Try to set it up like a puzzle, which can be fun (or challenging). If virtually all signals lean one way, go that way. If signals contradict directly, then perhaps lighten your position from what it otherwise might have been and be more ready to take evasive action if need be.

Signals are valid until disconfirmed, and each signal should have a certain price where the analysis (projection) is invalidated. Signals should not be generated in isolation.

Also, we take it day by day and modify our analysis if needed as the structure becomes clearer.

That would be nice wouldn’t it? It can be done using a good data feed like TradeStation (where you can record and DL indicator values) and Excel actually.

You can deconstruct each formula (RSI, MACD) so that you can input future prices and then Excel will calculate the future values, or what the price must do to result in a given RSI value (such as ‘overbought/oversold’, etc). It’s a future projection so obviously it isn’t absolute, but it can be helpful if you want to know what price level will push a certain indicator to a certain point and what you believe will happen at that point.

Let me break this comment to discuss the triangle.

If this is a triangle which broke support at 830-50ish on the S&P, this two day rally might look like a test back up to for resistence. (i.e what was support becomes resistence) The downward target from a descending triangle appears to still be valid.

I can’t help but wonder , if the downward target was met would all other upward signals/analysis still be valid? (i.e. still a divergence, fib %s still line up, still 10K plus upward targets)

Is there a tool that could show what a FUTURE chart would look like given that a future target price is reached? (Sounds like a great tool, eh?) Is that even possible?(What would MACD, Momentum, RSI, others show then?)

If all things line up at a future descending triangle lower target, then it might be a better place to enter.

That’s my thoughts exactly! This post is probably setting an AtT blog record, other than the congratulatory comment post – I’m always impressed by the knowledge and support of my readers.

This 4th wave – if it indeed is classified as such – was difficult. Was it a diagonal? Was it a triangle? What exactly were the parameters? Did it sub-divide into a complex pattern? It was rough.

I tend to err on the side of ‘my stops are too close’ but I’ve had to decrease the intraday sizes and go for larger stops against my comfort zone but within my research. Research consistently shows that if the initial target is small and the stop is larger, most strategies test out best (to the contrary of popular thought) but still. In highly volatile environments, particularly if you’re relying on ATR strategies, that stop needs to go a good distance from entry.

Ultimately, it’s risk-management and proper position control that saves us in this tenuous environment.

Indeed it could all be a complex corrective phase, which is puzzling to us all, and I’m open to interpretations, but it just almost feels like this hideous third wave has run its course and projections. Your count takes us quite lower on the chart, but let’s see how the next couple of weeks play out for signs of new information.

Thanks for reading!

I did a post a few months ago entitled “How I Set-Up My Charts” which describes the process in far more detail than I can in the comment box here.

A quick summary in terms of StockCharts.com:

20 & 50 EMA
200 SMA
Default Bollinger Band
MACD 3, 10, 16
Mostly 5-min charts

Let me know if I can be of further assistance.

Regarding the 10,000 to 11,000 target, if we base the current structure off Elliott Wave, then Wave 4 cannot retrace into the price territory of Wave 1, which terminated at 11,700 in March ‘08. Thus, wave 4 could not retrace beyond that, but will most likely retrace some Fibonacci relationship either of the entire impulse or – most likely – of Wave 3. If that’s the case (Wave 3), here are the potential Fibonacci targets for Wave 4 (estimations):

38.2%: 9,650
50.0%: 10,300
61.8%: 11,000

My guess is that because Wave 2 was ‘normal,’ then Wave 4 could be violent or steep and could retrace greater than the 61% level. However, according to Elliott principles, it can’t retrace beyond 11,600 which would mark the bottom of Wave 1.

Of course, I’m trying to interpret Elliott as best I can and I’m relatively new to the discipline so this is just my way to set logical targets and sort of play out the scenario in real time.