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Also in this issue: ■ A Challenging Year


■ What’s Controlling The Market? ■ The US Long Wave Revisited
■ The Kondratieff Wave Revisited ■ Forecasting A Market Recovery
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CONTENTS BONUS ISSUE 2019, VOLUME 37 NUMBER 4

FEATURE ARTICLE
The Traders’ MagazineTM 6 What’s Controlling The Market?
by Eric Morgan
When the movement of the
EDITORIAL
editor@traders.com Dow Jones Industrial Average
Editor in Chief Jack K. Hutson and Fibonacci levels are in line,
Editor Jayanthi Gopalakrishnan what’s it telling you? Let’s take
Production Manager Karen E. Wasserman a look at the Dow’s history and
Art Director Christine Morrison
see if its movements are truly
Graphic Designer Wayne Shaw
Webmaster Han J. Kim
random.
Contributing Editors John Ehlers,
Anthony W. Warren, Ph.D.
Contributing Writers Thomas Bulkowski, Martin Pring,
12 The Kondratieff Wave Revisited
Barbara Star, Markos Katsanos by Koos van der Merwe
Given the recent market
OFFICE OF THE PUBLISHER volatility, is the decade-long
Publisher Jack K. Hutson bull market over? And if we
did enter a bear market, in what
Industrial Engineer Jason K. Hutson
Project Engineer Sean M. Moore
year might the market bottom
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4 • Bonus Issue 2019 • Technical Analysis of Stocks & Commodities


6 • Bonus Issue 2019 • Technical Analysis of Stocks & Commodities
MARKET ANALYSIS

Dow Does The Tango

What’s Controlling The Market?


When the movement of the Dow Jones Industrial and the very first day of the DJIA’s existence, and it
Average and Fibonacci levels are in line, what’s it is all related to the Fibonacci ratio. This is no random
telling you? Let’s take a look at the Dow’s history walk! One could speculate the market is following a
and see if its movements are truly random. script. Is an algorithm controlling the market? Let’s

All
explore the market action from the 1932 bottom to the
the talk about artificial intelligence (AI) 2007 top using Elliott wave analysis to find out.
today is so pervasive that it’s worth ask-
ing the question, “Can an AI footprint be A mathematical step down Wall Street
found in the market?” By “AI,” I don’t Figure 2 shows the chart of the DJIA in the timeframe
mean computer-coded algorithms but rather a natural
order that can be seen as patterns in the market. Let’s Follow The Fibonacci 1.6076
October 9 2007
3

explore this idea by examining the history of the Dow 14280

Jones Industrial Average (DJIA) between the years


1896 and 2007 using daily DJIA theoretical highs 1.608
September 3 1929
2

Log 40.94 = 1.612


and lows as found in the DJIA historical database. 386.1 Log 386.1 = 2.586 = 1.608 2

(The DJIA theoretical high or low is calculated as Log 40.56 = 1.608


Log 14280 = 4.154 = 1.6076 3

if all the component stocks hit their highs or lows


simultaneously during the day).

A non-random walk down Wall Street 40.94 40.56


The DJIA was conceived on May 26, 1896 at 40.94. It May 26 1896
1.612
July 8 1932
1.608
took off and was never lower as it advanced to a peak FIGURE 1: FIBONACCI RELATIONSHIPS BETWEEN MAJOR PRICE POINTS IN THE
in 1929 at 386.1. It then crashed back to 40.56 on July HISTORY OF THE DJIA. The DJIA in terms of Fibonacci took one step forward, one step
8, 1932. Then it rallied over 75 years to the October back, and then two steps forward, all in the space of 111 years.

2007 peak at 14,280. Why is this important? 3 5V


If you take the log of these historical price points
(see Figure 1) you get almost precisely some power of 4

the Fibonacci ratio, 1.618 (actually it’s 0.01 shy). Two


1

price points are at 1.608, one price point is at 1.6082, III 2


and one price point is at 1.6083. The DJIA, in terms 3
5

of Fibonacci, took one step forward, one step back, 4 IV


and then two steps forward, all in the space of 111 55B I 1
years. This looks like a Fibonacci dance step!
50B
5
STOCKCHARTS.COM

45B
40B
2
The DJIA appears to be tuned to Fibonacci, dancing
35B 3
30B
25B
1 4 II
to one of nature’s natural melodies. It is fascinating
20B
15B
10B
2
how there is a precise mathematical relationship be-
5B
LISA HANEY

02 04 06 08 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

FIGURE 2: FIVE WAVES OF CYCLE DEGREE. This is a completed pattern consisting of


tween the 1929 top, the 1932 bottom, the 2007 top, five waves up of Cycle degree.

