Comments on: A Weekly Look at the XLF Financials with Elliott Wave

By: droys

droys — Mon, 26 Jan 2009 12:38:31 +0000

This might be a real fact that we must face all of these things but all i can say is that we must expect the things that are unexpected.I hope your blogs will generate more feedback because you take the time to write them so we should take the time to respond.

By: NotAfraidofTrend

NotAfraidofTrend — Mon, 26 Jan 2009 05:53:20 +0000

DaveB, you are absoultely right. Patience is a great virtue.

In hindsight, my short at S&P 1411, and held with patience, would have made more 10 times more money than what I could scrounge with all my hard work of trading since spring of 2008. It pays to be lazy!

Moreover, even though all my trades since last spring have been shorts, I had severe drawdowns, maybe because I did not use stops, during brief periods of ferocious rallies. If only I had ignored those rallies, I would have still done pretty good.

The only problem is that we never know what will happen next!

By: DaveB

DaveB — Mon, 26 Jan 2009 03:43:43 +0000

Yes, it does appear that we’re due for another attempt at the 20 week ema resistance. Even on the daily timeframe we’re pretty far extended below the 20ema. A trip back up to the daily 20ema would be a 20% gain from current levels, to the weekly 20 would be 50%. But as you said, there’s no really no reason to buy at this point.

When I started trading last spring I would salivate over potential gains like I mentioned above and often play knife-catcher on trades like this, more often than not coming out a loser. I’ve definitely learned to have patience in waiting for the right opportunity.

By: Corey Rosenbloom

Corey Rosenbloom — Mon, 26 Jan 2009 02:42:21 +0000

Dave,

Spot on – we have a triple swing, positive momentum divergence on the daily, which would likely support that we are about to embark on a larger than normal counter-swing up (large Wave 4) or perhaps even make a bottom (we have to explore that possibility). Let’s see if we can break those daily moving averages next.

By: DaveB

DaveB — Mon, 26 Jan 2009 02:15:10 +0000

We now have an even larger positive momentum divergence on the daily chart – new price lows were made in November and January but the momentum osc has made higher lows on each of those new prices lows.

By: Corey Rosenbloom

Corey Rosenbloom — Mon, 26 Jan 2009 01:28:03 +0000

Andrew,

I mentioned the possibility of Equality with Wave 1 particularly with such an extended 3rd wave. In fact, it would not be surprising perhaps to see a truncation.

I had a discussion this weekend with someone who had a valid point that the lows might already be in, particularly if the 5th wave truncates (under either scenario). I’m not willing to go that far, but the possibility does exist.

I’ll try to present log charts from now on with such large price moves.

By: Andrew Stanton

Andrew Stanton — Mon, 26 Jan 2009 00:54:36 +0000

The September to November decline was clearly the steepest and had the strongest momentum readings so the count as presented is the clear favorite. One thing to keep in mind; the most common relationship when the third wave is the longest is for the first and fifth to be equal and that may mean the bottom is not quite as far away as it would seem from looking at wave three. The index is already in single digits, zero is the limit. Sorry Corey but this is just the case where log scaling becomes very useful.

By: Corey Rosenbloom

Corey Rosenbloom — Sun, 25 Jan 2009 23:39:10 +0000

Paul,

It will take bank stability and willingness to lend to jump-start the economy. Many argue banks aren’t quite there yet.

It will be interesting to see how bank stocks perform particularly with partial government control if it comes to that.

By: Corey Rosenbloom

Corey Rosenbloom — Sun, 25 Jan 2009 23:37:54 +0000

Nnecker,

There’s a valid debate that we’re in the terminal Wave 5. Perhaps it’s showing thst structure.

I chose this count because it better displayed my interpretation of a third of a third (or in this case, a third of a third of a third) as the preferred count.

By: Paul

Paul — Sun, 25 Jan 2009 04:11:47 +0000

Corey, banks will become functional again and start lending to businesses and consumers with use of financial engineering implemented by government (good/bad bank or such). But I think that common stocks of financials will lag greatly due to subordinated position after government, bond, and preferred stock holders take almost full control of equity. Market will realize this and start enormous rally without the financials. New leaders will emerge and take the S&P index higher.