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<DIV> [Email is in 4 parts.3 gifs]
<DIV><FONT color=#000000 size=2>Tom...sure here you go. Below is an elliott wave
monologue I wrote a few months back...roughly about the same time I was calling
for a "bull on Valiun" market to start at the october lows......seems
I give this out at major weekly swing highs.lows.</FONT></DIV>
<DIV><FONT color=#000000 size=2> You are a drastically
mistaken in your beleif. Elliott wave is more of a science that you would
think.......but only proper elliott, not LFE which 99% of people use.
</FONT></DIV>
<DIV><FONT color=#000000 size=2> There is only one correct
market "count" all else is a figment of one's imagination. The count
is almost 250 years old.....& still correct. Market structure does not
change.it is STATIC once complete. People dont understand this.</FONT></DIV>
<DIV><FONT color=#000000 size=2> You are unfortunately
closed to understanding market structure from you sarcastic remarks...which is
sad.</FONT></DIV>
<DIV><FONT color=#000000 size=2> Pity.!!!</FONT></DIV>
<DIV><FONT color=#000000 size=2> Peter Kraguleski</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT><FONT size=2>Krueger Klage
Derivatives</FONT></DIV>
<DIV><FONT size=2>Sydney Australia</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV></DIV>
<DIV><FONT face=Arial size=2><B>-----Original Message-----</B><BR><B>From:
</B>Peter [KKD] <<A
href="mailto:derivatives@xxxxxxxxxxxxxx";>derivatives@xxxxxxxxxxxxxx</A>><BR><B>To:
</B>Schumar@xxxxxxxxxxx <<A
href="mailto:Schumar@xxxxxxxxxxx";>Schumar@xxxxxxxxxxx</A>><BR><B>Date:
</B>Wednesday, 4 November 1998 22:47<BR><B>Subject: </B>Elliott wave Monologue-
Peter Karaguleski<BR><BR></DIV></FONT>
<DIV>
<DIV><FONT color=#000000 size=2> <FONT color=#000000>Elliott
wave analysis has been pursued by many in the technical analysis feild over many
years due to its fractal nature of operation & accuracy it can
provide in trading markets. Since R.N Elliott first came up wit the methodolodgy
there have been some notable authors who have pushed the original works of R.N
Elliott. Some of these are Prechter, Neely, & Frost
. All have made significant contributions in bringing
defined order & structure to what many perceive as the random chaos of
financial markets. There is precise defined order in all time frames of market
structure from the monthly charts to the sub-minutte degree.
</FONT></FONT></DIV>
<DIV><FONT color=#000000 size=2> The major
pain that people find in using elliott wave analysis is that they presume
incorrectly that the analysis is very highly subjective & therefore is not
practical in trading markets. They are wrong because they (or atleast the vast
majority of people) utilse elliott wave incorrectly. Anyone can count 1,2,3,4,5
a,b,c, but only a true purist elliottician can predict the future with it.
