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Tuesday, July 21, 2009

Elliott Wave Update ~ 21 July

Some beautiful channeling on this chart. I think the key thing is that a break of the channel lines is an indication that Minor B is underway. The whole A move up reminds of of how the A wave off the 666 bottom topped out in the lower half of the 800 range. Lots of last minute fits of bullishness before a proper B wave price low finally kicked in. And the B wave low (I think 779 at the time) was a quick one that bounced pretty quick.

Same thing going on here? Perhaps. The equivalent is one quick trip down to the lower 930's or upper 920's for a B wave price low. But I am getting ahead of things again. I don't think this A wave from the 869 low has even topped out just yet. But its getting close.

As far as price action, it would seem the bulls want to top this Minor A wave out as high as they can so that any potential severe pullback holds the 927 -934 zone as a B wave pullback price low. Anyways, thats my gut feeling on how the price action is occurring. It just "feels" like a pullback that breaks under key support at 930 area will somewhat damage the rally's chances of making it to 1000 or much higher (which may be the true target - the 1014 38% Fib mark). For instance a drop back to the 915 area would seem awfully damaging. Anyways, I don't have a crystal ball for any pullback price low, I am actually keeping all possibilities open and trying to stay in tune with this rally overall.

55 comments:

  1. The damaging part will not be the breaking of a certain number on the downside. It will be the double top formation of 956 and change, IF IT OCCURS.

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  2. Of course its a Triangle...UG Asleep at the switch I was

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  3. Question, if we gap up tomorrow and D overthrows the Triangle, how far does it have to go to kill the Triangle?

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  4. Kudos for calling the rally and sticking with the TREND!

    It's downright funny to see Kenny and all of his "followers" filled with so much . . . trying to "pick the top" bias and mentality. My guess is that you can use his blog as a contrary indicator at this point. Just watch the comments that his followers make . . . no one is playing the long side whatsoever. The question isn't whether or not one should GO LONG APPLE, but when can I short it???

    Kenny seems totally "trapped" in his bearish SPX bias as he feels that a major low in the dollar is upcoming and that will be the proverbial "lynch-pin" for a decline in the equity market. But as we all know, such a correlation in the SPX/Dollar isn't always guaranteed.

    Today, he actually banned a guy this afternoon after the poster questioned Kenny's remark about SBUX beating estimates by "manufacturing its earnings." Kenny went on to add that the markets are "rigged". Sounds quite sophomoric to me, and a strong reflection of someone that blames others for their bad trades.

    He's not alone though.
    There seems to be an entire crew over there that believes in all sorts of CONSPIRACY theories, even when the FACTS state otherwise.

    Thank you for making your blog as objective as possible. The daily "diarrhea" that comes out of that OTHER website is a complete waste of time!

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  5. If we gap up over triangle tomorrow then the Minute [v] is in in play and well underway.

    If it goes much above 956 it kills the triangle

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  6. The drop of the century is approaching

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  7. Solar Eclipse tomorrow.
    What does Arch Crawford say about this date?

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  8. All I see is all bulls will be hurt eventually.

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  9. Arch Crawford expect a turn is approaching in 2009

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  10. Wags I must comment:

    1) I appreciate positive feedback on my blog but not at the expense of Kenny's, ever.

    2) Kenny's Primary high targets are not much different than mine, except in form.

    3) Kenny called P1 low when everyone was still bearish. He even did it even before EWI. He did it on about every top on the way down in P1. So to say the least, I eagerly read Kenny's blog more than even EWI.

    4) Although I used to be the biggest conspiracy theorist around, I made peace with those thoughts. I will say this about conspiracy: It is born from the same pot as "greed" is born from. There exists conspiracies as there exists greed. Those human "values" are intertwined. However I do not believe that a small cabal can control world sentiment (which is based on Nature's governence according to EW theory). So mankind will be greedy and conspire, but mankind can never control nature! That I have learned!

    5) We all, at times, become emotionally invested in our counts or charts even as analysts. Its a big demon I fight everyday. But as I say, Kenny and others have great technical reasons for seeing a bearish market drop from here and soon. So until the next 5 weeks plays out, I think it is premature to say for sure whats going to happen.

