NASDAQ Composite Index, GOLD, SILVER, 20-Year US Treasury Yield, and the Dow Jones World Stock Index.
The next scheduled quarterly report for the above markets is for mid-June however; a partial chart preview of these markets is available right now. To add value, and best serve the readership at large, we will begin including these quarterly reports with our Interim Monthly Forecast. Given recent market developments, we thought it prudent to release early preview to this report prior to its scheduled release date.
The current dynamism of the global financial markets is extraordinary. With epic dynamism comes fantastic opportunity accompanied with equally associated risks. Considering the sheer mass of impending structural imbalances, along with the array of geopolitical challenges confronting the present financial sphere, it is with great honor and sincerity that we provide the most careful and measured guidance to protect and reassure individual traders & investors in the challenging, and rewarding years ahead.
Below, we have provided an example of our comprehensive long-term structural analysis for the Dow Jones World Stock Index. By the June publication date, we will have completed analysis on all of the charts from the above list in similar fashion.
From Elliott Wave Technology’s Millennium Wave Quarterly Report (Preview)

Chart 4: The Dow Jones World Index / Franklin Templeton Hard Currency Fund vs Gold (behind price bars)
The Dow Jones World Stock Index:
We have included the Dow Jones World Index as a proxy benchmark for global equities. Charts will appear much larger, and with greater clarity from our secure website.
Four Long-term Chart & Analysis protocols featured in our MWQR reports:
1.
The solid green descending mountain seen behind the monthly price bars of this index-is its “true” monetary inflation gauge. Its data derived from plotting the price of the Franklin Templeton Hard Currency Portfolio against the price of Gold. Since fiat currencies “float,” (or more aptly sink) there is no better universal standard of measure to gauge the health of such currencies than to put them to task against the Gold Price. It is abundantly clear that this stock index has benefited tremendously in nominal terms as the real value of fiat currencies loosely associated with it have (inflated) tumbled considerably.
2.
Though degrees of trend are subject to shift amid changing market dynamics, our current wave analysis observes the Dow Jones World Stock Index as rising in a 5th wave of Primary Degree. The narrowly channeled V-reversal-138% advance from the 2002 low, (now 15% above its primary 3rd wave crest) has been spectacular! The structure of this robust advance currently lends itself to that of an extending (5) wave at Intermediate degree. Note the alternate (1) label in light blue at the top of the chart. We provide such alternates in the event our interpretation of “degree” is not in confluence with the level of dynamism inherent in the price action.
3.
The price charts go a number of years ahead of the current time. In this case, out to the 2010 period. We populate this space with a host of critically essential and user actionable information. The upside price targets listed here, are noted with green arrows along with trendlines in support of reaching each of the targets. The smaller dashed-horizontal gray lines, are listed price levels of anticipated corrective declines once the larger cycle reverses. Last are the narrow vertical tubes, which represent “weak spots,” or points of potential fracture that may breach the structural integrity of the current trend. These “fracture tubes” have tentative horizontal price targets associated with them, which adjust dynamically contingent upon the point of fracture.
4.
The red numbers listed in the upper part of the chart are Fibonacci price target clusters for the current degree of trend, and its associated subdivisions now in progress.
Franklin Templeton Hard Currency Portfolio:
The Fund invests primarily in high quality, short-term money market instruments (and forward currency contracts) denominated in currencies of foreign countries and markets that historically have experienced low inflation rates.
We trust the value in having access to such a precise long-term navigational monitor is self-evident. Those yet to board such markets, or seeking to add exposure, may strategically and prudently do so with reduced risk, at identified levels of key longer term support. Alternately, those seeking to “take partial profits” may do so as markets strike overhead areas of resistance, or reach resting targeted milestones.
Most importantly, in light of the violent, fast, and parabolic nature in which many markets currently trade, it is vital that one be fully cognizant where key levels of structural integrity may breach, and potentially cause the entire house of cards to crumble.
Bear in mind, what has taken years to build, is typically destroyed in a matter of weeks or months. Moreover, as evidenced by the performance of the Japanese Nikkei index over the past twenty years, after scaling such incredible heights for extended periods, when such wreckage occurs, it often lasts for considerable lengths of time.
Our approach to long-term forecasting is by no means arcane. We do not “predict prices;” nor become reliant upon previously stated predictions coming true; instead, we adapt to the dynamic price action as it unfolds. Doing so impartially, allows us to formulate astute and measured guidance based on the dynamic evolution of price.
Trade Better / Invest Smarter…