The major error prople make in using elliott theory is to presume that all
market strength(bull)/weakness(bear) is impulsive wave behaviour. This is
incorrect. Impulse waves are always the most powerful of all structures that can
be sustained overall but corrections also can mimick this. The following will
explain. </FONT></DIV>
<DIV><FONT color=#000000 size=2> Markets represent very
complex mass human psycological interactions. This interaction plays
out in corrective & impulsive wave structure . Normally in a bull market for
example there will be an initial impulse wave that is then followed by a
correction. When the psycology is such that an impulse wave is the dominant
force (especially in long term wave counts) the power behind such a tremendous
move will transfer to the next wave to follow the impulse wave..ie the
correction. . As such the normal psycology that is expected to prevail in that
market during the correction (ie which manifests its self normally by the
market moving down) does not materialise. Instead the correction travels up
& not down . This is because the power of the initial impulse wave was so
great that it stretches & contorts the following corrective wave
upwards. In essence there is an energy/power transfer occurring. When this
happen the impulse wave to follow the upward travelling correction will be
very powerful, more than one would expect. This is where people using what
I call "loose form elliott" usually go wrong (there are many other
aspects of elliott that I consider they ignore) . They do not recognise this
phenomenon & as such have incorrect counts on all time frames. This
market action is quite common, but is something most people will have you
beleive is not because it dosent fit into there counts.</FONT></DIV>
<DIV><FONT color=#000000 size=2> This is just one aspect of
what I consider most people do incorrectly in elliott analysis. This may sound
pompus of me but unfortunately there are no half truths in trading. You either
win or loose period.!!!</FONT></DIV>
<DIV><FONT color=#000000 size=2> I thought that I'd do some
analysis of equities markets in elliott speak as I cannot presume different
peoples understanding of elliott. I utilise nothing in trading except elliott
wave theory , support/resistance levels, fibos, & a trendline here &
there.</FONT></DIV>
<DIV><FONT color=#000000 size=2> The analysis below is
referred to the attatched gifs at end of email. I will simply work through the
decision processes & state SOME of the various rules I utilise as we
proceed. I will present differing degrees of market structure &
purposely have chosen some sub-minuttte work as this is by far the most
difficult timeframe to conduct analysis on. Also I will focus on corrective
structures as they are also the most difficult to analyse & to show that I
havnt just chosen the easiest structures to analyse I will also go through the
latest market structure (yesterdays) which was both subminutte & complex.
This should prove that elliott wave theory is not subjectivet but is the most
formidable T/A tool available. (I will state analysis which may not be evident
due to resolution of charts.........I present only SOME of the considerations as
there are many rules to consider with max & min limits to various
alternative paths, post structural implications etc )</FONT></DIV>
<DIV><FONT color=#000000 size=2> First
the S&P cash index for the period of 1/9/98 to the 30/9/98 (Analysis1.gif).
This structure was a double three corrective complex correction . This was an
expected outcome as normally fifth wave extension impulse waves are followed by
a double retracement & as such are usually complex unless it comes out
to be a flat structure. The fifthe wave extention impulse was the movement from
25/8 to 1/9 lows, they are never retraced completely even by the
next higher degree structure so we expect rangetrsdaing.. The double three is
composed of A-X-B ,,ie a compound flat - zigzag- triangle. There
structures frequently conclude with triangles as indeed turn out to be in this
case. </FONT></DIV>
<DIV><FONT color=#000000 size=2> Straight out from the 1/9
lows (which were easy to pick...stated realtime at avid chat site ..KKD is my
handle) we expect a firey run to a .618% ret of the 5th wave itself. which
occurred at 2/9 high. That structure was a double zigzag (B=0.5 external
fibo to A) & as such we do not expect more than an 61-81% ret of the move
but we must get a minuimum of .618% ret as this may be wave "b"
of an abc flat strating from 1/9 lows which is a minimum requirement for
flat (complex cant be joined to another stucture using X wave, so it must be
non-complex overall). We got that at {a} on 4/9 marked where it was
an .81% ret. We see that the wave down was a truncated zigzag where
c<a ..almost .382%, .These structures must be retraced almost
fully (& quickly) inorder to confirm that they are indeed a truncated
zig. We now look for a firey run up wards to atleast test the high of a. If its
a fiver then we have an abc zig from 1/9 lows & correction is complete
but we see that its a truncated zig also. So we have a 3-3-3- structure from 1/9
lows....either we are in a triangle or a compound flat but as we have a
truncated zig upto 9/9 highs it must be almost completely retraced
so we wont get a triangle(there are other reasons for this also) it must be
a compound flat from 1/9 lows. We expect a fiver down from (b). If it
turns at around the purple line it'll be a "c" wave failiure
hence we expect at minuium a new high here for the fiver upwards.
