Posted on July 16th, 2009 at 1:00 PM

While we no longer have an Elliott Type One trade on the SPY we do have a very clear cut False Bar Stochastic Trade that his triggered back on July 9 at the cross of the Regression Trend Channel. 

This scenario has led to a little bit of confusion this week in our mentoring program by more than a few traders.  It is important to note that while the Elliott Type One Trade and the False Bar Stochastic are based on similar Elliott Patterns they can occasionally conflict with each other.  This is due to the number of bars that each trade is taking into account in the strategy.  For example, our default Elliott Wave Counts are looking at the last 300  bars while the Stochastic is typically looking at 28 bars and up.

If you have taken advantage of this latest move on the SPY now is the time to adjust your stops and take initial profits.  The Ellipse that I am showing has been drawn from the trend high on June 11 to the retracement low on July 8.  Using the Ellipse in this manner has been shown in the past to be a very good predictor of where new trends may fail in their attempts to make new highs.

If you remember I posted a similar method back on July 1st on our first attempt at new highs before the market ultimately made another new retracement low.

By Kerry Szymanski of Harmonic Edge*
Posted: Jul 17, 2009

Effective research is the foundation for a good trading plan. To conduct your research, you are going to have to make some assumptions about the best way to trade a market. How does one go about making these initial assumptions? Essentially, you must draw on your knowledge of the markets and various trading principles you have learned.

If you have spent time studying the price behavior of a market, you will begin to notice patterns in the way a market trades. The first step is to gather examples of the pattern you are interested in trading. I generally recommend 100 samples.

By Nick Sudbury*

 One of the most popular and straightforward indicators used in the analysis of market indices is the moving average, which, as the name suggests, is simply the average closing level of an index as measured over a specified period of time.