By: Joseph Russo | Fri, Jan 16, 2009
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The November Low
In direct contrast to our previous piece exploring the current onset of Super-Cycle Wave IV, we will now take a closer look at the November low, and review the price action since then relative to speculative trading strategies. The small chart plots three months of daily closes for the Dow Jones Industrials. It shows that the move up toward the January high was clearly corrective. The chart also illustrates that the rapid decline off the January peak is fast approaching a key 61.8% Fibonacci retracement level. These three elements, the November low, the January high, and the .618 retracement level become essential pivot points from which we shall observe the near-term course of price action. To simplify this present inflection point, the market is entitled to do one of three things. First, it may hold the recent January lows, and then continue to chop higher, further subdividing its upward corrective course toward the 9630-10640 area. Second, it may recover only partially from the recent lows, rallying back up toward the 8675 level then once again collapse toward a retest or fresh new lows. Lastly, with the stubborn insistence of massive statist intervention, broad equity indices may also find themselves entitled to elongating a complex triangular consolidation, keeping the markets in a suspended state of limbo throughout much of Q1.

Theater of Speculation
So what does all this mean for short-term traders and long-term speculators? We will get to this shortly. In the interim, take note that we have intentionally avoided the term "investor". We have done so because of the widespread recognition that all such endeavors into the financial sphere have been, and always will be of a speculative nature. There never has been, nor will there ever be any long-term "security" associated with investing, only the risks and rewards relative to speculations taken over time horizons of varying length. From our perspective, nothing has changed. Financial markets are what they are, and what they have always been, theaters of speculation.

Speculator vs. Trader
Now that the financial system is on life-support, we trust that any sense of security still resonating from the ponzi scheme of long-term investment is extremely fragile. Glancing back at our small chart, "Near-Term Speculators" elected to take profits and/or sell short anywhere from 8800-9000 amid four recent rallies off the November lows. They are now likely to take profits on any short sales and begin attempt at reestablishing trade on the long end from the 8000-8300 area. Until price-action proves otherwise, and despite the sizable pullback from 9000, "Long-Term Speculators" are technically justified to maintain bullish positions acquired anywhere from 7600-7700 against the November lows. In total contrast, "Short-Term Traders" position themselves all over the map on a daily basis.

Snapshots of Short-Term Trading Success
Dispersed throughout the balance of this article, we display a variety of 30-minute charts, each reflecting recent short-term trading successes in their respective markets. To impart this information to our subscribers in advance, we employ a tactical trade-trigger strategy from which we identify various trigger-points and their associated point values for short-term speculative consideration. Although a portion of these triggers will outright fail, over the past couple of weeks, this particular strategy has outperformed all others, and has delivered outstanding short-term speculative profits for those embracing its disciplines.

Short-Term Strategic Trading Cycles
Over the same period, our short-term counter-trend strategies have underperformed markedly. As with all things occurring cyclically in nature, tactical trading strategies also have cycles. One cannot expect a singular strategy to outperform 100% of the time without an appropriate season of decline and rebirth. As the current financial crises so eloquently attests, such is the essence of speculation across all time horizons.

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 map 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.

Prudently trade the Super-Cycle IV-Wave
To safely speculate on, or effectively trade the endless array of unfolding subdivisions amid 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 forecast, monitor, and calibrate market impact relative to a multitude of trading signals that are in direct alignment with distinct speculative strategies set forth in the members NTO essentials file.

Regardless of one's level of trading experience, users must allow sufficient time to become acquainted with the authors charting protocol, strategies, and tactical narratives prior to entering positions or developing discretionary trading strategies of their own. Our forthcoming E-letters should assist greatly in this endeavor.

Communications in store for 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...



Joseph Russo

Author: Joseph Russo

Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology

Joseph Russo

Since the bubble, 911, and the 2002 market crash, Elliott Wave Technology's mission remains the delivery of valuable solutions-based services that empower clients to execute successful trading and investment decisions in all market environments.

Joe Russo is an entrepreneurial publisher and market analyst providing digital online media solutions designed to assist traders and investors in prudently and profitably navigating their exposure to the financial markets.

Since the official launch of his Elliott Wave Technology website in 2005, he has established an outstanding record of accomplishment, including but not limited to, ...

  • In 2005, he elicited a major long-term wealth producing nugget of guidance in suggesting strongly that members give serious consideration to apportioning 10%-20% of their net worth toward the physical acquisition of Gold (@ $400.) and Silver (@ $6.00).

  • In 2006, the (MTA) Market Technicians Association featured his article "Scaling Perceptions amid the Global Equity Boom" in their industry newsletter, "Technically Speaking."

  • On May 6 of 2007, five months prior to the market top in 2007, though still bullish at that time, he publicly warned long-term investors not to be fooled again, in "Bullish Like There's No Tomorrow."

  • On March 10 of 2008, with another 48% of downside remaining to the bottom of the great bear market of 2008-2009, in "V-for Vendetta," using the Wilshire 5000 as proxy, he publicly laid out the case for the depth and amplitude of the unfolding bear market, which marked terminal to a rather nice long-run in equity values.

  • Working extensively with EasyLanguage® programmer George Pruitt in 2010 and 2011, the author of "Building Winning Trading Systems with TradeStation," he assisted in the development of several proprietary trading systems.

  • On February 11, 2011, he publicly made available his call for a key bottom in the long bond at 117 '3/32. Within a year and half from his call, the long bond rallied in excess of 30% to new all time highs in July of 2012.

  • For the benefit of members and his general readership, he responded to widespread levels of economic and financial uncertainty in the development of Prudent Measures in 2012.

  • He publicly warned of a major top in Apple on October 26, 2012 in the very early stages of a 40% decline from its all time high.

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