© 2007 Joseph Russo
Editorial Archive

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BULLISH: LIKE THERE'S NO TOMORROW by Joseph Russo
ElliottWaveTechnology.com
May 7, 2007the financial sphere floors it
All that remains to seal absolute victory is to re-mastermind the majestic performance put on by the Clinton/Rubin administration in masterfully engineering a strong dollar policy concurrent with rising equity values, while commodities, gold, and interest rates plunged into the abyss.
feeling lucky - go ahead GET long (just don’t be fooled again)
Those who have been sitting on the sidelines, scratching their heads as equity markets go ballistic - fear not. One can BUY their favorite 7-year breakout of choice for the long haul without feeling like a complete fool, to save face and fortune; just remember to get the heck out of Dodge in the event of a majority plateau failure.
Broadest measure of u.s stocks closes in uncharted territory
What might one expect from the Wilshire 5000 breaking above critical mass? Sizing up, and more importantly, realizing an eventual full range nominal-expansion target of 22700 (50% from current levels) would validate one’s anticipated genius. To maintain prudence while embarking upon such an optimistic campaign, all one need do, is set an initial monthly closing stop below 14740 (3%), and then trail it up accordingly. In the event of a false start, no problem, just redeploy the strategy and repeat as necessary.

One more essential element for long haul investors
We shall assume such brilliant minds have long since acquired, and regularly rebalance at least 10% to 15% of their total net worth (including paper profits on inflated real estate values) in physical gold and silver bullion. The purpose in adopting such protocol (under ALL market conditions) insures against the ongoing deterioration of purchasing power inherently resident in government issued fiat currency. After all, we would not want to see such genius executed in vain. Therefore, if one is void of this vital investment component, might we suggest earmarking a portion of one’s long-haul equity purchases toward strategically planned bullion acquisitions.
the take away
To survive the persistent and egregious financial horrors bestowed upon us for more than 90-years, we must aggressively pursue practical initiatives in order corner the out-of-control financial sphere in such a way, as to remain whole against every possible outcome to which the masters of illusion may serve us.
hope for the future
Upon inevitable closure to the present paradigms widespread tolerance of illusory and deceptive economics, it is our hope that the generation earmarked to restructure the system, will prevail with minimal sacrifice amid a probable revolution. Furthermore, it will be essential that future generations of stewards contain vast numbers of visionaries, possessing unshakable principles, grounded in truth, holding steadfast to the highest levels of discipline and integrity for themselves, their families, their countries, their planet, and for the greater good of humankind.
the upside for right now (nominal or otherwise)
The present upside is that robust market’s frothing with animal spirit; lend themselves to an abundance of highly profitable, short-term trading opportunities. More experienced participants trade these markets aggressively in attempt to maximize nominal returns. To do so successfully is no small task. First, one must practice sound money management, and maintain a resident understanding and respect for risk. Secondly, one must acquire a competitive edge to assist in the effective deployment of risk capital. We categorize these unique and vital market participants as seasoned traders, or prudent speculators. Elliott Wave Technology devotes its highest level of focus and attention to these bold, creative, and determined combatants.
traders and speculators
For experienced traders speculating in the short-term direction of broad based indices, Elliott Wave Technology renders unrivaled forecasting guidance from which to execute one’s trading plans profitably. Thumbnail charts below illustrate a typical guidance and outcome study reflecting recent short-term forecasts from Elliott Wave Technology’s Near Term Outlook.

