SAW SOMETHING INTERESTING YESTERDAY
I admit to being fascinated by Elliot Wave Theory, always have been. What has turned me off to it has been how subjective it is when it comes to knowing what wave structure you are in at any given moment. This makes trading it very difficult. There is a program called advanced GET that automatically labels wave counts for you on the screen. This program has been out for a very long time, since the 90's from what I recall. My good friend I have mentioned at times in here, that jumps from one method to the next, showed me what he is currently studying yesterday, and it was interesting to me. There is some smart guy from India who has figured out a way to trade the wave mechanically. Of course it seems like everyone from India is smart doesn't it? As it turns out this approach is far from mechanical which I suspected, but it is decent from what I can gather.
First, here is the wave count that program applies to Gold, and I think it is hard to dispute that based on Elliot Waves, that this is the correct wave count. It currently shows we are in wave 3 down of what could well be a larger wave one. This count if correct, would call for a monstrous move down in GOLD. We did violate that crucial low last night, but are currently trading above that point now. In this theory wave 3's are longer than wave 1's so that means that this leg should go lower before completing the wave 3. It would then say we go sideways or bounce forming a wave 4, which then sets up the third down leg in the five leg sequence, which be definition has to exceed the low of wave 3. This tells us we are going lower here which ties in to my theory that once we exceed that key low on a closing basis, we could see a wipeout.
Elliot Wave theory does present a dilemma once that happens. Once the 5th wave is complete which could be as high as perhaps 1400, we then have to determine if that is 5 waves down completing something larger, or is just the beginning of a bigger down wave pattern. For the purposes of trading, that next determination is not relevant at this point. We would be looking down overall while at the same time looking for the 4th wave bounce to get short again. The next chart shows what appears to be the larger picture wave count, which does show we are in the 5th wave of wave 3. This is calling for dramatically lower prices, which does coincide with my observation that once that low went, we were headed for trouble.
It is amazing to me at this point that Silver has dropped 38% from the high and Gold 21%, yet we have barely heard a peep in the media about this. It appears the media is in on this conspiracy also. For Bubbles to last this long, you have to have a lot of things going on to perpetuate the fraud. By definition everyone has to be looking one way. How would you like to have bought Silver at the high, paid the dealer markup which in some places is in excess of 30%, and now be down 38% on the spot price on top of the commission? There are some people who have lost almost 70% of their money in this and close to 50% on GOLD. Why isn't there a question about that or an investigation into that?
You can bet your sweet ....... there is going to be when Gold goes under $1000. The government seems to want to be involved in judging how much money people should make. How in the world can they justify the markups in this industry? The reality of it is that you as an investor are responsible. If you paid that much of a commission it is on you, it is not Barry's fault. This leads me to the next topic I want to touch on briefly, JPM. They have revealed that they took a 2B trading loss, and now apparently we have to regulate more?
Why can't it be that sometimes you just lose? Where is it written that every trade or investment needs to be guaranteed a positive return? They just made bad trades, it is what it is. Sometimes you lose! Why in the world does the government need to be involved at all with a corporations transactions as long as they are following the law? If they were trading cocaine I could see an interest being legitimate. If they just made bad bets and lost money, that is what capitalism used to look like.
Moral of the story, sometimes you just lose money. The second moral of the story is, the bubble appears to be on the verge of popping here if this low right here does not hold. By Wave theory, that low is not relevant at all, it is a well defined structure to move down now. That low is not pertinent to the wave count.