    6) I do sense though, what you are getting at with the permabears being stirred up in a disbelief frenzy which is what I think your larger point is in your post. That is what P2 is supposed to produce at this stage I think. I too get a sense via message board traffic too. I actually mentioned to Kenny that when I see a certain someone (I won't mention) finally turn bullish on the boards, I will be calling a P2 top!

    So your larger observation about sentiment is appreciated but the comments about Kenny are not warranted nor appreciated.

    Thanks

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  11. He suggest that the best time to have sex is during solar eclipse

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  12. D,

    Point #6 is exactly what I was getting at, although I must say that as someone that trades the market day-in and day-out, one can only react and respond to what price levels that he is currently seeing in front of him, and not some "twisted" Goldman Sachs controls the world type conspiracy theory.

    We all know that earnings estimates have been revised downward to a certain extent and that there has been a certain amount of "sandbagging" going on . . . But at the end of the day, as technical traders we trade PRICE and not conspiracy theories.

    Thanks again for your eloquence and insight. It's very refreshing, for sure!

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  13. Just for the record, I believe we will get to SPX 1060 and perhaps higher. However, it is the manner in which we do it that matters the most. I see the market towards a low in early August and then a powerful rally that will produce about 2/3 of the move until March, peaking sometime in September.

    Even if one is perma-Bull a consolidation and retracement will build support for such rally.

    My criticism of Dan's approach is that he wants to get to 1000+ SPX as soon as possible so that we can get it over with. I do not see it happening folks.

    BTW, if one has a good directional sense, one can make money whether the market goes up or down. This bull vs. bears frame of mind is for little kids or sports fans.

    IMHO, what we are trying to discover here is the truth about future direction. If on the other hand your idea is to reinforce your existing bias then.......

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  14. This not what Dan wants, this is what the trader wants, so they could just load up more shorts and ALL IN around 1000

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  15. Dan,
    what's your A wave estimate?

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  16. Phoevos, it has been a powerful rally from the 869 low. Do you see the market actually doing a huge dip and then yet another powerful rally (in low volume summer) in what you are suggesting in the time you are suggesting? It doesn't even seem technically possible.

    I am not trying to get 1000 over with. I was perhaps in June, I admit that early 1000 call was based on a misreading of sentiment and waves. I have readjusted accordingly!

    But as of now I expect an ABC to form from 869 low and so far an "A" wave seems to be taking shape. I have stated that this would form a fine triple ZZ from 666 low. I have stated why it makes sound EW sense that the third and final ZZ takes place from a start point higher than the second ZZ.

    I have stated that bullish sentiment seems to have indeed corrected plenty (almost 50%) and that a move to peak sentiment is occurring and why sentiment should peak on a rally of this size.

    My reasons are sound. I was eager in June, but not now. If this rally takes us to 1060 in September that is just fine and indeed it might have a final fit of bullishness that surprises everyone!

    I am tryuing to take it one subwave at a time and I think I am doing ok.

    But you are suggesting first a very very bearish price dip I think. At least thats what you were stating on previous recent posts. Correct me if I am wrong.

    If you have sound EW observations that refute my current count, please state them. If its just your gut feeling that is ok too you can say so, I often express myself in that way too.

    But otherwise, you have been on the very bearish side and seem to be more invested in your count than I. You may be right in the end, but without sound technical or EW reasoning, how else am I to respond?

    I appreciate the acute sense that the last time the market was up here in the 950 area, I expected a B wave pullback and then a C wavce rally toward 1000 peak. Your right, I rushed it then, I don't think I am now.

    P2 may peak in Auguest or September or whenever. Each daily wave clues us in more to a final target.

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  17. Wags, then don't come over there is I am so full of shit. It is that simple. Then you won't have to put up with my nonsense.

    And you are not accurate why I kicked that guy off my blog, although I do not need to justify it to you in the least.