This is exactly what we get..ie 5 down then 5 up. "c" ends at an
external fibo level on 16/9 to initial "a" which is common to
corrective structures. Further there are numerous time considerations wrt wave
ABC of the flat from 1/9 in that they relate by fibos in time.Note
channelling also. As we now have a running flat (hence dont expect weakness0 it
can either conclude the correction </FONT><FONT color=#000000 size=2>or turn
into a complex. If so we would expect an abc zig to follow & not
retrace more than .618% of the flat from 1/9 lows or a triangle inorder to
provide alternation. We do indeed get a zigzag which concludes higher than the
green line which is .618% ret area...a=c in zig in price & time with b wave
flat. also note channelling. We now are almost certain to get a complex
from 1/9 lows, but note that we may turn down however minimum
ret is .618 of the zig in which case we can get a flat or 50%
ret min for a triangle to occurr from the 16/9 high. Intraday
analysis says we keep going upwards as no structure is yet complete on
that timescale..If we breach the 16/9 high case will be good that
the zig was an X wave. This occurs & we note that the channel bounds us. The
rise is corrective from X lows so we are looking for a corrective
structure to occurr from the 21/9 lows , either a flat or triangle
to provide alternation with the initial flat (upto red A) . For a flat we
need to get a min .618 ret of blue "a " , if we get 50%
(min) then its most probably a trianlge forming from the X lows. (unless
it subdivides, but this is doubtfull as "red A" is already the
subdivided structure).. From then on the triangle takes form as we only retraced
50% of blue "a".As it is a triangle we know that this double thee
structure from 1/9 lows will not subdivide into a triple three as
triangles conclude complexes.(there are different types of triangles & many
rules to guide one through them, I must ommit that due to space) Further
note the time alternation between wave A (red) & B (red) ...precisely .618
in time. When triangles conclude a complex they are followed by extreme
power...which is what we got after the 31/9</FONT></DIV>
<DIV><FONT color=#000000 size=2> In
analysis2.gif, again another double three comlex structure. From the 21/10 lows
to the 22/10 highs we have initially a wave "a" which was a
fiver. This could only mean either an impulse move upwards or a ziz, but the max
ret for zig is .618. The market dipped below this level marked by purple line.
We hence know that the wave down from 21/9 highs is sybdividing & we look
for a flat or triangle, eith of which must conclude above the purple line.
Intraday analysis wrt retracement levels & structure them show us that a
triangle is developing & it does indeed finish above the .618% ret level
(again I must ommitt triangle rules/implications for space) & it does so by
a fibo time period wrt "a". If a triangle follows an initial
impulse then it maust be a B wave tri of a zigzag. This is a different category
of triangle when compared to Analysis1.gif & has different implications. The
thrust outside of such a triangle will not be greater than the widest segment of
the triangle itself measured from the B-D line of the triangle. That gives us a
projection for blue "c" in terms of price. Fyurther as we know it is a
zig , waves "a" & "c" should relate by fibo in time
& price or usually tend to equality in time & price. This occurred
precisely...also npt the channelling of the zig. From there we expect a
retracement to the apex point of the traingle in terms of time....that is a low
risk entry point which occurred on the 23rd. . As this strycture which
anlysis showed was a flat ended above the .618 ret level of red A zig it is an X
wave...also it provides the necessary alternation with red A in stuctural terms.
. We are now hence faceing a double three at minimum or if rally from 26th fails
to retrace 50% then we consider alternatives but intraday analysis leads us on.