by Eric Morgan
Bonus Issue 2019 • Technical Analysis of Stocks & Commodities • 7
Two Parameters Explain 75 Years Of DJIA History October 9 2007 of interest with wave labeling added. This is a completed pattern
February 9 1966
V consisting of five waves up of Cycle degree. Let’s decompose
Cycle I, III, and V.
14280
Ideal: 1015
III
Figure 3 shows the idealized version of Figure 2 at Cycle
degree with each cycle replaced by a straight line. Notice
1001.11
March 5 1937
25.05
I 1.756
the mathematical relationship between Cycle I, III, and V. If
195.59
you divide the peak of Cycle I by its starting point you get
2.11 10.80 570
195.59/40.56 = 4.82. For Cycle III you get 1,001.11/92.69 =
10.8 = 4.82 * 2.24, and for Cycle V you get 14,280/570 = 25.05
IV
4.82 December 6 1974

92.69
Ideal: = 4.82 * 2.282.
40.56
2.28
II
I 4.82
III 10.80 = 4.82 * 2.24
I 4.82
III 10.98 = 4.82 * 2.28
Notice that the mathematical relationship between Cycle I,
July 8 1932 April 28 1942 IV 25.05 = 4.82 * 2.282 IV 25.05 = 4.82 * 2.282 III, and V is based on the magnitude of Cycle I and the factor
FIGURE 3: THE BIG PICTURE. Can you find the mathematical relationship? between the price level at the beginning of Cycle I and the end
of Cycle II (2.28). The price relationship between Cycle V and
I Cycle I is mathematically perfect. Cycle III would be mathemati-
Cycle I
5 cally perfect if the peak of Cycle III was 1,015 instead of 1,001:
3 1.2043
195.59 1,015/92.69 = 10.98 = 4.82 * 2.28. If it weren’t for a measly
111.93
14 points, then Cycle I, III, and V would be perfectly related.
2.76 Think of all the thousands of points the DJIA has traversed
1 1.305
2.28 2.11 in that 75-year expanse and it missed mathematical perfection
81.39
by just 14 points characterized by two parameters. The Cycle
III orthodox top was 1,001, but the market spent several years
1.207
2.25
1.638 85.72 going above and below 1,000 until 1973. The Cycle III top was
2.00
4 92.69 the only top or bottom that wasn’t a clean spike.
49.68 II In reality, perhaps it only takes one parameter to explain 75
40.56
2 years of DJIA history, because 4.82 = 1.205 * 4, 2.11 = 1.2054,
FIGURE 4: CYCLE I SUBDIVIDED INTO FIVE PRIMARY WAVES
1.756 = 1.2063, and 2.28 = 1.2054.42 where 4.42 = 1.2048. So
every parameter in this Elliott structure can be derived from
one constant (1.205). Simply amazing!
III

Next level down


5
Cycle III
1001.11
Going one level lower, let’s subdivide Cycle I, III, and V into
3 1.2062
688.21
their five primary wave components (see Figures 4, 5, and 6).
2.722
1.908 1.756 The start of each cycle to the primary wave 3 top was very close
to some power of 2.76. The power was 1, 2, and 3, in that order.
1 1.312

213.36 1.207 Cycle III was just shy at 2.72. Cycle I equals 111.93/40.56 =
2.76. Cycle III equals 688.21/92.69 = 7.424 = 2.7242. Cycle V
4.28
1.328 524.55
4 570 equals 11908/570 = 20.89 = 2.7543.
2.30
160.62 IV Now let’s compare the top of wave 3 to the top of wave 5.
2 For Cycle I, 195.59/111.93 = 1.747 = 1.2043. For Cycle III,
92.69
II
1,001.11/688.21 = 1.454 = 1.2062. For Cycle V, 14,280/11,908 =
FIGURE 5: CYCLE III SUBDIVIDED INTO FIVE PRIMARY WAVES
1.199. Here, the relationship between the top of wave 3 and the
top of wave 5 is some power of 1.20. The power in this case is
V in descending order: 3, 2, 1. Now let’s compare the top of wave
Cycle V
5
3 to the bottom of Cycle II and Cycle IV. For Cycle I, the top
of wave 3 divided by the bottom of Cycle II is 111.93/92.69 =
14280
3 1.20
11908 1.207. For Cycle III, the result is 688.21/570 = 1.207 again.
2.7543 There is also a relationship between down waves within the
cycle and the next larger-degree down wave. For Cycle I, multiply
1.99
1 1.658

2747 Primary wave 2’s magnitude with Primary wave 4’s magnitude
1.70
7.37 and compare that to Cycle II. 1.638 * 1.305 = 2.138. Cycle II =
2.11. Doing the same for Cycle III, the result is 1.328 * 1.312 =
7178

1.742. Cycle IV was 1.756. Note that 2.11 is 1.2054, and 1.756
4
4.82
1616
is 1.2063. The 1.20 factor is ubiquitous in these primary wave
570
2
relationships as it was in the cycle degree relationships seen
IV
FIGURE 6: CYCLE V SUBDIVIDED INTO FIVE PRIMARY WAVES earlier. The consistency of these relationships across Cycle I,
8 • Bonus Issue 2019 • Technical Analysis of Stocks & Commodities
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Same Relationship At 2 Different Degrees Of Trend
688.21 = 229 * 3

