Elliott Wave---Sillywave Style

SP 052211

2011-05-22T07:39:00.000-07:00

Now this chart will give us daily and swing trade to several days to a trade perspective. I use just the two chart sizes for all my trades. One can use more, I just like fewer as in simpler.

The yellow box is an running wave -2-. The market just kept moving on and not really much consolidation hold back as we see in wave four now.

The big channel is the same as the daily chart on the upper line. The other line would represent a middle line of that channel and will find resistance there. This channel is the bigger picture of what to expect.

I identified here wave iii-3 for this. So it puts wave four in progress from that point on. The labels of wave -abcd- are marked and wave -e- is in progress. This should be last wave for wave -4-. After this the market should go up and will discuss the potential there, later.

On the smaller channel. Draw a line on the top of letter -b- peak and wave -d- peak. Copy and paste to wave -c- low. This is target for completion of wave -e-. The market should slow down before touching it. Seldom, but if the market spikes. Meaning it goes quickly to the target and bounces out quickly. Usually leaving a wide bar there. I hate them, because the market could also spike to target but just keeps on going. Which means analysis was totally wrong. I prefer they consolidate a bit before.

Expecting the market to turn on the lower channel line. The line beginning at wave -d- label is the con-strainer line drawn off of wave 1-2. Remember? This will help identify wave -4-. Wave -4- should come out an touch before going to target or completing wave five. If it does not come out to touch it before hitting the lower line. I would not put a trade up. Very rarely will that analysis be wrong. The con-strainer line is also a line to be used to say your analysis is wrong and time to get out of a trade or at least review your analysis up to that point.

That should cover the analysis up to this point. Monday will reveal more and make trades from there.

SP Daily 5/22/2011

2011-05-22T07:36:00.001-07:00

Elliott waves has impulsive and correction waves. Impulsive are mostly labeled and described by 12345 patterns. Corrective waves are labeled and described by abcde patterns.
For simplicity when using numbers it appears like this 1a-2a-3a etc. Next hierarchical would be 1b-2b-3b- etc. Same for letters or corrective waves but they begin with letters and hierarchy by numbers.

Use lines to identify wave patterns. Draw a line from beginning of wave one to end of wave two. When touched again. It is wave four and five is right after it. So one knows where the turning point is established at.

Now for wave -c-. I use this method. Draw a line form beginning of wave to end of wave -b-. Copy and paste it on top of the end of wave -a-. Wave -c- when it hits is end of trend.

These work most of the time, but not always. There are some what subjective but do have some rules. It is application part that is subjective. In that the technician knows where the line should be. It may have two options. So one holds off on trade to see if market will slow down. If not they use the second option line. Also, using an entry of the opposite end of bar the market is moving will prevent one from entering on a false line.

Pattern--notice the square box on left in yellow. One can also look at the pattern to the far right labeled -A1-B1-. Notice how many bars are there. 10-12 bars indicating it is a corrective wave pattern of -b-. It it was a number wave in this position. It would half that many. So in the far right pattern. We know it is an -a-b- pattern and not a typical impulsive -12345- pattern. This tells us that one more leg down and next wave is up for this wave pattern.

On this daily chart. Lines, lines, every where a line. I have more lines then needed at the moment, but they remind me of the farther out future of this market.

First the yellow line that is labeled iii-3 on upper left side. This is just a pattern identification. This pattern not only happens at end of wave 3, it also happens sometimes at end of wave -c-.

In this case it is wave -3- end. So from that point on it is wave four in progress. Now in the lower corner there is a red line moving upward. This line often contains the market and wave four ends there. Other times this is not so. It depends on wave -2-. If wave -2- is an -abc- pattern it contains it. If not, it does not. In this case I do not believe it will.

There are two channel lines going down. One larger then the other. The larger one should contain this fourth wave pattern that most often unfolds in an -abcde- pattern. Working on wave -a-. This channel is created by two methods, discussed at another time.

The smaller channel should contain wave -a- and is created by the top one. Taking the first two points to create it. Copy and paste it to the first fractal. That is first fractal going down in an bull market and just the opposite for a bear market. Sometimes they do not show unless one goes to a smaller chart. I do not, but look for an congested area. That indicates a fractal does exist on smaller chart. So I paste it there. So when the next leg coming down hits it. The trade is finished and needs reversed.

So the lines tell us short and long term what to expect. That is weeks to months into the future.

Lesson on Identifying Corrective Waves

2011-05-13T19:29:00.000-07:00

Here is one thing that can help one identify what wave they are in when things get a little hazy.

Notice first on the left the light blue short angled line. Just above it. Is a iii-3 pattern. The same happens often, but not always at end of a wave -C-. A technician needs to identify these so they know where wave -4- is at.

Now look at the while line that has 1354 on the right side. Notice this wave did not go back to wave iii area that is the beginning of wave four. This is a running wave four. That is it continually goes down. If it was any other pattern of wave four it would not go much past that line.