The above examples are not results of specific trading instructions, or closed trade outcomes. They are representative of Elliottwave Technology’s navigational guidance from which speculators gain a unique competitive advantage in formulating and managing their trading offensives.
Our approach to short-term market guidance, and long-term forecasting, is by no means arcane. We never “predict prices” nor become tied to a fixed bias or singular perception; instead, we adapt to the price action as it unfolds. Doing so impartially, enables us to formulate astute and measured guidance based on the dynamic evolution of price.
Trade Better / Invest Smarter…
Joseph Russo

© 2007 Joseph Russo
Editorial Archive

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THE RAGING BULLS by Joseph Russo
ElliottWaveTechnology.com
May 21, 2007markets at a glance
INDEX TRADERS EDGE Vol.
1

Two weeks ago, we shared with readers a perception that equity markets were bullish like no tomorrow. That general assessment has held course thus far. However, intermediate level timing models are suggesting that equity markets may be fast approaching a juncture of pivotal import. If so, many broad market indices will soon elect one of three critical paths in the days and weeks ahead. Our continued diligence monitoring minor degree trends, together with intra-day price structures; enables us to anticipate which of these critical paths each market is in the process of adopting.

The surge in equity prices from March appears driven by a healthy dose of animal spirits. Of late however, neither momentum measures nor sound fundamental metrics appear plausible enough to account fully for the unprecedented two-month rise in prices.
It is clear that some form of exuberance is taking hold of equity indices. As the US Dollar gasps for air, equity markets continue to press higher in a raging bull market that is historically over-extended, overbought, and extremely mature.
That said - one must be aware that equities are subject to another February-like decline without any particular notice.

Despite such imminent prospects, the recent buying-panic in select indices may well persist for much longer than one might assume. Once the surge abates, rather than a sharp decline, Act-II may bring with it a sideways levitation, serving to work off extreme overbought conditions, and perhaps introduce prospects for a summer consolidation. In either case, it is advisable that one stay tuned for the new fall season.
last week’s short-term navigational GUIDANCE

This segment highlights one of many indices and time-horizons covered in the Near Term Outlook. Such exercise intends to reflect upon the worth of forecasting accuracy from the preceding period’s guidance. Top honors for short-term directional guidance from last week go to the NASDAQ 100.

Previous Week’s Statistical Summary for the NASDAQ 100:

Weekly data points
·

Open - 1901.66
·

High - 1906.38
·

Low - 1866.96
·

Close – 1896.93 -0.24%
·

Range - 39.42 pts 2.07%
·

Total Navigation Points Captured – 71 pts +3.73%
·

Short-Term Trader’s Profitability Assumption* – 42.60 pts +2.24%

*Allowing for entry, slippage, and commission- the profitability assumption above reflects a 40% margin-buffer subtracted from the total navigation points captured by guidance.

From
Elliott Wave Technology’s
Near Term Outlook for the week ending May 18, 2007


Our short-term guidance rolled into last week’s trade from the long side. Our bullish stance arrived courtesy of a buy-signal issued against the previous Thursday’s May 10 low of 1874.24. The day following this signal, the NDX opened with a 3-point gap-up, and settled the session 23-points higher on the day. As such, we began last week on a rather profitable note.
Monday, May 14 – Pre Open Report
In our first report to start the week, we stated clearly that an anticipated follow-through rally, stemming from a breakout above the previous day’s large range inside session, was likely to be short-lived.
In the form of a trendline break (TLB) carrying a minimum downside reversal target of 15-points beneath its breakdown apex, we graphically illustrated how and where the first sign of such failure would manifest.
Monday, May 14 – Opening Bell
After a huge gap-up open at the bell, the NDX surged straight up to its print-high for the week at 1906.38. Then suddenly, the rally failed, reversing course with fierce bearish abandon
Upon the hard-down reversal, the market tripped beneath our resting (TLB) apex at 1896.07, electing a SAR (stop and reverse) sell-trigger, prompting short-term traders to take profits on longs and reverse to the short side of the market.
Thereafter, not only did the market retract all of Monday’s gains, but also erased all of the gains amassed from the previous Friday as well. The NDX hit an intraday low of 1878.63 (a 27-pt intra-day reversal) before settling the session at 1885.58, down -16.08 on the day.