524.37 = 229 * 2.29


5
688.21 V
These repeatable mathematical
3 III 14280 relationships bring a beautiful
295.06 = 229 * 1.29

1
524.37
108.22 272.06
Log 1001.11 = 3.00
1001.11
order and understanding to the
295.06
I
Log 195.59 = 2.29 seeming chaos of the market.
195.59
134.44 40.70 270.01 416.15
4 570
IV
254.36
92.69
160.62 2 40.56
II

FIGURE 7: PRIMARY WAVE 3 OF CYCLE III. Here you see the linear and logarithmic III, and V is amazing. Is an algorithm at work here?
relationships. Let’s look at one more wave structure, primary wave 3 of
Cycle III. This wave subdivided as shown in Figure 7. First,
Triangle Mathematics Cycle III notice the length of Intermediate wave 3 and wave 5 are prac-
1001.11
tically identical, and wave 1 is almost exactly 1/2 of wave 3
Cycle I and wave 5. These are near-perfect relationships. Also, if you
195.59 divide the top of waves 1, 3, and 5 by 229, you get 295.06/229
102.9
908.42 = 1.29, 524.37/229 = 2.29, and 688.21/229 = 3.00. The wave 3
155.03
peak is related to wave 5 by the ratio 2.29 to 3.00, which is the
92.69 same relationship between Cycle I’s peak and Cycle III’s peak.
52.13
Cycle II Cycle I = 195.59 and Cycle III = 1,001.11. The log of 195.59
40.56 = 2.29. The log of 1001.11 = 3.00. So a linear relationship at
155.03 * 102.9 * 52.13 = 911.92 intermediate degree expressed itself as a logarithmic relation-
FIGURE 8: TRIANGLE METHODOLOGY OF CYCLE I AND CYCLE II ship at cycle degree. This 75-year fractal pattern has a treasure
trove of mathematical relationships.
Triangle Mathematics Cycle V
14280
A cycle length predictor?
Cycle III Another property of this fractal was
1001.11 revealed as an offshoot of my investiga-
431.11
13710
tion of Heron’s rule, which allows you to
calculate the area of a triangle by know-
908.42

570 ing the length of the three sides. I formed


477.31
Cycle IV a triangle by using Cycle I and Cycle II
92.69 as two sides and formed the third side
908.42 * 431.11 * 477.31 = 13672.17 by connecting the Cycle II low back to
FIGURE 9: TRIANGLE METHODOLOGY OF CYCLE III AND CYCLE IV the start of Cycle I (see Figure 8).
If you multiply the three sides of the triangle in Figure 8
5 and take the square root, the result is 911.92. This is only three
PDF Is Part Of A Larger Fractal 27064 points more than the length of Cycle III, which is 908.42. If
you do the same thing for Cycle III as shown in Figure 9 and
multiply the three sides of the triangle and take the square root,
October 9 2007 the result is 13,672.17. The length of Cycle V was 13,710, a dif-
B
ference of only 34 points. Is this mere happenstance? Wouldn’t
it be remarkable if there were parameters of two just-completed
14280
3
20624
January 14 2000 cycles that could be used to predict the next up cycle length?
11908 Well, this technique did just that. This is another remarkable
4730
7840
feature of what I call the perfect Dow fractal.

The perfect Dow fractal (PDF)


1.658 2.217

The consistency of these mathematical relationships between


waves I, III, and V is astounding. It’s as if the market is fol-
7178
A
lowing a script. Robert Prechter, an authority on the Elliott
6440
C
4
wave theory, once said, “The market has memory. It knows
FIGURE 10: THE LARGER FRACTAL. The perfect Dow fractal seems to be embed-
ded in a larger fractal. Continued on page 30
10 • Bonus Issue 2019 • Technical Analysis of Stocks & Commodities
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Caution Ahead

The Kondratieff Wave Revisited


Given the recent market volatility, is the decade-long bull Kondratieff waves
market over? And if we did enter a bear market, in what year Nikolai Kondratieff (Kondratiev) was a Russian economist. He
might the market bottom and a new bull market begin? Here’s was the first to suggest that industrial economies followed a
a market outlook based on an updated look at K-waves and cycle of change in prices and production. After a great deal of
Elliott waves. study, he arrived at the conclusion that the cycle is a cycle of
liquidity and not of price. He posited that rising and declining
MAZE: STUART MILES/SHUTTERSTOCK/COLOR BARS: CHRISTINE MORRISON

by Koos van der Merwe trends for money, labor, and products have an effect on the