We expect a triangle or flat structure to folow the red X wave. If a
tri it ensures an end to the complex overall., if flat there is possibility
we subdivide onto a triple three, but that has certain implcations which
dont fit int the larger count from the 20th. . We hence conclude that we
can only get a doublt three even if we get a flat after the X wave. We do indeed
get the flat & note the channelling & time akteration
considerations....we also then look for a break down thriugh the lower channel
trendline which we get. The larger picture tells us that we should get at a
minum .618% ret of the double three from the 21st & a max of 100%,
ideally it should be between 81% & 100%.. That occurs precisly. The
structure may have bounced from the .618 ret level & the sructure from
the 20th subdivide even more but intraday analysis from the 27th high di not
give the required sructure down for that to happen . Also there were other
timing & channelling considerations from the 8/10 lows which help define the
end of the corrective at the 28th lows.</FONT></DIV>
<DIV><FONT color=#000000 size=2> Okay
, so how about all that intraday analysis which I mentioned that helped
define these examples I have disscussed. That is subminutte degree & the
most difficult to analyse by any method of T/A Do remember elliot is a fractal
science so if it works on one degree time frame it must wok equally on
another...The following is yesterdays market action.Analysis3.gif. ( this is a 5
minute char of yest spx)</FONT></DIV>
<DIV><FONT color=#000000 size=2> The count starts from
the previous days high where the red dot is placed on the upper LHS. From
the red dot we expect a minimum retracement to the base of the previous
days range..it was 1110. This arises due to the larger count from a few
days ago but we expect a corrective structure to exceed that minimum
due to implications of the previous structure (must ommit reasons due to
space & time) the blue "a" got to the 1110 level. , & it was a
truncated zig structure so we expect almost a full retracement of the fall which
we got with blue "b" making new highs.. We now know we are in a
triangle or flat as "a" &"b" are both zigzags. It
may very well be an abc flat as the recent zig provides perfect alternation, so
we look for a min 38.2% ret of blue"b", if a fiver follows then we
have an abc flat from the red dot highs. As irregular flats are
uncommon we dont expect new lows to be made.. If so it will be an abc
compound flat. Sure enough "c" was a fiver that did not make new
lows. , but it may be wave a of a zig from the "b" highs leading
onto a compond flat. We know that the sructure we have upto the "c" is
complete because of the fibo time relationship "a" &
"c" have ie 0.618 in time.. so we have completed the orrection. This
however is a concern as we expect lower prices due to implications of the
previous days structure, but the abc flat so far is a "C" wave
failiure which is bullish..hence three things can happen here to get to lower
prices by way of neutralising this bullishness. 1- the flat can be the
"A" wave of a larger counppond flat which will drift downwards.
The minimum requirement is the we must ret a min of .618% (shown with the
red horizontal line)...but that would necessitate to long a time requirement as
the other waves would have to subdivide likewise (even more really) but the
larger structure implies we dont have that much time. Due to this , this
possibility is low. 2- we get a downward drifting triangle with the flat being
wave "a". Problem is that it would necessitate a
"running" category triangle which has implications which dont
fit the larger count. This possibility is very low .. The last possibility is
that the flat is wave "A" of a complex structure drifting down. For
this to occur we CANNOT retrace more than .618% of the flat measured from
"a" to "c" . It should be folllowed by a zigzag alternating
in price & time (& implicitly structur therefore) with the
flat OR a triangle which hence concludes the complex as a double three.
</FONT></DIV>
<DIV><FONT color=#000000 size=2> We get exactly the last
possibility a complex.!!! The X wave dosnt retrace more than .618 of the
flat , it implicitly therefore nullifies the strength of the C wave failiure
flat . We get a zigag downwards, but wave "c" is 1.618 times the
length of wave "C" of the zig , implying weakness which gives rise
to another x wave ..ie the complex goes into a triple three, This has
specific imlications about structures to come later. . We expect a flat or
triangle to end the complex.. & we get a triangle. Perfect alternation in
time . price & sructure. MOST LOOSE FORM
ELLIOTTICIANS would have thought that the declline yesterday was impulsive
& that the triangle at the end was wave 4 of the impulse OR wave B of
a zigzag. . This could not be the case , nor a consderation using proper elliott
analysis. Note the channelling inbetween the red lines & the time
alternation between the components in terms of time.. Also note where the
triangle ended at the red dot on the bottom RHS of the chart.ie precisely
at an external fibo relationship to wave A (red). The green channel line is the
real channel as it comes of a point I describe as a "reference
node" which is a typical X or B wave that is prominant. See how clearly is
defines the end of the complex..</FONT></DIV>
<DIV><FONT color=#000000 size=2> Thats
all I have time for. I hope you can all see the true benefit of elliott used
properly. This rise from 8/10 in equities will make a high today possibly
, stay up here for a few days then fall slightly.</FONT></DIV>
<DIV><FONT color=#000000 size=2></FONT><FONT size=2>Pere Karaguleski <A
href="mailto:derivatives@xxxxxxxxxxxxxx";>derivatives@xxxxxxxxxxxxxx</A>
</FONT></DIV></DIV></BODY></HTML>
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Subject: Fw: Elliott wave Monologue- Peter Karaguleski
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