From
Elliott Wave Technology’s
Near Term Outlook for the week ending May 18, 2007


Last Monday’s report also mentioned the likelihood that there was fair potential that such a rally failure would likely engender a bout of choppy trading dynamics short-term.
Wednesday, May 16 – Pre Open Report
The second of our three weekly reports, highlighted a short-term buy-signal against Tuesdays 1870.24 low. Additionally, under this reports proprietary turn-date chart, we stated, “nothing would be finer than to see a marginal new low for the move (Wednesday), followed by a reaction rally of merit.”
Wednesday, May 16 – Opening Bell
After a brief 4th-wave gap-up after the bell, the market quickly reversed to print the anticipated new low at 1866.98 (3.26 pts below Tuesdays). This low provided a gracious secondary queue for short-term traders to take profits on any remaining shorts, and SAR long the NDX.
Thereafter, from Wednesday’s intra-day low of 1866.98, the NDX mounted a robust 24-pt rally, ending the session at 1891.57 near the highs of the day.
Friday, May 18 – Pre Open Report
In our last report for the week, we began by noting two bullish pattern triggers residing above the market. Additionally, we stressed that recent market conditions were being governed by failure or success of the numerous short-term pattern triggers buried amid intra-day price action. Thursday’s session closed on a sour note down -6.89 on the day. We noted that per the close, by way of a marginally negative pattern-breach, that bears had a slight upper hand going into Friday’s trade. We clearly identified, precisely where this bearish trigger-line rested, drawing a clear line in the sand as to where it would begin to succeed or flat-out fail. Note: In the interest of preserving proprietary methodology for clients, along with specific price projections and larger degree wave labels, we have removed all past and forward trigger-lines, from the above chart.
Friday, May 18 –Opening Bell
Friday’s opening bell ushered in another gap higher, which immediately negated the marginal bearish trigger-line violation noted from Thursdays close. Within the first hour of trade, both of the overhead pattern buy-triggers specified in our report had triggered. The NDX went on to finish the session up +12.25 closing the week at 1896.93, up 29.95 from its low, but down marginally -0.24% from Monday’s open.
intra-day snapshots for the week ahead

In this segment, we share with readers a collection of intra-day charts that span the preceding two weeks. Each index includes forward-looking graphics, which illustrate plausible variant price paths for the week directly ahead
Bear in mind that such price path projections are by no means forecasts. Such projections do not in any way to reflect our branded market guidance, nor are they to be interpreted as trade recommendations of any type.
The intent of such projections is to provide advance consideration for one or more plausible paths residing amid a much broader range of variant outcomes.
Disciplined monitoring of intra-day wave structures enables us to quickly confirm or negate any of the plausible paths set forth. Through this process, we readily identify the development of variant patterns as dynamic price structures evolve.

The Near Term Outlook delivers unrivaled short and long-term forecasting guidance for the U.S Dollar, Dow, SPX, Gold, HUI, and NDX.
The concise, impartial market guidance, consistently present throughout this publication, provides clear targets, triggers, and variant parameters from which active traders can successfully construct low-risk trading strategies. The long-term rewards in adopting such guidance as part of one’s trading arsenal are quite substantial, and well worth the risk.
In closing, we wish to remind readers that the rigors and discipline we employ in delivering such guidance is by no means arcane. Our methodology is fully transparent, and clearly translated, providing a lifelong benefit of advanced trading skills to each of our clients. We do not predict prices, nor are we ever tied to a fixed bias or singular perception; instead, we adapt to the price action as it unfolds. As evidenced in reviewing our prior week’s guidance, the competitive edge is most notable.
Trade Better / Invest Smarter…

© 2007 Joseph Russo
Editorial Archive

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JUNE SWOON - SUMMER RALLY by Joseph Russo
ElliottWaveTechnology.com
June 3, 2007
"The Raging Bull"
we spoke of a couple of weeks ago, appears to have taken up permanent residence across many sectors of the financial sphere. This bull has been relentless, cunning, and quite masterful in dealing with the plethora of participants who have been eagerly anticipating some type of correction – if not an outright crash!
After 11-weeks of nothing but blue sky, we suspect this bull may simply be growing bored of the dominance it imposes upon bears at will. Perhaps a couple of weeks respite in June ought to be a minimum at which this easily antagonized bull may once again become angered, electing to resume its deceptive charge with renewed fury.

The Dollar has been on the rise for five-weeks since its low in April. The king-fiat’s next hurdle is the 83.00 level - just above critical overhead resistance.
The Dow packs an overabundance of bullish-lift, which if threatened by a wide enough air pocket, could abruptly reverse the parabolic trend. We would consider anything less than that, minor turbulence.

