MarketMap June update

Posted by on May 31, 2018 in Be a Trader | 0 comments

Advanced Rule of Alternation

My work advances the EWT Rule of alternation and builds on the way Robert Farrell understands the unexpected nature of the market. An understanding that made him the top-ranked institutional market analyst on Wall Street for 16 years.

While Bob never spelled it out, he uses natural calendar demarcations to anticipate change to something different. If the first half of the year was characterized by a narrow range, he would expect something different in the second half of the year.

In EWT the rule considers the nature of the alternating corrective waves if the first correction is simple the second one is expected to be complex and vice versa.

This simple notion breaks the linear mindset, a trap for traders and advisors alike.

When Generals fight the last war, it easy for the opposing generals to anticipate his tactics. His strategy is therefore flawed and not forward thinking. In fact, in real life the Department of Defense rotates its generals and field commanders keeping a fresh point of view and unique strategic eyes on the battlefield. They retire the good ones in a hurry; I am sure you could name at last three in our lifetime.

It is also a cliché to say that analyst is always looking at the most recent great bull or bear market to capture the same opportunity again. This will leave the investor, trader, and analyst waiting for an opportunity that does not arrive, at least not in the current cycle. Some wait for 20 years before the market comes back.

Back in 1984, everyone was buying gold and oil after the bust because at the inflationary peak the speculative intensity had advisors, and investors believing that hyperinflation was a fact of life.

The point is two-fold. Don’t shoot the messenger. At the peak of the inflation market, the TA staff at Merrill called the top. The brokers in my region stopped attending the squawk box broadcasting that message.

The other point is the current bear market will not be like 07-09, it will be more like

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