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Great contribution made by Bill!
BW>>Interesting note: circa 1988 his newsletter backed off on those very
specific short term educational
charts just about the time it got out of sync with the market.<<
BW>>I think they even said it was time to be less concerned with the near
term details<<
BW>>I wonder if that lack of attention to near term detail, and the
perspective that inevitable events were unfolding then, had something to do
with the sharp performance decline.<<
An explosive secret.
I was a demolition expert in the Marine Corps back in the early 1960s. I was
REALLY good at blowing stuff up. It also taught me a lot about risk, because
there were no live BRAVE demolition experts. Just live SCARED ones. All the
brave ones had one final memory, I suppose, of the smell of exploding C3 or
C4 (the plastiques of choice back when I was blowing up bridges and building
instant swimming pools for an evening dip).
Anyway, the secret is not to respect risk, or to adhere through life to our
favorite motto at the time (Semper Kluck ... loosely translated as "I'm A
Chicken, But I'm Alive) ... nope ... the secret is that stuff blows up from
the inside out. It EXplodes. And any device designed to make it IMplode, is
just a short cut to get the EXPLOSION to be bigger and louder and more
terrifying ... atomic bombs do this quite nicely.
And the secret is that markets do exactly the same thing. They explode from
the inside out. Folks...this is a biggie, and you're going to see why when I
show you how I enter and exit the market. Because it starts at the lowest
level of the market (in my case at the 2-minute charts), and it explodes up
into the higher levels. Sometimes a big bang (daytrade). Sometimes a small
pop (scalp). Occasionally, at wonderful, rare moments, a detonation of
memorable proportions (position trade).
What do I mean when I say the markets explodes? Any movement starts at the
lowest level of the market, and it explodes up through various levels until
it spends itself out. Then you hang around and wait forthe next explosion
(maybe in the same direction, maybe not). in other words, an action which
starts at the 1-min bar level may move up to the 2-min, then the 6-min, the
18-min...etc. The strength of the move dictates how far up this chain of
reaction moves. The important thing to remember is that it moves up the
chain. Not down. Never, ever down. Nothing ever starts at the 18-min bars
and works it's way down to the 1-min bars.
Explosions do not work that way. Ever.
And yet a surprising number of smart traders make judgements on the basis of
daily charts without ever thinking of looking lower. I find this
extraordinary. I see it every day. People look at a daily chart and announce
that such and such is going to happen. An S&P "daily" bar chart is made up
of 450-minute bars. Making a call on the basis of that, without looking at
the underlying structure of the 2-min, 6-min, 18-min, 50-min and 150-min
bars, can be equated to building a skyscraper by starting on the 6th floor.
That's a terrific way to build a castle in the sky, perhaps...but it won't
build much of a trading account. It doesn't matter if you are a position
trader, a daytrader or a scalper; if the information you base your decisions
on does not have a firm footing in the bedrock, you're gonna get snookered
by the market, sooner rather than later. Bedrock, for me, starts at the
2-min level...and I spend a lot of time looking at the 1-min level when I
search for my entry and exit signals.
This, then, has been my biggest lesson leading to success in the market.
This is the big, obvious secret that many people never pay attention to.
Born from my experience as a demolition expert in the Marine Corps 37 years
ago.
To succeed, every judgement I make, every trade I set up, must start at the
smallest detonation level. It must start at the core of the market. It must
be the detonation cap inserted in the lump of plastique.
I need to make another point here. I go against a lot of the Elliott Wave
Theory doctrines (but none of the real rules). My structures will, at times,
drive Elliotticians nuts. The structures are based, not simply on Elliott
Wave Theory, but even more on real time trading.
I am a trader, and all my work is designed to create "safe" trading. The
biggest "fault" I have (from an Elliottician's point of view) is that I do
not base my counts on the big picture (like Robert Prechter and Neely, who
both think I am full of crap)...but rather on the foundation...the small
picture. I start my counts from the bottom up (the 2-min bars), not from the
top down (daily or weekly bars). I believe in the molecular structure of the
market.