After a five-week pounding, gold has come back to life and is back-testing a key broken uptrend from 2007. For the next two weeks, key support is at $650, and resistance sits at the $690 level.
The S&P remains on a critical mission toward testing, and breaking out above its historic intra-day high at 1553.11. The timing at which the S&P elects encounter with such critical mass may prove pivotal

March 5 – April 20
After a robust 9.75% rally from the March low, Swing-Trade guidance for Gold returned to a sell-side bias. Our bearish posture arrived courtesy of a sell-probe signaled against GLD’s 68.73 high on April 20.
May 2 – May 7|
By May 2, just seven sessions from our sell-side guidance, GLD printed an intraday low of 66.11 - down 3.77%. From that interim pivot low, in just two trading sessions - Gold exploded to the upside, challenging the resolve of those holding short – climbing back to 68.46, retracing nearly all of the short-side gains accrued over the previous seven sessions.
May 7 – May 17
The two-day price spike off the interim pivot low failed to produce any follow through. For the next 9 trading sessions GLD - pounded with sell orders - plummeted 5.46% before reaching an interim bottom at 64.72.
From
Elliott Wave Technology’s
Near Term Outlook for the week ending June 1, 2007

May 17 – May 23
Upon stabilizing from the May 17 base at 64.72, GLD began inching its way back to the upside. Our studies suggested that the market was nearing a significant level of oversold, and ripe for a rally of merit. We quickly began warning sell-side swing-traders to prepare for imminent “buy-probes.” Price chopped higher for the next 5 sessions - touching an intraday high of 65.89 on May 23. That short-lived rally was corrective, and marked our smaller degree 4th-wave crest. Although we were turning near-term bullish on Gold, the market was still in a tight downward trend channel, and was telegraphing the potential for another marginal 5th-wave low prior to setting a tradable bottom.

May 24 – June 1
|While progressing through the 4th-wave high, we had drawn a lower boundary trendline illustrating a bearish flag pattern that was engulfing the triple-three corrective rally. Further, we projected an additional .77-cent decline would be likely if that boundary were to fail. As if on queue, trade on May 24 broke down sharply below that boundary - printing GLD’s intraday low of 64.52, down .79-cents on the day. Known in well in advance, our pending buy-probes confirmed at 64.52 - just .20-cents, or a marginal .3% under the May 17 low of 64.72. On May 29, after a gap-up out of a small corrective coil, the sudden rally faded just as quickly as it arrived, then headed straight back down toward a near re-test of its lows. By sessions-end, GLD reversed higher to close the month back above the power down trendline. By the end of trade on Friday June 1, another gap-up rally took root, and closed the first session of June sharply higher at 66.44, up 3% from the May 24 low.

The Near Term Outlook delivers unrivaled short and long-term forecasting guidance for the U.S Dollar, Dow, SPX, Gold, HUI, and NDX.
The concise, impartial market guidance present throughout this publication provides clear targets, triggers, and variant parameters from which active traders can successfully construct low-risk trading strategies. The immediate and long-term rewards in adopting such guidance as part of one’s trading arsenal are measurable.
We remind readers that the rigors and discipline we employ in delivering such guidance is by no means arcane. Our methodology is fully transparent, and clearly translated, providing a lifelong benefit of advanced trading skills to each of our clients. We do not predict prices, nor are we ever tied to a fixed bias or singular perception; instead, we adapt to the price action as it unfolds. As evidenced in reviewing our prior period’s guidance for GLD - streetTRACKS gold, the competitive edge is most notable.
Trade Better / Invest Smarter…

© 2007 Joseph Russo
Editorial Archive

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A LITTLE DIP'LL DO YA by Joseph Russo
ElliottWaveTechnology.com
June 10, 2007
A week ago, we alerted readers of an imminent June Swoon.
We opened last week’s commentary by stating: “After 11-weeks of nothing but blue-sky, we suspect this bull may be growing bored of the dominance it imposes upon bears at will.
Perhaps a couple of weeks respite in June ought to be a minimum at which this easily antagonized bull may once again become angered, electing to resume its deceptive charge with renewed fury.”
Timing last week's sell-off was business as usual for us, and nothing short of perfect.
For the first trading week in June, the majority of broad based financial indices (save for the US Dollar) took sizeable losses. By last Thursday’s close, the Dow Jones Industrials gave back 425-points - or 3.10% from its recent print highs.

