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I had been diligently counting my Elliott Waves for weeks, waiting for the
end of the fifth wave and anticipating a subsequent significant correction.
As a day-trader, I have to say that I am not a believer in Elliott as a
predictive trading tool. Three up, two down, or two up and three down,
sub-waves, extensions, etc, it seems to me that it is always right after the
event, but I can't put my money on it beforehand. For me, it is just too iffy!
I jumped in because I just HAD TO GRAB THAT TOP!. I sold March T-Bonds at
119-11.
Me, I go by the prices that I know are marked on the pit traders' cards. I
like to work with what they are working with! They are the guys that count!
On 12/04 the pivot was 119-10, so rather than go short, after the open and the
market had traded down to and stalled at the pivot (with one tick at 0800
dipping down to take the stops out before the upward move) that was the time
to buy.
The market stalled at the previous day's high (one tick below R1), then broke
through, with a considerable increase in the tick volume, and went on up to R2
and reversed (creating a 21 month high). It came off with decreasing tick
volume, and coasted through R1 and the Pivot. It then went sharply down
through S1 - and closed the day as a strong upthrust, like a telegraph pole on
hill. That, to all technicians, is a tell-tale sign which heralds a turning
point for all to see.
Now, for this to happen on the day before the Employment Report, indicated
very strongly that the market would move down rather than up. It was sure
going to move, but which way? Since report days commonly move a big point or
more, there was good profit in the offing for the brave, if you took a
position before the report. It had to be worth considering going short with a
buffer of the 20 ticks from the top of the previous day.
I'm bound to say I didn't do it! On a major report day, it is a gamble
whatever the charts and the fundamentals look like, but for those with a more
cavalier approach, it was a good bet. And as that famous trader said: "You
can't tell till you bet."
Anyway, as soon as the move had been made, I put up the retracement tool and
as it came back to exactly the .382 retracement, sold it when it made the
'double top' on this line. (As you will appreciate, like the pit, I too
believe in Fibonacci retracements. There is nothing very iffy about those
numbers!). It then made a 'double bottom' on the 117^20 line - where four
out of five 5 minute bars of the original move could not penetrate. The two
bar reversal looked very solid and if it was only a 'scalp' to the retracement
line, it was worth it for 10 ticks.
The market then did, indeed, come back to the retracement line, nearly hit it,
then hit, then on the third occasion - as one expects with a Fib number - went
through. It then halted at the weekly low, but the retracement was well
within the .382 and it went through on the second attempt. (Worth noting
here, that your stop needs to be moved up as you move up the retracement tool)
As you know, the market sailed with a strong following wind through the old
S2 and SI and when it hit the intraday high... well that is enough excitement
for one day!!
Let me end by saying that I definitely believe the market moves in waves, but
I question the predictive value in the wave counting. It is important to know
that whatever way the market is going, it will, without question retrace (and
create a wave) but the Fibonacci measurement is much more significant and it
offers more to me as an accurate tool than anything Elliott offers. A
Fibonacci extension or an Elliott wave extension which one would you put your
money on?
Good trading all
Bill
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