In
movement of a cycle.
my article “What To Expect In 2018” published Kondratieff brought his observations to international atten-
last February in the 2018 Bonus Issue of Technical tion in his book The Major Economic Cycles, a book he wrote
Analysis of Stocks & Commodities magazine, I in 1925. The K-wave, as it is commonly known, is shown in
concluded after studying Elliott wave and the Kon- Figure 1. He believed that the K-wave is an economic cycle
dratieff wave that a correction should occur sometime that affects all sectors of the economy. He focused mainly on
in the year 2018. I stated that the year would be an price and interest rates to develop his cycle theory.
interesting year—a year to be cautious and a year to watch Tragically, Kondratieff’s research and conclusions were
carefully. With the present correction in the market, my forecast seen as a criticism of Josef Stalin’s intentions for the Soviet
was accurate. How did I arrive at this conclusion? I studied the economy. Because of that, Stalin had him sentenced to a Soviet
Kondratieff wave, tying it to the Elliott wave to obtain a better gulag. He was executed in 1938.
time prediction. What do these cycles say now? Looking at the K-wave in Figure 1, you can see that the
12 • Bonus Issue 2019 • Technical Analysis of Stocks & Commodities
CYCLES

Kondratieff wave predicted a correction for KONDRATIEFF WAVE COUNT — ORIGINAL


2019. The chart suggests that 2019 would be Years in which panics have occurred and will occur again
1927 18 1945 20 1965 16 1981
a year in which panics would occur, based
on the cycle of previous years with panics. Years of good times, high prices
Of course, not everything is that accurate, as Times to sell values of all kinds

can be seen in the chart in Figure 2, a chart


that shows the K-wave superimposed on the 9 1935 10 1945 8 1953 9 1962 10 1972 8 1980 9
S&P 500 index. For example, the K-wave
called for a correction in 1999. The correction
occurred in March 2000, the following year. It
also called for a bottom in the market in 2005
but the market bottom occurred in October 7 1931 11 1942 9 1951 7 1958 11 1969 10 1979 6 1985
2002. Note that the minor correction that was Years of hard times, low prices. Good times to buy stocks, goods etc. and hold until the years of good times, and then unload

forecasted for 2016 in the K-wave chart in


Figure 2 corresponding to the label “Years of KONDRATIEFF WAVE COUNT — PROJECTED
Years in which panics have occurred and will occur again
good times and high value; time to sell values 1981 18 1999 20 2019 16 2035
of all kinds” did occur as an Elliott wave 4
correction, but it occurred a year earlier, in Years of good times. high prices
2015, than the K-wave forecast showed. Times to sell values of all kinds
So although the K-wave gives us an idea
of what could occur in a particular year, the
9 1989 10 1999 8 2007 9 2016 10 2026 8 2034 9
1980
timing is not always correct, especially the
timing for a stock market recovery.
Because of that, I decided to tie the K-wave
chart to an Elliott wave count to improve the
timing of a projected correction. Looking 7 1985 11 1996 9 2005 7 2012 11 2023 9 2032 7
Years of hard times, low prices. Good times to buy stocks, goods etc. and hold until the years of good times, and then unload
2039

back through history, I doubt that Ralph Elliott FIGURE 1: KONDRATIEFF WAVE CHART. Here you see a Kondratieff wave chart going all the way back
had ever heard of Nikolai Kondratieff and his to the 1920s when Nikolai Kondratieff first wrote about it. I have projected it into the future to 2039.
cycle theory even though the two men lived
in the same generation.
V
2885.50

Kondratieff Wave
Elliott waves
2500

Figure 3 shows the basic Elliott wave pattern.


Jul 2015
Years in which panics have occurred and will occur again III

According to Elliott wave analysis, the stock 18 1999 20 2019 2000

market tends to rise in five waves up and V


Mar 2000
B
May 2007
1811.70
IV

three waves down to form a complete cycle I


1500

of eight waves. Waves one, three and five are


known as “impulse waves,” and waves two 1999 2007
II
2016 1000
and four as “corrective waves.” Each major
10 8 9 10

wave can in turn be subdivided into impulse


Oct 2002
A Mar 2009
Years of good times and high value.
C Time to sell values of all kinds
and corrective waves. Of course, Elliott wave
500

counts can change as the pattern develops and


events unfold. Years to buy stocks and hold
0

The chart in Figure 4 is an Elliott wave 11

1996
9

Dec 2000 2005


7

Dec 2008 2012


11

Dec 2016 2023


count of the S&P 500 index as of December -500
28, 2018. It shows that the index completed
President President President President
Clinton Bush Obama Trump
a WAVE V top in October 2018, not in 2019 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

as suggested by the K-wave chart. However, FIGURE 2: THE KONDRATIEFF WAVE WITH PRESIDENTIAL CYCLES AND ELLIOTT WAVE COUNT.
caution prevailed, as the proximity of the The K-wave was calling for a major correction to begin in 2019. A correction began in October 2018. Actual
Elliott wave count to the K-wave forecast did market bottoms have tended to occur two to four years before the K-wave suggests a bottom would occur.
Based on that, the market could bottom between 2019 and 2021 rather than in 2023.
suggest caution.
Looking at the Elliott wave count in Figure
4, we can see that a Wave A bottom has occurred on October suggesting that the Wave C could possibly be a major WAVE
26. We can also see that a Wave B upward correction was A. The index has now risen in five waves in a major WAVE B
completed on November 7, with a Wave C correction com- with a major WAVE C correction that could bottom sometime
pleted on December 24. The index has since risen strongly, in 2019 to 2023 as suggested by the K-wave.
14 • Bonus Issue 2019 • Technical Analysis of Stocks & Commodities
Tying together K-wave
and Elliott wave
5 B
c