Next, we will look at how the major indices faired last week, and what may be in store ahead.

Trade Triggers and Target Captures from Elliott Wave Technology’s
Near Term Outlook for the week ending June 8, 2007
The price data, trade-triggers, and capture-targets in the gray center panel of the chart below, represent the culmination of analysis presented over the last week of trade.
Price data in the left panel shows guidance for the week prior to last.
The panel on the right is empty awaiting next weeks price data. However, we have already populated the Near Term Outlook for Monday with an array of trade-triggers, and price-targets for next week.
Do join us should you wish to fine-tune or establish fresh trading points toward gaining a clear competitive edge for the week ahead and beyond.
From two-weeks ago - for the week ending June-1
Our short-term analysis began last week after outlining triggers and targets, which had amassed nearly 20-pts in profit from the S&P the week prior.

Monday, June 4 – Friday, June 8
After reaching an upside price target of 1538 from the prior week, we tagged last week's first short-term capture with a small 5-point upside target from the 1535 level.
Apart from that, Monday’s trade was mostly a non-event retest failure-session.
The next three days knocked the bullish wind out of most all broad based indices.
By Friday, bullish blowback was all over the bears with vengeance.
We have annotated the above chart highlighting the balance of the week’s price-points and targets.
We have noted resting sell-triggers with red circle points, target-captures in turquoise, and buy-triggers in green.
By week's-end, our analysis had pinpointed over 40-pts worth of profitable trade set-ups in the S&P 500.
Including the 19-pts captured the week prior, we have successfully identified over 60 S&P profit points in the past two weeks!
Our discipline in maintaining high levels of impartiality relative to bias - brings forth a constant flow of short-term trade set-ups on both sides of the market.
Given this robust two-way dynamism, a fair number of triggers will fail to meet their targets.
Because offsetting triggers often reside within tolerable risk levels above and below the market, potential losses related to directional target failure are limited.
Does all this sound too good to be true?
The short answer is YES, it does indeed!
Let’s get real for a minute.
Truth told - it is highly unlikely that anyone on the face of the Earth could have possibly executed entry and exit orders to capture 100% the price points we provided last week.
Given this reality, we automatically deduct 40% from the total point-capture in arriving at a more realistic profit assumption from our ongoing analysis.
Does it still sound too good to be true?
Frankly, it does – and the answer is still YES!
Even after the 40% margin buffer – a respectable level of talent is still required in one translating our directional guidance into working orders, and booked profits.
As it is, order execution and trade management skills are challenging enough - both require a good deal of practice, patience, and discipline to acquire.
Obtaining a reliable road map of price-targets, and trade-triggers from which to evaluate, launch, and manage trades, is of very actionable utility while honing such skills.

Although having an accurate market-map cannot guarantee one will never make wrong turns, access to such content can only improve the bottom line and skill set for every level of trader imaginable – without a doubt!

Trade Better / Invest Smarter…

© 2007 Joseph Russo
Editorial Archive

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RUNAWAY BULL? by Joseph Russo
ElliottWaveTechnology.com
June 18, 2007
Coming off a highly erratic two-week period, with certain indices revisiting old territory, and others moving into uncharted waters, one must conclude that the financial sphere is obviously a bit insecure here.
Is a runaway bull upon us, or is this a last thrash of erratic house cleaning by the shopkeepers?
In due course, we shall know whether this bull has legs, or if it is a mere fish-out-of-water – in the throws of its last rally spasms toward sheer exhaustion.

Such volatile behavior also begs the question; how is it remotely possible that markets “are always right” when they display day-to-day behavior that clearly suggests they are flat-out wrong, outright deceptive, or at best - largely confused as to their general intent, direction, and metrics of valuation?
Speaking of revisiting old-territory, after spending the past eight-years in previously uncharted territory, (the Gold Coast of southern California) Elliott Wave Technology will be moving operations across-country, back to its territory of origin – New England – home of the hedge funds.
Just beyond the borders of NYC, some 45-minutes from Wall Street, and about 15-minutes from the Greenwich, CT estate of the infamous Paul Tudor Jones, we will be setting up shop over the Labor Day Holiday.
Traversing freely between America’s wealthiest coasts is a distinct privilege, and in this case, one of duty and honor to family.
Typical of baby-boomer demographics, circumstance has arrived in which a remaining parent (Happy Fathers Day Pop!) requires honorable attention and dutiful presence.
During transition, our regular service publications will continue unabated. Further, we shall make every effort to continue providing general readers with condensed versions of our regular market commentaries until we are settled.
The June 10, Volume 3, of our Index Traders Edge included the regular feature in which we highlight specific forecasting results and trading points extracted from our Near Term Outlook publication.
We will temporarily omit this segment due to the time constraints surrounding our imminent transition.

