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 After
a brief update on the Dow, we will share with readers the five levels of tactical
engagement, which drive our market guidance and summarizes the working architecture
behind Elliott Wave Technology's forecasting disciplines.
Update on the Dow
Last week, we had mentioned the tentative low (7909) in January.
The smaller set of "upward" Fibonacci retracement levels previously
added are providing us with clear information relative to the market's near-term
condition. Thus far, the Dow has sternly rejected price as it back tested the
larger broken speedline of former support. Prior to collapsing just above a
modest .382 retracement rally, the market reached its latest interim peak on
Wednesday January 28. Wednesday's print high of 8405 quickly succumbed to over
400-pts in losses on Thursday and Friday. Though still holding, the price action
of last week strongly suggests that the January low is likely to fail in the
not too distant future.
Levels of Engagement
Over the years, we have routinely reported on the fast-paced excitement surrounding
short-term trading accomplishments, and more recently on the powerful strategy
of capturing medium-term moves in bridging
the gap; however, we have yet to explain just how each of our tactical
approaches are designed to integrate and work together as part of a larger
strategic trading operation. Although each level of operation trades effectively
as a stand-alone strategy, like Elliott Waves, each of them also comprise
elements of larger sequential design.
 Level-I
Core Cyclical Positioning
Our fully integrated trading models begin with secular and cyclical assessments
of long-term price data. We then execute a methodical technical approach from
which to express either a cyclically bullish or a bearish opinion within a
given market. As of January 2007 for example, our long-term cyclical assessments
turned bearish on the Dow just above the 12,000 level. For the last year, our
largest governing core position has been engaged on the short side of the Dow.
It will remain there until we observe a reversing cyclical shift.
Level-II
Hedging Long-Term Cyclical Postures
The next level of our strategic model addresses the primary trends residing
within the context of the larger cyclical trends. Though they may not affect
the direction of the dominant trend, primary moves can be rather substantial.
As such, our primary hedging strategy intends to protect and even profit from
market movements counter to those positions held in Level-I core accounts.
For example as of November 2008, speculative countercyclical hedging operations
remain justified in holding long positions in the Dow from the 7650 level.
This versatile hedging strategy not only protects, but may also enhance core
account performance by trading in the same direction vs. limiting its operation
to only taking trade's counter to those held in Level-I.
 Level-III
Supportive Medium-Term Hedging Operations
We discussed this level of strategy in bridging
the gap. Similar in purpose to the previous, Level-III supports, protects,
and enhances operations taking place at one level above. The tactical approach
of this operation addresses the smaller to medium-term trends that reside within
the context of primary trends. As a stand-alone strategy, Level-III is well
suited for those wishing to engage from a distance. Level-III does NOT require
one to monitor price-action during the day.
 Level-IV
Short & Medium Term Speculative Opportunities
Without exclusive regard for trend, this level of ancillary engagement focuses
on identifying a multitude of measured trade triggers in either direction.
The tactics comprising this strategy are visual, providing clear price targets,
defense boundaries, and risk levels. At their discretion, traders with clear
vision of trade trigger locations may then accurately assess risk vs. reward
in order to make best-practice judgments as to which they will take action
on. This level of engagement is generally suited to those with moderate or
frequent daily access to real-time charts.
Level-V
Short-Term & Day Trading Disciplines
Level-V is also an ancillary operation in the grand scheme of things. It consists
of a proprietary short-term/day-trading model that delivers concise one-hour
advance notice of entry and exit signals throughout the course of each trading
session. Although we consider engagement at every level speculative, day trading
is a highly accelerated form of the art. To control the mayhem inherent in
such endeavor, our model is predominantly mechanical in nature. A disciplined
methodical approach takes the emotional guesswork out of an otherwise shell-shocked
war-zone-like environment, and entrusts most of the decision making to the
steady hand of a proven mechanical framework. As with all speculative endeavors,
periods of poor performance and drawdown are part of the discipline. This level
of engagement requires that one have access to live intraday charts throughout
the entire trading session.
The Complete Speculative Landscape
In our total commitment to keep one-step ahead of the entire speculative process,
we go to great lengths in continually plotting course of the entire trading
landscape for all time horizons. Doing so enables us to assess which strategies
are currently working, which are muddling through, and which are languishing.
Maintaining impartial resolve to such discipline allows us to deliver large
profits without self-aggrandizement, and engender caution where necessary
to stem losses amid situations of challenge.
 Trade
the Super-Cycle
IV-Wave
To safely speculate on, and effectively trade the endless array of unfolding
subdivisions forthcoming in SC-IV, one may subscribe to our premium technical
publication.
The express focus of Elliott Wave Technology's Near
Term Outlook is to help active traders anticipate price direction and
amplitude of broad market indices over the short, intermediate, and long-term.
Over the past three years, we continue to hone the art of dispatching tactical
trade set-ups and market forecasting into a consistent, impartial, and immensely
rewarding endeavor for those who take the time to embrace it.
We deliver this unique blend of proprietary charting protocol daily, with
the express intent to convey timely and profitable information. Our daily
reports impart strategy-specific
guidance, which strives to calibrate market impact relative to a multitude
of trading signals that are in direct alignment with strategies provided by
the author.
Regardless of one's level of trading experience, users should allow sufficient
time to become acquainted with the authors charting protocol, and tactical
narratives prior to taking positions.
Communications 2009:
To more effectively convey dynamic trading conditions relevant to our technical
publications; we are soon planning to launch complimentary E-letter briefings
for anyone interested in following our work. E-letter dispatches will briefly
summarize tactical trading postures across various time horizons and trading
strategies. The theme of our maiden E-letter will reveal how to sell at major
tops, and buy at critical bottoms. Those interested may email us
to get an early seat on our mailing list.
Trade Better / Invest Smarter...
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Joseph Russo, presently the chief editor and analyst for Elliott Wave Technology,
has been studying Elliott Wave Theory, and the Technical Analysis of Financial
Markets since 1991 and currently maintains active member status in the "Market
Technicians Association." Joe continues to expand his body of knowledge through
the MTA's accredited CMT program. Having passed the Level I examination
in November of 2004, Joe is now preparing to begin study for his Level II
exams. Upon successful completion of an exhaustive level III examination he
will have earned the industries highly regarded designation of Chartered Market
Technician.
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