FOMC days: When TV goes nuts, and Wolfe Wave practioners giggle.

In one of my lessons I show an example of an FOMC day (11/7/02) where the market goes nuts (TV words, not mine) and then the market settles into a natural rhythm.  A Wolfe Wave.

A footnote to my bearish stock market call.

A footnote to my bearish stock market call.

 

I have received a few emails hoping that my bearish analysis is wrong.  I have also received many more emails thanking me for my blog of September 22nd, alerting them to trouble.  That was about 1000 Dow points ago, and the exact top of that darling AAPL.

 

People are terrified of losing their "nest egg."  As my students know, I don't give investment advise.  I just explain the waves according to my rules.  Believe me, I do not want to see a bear market.  It is extremely bad for my business and everybody else.  However, my conscience would bother me if I did not explain what I see.    

 

The good news is that there will surely be bullish and bearish waves to trade on smaller time frames.  Also, there is always the possibility that a large bullish wave will form on the way down.  My Wolfe Wave Practioners will see it, if/when one forms.  (Please see my previous blogs on this subject.)

Potential stock market crash

Bill Wolfe says: There is a potential stock market crash coming!

 

As all of my students know, I never incorporate fundamental, news, politics or the like, in my market analysis. My opinion is always based on my fifty-years of wave study.  The waves cannot be more bearish.

 

On the monthly chart, the long term bullish wave was satisfied when price hit the Target Line in 2007. (Chart not shown.)

 

Since then, price is in the the process of forming the next bullish wave. Wave 4 of this potential bullish wave has enormous "pressure points" pressing down on the potential 1 to 4 line.  The lesson on "pressure points" calls for price to be forced down "with a vengeance." 

 

For this to happen, price would have to go below a price that is too scary to mention, but that is what the rules suggest.

 

Even if the market would make a new high, it would still be only a 3 point for the next bearish wave. 

 

If I am wrong on this, I apologise to the followers that lost opportunity.  If I am correct, I hope to have you all as future Wolfe Wave Practioners.

Bearish Wolfe Wave update:

The weekly bearish wave that was highlighted on Sept 22nd, is playing out exactly as anticipated. The "bumps" were an indication that the wave was not stable and that they may spawn some small bullish waves.  That is exactly what happened.

Bearish Wolfe Wave

This may not be the best time to be long the market. On the attached weekly chart of the S&P, there is a bearish Wolfe wave (Lines not drawn). The wave has some "bumps" between

Support and Resistance. Dumb and dumber.

Support and Resistance: Two of the dumbest things a traded should follow.  Often you will see an analysis of a chart, by a "professional" of course (especially on TV) marking the most recent high and low as "support and resistance."  Wolfe Wave Practioners giggle.

Scary headlines freak out investors:

"Market in turmoil" /  "DJIA down for the year after 274-point rout"   /  "Markets dive as jitters grow" 

Unless  you were taking my course.

Speed trading...

Much is in the news lately that speed trading is giving an unfair advantage to those with "big bucks."  Those that can position themselves to gain an unfair advantage by a nano second, either with computers or physical location.

Copycat Wolfe Wave analysis.

Copycat Wolfe Wave analysis. I get them in the mail every day. 
Programmers, system writers and "shocking headlines." They all take credit for the same thing: Their interpretation of the Wolfe Wave.

A trader's "arsenal." Not a good idea, IMO.

How many times are we reminded to "add this to your trading arsenal"? NG, IMO.  When I was a kid I had indicators for up, down and sideways markets, and anything that I could invent to be

Will yesterday’s indicators work today?

The problem with many indicators is that they are set, or shall I say, curve fit , to a specific time frame.  When the rally/decline reaches the limits of their time frame, time saturation takes place and the indicator is rendered useless.