RE: [RT] Wolfe

["Jim Ross" <jrosscpa@xxxxxxx>]

I have had several similar encounters with Wolfe Waves in which I made an obscene amount of money with relatively little funds (and subsequently lost until ‘08).  I employ a Mandelbrott inspired strategy of purchasing distantly out of the money options (high leverage, high risk).  Mandelbrott theorized (and proved in the “Misbehavior of Markets”) that out of the money options are dramatically underpriced by Black-Sholes because of the excessive number of “long-tailed” events (one-day 7% gains or losses in the market).  Wolfe Wave, among other methods, convinced me of a nice top in March ’06 and I made a nice 20 bagger that month on a $25K position.  I gave it all back.  I’ve done that about 3 times.  Well, I defied my lack of learning curve in ’08 finally.  I taught the market something (not really).  I was following a ridiculous WW, Elliot Wave, and Puetz Crash window expectation for the period August to October 08.  I successfully traded positions from an original investment of $25K a couple times and on September 19, 2008 (a 10% two day up move) I bought 9000 contracts (900K  shares) of October 38 QQQQ puts at an average of $.24.  When we hit the credit lockup on September 29 I sold those puts for between $1.2 and $1.9 and took the proceeds out the back door to BB&T and invested in CDs under the CDARS program (it gets spread among several fully FDIC insured banks below the $100K limit).  That was a nice payday on an original investment of $25K.  Unfortunately, Mr. Market had the last laugh.  By October expiration, those 38s would have been worth almost $9 each or about $8.1M on that original investment of $25K.  That’s alright, those monies are locked away from my itchy fingers for a while.  Hats off to Mssrs. Mandelbrott, Elliott, Gann, Fibonacci and Wolfe.

Recently (Friday close), I flipped long SPY to highly levered short QQQQs (April expiration) looking for that Elliott Wave 5 and the Wolfe Wave target; yesterday was quite painful.  QQQQs at the EW, Fibonacci and WW target of low $18s would be a 30 bagger on April 24 QQQQs (cost $.20, intrinsic $6) and my little $25K investment would be worth $750K, in the very ideal situation.  Hmmm, I’d take a third of that and be quite happy because wave 5s are very treacherous.  They can truncate or extend.  And the next wave after a 5 is a very large correction that is likely to be a V bottom. There will be very little time to react.  Waiting to see $18, should it occur, is not something I’d try.  Let’s see what happens.

Best regards,

Jim

 

From: realtraders@xxxxxxxxxxxxxxx [mailto:realtraders@xxxxxxxxxxxxxxx] On Behalf Of Kishore Rochey
Sent: Thursday, March 19, 2009 12:00 AM
To: realtraders@xxxxxxxxxxxxxxx
Subject: Re: [RT] Wolfe

 

 

Thanks Jim

 

As I mentioned, I read it in Street Smarts. At that time in 1997, I noticed a pattern in the weekly chart in the Malaysian Stock Market

and similar patterns in the Asian Indices. I was at a brokerage house dealing with  high net worth clients. During May of 2007, my boss

handed me some client accounts to look after. He asked me to recomend a strategy for them.

 

As I had just read "Street Smarts" and also noticed several Asian Stock Indices showing similar Wolfe Wave Patterns, I recomended to

exit all positions for about 2 to 3 months. Anyway, a correction was also in the cards. As the saying goes " Sell in May and Go Away".

 

My boss didnt like the suggestion and told me to find a way to recomend a switch in portfolio holdings to less volitile, safer stocks.

I live in SIngapore. The portfolios were mostly Malaysian Stocks.

 

Two months later, the Asian Financial Crises began. There was blood in the streets for many financial assets.

The Malaysian government, instead of going to IMF for help, closed all doors and imposed "Currency Control"

Nobody could take money out of the country if they sold shares. The money had to be kept within the country until

nobody knew when.  The deputy prime minister ( in US terms , the Vice President ) was arrested for sodomy.

 

There was choas. I recall this incident because it were the Wolfe Waves which alerted me of what I didnt know was about to happen.