Now look on the other side of the chart at white line @ 1350. Notice how this traced back to a wave -2-. The retrace is a wave -B-.

Wave fours attract wave ones and fours.

Wave twos attract waves -B's-.

One can also use a retracing tool to help identify them.

Wave fours go back between 38-50%

Wave twos and B's go back 50-61.8%.

This should help one keep track of he pattern their in so they know what to expect next.

Tried and Tried

2011-05-13T14:15:00.001-07:00

To get on an post the trade again.

It was a good one and you can see how I played it out. I believe the next move is going to be wave C. I was starting to get lost and can say as always, not absolute sure either. But enough to be able to trade it.

Today's down move is a B wave and the next should be a C wave with a 12345 pattern. It appeared to me that the A wave was an abc so most likely C will not be that pattern.

Can not set the channel as the 1-2 pattern has not yet developed. But it should go to 1347 area minimum and most likely to 1352 area.

I will try and get the channel out after the 1-2 is formed.

Good trades

2011-05-12T03:31:00.000-07:00

Update to the channel

I placed them wrong in the last post and this is the correct ones.

When line hit it should be the 3 of wave iii of 3. That should lead into wave 4 of the larger correction (possible running wave 4). Get more data to know that configuration.

Watch the fall

2011-05-11T19:08:00.000-07:00

It will not be long this will fall sharply and for more then one day. Impulsive wave A.

Look at this chart. The red lines represented the first wave in balance. Notice the top red line that is off of wave 1 beginning and off of wave two end. When the market touches it again it is wave four. At times it just touches the pattern and continues lower. Other times it goes beyond. I am trying to still figure out the difference or what can be learned from that.

I do not believe this wave four will go higher but could go to about the white line or slightly above.

If it does not go higher. Notice the line drawn in yellow. If it does go higher redraw it at the newer high point. Copy and paste to bottom point already illustrated, This should be target for wave five of this smaller wave scenario.

That would bring on a larger correction before going much lower. Unless it is a running fourth wave. Wait and see.

Daily 5/10

2011-05-10T15:24:00.000-07:00

The long term the lower upward angle upward in red. That is our destination for wave four to end. Sometimes it contains the market and other times it does not.

We are in wave A at the moment. Wave A can be an abc pattern or a 12345 pattern. The latter is the most common.

Wave 3 first target is 1.618 and I put a line on a fractal to narrow that target down for assurance. The market usually looks for fractals.

Breaking the upward line right under the present data confirms a new pattern. Even though our smaller chart is indicating it. Yet, we like each chart an line to confirm out analysis.

On the top one should notice a iii-3 and line. I will start pointing these out more often. The pattern helps the technician find wave 3 end. A tool to help the technician to keep his patterns straight. Which is the biggest problem in wave usage.

Good Trades.

2011-05-10T15:16:00.000-07:00

I am putting up two charts. One shows the pattern I am using for wave two. A complex pattern of abcde. Tonight should be the end and look to go south.

We have a triangular pattern to let us know where we diffidently need to be short at. After the opening bell it went north but still good.

If it challenges a new high. I would sell it or the line or bar method.

This will be wave three and will discuss destinations and the larger wave pattern on that daily chart.

Correction??

2011-05-06T13:53:00.001-07:00

Corrections---they are a challenge since there are so many patterns they can be.

This is the beginning. The yellow b wave is not set as finished wave.

1.From here it could go up to 1355 area for a two wave---simple abc pattern

2. It could trace back to 1344 and then go lower before higher.

3.It could turn into a running two wave which means it would have lower highs and lower lows each day.

Triangular

2011-05-05T16:12:00.001-07:00

The triangular has shown up, I believe. That is drawing a line off of the beginning of wave one and end of wave two. The fourth wave touches it and will pinch the final fifth of the fifth wave down.

The Red line shows the drawing and the triangle. When broken is confirmation that wave 1 down is over and the 2 wave has begun. Look for an .618 retrace.

I bailed out on the line per last post. Put another short on(as seen in chart). This fifth wave--I am looking for a failure fifth. My definition of a fifth failure is one that ends before or barely exceeds make new lows in this bear market.

Good luck in the next swing trade or day trades for you that do.

At hand

2011-05-05T12:30:00.001-07:00

The pattern is coming to an end. It appears a fifth wave and the fourth is in progress or over. I think the low is here on this trend line.

with caution time to change directions. I still like 1323.75 for target.

Where is the end

2011-05-05T05:17:00.001-07:00

I think it is tipping its hand. Still need more data to determine.

It appears this is the count. Notice the yellow angled line on the bottom. This pattern is typical of wave iii-3. It helps one identify where wave three is. Now wave 4 a corrective wave is the hardest to determine like all corrective waves.

This is the labels and channel I am using now to determine the end. Looking for more down. Since this is the first wave---I am not looking for a fifth wave failure that is typical at end of a wave count.

