22Jan2006
OEW goes international
INTERNATIONAL MARKETS:
I have received several requests over the past few weeks for my count on some foreign markets. Being the curious type, I decided to grant a few of these requests and did some work on the DAX/FTSE/HSI/NIKK. It's interesting to notice how the world's markets are all closely related to each other. For example, our supercycle bear market bottomed in October 2002. We rallied in the first impulse primary wave off the lows and then corrected into March 2003 in the second primary wave. Just as the U.S. was initiating its third primary wave, all the world's markets bottomed, ending their supercycle wave and joined the new supercycle uptrend. The most of impressive of the four markets has been the Nikkei. It had been in a supercycle bear market for 14 years (1989-2003)! The perennial bears never mention that fact. They were right about the supercycle wave, but were perhaps living in the wrong country. Below is a recap for each of the markets. I'll note this in the recent studies section for future reference. All charts are listed in the CHART LINK.
the DAX:
Primary waves I and II concluded in mid to late 2003. The DAX is currently in an extended primary wave III, and major wave 3 might have just completed as I can see five waves down, on the daily charts, from the new high 5500+. There is good support at the 4800 level, which represents the previous fourth wave, and this should provide a good long term entry point. Primary waves 3, 4 and 5 are yet to be completed.
LONG TERM: BULLISH.
the FTSE:
Primary waves I and II concluded in the spring and summer of 2004. This is a nice trending market like the DAX. The FTSE is currently in major wave 5 of primary wave III. It seems close to completing this wave at the 5700+ level, and there is good support at 5200, the previous major fourth wave. Primary waves 3, 4 and 5 are yet to be completed here as well.
LONG TERM: BULLISH
the HSI:
The Hang Seng completed its primary waves I and II in the spring of 2004. It is currently in a constructively extending primary wave III. I have it as being in intermediate wave iii of major wave 3 of the third primary wave. The current wave looks yet incomplete at the 15,700+ level. Expecting more on the upside here. Primary waves 3, 4 and 5 again are yet to be completed.
LONG TERM: BULLISH
the NIKK:
The Nikkei as mentioned before has been in a 14 year supercycle bear market. In 1989 several institutions offered 5 year put and call warrants on the Nikkei. It was easy to ride the bear market all the way down to the initial low in 1990, which we did: (39,000 - 14,000). I have not looked at this market since. Primary waves I and II concluded in the fall of 2003. Then for 18 months the Nikkei set in a place a succession of subdividing first and second waves: major waves 1 - 2, intermediate waves i - ii, minor waves 1 - 2 and finally minute waves i - ii. One needs to look at this chart to see exactly what I mean. Then in the spring of 2005 the Nikkei went parabolic rallying from 11,000 to over 16,400 in what appears to be just minute wave iii. This wave looks complete: with initial support at 15,000 and then 13,500. It has always been a volatile market. However, the bull market potential for price appreciation here far exceeds any of the other three. I'd rate the HSI second. If a pullback to 13,500 occurs it would appear to be a good long term entry point.
LONG TERM: BULLISH
In the future I will keep track of these markets on a day to day basis, posting only in the weekly summary, unless some unusual opportunites arrive during the week. OEW has gone international, but I'm still right here. Best to your week!
| 6Dec2005 OBJECTIVE ELLIOTT WAVE
RN Elliott, in the late 1930's created a theory that all stock market activity can be measured, tracked and even forecasted, plotting price activity verses time. Elliott proposed that investor psychology unfolds in a series of "waves" that build to a crest in bull markets, before receding into a bear market. Using a set of basic tenets, he defined what has until this day, been known has the Elliott Wave Theory. The original precepts of the theory have survived the decades by being passed from master to master: from Ralph Elliott to Hamilton Bolton, Jack Frost, and lastly Robert Prechter.
In the early 1980's I was exposed to the EWT through the Frost/Prechter text; "The Elliott Wave Principle". After a thorough examination of the material, I realised that hindsight was better than foresight in labeling the waves. Sure, one could be quite accurate for a period of time with one particular count, but in the long run, the market would prove the count to be wrong, simply because of the subjectivity involved in labeling the waves. Thus, I gathered, if the theory was truly a principle rather than just a theory, there had to be some missing elements from the basic tenets.
After thoroughly assimilating the material, I began to look inside the theory, in an attempt to understand exactly what it was intended to display. And, in a matter of months, the missing tenets were easily uncovered. When I approached Frost and Prechter of my findings, they both simply stated, they followed the theory as it was originally intended, and had no interest in any changes. So I let it go at that and started following the markets using my newly discovered tenets. That was the mid 1980's. Today 20 years later, the modified EW that I employ, which I call Objective Elliott Wave (OEW), still works like a fine time piece. Clearly defining waves, as they unfold, with hardly any subjectivity to speak of, only to be interrupted, from time to time, with an occassional need for technical analysis.
After considerable thought, I have decided, for the first time, to mentor those who wish to fully understand and apply OEW, for their own investments and/or their clients, under one condition: That the proprietary information they receive during their tutoring remain confidential, and, not be presented/used in any media whatsoever. This is a gentlemens agreement. I have, in the past taught courses on the Elliott Wave, but have never fully disclosed my particular approach. After 20 years of watching the markets unfold as expected, I feel it is time to share so that others can benefit as well. Remember, what you will learn here you will not find anywhere: it is all proprietary information.
We have a New Year approaching, lets make this a great year! If you are sincerely interested in learning the Elliott Wave as it was intended to be applied, one on one. Just drop me an email (caldaro@msn.com) and I'll fill you in on all the particulars. Peace and Happy Holidays!
|