The K-wave suggests that the bottom of WAVE 5 a


2 b

C should occur in the year 2023, but looking


a 1 4
c b
3 Wave 5 3
Wave B
back at the chart in Figure 2, we can see that
Wave A 3
4 A
the previous WAVE C bottom occurred much
5 Wave 4
b 1 Wave C 5

earlier than that suggested by the K-wave. The a C


2

previous Elliott WAVE C bottomed in March 3


c 4

2009, when President Barack Obama took over Wave 3

from President George W. Bush, rather than in 4

the year 2012 as suggested by the K-wave. In 1

addition, Figure 4 shows that a WAVE A bottom 5


Wave 2
1

occurred in October 2002 and not January 2005 3 b

as suggested by the K-wave.


Wave 1 a
2

4
The reason that the dates of actual bottoming 1 c 2

turning points in the stock market seem to 2

have always occurred earlier than the bottom


predicted by the K-wave is probably because FIGURE 3: BASIC ELLIOTT WAVE PATTERN. According to Elliott wave theory, the stock market rises
in five waves up and three waves down to form a complete cycle of eight waves. Waves one, three and
Kondratieff was an economist and his forecast five are known as “impulse waves,” and waves two and four as “corrective waves.” Each major wave
was designed to predict economic expansion, can in turn be subdivided into impulse and corrective waves.
recessions, and depressions. It was not designed
to predict the movement of the stock market, and certainly not 2023 (Figure 1), in the past, the index bottomed two to four
the US stock market of today’s modern world. At the time that years before the reversal called for by the K-wave. Allowing
Kondratieff prepared his wave theory, electronic automatic for a similar margin of error based on how close the bottoms
trading was an idea for a far-off future world. predicted by the K-wave have been to actual stock market
So while the K-wave is suggesting a bottom in the year bottoms, the bottom could be in 2019 and not in 2023.

SINCE

Test-drive it to See All the Signals!

THESE RESULTS ARE BASED ON SIMULATED OR HYPOTHETICAL PERFORMANCE RESULTS THAT HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE THE RESULTS SHOWN IN AN ACTUAL PERFORMANCE RECORD, THESE RESULTS
DO NOT REPRESENT ACTUAL TRADING. ALSO, BECAUSE THESE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THESE RESULTS MAY HAVE UNDER-OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FAC-
TORS, SUCH AS LACK OF LIQUIDITY. SIMULATED OR HYPOTHETICAL TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS
BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THESE BEING SHOWN. THE TESTIMONIAL MAY NOT BE REPRESENTATIVE OF THE EXPERIENCE OF OTHER CLIENTS AND THE
TESTIMONIAL IS NO GUARANTEE OF FUTURE PERFORMANCE OR SUCCESS. TECHNICAL ANALYSIS OF STOCKS & COMMODITIES LOGO AND AWARD ARE TRADEMARKS OF TECHNICAL ANALYSIS, INC.

Bonus Issue 2019 • Technical Analysis of Stocks & Commodities • 15


Transportation Average showing the cycles indicator in Ad-
vanced GET. The cycles indicator calls for a bottom in August
Will the past success that 2019. A look back at previous cycle tops and bottoms shows
that the suggestions given by the cycles indicator have been
Kondratieff had in forecasting reasonably accurate give or take a few months.
movements of the stock
market continue? An interesting year
There is no doubt that the year 2019 will be an interesting year
for the stock market. The K-wave called for a correction to
occur in 2019. The correction started on October 3, 2018.
Based on the Kondratieff wave forecast, it does appear that The K-wave is also suggesting that the market should start
the days of easy money could be over, and that the years 2019 recovering in 2023. As we have seen, history has shown that
to any year before 2023 will be a period of major volatility and the recovery usually occurs two to four years earlier. This
high risk for investors. Looking at the area labeled “when to means that the recovery could start sometime in 2019 to 2020,
buy stocks and hold” on the chart of the K-wave in Figure 1, as suggested by the cycle formation in Figure 5. The indexes
the two- to four-year margin of error suggests that 2019 to 2021 plunged on Christmas eve 2018, which was the worst-ever
could be the end of the current correction (rather than 2023).
Continued on page 28
The next bull market?
There is no doubt that the S&P 500 index will start Oct 3 2018
3000.00
correcting in an upmove sometime in 2019 with the V