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  18. Great observation Dano regarding greed and the conspiracy theories they are not mutually exclusive of course and with certainty the law of nature will be observed.....and will it ever...but be open to the timing of this.....it can be very expensive if you are not patient Joe has been working feverishly with his calculus derivatives for this move......but all he can come up is snake eyes for the Fed......so the law of nature will play out.......be open to the fact that GS is the market for the time being...it is not a conspiracy but a necessity...

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  19. Actually Wags, your comment about "trend" make me believe you are the guy who got banned today. You made a comment about "trend" on my blog too.

    Now we know!

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  20. DAN, I'm seeing Hanging man on QQQQ , SPY and DIA. what's your thought

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  21. Dan:

    Check this out re: a common frame of reference:

    http://dshort.com/charts/bears/price-and-volume-large.gif

    All the sound technical and EW reasoning rests with you, Kenny and EWI's three weekly updates which we all follow.

    At the moment I see a sideways or lower movement until an early August low (perhaps 8/3/09). Following such I see a 200 point rise of SPX to around 1100. Following such there will be a decline but not the celebrated P3 of 400 that everyone is expecting (instead something milder but still substantial). The Bull market will resume towards end of 4th quarter and then rise for six months. Summer of 2010 most likely will produce the SPX 400+ that you have been alluding to.

    Since you are EW artist, could you construct a scenario that plays out as such? I think I know the outside parameters as described. Your contribution would be appreciated if you can construct the internals to show how we can get there. Feel free to improvise and think out of the box as necessary. I am not asking you to abandon your own positions and/or change your fine blog on my account...simply carefully examine this alternative.

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  22. Kenny, I recoiled at Wags' post as well. Saying 'go with the trend' is like saying 'buy low, sell high'...a bunch of nonsense. We are all trying to figure out what the trend is and trade with it.

    My trend indicator went short today for the first time since this wave started. My response? I went short. If it I get smoked on tomorrow's open then that's trading but everyone is looking for the trend.

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  23. Phoevos - What are these sentiments based on exactly?

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  24. Michael:

    I don't mean to defend Wags, because I think his comment was over the top and indicative of frustration of some sort or another.

    Nevertheless, following the TREND can be substantially different for a day trader vs. a position trader.

    I think Wags was referring to daily Trend, where most of Daneric's analysis is truly helpful.

    Personally, as a position trader I pay more attention to the larger picture as it unfolds and does not bother me to be outside the trend for a few days, as long as the trend eventually meets my expectation.

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  25. Dave_S:

    For the moment I cannot reveal source since there are copyrights and similar sensitivities involved.

    I can get them to Dan's or Kenny's hands via e-mail, but will not be able to post in a public forum. Fair to say that the work involved is based on cycles analysis.

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  26. An alternative to P2 reaching ~1100 is shown here:
    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=2&mn=6&dy=0&id=p78881847233&a=163832306

    The downward trendline from May '08 should act as strong resistance. We're right on it. Whether it can reject an upward move resulting from manipulation and TARP money being pumped into the market is a big question mark.

    Sans manipulation, this is a sensible endpoint for P2. I don't see P2 ending suddenly or dramatically; still plenty of dumb money out there buying the dips. So, a couple months of churning in the 880-950 range would make sense, taking us into the historically significant Oct timeframe. That's when I think the bottom starts to fall out.

    Alternatively, we could see a break above the trendline to ~1100 over the next month or two, followed by a retest that fails around October, starting P3. Less likely than the above scenario, imo.

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  27. Michael, I'm not sure what you are suggesting . . . especially given the fact that the cyclical stocks (steel, coal, copper, drillers, etc.) have been surging straight up for 6-7 consecutive days now. That my friend is a TREND and is not something that aborts after just a couple of days.

    With all due respect, I'm surprised that you are puzzled as to what the trend of the market currently is.

    I've been trading for over 28 years now with 10 of them having been as a floor trader in the commodity pits of #4 World Trade Center. I don't ascribe to any conspiracy theories or the recent rash of posts that claim that Goldman Sachs controls all of the markets and that the markets are "rigged". To me, those are pure excuses as to why someone is unable to make money trading.