Temple Williams
www.skansearch.com
----- Original Message -----
From: "Bill Wynne" <tradewynne@xxxxxxxxxxx>
To: <catapult@xxxxxxxxxxxxxxxxxx>; <omega-list@xxxxxxxxxx>
Sent: Thursday, October 04, 2001 12:44 AM
Subject: Re: Chaos theory
> > If "bad calls for the 90's"
> > refers to the identification of a cycle top of an economic
> > and cultural cycle spanning centuries...
That might be part of it, but the "cycle" bull trend he thought was over
in a five year span (1982-1987) has lasted at least 18 years (until 2000).
So he's off by 300%+ in time on this "cycle" degree swing.
Given the very nature of Elliott, that patterns have similar
tendencies on all degrees of scale, could he be "off" on the
"supercycle" scale by a similar percentage? If so this "supercycle" top
could occur well into the 2100's. Not that I'm saying it will.
>Some might call him a genius. I call him a salesman (as in used car.)
Maybe somewhere in between.
Prechter does deserve some credit. His run was from the
mid-seventies through the 1987 crash. His newsletter
was frequently #1 and he had years with 70%+ winning ratios with
winners 2-3+ times the size of his losers. He won the 1983(?)
US trading championship's options division making 400%+/- (?) in
four months. Many of the other top guys then, in those
real money competitions, were his subscribers. He "called" the 1978
and 1982 lows to within a few ticks months in advance. He called
for a bottom in 1987 in his *1978* book. He called the 1987 top in real
time, and had published a "cycle low" due for the Monday or Tuesday
of the 1987 crash way ahead of the event. I'm sure there's more
that I can't remember or don't know about, but the idea that he just
got lucky is a joke: it'd be like walking into a casino everyday for
10+ years and hitting the jackpot on the slots again and again. Something
was going on there.
Of course Prechter didn't invent Elliott, but he deserves credit
for popularizing him / it. In the "old days" Prechter's newsletter was an
excellent educational tool: not only did he tell where the market was
going (and when), but he showed how he'd figured it out
with very detailed long and short term charts. Interesting note: circa
1988 his newsletter backed off on those very specific short term educational
charts just about the time it got out of sync with the market. I think they
even said it was time to be less concerned with the
near term details, and to get prepared for the *inevitable* longer term
decline. I wonder if that lack of attention to near term detail, and
the perspective that inevitable events were unfolding then, had something to
do with the sharp performance decline.
>Then he started believing his own press about how
>brilliant he was....
I wouldn't put it in those words, but maybe Prechter had
a "5th wave" of his own in 1987.
Prechter had these words in 1978:
"...if it was the Barbarians who finally toppled a rotting Rome,
can it be said that the modern day Barbarians do not have
adequate means and a similar purpose?"
And:
"The trend of man's progress, as the Wave Principle points out,
is ever upward. However, the path of that progress is not a
straight line and never will be unless human nature, which is
one of the laws of nature, is repealed. Ask any archaeologist.
He knows."
I think it applies to individuals and organizations too: no one
stay's the best forever, but that shouldn't diminish their
past contributions.
BW
>From: DH <catapult@xxxxxxxxxxxxxxxxxx>
>To: Omega List <omega-list@xxxxxxxxxx>
>Subject: Re: Chaos theory
>Date: Tue, 02 Oct 2001 22:27:01 -0700
>
> > If "bad calls for the 90's"
> > refers to the identification of a cycle top of an economic
> > and cultural cycle spanning centuries
>
>It doesn't. Since most of us don't live several centuries, that might be
>interesting but hardly useful for trading. Furthermore, until a few
>centuries have passed, we won't know how right or wrong he was about
>that particular long-term call.
>
>Prechter's "bad calls" refer to his consistently telling his newsletter
>subscribers to get short (*right now*, not sometime in the next decade
>or two) during the biggest bull market in history. He had a good run in
>the early 80's. Then he started believing his own press about how
>brilliant he was and went on the mother of all losing streaks which
>lasted far longer than his one and only winning streak.
>
>Personally, I don't understand all the fuss about the guy. He didn't
>invent Elliott wave, Elliott did. Prechter just repackaged it in a
>barely decipherable form and milked it for all it was worth. He made a
>helluva lot more selling books and newsletters than he or any of his
>disciples did in the market if they followed his recommended trades.
>Some might call him a genius. I call him a salesman (as in used car.)
>
>--
> Dennis
>
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