start of a major bull market. The Elliott wave count in


2900.00
Nov 7 2018
Figure 4 is showing that the S&P 500 index could soon b B
b B 2800.00
be falling in a Wave 5 of WAVE C. 5
2700.00
With the dramas that are happening daily throughout a 3

the world, from Brexit to the US government shutdown c


a 4 2600.00
to uncertainty in countries such as North Korea, Yemen,
A 1
Oct 26 2018 2500.00
Afghanistan, and Iraq, surprises can happen at any time 2

and news carries global influence in today’s world. c


2400.00

President Donald Trump tweeted on December 26, 2018 C


A
2300.00
that “now is the time to buy shares” and the same day Dec 24 2018 C
2200.00
the DJIA rose over 600 points. Thus, new reasons for
volatility in the market are arising all the time. Given 2100.00
that, will the past success that Kondratieff
Apr had in Jun
May fore- Jul Aug Sep Oct 10/19/18 Nov Dec Jan 2019

casting movements of the stock market continue? FIGURE 4: ELLIOTT WAVE AND S&P 500. This shows an Elliott wave count on a daily chart
of the S&P 500 index ending on December 28, 2018.
Presidential cycle
Looking at the presidential cycle in 3
5
5 12000
Figure 2, we can see that the stock
v
11000
market corrected before President 3 iii 10000
William Clinton handed over the 5 4
3 9000
v
presidency to President Bush. We
iii iv
B
1 i
8000
can see that the market collapsed
iv
4 ii
A
7000
before President Bush handed over
2
i C
1
6000
the presidency to President Obama
3 5 4
3 5 35 1 ii
2
v
and that the market corrected before
iii 4 5000
2
1 iv 1

President Obama handed over the 4000


1 iii v i 4 4
4 1 2
4 i iv ii
35
presidency to President Trump. Is
2
2
4 ii 2 3000
1 4 1 2
3

the current correction suggesting


2
3 5 5 2000
3
5
that President Trump will be hand- Aug 2019
1000

ing over the presidency to someone


else in 2020? Cycles 0.00
ADVANCED GET

Cycle indicator 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 02/22/21

Finally, the chart in Figure 5 is a FIGURE 5: CYCLE INDICATOR. On this monthly chart of the Dow Jones Transporation Index, the cycle indicator is
monthly chart of the Dow Jones projecting the market bottom to be in August 2019.

16 • Bonus Issue 2019 • Technical Analysis of Stocks & Commodities


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What Can We Expect?

Stocks Could Face


A Challenging Year
What does 2019 hold for us? While there’s no certain answer The fundamental landscape
to that question until the year ends, we can at least look at So if that is anything to go by, February 2019 could potentially
some “big picture” indicators to make forecasts. be a negative month for the US indexes. In any case, I think
2019 as a whole could be a year of high volatility. Unlike in
by Fawad Razaqzada the past several years when the only strategy that seemed to

A
work was buying the dip, 2019 could be a year for both the
fter a poor start, the US stock markets recovered bulls and the bears to enjoy.
noticeably to end the month of January 2019 higher. In 2019, selling the rips might also become fashionable
Sentiment improved mainly on the back of hopes that among market participants. The prospects for softer economic
China and the US would end their ongoing trade spat performance in the US and disappointing corporate earnings
and reach a deal in the months ahead. In addition, results could undermine equities. However, the rising levels of
the Federal Reserve more or less announced that it government spending in China and still-loose monetary policy
will be pausing its hiking cycle following four interest rate from the likes of Bank of Japan and European Central Bank
rises in 2018. However, despite the sizeable rebound in Janu- will help limit the downside. So both the bulls and the bears
BEINLUCK/SHUTTERSTOCK