    In any event, for me the TREND has been straight up since July 13 in many of the cyclical names that I trade. If you don't believe me, feel free to take a look at the chart patterns of ACI, BTU, CNX, FCX, or PTEN.

    While the "Trend is Your Friend" sounds easy, it is indeed much more difficult to adhere to - - - especially if one allows their ego and the "conspiracy" theories to enter into ones thinking. As I've indicated earlier, I've seen comments on other blogs (Kenny's) that say that the market is "rigged" all the while they are trying to read the technicals and wave count of the market.

    That's not my style.
    If it works for you, then so be it.

    Victor Sperandeo once said to me back in 1984 that a good trader "observes what is happening (in terms of price) and assumes that it will continue".

    Having done that since July 13th has not only made me most profitable, but has also kept me out of the "pick the top" category.

    To each his own.

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  28. NP, like Dan, was just curious where you were getting these forecasts from.

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  29. Phoevos, I personally trade three different systems and each has its own time-frame.

    We are all looking for the trend on whatever time-frame that we are trading so I still find the admonition ridiculous.

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  30. Wags, or Mikey, all trends END. This one is coming to a screaching halt shortly, dont say we didnt warn you. There is more to market movements than just "price" or a P&F chart, which is why were here. Not sure why your here, since the trend seems to be your almighty.

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  31. NP? If you are addressing Phoevos it is God Apollo's other name (according to the ancients a patron of music and the art of prediction - Oracle of Delphi).

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  32. Dave,

    Then please help me reconcile the fact that you are stating unequivocally that "this one (trend) is coming to a screeching halt shortly" while Dan is looking for SPX 1060.

    You seem to be quite adamant in your claim. Care to specifically cite where the TOP is of this current move up from 869?

    Thanks.

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  33. Dano - From all I read, how can anyone who trades plan on a vacation out of the country and out of communication anytime between late August and September? While your excellent work always follows the market, not makes the market -- that's GS's job, but many times in the past you would comment on timeframes regarding wave counts (ie too short, more time needed, etc.)

    So, do you have any "gut feeling" thoughts regarding the need for a "substantial and real" pullback (not like today's mini-trap) prior to a final push the top, and, more importantly, are you also generally looking at a late August/September timeframe for the wave top?

    TIA

    PS I just joined goog accts just to comment on your blog

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  34. It already on Dan's chart, did you look at it?

    We are not going straight up to the top (or in laymans terms, a new downtrend is coming first), thats whats great about EW, knowing approx ahead of time some of the moves and trading them. Note that there are other counts, some which include NOT going up any further.

    Dont get me wrong, the TREND is great and all most traders really need, but we're not "most traders" and this and Kens blog revolve around the Elliot Wave and some of us believe the only way a market could have achieved what it has from March to now is through Manipulation (sans Dan and others)

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  35. Dano- Just reread your comments of today and you have already answered my first question. (I need stronger glasses). Still like to get your read on late Aug/Sep timeframe for wave top? Think it's chances are good?? thanks

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  36. Dave- Understood.
    I use EWT as one of several weapons in my technical arsenal. I am also aware that there are different counts as well. That is why I'm here. :)

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  37. This report except might help:

    In April I suggested this pattern for March through November: a powerful advance from the bear market low 3/2009 through 5/2009, then only sideways (in the preferred scenario with an upside bias, in the alternate scenario with a downside bias) until early August or so where a 2nd but weaker leg higher commences. So far we have been tracking the preferred scenario quite well, right now we are in the middle of the consolidation (green circle).

