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June 30, 2007

Erratic Range-bound Trade
by Joseph Russo

As the financial sphere and all of its participants scramble to position themselves on the proper side of the next big move, the "house" goes about doing what it does best. Particularly over shorter periods of erratic range-bound trade, "the house," (any consolidating broad-based index) becomes most intent upon confusing as many participants as possible. Amid such chaos, the marketplace (by design) will efficiently assimilate a fair portion of the majority's active trading capital in what is for most traders, a rather frustrating price-discovery process. Perhaps this chronic frustration is origin to a denial-based allusion that "the market is always right." We also ponder if such mechanics are a suitably alternate way in which to perceive the "efficient market hypothesis."

OVER TIME, THE HOUSE MUST ALWAYS WIN ? OR THERE IS NO HOUSE
Many have often compared Wall Street to one giant casino. There is fair evidence of truth in this, to which short-term traders will no doubt attest. At the other end of the spectrum, institutional money managers along with the most passive of individual participants are likely to embrace the long-term "investment" argument. So long as secular up-trends quickly resume and remain generally stable, the investment argument will always prove to be the brilliant no-brainer. However, upon the inevitability of a long-duration secular decline, such brilliance painstakingly returns to the lowest common "casino" denominator. Indifferent to all outcome preferences, on every level, in due course, across every time-frame, and with no exception - BULL or BEAR, "the house" must always prevail. Most players readily accept such realities upon venturing into a casino, and should likewise be cognizant of similar dynamics forever present throughout the financial sphere.

While Index Traders Edge Vol. 5, contemplated whispers of instability, this issue suggests more of the same - as the bulk of hyperactive participants will no doubt fail in their valiant short-term attempts to stay one-step ahead of a rather fast-paced and erratic "house-cleaning" consolidation. During such episodes, "standing aside" can prove to be a suitable and prudent tactic for various shorter-duration trading strategies. Only those "quickest on the draw," in possession of carefully calibrated price targets and precise trade-triggers, will profit amid the sharp, erratic, and abrupt reversals. In kind, traders who attempt to distance themselves from the intra-day malaise will require more patience, flexibility, and risk tolerance in prudently trading through such bi-polar consolidations.

For all such traders, there is no better road map or range-tracking medium than the stunningly accurate, impartial analysis, through which Elliott Wave Technology concisely documents, and archives its unique brand of trade-triggers and price targets. No matter the time-frame, and regardless of the prevailing market climate, we are steadfast in keeping subscribers in the profitable minority, and fully abreast of both fast-moving, and longer-term market dynamics.

That said - let us look at where the weekly charts are trading, and what might be on tap in the week ahead.

Concise, impartial technical analysis present throughout our publications, provide clear targets, triggers, and various parameters from which active traders can successfully evaluate, construct, and manage low-risk trading strategies. The short and long-term rewards in adopting such analysis as part of one's trading arsenal are quite substantial.

Rigors and discipline employed in procuring both short and long-term forecasts are void of mysticism, idle chatter, and all other varying forms of market-magic formulas. Our methodology is fully transparent, and clearly archived - providing a lifelong benefit of advanced trading skills to each of our clients.

Trade Better / Invest Smarter...

Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology

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.

Copyright © 2006-2008 Joseph Russo

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