ary, I am not so sure we are out of the woods just yet. Indeed, will have compelling reasons to make their presence felt.
between the two separate selloff periods in the fourth quarter The bears can point to growing signs that the US economy
of last year, stocks actually rose in November. may have already peaked, and that the potential downturn
could undermine corporate revenues and profits in the upcom-
18 • Bonus Issue 2019 • Technical Analysis of Stocks & Commodities
MARKET OUTLOOK
NeuroShell
ing quarters. The recent currency crises in several emerging break reversal at
Trader
market economies have likely hurt demand for US and other the end of the sum- 2019 WINNER
developed economies’ exports, made worse by the growing mer, when it failed
trade dispute among the world’s largest economies. to hold above the AI TRADING
Ongoing uncertainty about Brexit—the UK’s impending previous record SO�TWARE
departure from the European Union—also contributed towards high of 2872.87
slowing economic conditions both in the UK and Europe, as (hit back in January
individuals and businesses put their spending plans on hold. 2018), the index has
In fact, Germany was on the verge of suffering a potential fallen sharply to SAVE TIME
recession following the release of consistently poor economic break its old lows.
data in recent months. The Eurozone’s economic powerhouse At the time of this Build trading
suffered a contraction in its GDP in the previous quarter and writing in late Jan- systems in minutes
so another quarter of negative growth would technically tip the uary, the S&P had
nation into a recession. And with China’s economy growing rebounded to trade without coding
at its slowest pace last year since 1990, this doesn’t bode well back around the
for Germany given that China is a large consumer of luxury point of origin of
German cars, among other things. With growth in both China the previous drop
and the Eurozone slowing, you have to wonder what that means between 2631 and
for US exports. Domestically, the positive impact on the US 2700. If we see a
economy of the past tax cuts is diminishing, while efforts to breakdown on the
start the process of impeachment of President Donald Trump lower timeframe
are an additional risk facing US investors. charts around this
Underscoring the above worries, Apple Inc. (AAPL), for potential resistance NeuroShell.com
example, has said that it is expecting a drop of up to 10% in area now, then this 301 662 7950
its revenues for its current fiscal second quarter, which ends could trigger an-
in March, as a result of falling iPhone sales in places such other wave of sell-
as China. We have seen similar warnings from a few other ing in February.
tech giants as well. If lower guidance becomes a trend, then it Based on this alone, I certainly wouldn’t rule out the prospects
would become difficult for investors to justify holding stocks of a potential drop towards the 10-year-old bullish trendline
at these elevated levels. in the upcoming months.
But it isn’t all doom and gloom out there—not yet anyway. For now, the near-term path of least resistance may be to
The stock market correction at the end of last year could just
turn out to be a large dip rather than a major trend reversal. Continued on page 31
The US economy may not weaken
as I envisage it would. In any case,
False break reversal
central banks will undoubtedly move
in to limit any potential drop in the S&P 500 Monthly Chart 2700.00

markets. Indeed, given the outlook for 2631.00

slower economic growth, recent falls


in crude oil prices, and the impact 12-period
of the past tax cuts falling out of the SMA
equation, inflationary pressures are
likely to wane further in 2019, thus
increasing the likelihood that the Fed
will hold off raising rates further.
Meanwhile, other major central banks 10-year bull trend
will likely keep their respective poli- since 2009 still intact
cies accommodative.

Technical outlook
Still, from a technical perspective
at least, the monthly chart of the
S&P 500 (Figure 1) has shown a few
ESIGNAL

longer-term bearish developments, FIGURE 1: THE BULL IS STILL INTACT. After breaking its old lows, the S&P rebounded to trade back around the
suggesting we may have already point of origin of the previous drop between 2631 and 2700. If we see a breakdown on the lower timeframe charts
seen the peak. After staging a false around this potential resistance area, it could trigger another wave of selling.

Bonus Issue 2019 • Technical Analysis of Stocks & Commodities • 19


Fractally Speaking

The US Long Wave Revisited


Want a long-term cyclical outlook for the US stock market? United States operated under its current constitution. Prior
Here’s one way to do it. to then, the states/colonies were a loose confederation and
sometimes competed against each other.
by Mark Rivest For many reasons it’s difficult to get an accurate El-

R
liott wave count of stock prices prior to the 20th century.
alph Nelson Elliott discovered that stock market Fortunately, Elliott wave theory extends beyond the stock
prices have repeatable patterns. He called this market and can be applied to any mass mind activity. My
phenomenon the wave principle, now known as article “The US Long Wave” noted that the history of US
Elliott wave theory. He also found that this pattern economic contractions from 1790 to 1929 formed the basic
was just one part of a larger pattern with the same Elliott wave pattern.
structure. This larger pattern was again just one The Dow Jones Industrial Average (DJIA) 100-year chart
part of a still larger pattern and could progress to infinity. in Figure 1 illustrates the basic Elliott wave pattern. There
Form remains constant but size will vary. A one-hour price were three growth periods: 1932–1937, 1942–1966, and
pattern could be part of a one-day pattern, which in turn 1974–2000. Separating the growth periods are two contrac-
could be part of a one-week pattern, theoretically growing tions: 1937–1942 and 1966–1974. This is the basic Elliott
into centuries. five-wave pattern. A miniature version of this pattern can be
My article “The US Long Wave” that appeared in the 2015 seen in the bull market from 1932 to 1937. This five-wave rally
Bonus Issue of this magazine illustrated the long-term Elliott was then followed by a three-wave correction. This growth
LONG WAVE: PROKURINA YULIA/SHUTTERSTOCK

wave pattern of the US stock market based on economic cycles contraction sequence is illustrated as Cycle waves “I” and
since the inception of the United States. This follow-up article “II,” which were the first two waves of a larger developing
focuses on the US stock market from 2009 to 2018 and where five-wave pattern that completed in the year 2000.
it could be within the long wave. The 1932 to 2000 secular bull market is perhaps the largest
Elliott wave ever accurately recorded for a stock market. It
Dow Jones Industrial Average: 100 Years illustrates the theory of an ever-expanding wave pattern on
Finding the wave point of origin is the first step of Elliott a multi-decade scale.
analysis. For the US long wave, 1790 is the first full year the
20 • Bonus Issue 2019 • Technical Analysis of Stocks & Commodities
HISTORICAL ANALYSIS

