Posted on July 13th, 2009 at 1:30 PM 

The Daily S&P and Dow Futures charts had triggered LONG on the Type One and Stochastic setups. For reasons stated before (Time Frame Conflict ) I had not triggered long. I'm waiting until we have a clear direction and an agreement between the Daily and Weekly charts before I commit long term.

Today, however, we have made a lower low in the Wave 4 on the Daily chart. That means we will have a recount once data for tomorrow's bar shows up on the Daily chart. Wave 4 will adjust to the new low, and we will reset the PTI and Wave 4 Channels. It remains to be seen whether or not the rules on the Daily will be met. We could have a violation of the Wave 4 Channels or the PTI once this new count is established. That would offer us some more clear direction on whether to believe the Daily or the Weekly chart at this point in time. We'll examine that more as the week goes on.

Posted on July 13th, 2009 at 1:30 PM 

We received our adjusted count today in the S&P and Dow markets. All is well so far. Our PTI in both markets is still good, as are the Wave 4 Channels. However, the Dow is getting very close to violating the Red channel. If we move much lower than yesterday's low, we will wind up violating this level. 

In the S&P, we still have some wiggle room for the W4C.

Posted on July 13th, 2009 at 1:30 PM 

As promised, I wanted to revisit some of the Stochastic and Type I setups I listed on June 29th .

As it stands, only one of the three trades triggered us in.  NVTL is only a couple of ticks from stopping us out. While many traders stress out over getting stopped, I view them as simply the cost of doing business. In the NVTL setup, we were looking at a 7-1 reward to risk setup. I'll take that kind of ratio any day of the week.

The other two candidates never provided us with a clean trigger mechanism to enter the market as they made new lows during the retracement. Step back, reevaluate the trade and keep them on the radar as they may still be good setups with a potentially better entry price.

Trade Smart

~Duane Gott

Posted on July 13th, 2009 at 1:30 PM 

Well folks, the Daily S&P Futures chart hasnow violated the Wave 4 Channels (on Wednesday's bar) and today, has violated 140% retracement in the Oscillator. Thus, 2 out of 4 rules for the Type One trade are broken.

So what does this mean? Specifically, with the Wave 4 Channels being violated, it means that there is a less than 50% chance of making higher highs in a good 5th Wave.The Oscillator Pullback violation means that we have a 94% chance in being correct that this is NOT a true Wave 4. Yes...a 94% chance. The research done before Advanced GET was released way back in 1987 found that, during Wave 4, the 5, 35 Oscillator pulled back to zero (90%-140% retracement) 94% of the time. That means that only 6% of all Elliott Wave 4s have a retracement other than the 90-140. Unless this is one of that 6%, we are NOT in a true Wave 4.

That brings up an interesting question: If it's not a 4...WHAT IS IT?!

We'll discuss the possibilities of that in future posts.

Be prepared!

Nate McCartney