Saturday, December 20, 2014

Dow to Peak in 2015

Rooted within a long-term forecast rendered 4-years ago, we have been watching the year 2015 as a potential time-frame in which the Dow could peak and put an end to the bull market in equities.

If the fed-engineered bubble in equities does not burst sometime in 2015, the next most likely time-frame in which it is most likely do so is in 2021; if 2015 marks a top however, 2021 could then provide a time-frame for a low period in the grand scheme of things.
4-years ago, with the Dow trading at the 11,400 level, our forecast clearly defined further upside to wave-A, followed by a decline to wave-b in 2012, and then another powerful wave-C of B rally toward fresh new highs in 2015.

Apart from minor adjustments to the visual amplitudes rendered some 4-years ago, this is for the most part, exactly what happened, and this is precisely where we find the Dow Jones Industrials trading today.

In viewing the same chart today, you’ll see that the still rising A-wave in 2010 peaked well prior to reaching the upper trend channel boundary.

Thereafter, though rather shallow for a primary degree B-wave decline, the market pulled back sharply heading into 2012 but found a semi-permanent support base upon retesting mid-channel support.

As we close in on 2015, the primary C-wave up (of the larger cycle degree B-wave) has been a rather vertical affair, producing three solid years of parabolic run up - enabling price to breakout out above the long-term upper trend channel boundary of resistance to new historic highs.
When it comes to market forecasts, one should never come to expect an exact level of precision nor rely upon such to trade/invest their hard-earned savings or speculative capital.

Future price action can and will change forecasting dynamics, despite the occasional accuracy of such forecasts. More importantly, due their varied and subjective dynamics, we cannot rely upon Elliott Waves nor Fibonacci time projections as a means by which to trade or invest.

As we’ve been stating for years, Elliott Wave Theory is in our opinion, one of the very best set of technical tools with which to effectually provide a general framework for tracking the progression of a price series however, – ELLIOTT WAVE THEORY IS NOT A VIABLE TRADING OR INVESTMENT STRATEGY.

So what is the plan for avoiding another crash or missing further upside? It’s quite simple. Stick with a time-frame specific trend-trading strategy that will effectively alert you when it’s time to reverse course.

Maintaining the discipline to act upon such a strategy is in our view the most important essential ingredient needed to keep one-step ahead of the markets.

That said, if your mind is now stuck on the plausibility of the equity bubble bursting sometime in 2015 – or in contrast, a possible stock market boom continuing well north of Dow 20K into the 2021 timeframe, you’re probably thinking…

…Okay Joe, so how in the hell do you propose I position my funds for what you suggest might unfold in the future?
It's all well and good that both of these outcomes are viable, but how in God's name am I supposed to know which one of these propositions to go with?
Do you have some kind of system or something that tells you when to get out of dodge and when to get back in on the long side?
What am I supposed to do if you're wrong about everything?
I remember back in 1995 when you Elliott Wave people said the stock market was at the crest of a bear market tidal wave. You were all dead wrong then, and numerous times since.
Instead of a bear market, the Dow more than quadrupled by 1999. How are you going to deal with another profound forecasting disaster of such magnitude?

To answer the above questions in short: 
 Firstly, we suggest positioning ones speculative/investment funds in tandem with a rules-based trading/investment methodology that has proven to be profitable over varied market cycles. 
  • No one knows which forecast (if any) will come to fruition thus, the necessity to adopt a disciplined strategy. Such a strategy will guide you to automatically adapt and adjust – enabling you to trade and always remain invested in harmony with the time-frame specific trends in force.
  • Yes, we employ an automated rules based trading methodology that systematically positions us on the right side of the markets, and gets us out of the market (or short) before things start getting ugly.
  • When our methodology is wrong, it will simply correct itself far in advance of doing any major damage to our account balances and equity curves.
  • Lastly, we are not the same Elliott wave people who forecast the onset of a great bear market in 1995. We are the next generation of Elliott Wave. Embracing the discipline of flexibility in forward vision along with applied strategic automation is what sets us apart from most others. As the markets change, so do our forecasts and positions. In our book, price action rules. As such, it is impossible for us to endure a forecasting blunder to the magnitude described.
Until Next Time, 
Trade Better / Invest Smarter 

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