Rest assured however, that across all time frames, our methodologies continue to perform brilliantly!
We shall resume inclusion of this feature highlight just as soon as time permits.
That said – let’s see how the major indices faired last week, and what might be in store for the week ahead.

Concise, impartial market guidance, present throughout our publications, provide clear targets, triggers, and variant parameters from which active traders can successfully evaluate, construct, and manage low-risk trading strategies.
The short and long-term rewards in adopting such guidance as part of one’s trading arsenal are quite substantial.

Rigors and discipline employed in procuring the analysis is void of mysticism, idle chatter, and all other varying forms of market-magic formulas.
Our methodology is fully transparent, and clearly translated, providing a lifelong benefit of advanced trading skills to each of our clients.

© 2007 Joseph Russo
Editorial Archive

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ERRATIC RANGE-BOUND TRADE by Joseph Russo
ElliottWaveTechnology.com
July 2, 2007
As the financial sphere and all of its participants scramble to position themselves on the proper side of the next big move, the “house” goes about doing what it does best. Particularly over shorter periods of erratic range-bound trade, “the house,” (any consolidating broad-based index) becomes most intent upon confusing as many participants as possible. Amid such chaos, the marketplace (by design) will efficiently assimilate a fair portion of the majority’s active trading capital in what is for most traders, a rather frustrating price-discovery process. Perhaps this chronic frustration is origin to a denial-based allusion that “the market is always right.” We also ponder if such mechanics are a suitably alternate way in which to perceive the “efficient market hypothesis.”
overtime, the house must always win – or there is no house
Many have often compared Wall Street to one giant casino. There is fair evidence of truth in this, to which short-term traders will no doubt attest. At the other end of the spectrum, institutional money managers along with the most passive of individual participants are likely to embrace the long-term “investment” argument. So long as secular up-trends quickly resume and remain generally stable, the investment argument will always prove to be the brilliant no-brainer. However, upon the inevitability of a long-duration secular decline, such brilliance painstakingly returns to the lowest common “casino” denominator. Indifferent to all outcome preferences, on every level, in due course, across every time-frame, and with no exception – BULL or BEAR, “the house” must always prevail. Most players readily accept such realities upon venturing into a casino, and should likewise be cognizant of similar dynamics forever present throughout the financial sphere.
While Index Traders Edge Vol. 5, contemplated whispers of instability, this issue suggests more of the same - as the bulk of hyperactive participants will no doubt fail in their valiant short-term attempts to stay one-step ahead of a rather fast-paced and erratic “house-cleaning” consolidation. During such episodes, “standing aside” can prove to be a suitable and prudent tactic for various shorter-duration trading strategies. Only those “quickest on the draw,” in possession of carefully calibrated price targets and precise trade-triggers, will profit amid the sharp, erratic, and abrupt reversals. In kind, traders who attempt to distance themselves from the intra-day malaise will require more patience, flexibility, and risk tolerance in prudently trading through such bi-polar consolidations.
That said – let us look at where the weekly charts are trading, and what might be on tap in the week ahead.

  

S&P 500 outcome

Concise, impartial technical analysis present throughout our publications, provide clear targets, triggers, and various parameters from which active traders can successfully evaluate, construct, and manage low-risk trading strategies. The short and long-term rewards in adopting such analysis as part of one’s trading arsenal are quite substantial.
Rigors and discipline employed in procuring both short and long-term forecasts are void of mysticism, idle chatter, and all other varying forms of market-magic formulas. Our methodology is fully transparent, and clearly archived - providing a lifelong benefit of advanced trading skills to each of our clients.

© 2007 Joseph Russo
Editorial Archive