    The rally starting around early August should be about 1/2 or 2/3 as large as the one that started in early March and coincide with positive economic news, i.e. until then the economic recovery should slowly be visible in the lagging ex post data. As already forecast a half year ago, the ideal low for the world economy is (or was) Q2/2009, then at least 2 good months are needed and finally another month to compile the data, that's the earliest time the (short) upturn can be detected in the rearview mirror. This confirms the outlook for August-September, as always you should "sell the news": the remarkable improvement in sentiment will be a strong sell signal from a contrary perspective

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  38. Dave--Thanks, I caught it as you wrote it. I personally have long subscribed to the theory that the market wants to screw the most people possible, no matter who is doing the manipulation. While sometimes the manipulation is evident, it does not preclude going down, up or sideways. Today's mini-trap was totally manipulated -- but cost some people some $. f

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  39. Flyfar - see Dan's chart in this post

    http://danericselliottwaves.blogspot.com/2009/07/refining-p2-target.html

    IF (and of course its always a big if) things play out accordingly, looks like a possible top near end of Aug. Things may change of the fly...

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  40. FF - agreed. Especially in this rally, it seems the market always moves against the herd. Like the last Head and Shoulders that everyone came about, once everyone knew, it was bound to fail. Price even broke the neckline really sucking the shorts in first, classic.

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  41. Looks to me like a "Major Trend Change" is taking place,,"HEADED SOUTH"...

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  42. Dave S.
    That's why I believe GS will definitely screw the shorts this time. Their aim is to crush both sides and finish w/ all the money or most of it. Be ready for all kinds of different moves in the future. Obviously they use EW to figure where to move this market. When we expect a top they most likely will send it through that top. so what do we do? I have no idea. I really think that this market is no longer tradable using EW. They seem to have the crew second guessing themselves constantly.

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  43. Wags94596 - I agree with most of what you say. Thanks for saying it.

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  44. Well I wouldnt say not tradable, but it certainly is not getting any easier!

    The "markets" job is to seperate us from our money, and overall there are countless people who would attest its doing its job...

    Cheers

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  45. You are welcome "FTLOG".

    By the way, I'm not that big on cycles because they always seem to be coming in early or moving around a bit, and certainly the Bradley Siderograph hasn't been all that good over the past couple of years ( after its huge call in March 2003 ) but it did have a major turn called for 7/14-15 of last week.

    Along similar lines... Arch Crawford ( who I spoke briefly with today ) has a small blurb in Barron's this week highlighting tonight's solar ECLIPSE ( the longest one of the 21st century ) that is taking place tonight over in Asia. Arch remarks that it is full of "negativity" and he is long gold stocks - - - looking for a magnificent move in Gold vis-a-vis the U.S. Dollar; with emphasis on the "magnficent" part.

    Thus far, it looks to be rather quiet over in Asia/Pacific tonight, with the MSCI Asia Pacific Index holding some small gains after an amazing 8.7% gain in the past six sessions.

    :)

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  46. Dave_S, many Elliot Wave followers fall into the trap of constantly shorting tops or going long at the bottom. That seems to sum up the intraday comments on this blog--somebody entering and getting stopped out.

    You can 'trend follow' by entering impulse moves *after* they've started...

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  47. Agreed. There is nothing wrong with missing the first part of a move, learnt that one the hard way many times over...

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  48. And therein lies the so-called "ridiculous" point that I was making earlier about TREND following.

    Rather than already having a "bias" and looking for certain indicators to turn, a divergence, or an inter-market relationship to occur - - - it's far easier to climb aboard once the trend in price has already been established and confirmed.

    At present, triangles can take a lot of time to form and require an awful lot of patience. Until a price break of 943 SPX occurs, the short-term trend is still up in my opinion and I will continue to trade the market accordingly.

    Good Luck to All.

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  49. Wags - Just noticed your post about K above while reading thru the comments. I have a target of 1050 on SPX and am a huge believer in market manipulation. A majority of the basis for may call of SPX to 1050 (which was placed 5 weeks before GS came out with their 1060 target) is manipulation. I have not been banned, so I do not get your argument. K allows balance on his board as long as the arguments hold water. I back mine up with pure TA. I'm not sure who he banned, but he never has taken anyone out without reason.

    K and DE do the best they can for free for the world to see. They guarantee nothing and we all know EWT is not an exact science. It takes a huge set of balls and a great deal of kindness to do what they do for the general public. That should be respected and not disrespected in any case. Civility is the key and if someone on their blogs (or mine) acts up, they get the boot. We are developing communities and some fit and some don't.

