Robert Prechter – go short…Ralph Acampora – go long
I respect both Robert Prechter and Ralph Acampora, both of them have been around the block and have seen many things in the stock market. But yet they have two totally different view points.
Before I begin, I haven’t gotten back into the market after being taken out to the wood shed for a good liken. You know… that is the first time that I got taken out on a low…well it’s my own fault…
Admitting fault or knowing that your going to be right 70 to 80 percent of the time and not 100 percent is part of trading. That is the 6th rule inside a free ebook from Dick Diamond “45 Years Of Advice From A Trading Legend” I recommend reading it.
You noticed that I said trading and not investing. There is also speculating too. We’ll talk about that some other time.
I’am going to give you one chart this time and its the Russell 2000. A couple of years ago I remembered listening to a retired commodities trader talk about the proper way of trading and how things have changed today. One thing he talked about was in any direction you had patterns within patterns. You had bullish patterns within bullish patterns and you had bearish patterns within bearish patterns. I have been noticing this for a while now and all the patterns I’ve been seeing are head and shoulder patterns within head and shoulder patterns.
If you narrow down the time frame you’ll see it again and again…you’ll notice that the next pivot point is set up to happen on or around May 7th. In the chart above you can see the larger head and shoulders formation and in the right hand side the baby head and shoulders formation. My pivot point calculator indicates dates when there is a change in trend or a break out or a break down. Well… May 7th is here…are these head and shoulders formation going to show their bearish might or are they going to tease us and move against the pattern. a head and shoulders pattern is a bearish pattern, but when a pattern’s price moves against the patterns nature, in this case having a pivot point on May 7th and moving higher, that is super bullish.
The chart above is the 5 minute chart of the Russell 2000…self explanatory.
The chart above shows a sideways correction, in the top right corner you can see a baby head and shoulders pattern.
The chart above is the monthly Dow Jones Industrial Average. You can see a larger sideways corrective pattern.
Getting back to what we were talking about earlier, Ralph Acampora has some very good remarks about the DOW. He is totally bullish, you can listen to him hear at Financial Sense, it’s a good interview. As far as Robert Prechter goes, Elliott Wave Theory is his claim to fame. We talked about this before on Swing Trading Forecast and I agree with Robert Prechter, but, you can’t be dogmatic about the price movements and forecasts of the financial markets. Robert Prechter says that we are going back to the previous 4th wave. That previous 4th wave was in the 1970′s, you might say it’s all hog wash, but that is one of the rules about Elliott Wave Theory, when wave five ends it usually goes back to the previous wave 4. You notice I said, USUALLY, that’s because we only deal with probabilities in the financial markets. Suppose I got stopped out on Tuesday and the market actually went higher when the guy down the street is still hanging on to them, he or she is feeling really lousy. It is part of the game.
One last note, I don’t have a chart for the HUI index, click here to see the previous post and you’ll see what I mean, I’am still watching it. The 400 level is the median price between the high and the low of 2007 and 2009.
So…your wondering how can I respect both Robert Prechter and Ralph Acampora who both have opposite views…easy…you have to be open minded.