Where Will the Bear Market End?
November 27, 2008 by Scott · Leave a Comment
Market technicians have long observed that market movements contain many patterns that repeat over and over again. One such (very) long term pattern is the ratio of the Dow to Gold. As you can see in the following chart, at the end of the last 2 previous major bear markets, one in 1932 and the other in 1980, the market bottomed when one ounce of gold bought 1 share of the Dow.
Will this ratio mark the end of the current bear market? At current gold prices that would put the Dow at 800. Seems like a stretch. Or is it? The chart above ends with 2006 data at a Dow/Gold ratio of 20 (meaning that 20 oz. of gold buys a share of the Dow). Where are we now? Based on closing prices of both the Dow and Gold for November 26, 2008, the Dow/Gold ratio is currently 10.7 (8726/814). That means that from the peak ratio of 40 in 2000, we are currently 75% towards the ‘target’ ratio of 1, where an ounce of Gold buys a share of the Dow.
Now that target doesn’t necessarily mean that the Dow will go to 800; rather, it means that the ratio of the Dow to gold will go to 1. So a Dow value of 3000 and a gold price of $3000/oz will produce the target ratio as well.
The bottom line is that, although we don’t know the nominal value of the numbers, what we do know is that a significant bottom will be reached if we see the value of gold buy a single share of the Dow.
S&P Wave Count 11-20-2008
November 21, 2008 by Scott · Leave a Comment
S&P Wave Count 11-11-2008
November 11, 2008 by Scott · Leave a Comment
A Tangled Web Indeed
November 11, 2008 by Scott · Leave a Comment
Oh what a tangled web we weave!
House Discussing IRA, 401k Confiscation
November 9, 2008 by Blake · Leave a Comment
Title says it all. Definitely something to think about. Trading is for naught if you can’t protect your keep.
Tumultuous Times
November 5, 2008 by Blake · Leave a Comment
There’s no need for us to comment on the Election results: first, our personal opinions are just that - personal - and second, pretty much everybody knows that the economic issues facing us are much more broad than the election and the Presidency in general.
in other words, we still have extremely volatile markets, looming further credit contraction, a debt-ridden financial system, and no quick fix.
We might occasionally opine about the dire “macro” economic situation, but our job is to trade, not to blog. And the fact is that if you know what you’re doing, markets such as these are incredibly lucrative, as the increased volatility presents fantastic trade set-ups with astounding frequency. WaveTracker helps us keep up by illuminating key confluence points that we simply could not compute by hand in fast moving markets.
Of course, please heed our advice to be calm and prudent, especially if you’re new to trading. Most importantly, get a methodology and stick to it. Losing discipline means you’ll get cleaned out!
The AWEsome Way to Trade Elliot Waves
November 2, 2008 by Blake · Leave a Comment
While Scott published this article in the eSignal Learning forum over three years ago, it remains as relevant today as ever before.
Sure, we’ve matured our trading methodology over the months that have transpired since then. After all, we’re always trying to improve our game, and there’s always more success to be had. Nevertheless, the fundamental insights offered in this piece constitute our trading core. If you’re not familiar and you’d like to see how we incorporate Elliott AWE patterns into our trading, by all means have a read.