The volatility is typical of wave four. Some say, if your not sure in your count. Your most likely in wave four.

good luck

Fooled but notified

2011-05-03T14:21:00.001-07:00

Fooled but notified. I mention in last blog to watch the line. So it went a little lower then I thought it should but hitting the trend line (red handle) in lower red square box got me to change position. The market five point zig-zag was notification something was not right for my opinion.

I took myself out of the market and went about my day. Tonight things look different.

I am looking at the lower support line to go long using the bar method at 1349 area.

It needs to break the new trend line on top to verify it. Initial target is .618 or about the new line @1362.75. Will let the pattern unfold to see. This should be an B wave with the AB forming now.

Time to turn again

2011-05-02T16:22:00.001-07:00

This down move today was wave A and first wave of the fourth wave here. Now wave B and normally it will go back to the top. Will see after it unfolds again.

I am holding back on drawing the lines quickly to give every one a chance to find them on their own.

So breaking of this line is a diffident to get long on. Of course I am looking for it to just touch todays low again or barely.

Use your favorite entry method.

Good trades

Lesson: Trend Lines

2011-04-22T20:47:00.000-07:00

Follow the posts to see how this is done, but one factor is this.

In wave principle every turn ends in an 1-2-3-4-5- pattern. Wave C ends in an 12345 pattern. Wave five ends, most of the time in an 12345 pattern. I have seen markets go along showing no pattern. Then all of a sudden, start a very visible 12345 pattern before turning.

Here is my secret on those and it comes from Robert Miners book. If one draws a line from the beginning of wave one and end of wave two. Wave four will come back to that line. So now one knows exactly where the last wave is at.

I have also watched this phenomenon often and the market thereby finishes on this support line or the wave 1-2- of the next wave will form just above the line. So the market will end on the line before breakout.

Either case getting in the market at trend line is very close to the top, too.

The exception to this is wave ABC. One can identify where it will end by finding the fractal created on the data going up in a bull market. Finding this fractal is a little subjective. Draw a line from there to end of wave A and wave C will end on that line. Watch in the posts and see how this is done.

These two lines are of utmost importance to understanding the lines or channels these lines are made from exact points. They are essential to all of my trading.

Yes, one can have data in so small a time frame this method does not work.

I use so many trades to a bar for data.

The reason for that is each bar then represents so many emotions of traders. Which is based on the same principle as Wave principles. It also filters slow trade times by taking time out of equation and using the number of trades executed. Making a smoother chart patterns.

Lesson: Wave Counts

2011-04-19T17:36:00.000-07:00

I have seen three types of counting waves.

Mine is similar to two of them and the third is way different.

Due to my software limitations and for ease. I use numbers and letters.

If I am doing an number count. I put an letter after it. The higher the letter the higher in the hierarchy it is.

So an 1a,2a,3a,4a,5a is smaller wave count then an 1b,2b,3b,4b,5b count.

Then the letter which is the correction count. Would have numbers behind it.

A1 or A2.

LESSON-How to Enter a Trade

2011-04-18T20:08:00.000-07:00

I illustrate three methods here and they cover 90% of all entries to get into a Silly Wave target trade.

The first is a Pinnacle trade. A point in the market and enter a quarter below the low or high of that point.

Two is a Bar trade. That is to put a stop just above the bar or just below depending on direction of market. Keep moving it on every bar till engaged or the market has moved significantly on. Indicating your analysis was wrong to begin with. This is the safe guard with this method.

Three is the Trend Line trade. To enter on a trend line trade. Wait till a bar is formed just above or just below the trend line in this case a short would be activated. Opposite for a bull or long trade.

The fourth method is also a trend line trade. This trend line will angle up or down with its matching trend line opposite forming a channel. Once but not very often it will crash through this line. The reason to use stops. Otherwise one exits on the line or enters on that angling line.

There it is in a nutshell and pretty simple to do without being subjective. When I mention target you know what to do to get in the trade. Weather one uses a line or bar is close enough to be profitable.

For protective stop. I use 1-3 points. That is 50-150 bucks to protect my trade.

One caution. As the market heads for target. I am looking for the wave pattern to unfold. If it does not. That is cautionary warning to the trader to recheck analysis.

In watching my analysis you have a chance to start seeing patterns that are not described in any books that are in print describing wave patterns. Way to many to compile but channels define them for you.

Also, be checking the speed at which the market moves toward turning point. Seldom do they spike, but spikes are very fast in and out and easily determined. Otherwise they should move in slower and out faster. If not your probably on the side of a losing trade.

I expect my trades to move immediately in my decisive direction.

In conclusion: There are many more ways to enter the market safely. These are my favorites for this system.

Triangular Squeeze

2011-04-12T10:27:00.000-07:00

Notice the triangle of the lines. It is what I call the squeeze of wave three in the channel. In reality it is not just wave three but an inverted wave B of wave four.

I try to keep these silly waves uncomplicated as much as possible. That is why they are silly because most technicians have this rule and that rule and so many rules. One has to go to college to learn the stuff. All in the name of creating them objective leaving most people bewildered, confused and almost subjective in nature.

Happy Trading