 

Cheers and Thanks

 

Kishore Rochey

 

 

 

 

----- Original Message -----

From: Jim Ross

To: realtraders@xxxxxxxxxxxxxxx

Sent: Wednesday, March 18, 2009 5:00 AM

Subject: RE: [RT] Wolfe

 

Yes, I’ve read his little teaser tutorial on Wolfe Wave many times and that’s why I call it KISS.  It is simple and I believe it gives you a little edge.  I don’t know what you’d get for the $3K and I haven’t taken the course.  And I’ve never found, in hundreds of hours of posting on many blogs, anyone who has taken the course.  The WW searches I’ve done are quicky descriptions of the method but do not comport to Mr. Wolfe’s tutorial in many cases.  So, no, I really don’t have anything that would be more sophisticated than that tutorial unless you spent the $3K for the fax back and forth Wolfe wave course. 

Reading your post, you might not have discovered the Wolfe wave teaser tutorial.  It is very good although I’m sure he’s holding back some things that he considers ‘secrets’ that are worth the cost of the course.  I used to have the link but I’ve changed computers.  You’ll know you’re there when you get the last couple screens that offers it for the fee.  It is well worth reading, a couple times (takes only minutes to move through it). 

Good luck, Jim

From: realtraders@xxxxxxxxxxxxxxx [mailto:realtraders@xxxxxxxxxxxxxxx] On Behalf Of Kishore Rochey
Sent: Wednesday, March 18, 2009 2:53 AM
To: realtraders@xxxxxxxxxxxxxxx
Subject: Re: [RT] Wolfe

Hi Jim

I read about this method of trading - Wolfe Wave some 10 years ago from the book ' Street Smarts '

A friend lent me the book to read.

Looking at the screenshot, I understand where you are coming from.

Do you have any recent meterial on the setups or any update of the Wolfe Wave trading method.

I remember that it was being taught by Mr Wolfe himself for about USD 3,000.00 then.

Regards

Kishore Rochey

----- Original Message -----

From: Jim Ross

To: realtraders@xxxxxxxxxxxxxxx

Cc: 'Rob Almony' ; 'Tony Ritenour' ; 'Jeff Shumate' ; scott.kattwinkel@xxxxxxxxxxx

Sent: Wednesday, 18 March, 2009 9:25 AM

Subject: RE: [RT] Wolfe

Thanks Don.  Actually, in early March I was looking at looking at a larger timeframe and McHugh’s March 9 Phi turn date as being point 5 that got me long March 9.  Looks like the green objective line that is realized.  On Friday near the close I flipped short because we’d gotten so close to the objective (I quick called it Friday as today demonstrates).  Once the topping is complete (and today’s move looked very ending diagonalish to me) this top becomes a point 5 with Jan 2008 as point 1.  That gives an incredibly lower objective (see the second chart).

Which gets us back to the next apparent Wolfewave with much larger time and price implications.  Note that the objective we reached recently through the bullish WW above now becomes point 5 of the new wave.  The fly in the ointment is that point 5 above can overshoot so it can still go higher before the dive.  And EW would allow this thing to piddle around for quite a while before embarking lower.  Nevertheless, the weight of EW “celebrity” analysts believe a wave 5 down is forthcoming (Prechter and Neely notably). 

From: realtraders@xxxxxxxxxxxxxxx [mailto:realtraders@xxxxxxxxxxxxxxx] On Behalf Of Don Ewers
Sent: Tuesday, March 17, 2009 7:52 PM
To: realtraders@xxxxxxxxxxxxxxx
Subject: [RT] Wolfe

Jim,

Here is a different Wolfe wave pattern that appeared back a week ago at the bottom I was watching.  It is off Interactive Brokers 30min charting so I can't label the 1-2-3-4-5, but look at the downward wedge, a clear 1-2-3-4-5 and spring starting. Prices did retreat but stopped at the lower TL (retreat not shown), then rocketed moving well above the target line  . . .  telling us something . . . . this reaction was more than a Wolfe?

Don Ewers

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