    As for your doubting that market conspiracies exist, IMO you should look a little deeper. The PPT is real.

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  50. Shanky,

    The only "conspiracies" that I have personally witnessed during my 28 year trading career are those that occur when a fund, firm, or a trader has to be liquidated by his clearing firm and the proverbial "Vulture" trade occurs. Usually the victim is given a nice "push" (right towards the end) given that people on the floor talk and there is enough transparency out there to know how some are positioned. My experience with this is based on a pretty extensive background in the financial markets that goes back to the days when Saloman Brothers was heralded the same ( if not more ) than Goldman Sachs is being heralded today.

    I'm not just talking about when Victor Niederhoffer got crushed like a bug back in 1998 ( another alleged conspiracy ) and my friend Michael Goodwin at Deutsche Bank took the "other" side of the liquidation trade to make the equity derivatives desk $45 million that week. I'm talking going waaaaay back to the days of Salomon Bros.

    That having been said, I am at a total loss as to how one ascribing to such a philosophy of market "conspiracies" helps them pull the trigger on a trade, let alone make money consistently. It would seem to me that more often than not, it would be a distraction and do the exact opposite. As a result, I don't see why there is any need to even go "there". It's simply not constructive to any trading methodology that I know of, or experienced. In my book, if you are a TRUE technician, the only thing that matters is PRICE. Nothing more, nothing less.

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  51. On a similar note, I've noticed that there has been a downright obsession recently by the media ( as well as with younger traders ) with the likes of Goldman Sachs and their ability to make money. While I find this obsession to be entertaining, it certainly doesn't enter into my trading methodology. If you see "manipulation" as the basis for a move to SPX 1050, than so be it. I am a technician, and my methodology is not based on hunches or conspiracy theories. I just don't see how one can successfully and consistently construct a trading methodology based on something like that.

    (For what it's worth, GS is not the only I-Bank that has been bullish on the equity market this year. There are a whole host of other firms that have been quite positive and have been so for many months now)

    And finally, I believe I have been quite civil in my discourse here and take strong exception to anyone that suggests otherwise. I have not taunted anyone, nor have I made any personal attacks on anyone, or have I been anything other than civil on this blog or any other blog for that matter. If people think that asking a specific question countering someone making a baseless claim is an "attack", I suggest that they grow up.

    There are an awful lot of blogs out there on the Internet. One look at the comments will tell you if there is any value there or not, in my opinion. When I see people start throwing around numbers and making false claims based on no facts whatsoever already in evidence, I seriously question that and the integrity of the blog. It's amazing how "soft" and lazy people have become in their reading comprehension and ability to distinguish FACT from fiction. For example, how many times have you seen a member of a blog state what they believe is FACT just because they heard it on TV or read about it in some sort of newsletter?

    But when someone is questioned on where their alleged facts and claims come from, they simply throw their arms up and say "It's part of market manipulation, don't you know?" or they claim that they are being taunted/attacked.

    If others wish to embrace market manipulation and conspiracy theories as a comforting "popsicle" than so be it. It's just not a part of my trading methodology. I have stated this on a couple of occasions now. If anyone considers such an expression of opinion as some sort of an "attack" then they really have issues.

    Again, I believe in PRICE telling me what is going on in the market place. Period. My clearing firm pays me based on the PRICES of the vehicles that I trade; not "conspiracy" theories. For me, anything else entering into my technical analysis and trading methodology OTHER THAN PRICE is a distraction. Period.

    Good Luck to All.

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  52. Thanks Wags - Price rules - I agree 100%. I follow the indicators and the trends and do pretty well with a high majority of my calls. I do not trade manipulation, I trade the charts. I do what I see and not what others say. Makes me unpopular sometimes, so you can say I have earned my respect the hard way going against the bears and remaining independent. I use many traditional and nontraditional factors in determining my calls, but I never go against the charts (that would be moronic). Let's not debate the manipulation thing. Let's just agree to disagree and sometime in the future we'll get the answer. Thanks for your reply.

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