The trend since 4/26 and 6/21 has been down and has drawn in a lot of shorts. This is why I think apart from the I1 going up that the stock market will rally at least another week. I took profits at 9930 and 9940, but the market kept going up to 10,000 driven by capitulating shorts. I have relabelled the count to reflect this and see the DJ futures at Sub-Minuette3 top. This is equivalent to cash DJI at 10,035. I'll get back in on the next correction as S4, which should get us down to 9900. This count is a change from my earlier post and implies more upside after S4 completes to finish Minuette3.
I am still long TLT, the long bond. The stock rally caused it to break support, so I'll be looking to sell it on a stock market correction.
My mind automatically aligns events as probabilities. So do all Elliott Wave practitioners. In a field of possibilities the wave count having the highest probable outcome is the one selected. There may be 2,3, or 5 valid alternatives. My use of I1 changes the order of the probabilities for my wave counts. What counts are the most probable given the direction and time restrictions imposed by the upcoming I1 move(s)? This improves my accuracy immeasurably.
Using I1 to re-align probable outcomes, I have found that I can maintain a wave count at odds with more experienced wave practitioners and come out on the other side of the trade with the correct count. To their eyes it would seem like dumb luck, but the real reason is the I1. Without it I may still be able to make money, but it would be with a lower win/loss ratio as I would be trading based on the wrong expectation at least a third of the time. In the heat of the trading battle sometimes I post charts with the wrong labelling (Minuette instead of Sub-Minuette, etc.). To the purists I apologize. I try to go back and clean them up, but the gist of the wave counts as originally posted give the direction and probable amplitude of upcoming market movements.
Steve, I have been following your blog for several months now, and I must say the I1 is fantastic!! I continue to be amazed at the accuracy of the turns predicted by I1, however I continue to stay within my money management rules because as you say it is about probabilities, but no doubt that I1 has improved my success!! Thanks again for the great work!!
ReplyDeleteYou're velcome! I am happy that traders benefit; makes it worthwhile.
ReplyDeleteI just found your blog last week, and it's already helped me. My approach to trading is intermediate term positions using EW with entry points when sentiment is extreme.
ReplyDeleteI've been short (long TZA) but was considering taking profits and repositioning later, but I didn't want to miss the bigger down move I'm still expecting.
Your work convinced me to exit TZA yesterday on the big intra-day down move and to wait until a rally phase ends later this month.
WOW! It was AWESOME being in cash and watching the market rally today knowing I have more dry powder to reload when the time is right to re-enter on the short side!
I'll be studying your rules, charts and track record as I can in the days to come. THANK YOU for putting your work on the web. I'll be in line when you're ready to convert to paid subscriptions!
Steve,
ReplyDeleteHas you ever looked at using rate of change of I1 to fine tune entry and exit? Here is what I calculated:
1 20100702 22.35137 22.35137
1 20100705 21.57711 21.57711 -0.77426 -3.464038222
1 20100706 21.9467 21.9467 0.36959 1.712879992
1 20100707 22.73956 22.73956 0.79286 3.612661585
1 20100708 24.07844 24.07844 1.33888 5.887888772
1 20100709 26.13671 26.13671 2.05827 8.548186677
1 20100712 28.78697 28.78697 2.65026 10.13999084
1 20100713 30.21966 30.21966 1.43269 4.976869743
1 20100714 31.80805 31.80805 1.58839 5.256147819
1 20100715 33.66239 33.66239 1.85434 5.829782083
1 20100716 35.20112 35.20112 1.53873 4.57106581
1 20100719 36.13145 36.13145 0.93033 2.642898862
1 20100720 36.27178 36.27178 0.14033 0.388387402
1 20100721 36.41742 36.41742 0.14564 0.40152427
1 20100722 36.30637 36.30637 -0.11105 -0.304936484
1 20100723 34.96335 34.96335 -1.34302 -3.699130483
1 20100726 33.57488 33.57488 -1.38847 -3.971215573
1 20100727 32.35731 32.35731 -1.21757 -3.626431427
1 20100728 31.96437 31.96437 -0.39294 -1.214377833
1 20100729 31.80197 31.80197 -0.1624 -0.508065699
Based on this, it would suggest reducing exposure on either the 12th which is the peak of "acceleration" or on the 19th the last big increase in I1. Thoughts?
Charles
Charles,
ReplyDeleteI'll need more time to analyze and back-test. What parameters are you using for the ROC? Have you drawn any conclusions for the limited data set? I can provide several years raw I1 if you want to pursue this.
Thanks,
Steve
Quarkonius,
ReplyDeleteThanks for the post. Trend reversals are the toughest periods emotionally. To sail through one successfully is a good experience, not just because it is fulfilling, but because we learn how the market participants behave and understand the crazy price movements better.
Steve,
ReplyDeleteI started with the simplest one day ROC: (I1B-I1A)/I1A * 100. I need to back and look at your last post when you gave a list of the raw I1 scores over a turning point range. It would be much easier to start with several years of data to make some real conclusions and to try differing parameters. I would be glad to help.
Charles
p.s. now up 71% ytd and i love when my timing model and I1 line up!
p.p.s. i will give you my email in case you don't have it in a follow up post so you won't need to broadcast it to the world lol