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nwinski@xxxxxxxxxxxxxxx (nwinski) wrote:
<<I am curious as to what your trading startegy is for your above
wave analysis? For example, waiting to buy until the DJIA to pass 8,000 for
confirmation that the market should go higher doesn't seen to offer a
superior risk reward entry or am I missing something here?>>
Norman,
If we reach Dow 8000, I will be confident the drop from 8/7 was not an
impulse move, and will assume the drop was a three wave corrective "zigzag".
Whether the move is a completed three wave correction (at the low), or is
wave 1,2, and 3 of a yet to complete impulse wave, the break of the upper
trendline (with conviction) was the buy signal. Regardless of the final
outcome, both scenarios called for a move "up" at the point the upper
trendline was broken. This is what is necessary in my view to trade with
Elliott. No matter which scenario is valid (and you can have several running
at the same time), if the vast majority call for a move in the same direction
regardless of possible action down the road, you are very safe.
As to a safety net. I will start to look for lower trendlines as this latest
up move develops. This will take a bit of time as data is needed, but if the
impulse scenario proves to be the correct analysis, wave 4 will take at least
as long as wave 3 to develop, usually longer. Not everyone agrees with this,
but that's been my experience.
This is the most basic of approaches I take, and there are a myriad of other
circumstances that impact on what to do. I also think it depends on what
sort of time frame you are trading in. For the very short term, "in and out"
one needs to act immediately when the trendline breaks with authority, and
use very short term data. For less risk, longer term, and when electing to
risk more of my capital, one of my rules is never trade against the daily
MACD, no matter how obvious I think the wave count is.
<<How much would you be willing to pay over 7600? 7650?>>
I did say my expected support was 7600, but as you suggest, that was the
analysis part. We reversed about 19 Dow points above that, so I consider the
support as valid. The trading part did not let me enter the market until the
upper trendline (at the time 7800) was broken. I need to see how the
trendline is broken. A slow meandering move "up", doesn't cut it. Triangles
have a nasty habit of participating in "false breaks". Need to see real
"oomph" going across the line. Guess that's the price you pay (or give away)
to be somewhat more confident in the analysis.
Enjoying the chat,
Peter
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