S&P 500: 20 years


Drilling down to a smaller time scale and a different stock This corrective pattern may
index, let’s examine the S&P 500 (SPX) for wave patterns
after the year 2000. There are 10 different Elliott wave cor-
also be giving clues that the
rective patterns, two of which can exceed the correction’s next bear market may have
point of origin. begun in 2018 or could begin
See the SPX monthly chart in Figure 2. This is an example in 2019.
of an Elliott wave expanding flat correction. The first wave
of this correction is the 2000–2002 bear market. The second
wave was the five-year bull market that ended in 2007. Note
that this peak marginally exceeds the first-wave-down point of This corrective pattern may also be giving clues that the next
origin made in March 2000. Finally, the third wave 2007–2009 bear market may have begun in 2018 or could begin in 2019.
exceeds the low of the first wave made in 2002 and completes The red trendline that originates at the SPX March 2000 top
a nine-year Elliott wave correction. connected to the SPX peak of January 2018 crosses the so-far
all-time high made in September
2018. The subsequent sharp drop
could be the first wave down of a
larger developing bear move.
Another trendline that begins at
the SPX October 2007 top when
connected to the January 2018 high
implies a new high could be made
at or above SPX 3,000 sometime
in 2019.
Backing up the theory of a top
BIGCHARTS.COM

formed in 2018 or forming in 2019


is the significant MACD bearish
FIGURE 1: THE BASIC ELLIOTT FIVE-WAVE PATTERN. On this 100-year chart of the Dow Jones Industrial Aver- divergence, indicating weakening
age (DJIA) you see three growth periods: 1932–1937, 1942–1966, and 1974–2000. Separating the growth periods upside momentum.
are two contractions: 1937–1942 and 1966–1974.
Fibonacci analysis
Projections for bull market termina-
tion points can be determined by
Fibonacci extensions. The first step
is to measure the length of the last
most significant decline and then
multiply it by a Fibonacci extension
ratio. This amount added to the
decline bottom will determine an
approximate termination point for
the bull move.
Some of the Fibonacci extension
ratios are 1.236, 1.382, 1.50, 1.618,
2.00, 2.236, 2.382, 2.50, and 2.618.
My article “The US Long Wave”
had noted that near the end of 2014,
the DJIA came close to a Fibonacci
extension point. This was calculated
by multiplying the length of the
2007–2009 DJIA decline (7,728
points) by 1.50, which equals 11,592;
FIGURE 2: EXPANDING FLAT CORRECTION. On this 20-year chart of the S&P 500, notice the first wave of this adding this to the DJIA bottom tar-
correction is the 2000–2002 bear market. The second wave was the five-year bull market, which ended in 2007. geted 18,062 as a possible DJIA top.
The actual DJIA high in December
Note that this peak marginally exceeds the first-wave-down point of origin made in March 2000. Finally, the third
wave 2007–2009 exceeds the low of the first wave made in 2002 and completes a nine-year Elliott wave correction.
This corrective pattern may also be giving clues that the next bear market may have begun in 2018 or could begin 2014 was 18,103. This is a difference
in 2019. of only two-tenths of a percent.
Bonus Issue 2019 • Technical Analysis of Stocks & Commodities • 21
the actual SPX high was 2,134. Talk
about precision! Later in August,
there was a global mini-crash and
it appeared to be the start of a large
bear market. However, it turned out
to be only the first wave down of
an intermediate-size correction that
ended in February 2016.
The subsequent bull move went
beyond several Fibonacci extensions
with the 2.618 ratio or 3,047 as the
next target.
In October 2018 the DJIA reached
the area of its 2.618 extension. The ra-
tio target was 26,702, or nine-tenths
of a percent below the actual high.
There are no rules regarding leeway
for Fibonacci targets. Considering
this calculation covers a period of
several years, the wide leeway is
FIGURE 3: FIBONACCI ANALYSIS. The SPX 1.618 Fibonacci extension point was 2,138 and the actual SPX high was acceptable.
2,134. Later in August there was a global mini-crash and it appeared to be the start of a large bear market. However, Also note the significant RSI bear-
it turned out to be only the first wave down of an intermediate-size correction that ended in February 2016. The ish divergence. This is further proof
subsequent bull move went beyond several Fibonacci extensions with a 2.618 ratio or 3,047 as the next target.
of waning upside momentum.

Wave structure
2009–2018
After the SPX high in May 2015,
the rally from 2009 appeared to be
a three-wave structure. If a major
top was made at that time, the most
likely Elliott wave structure would
be an expanding flat. This would be
another example of a smaller com-
ponent having the same structure of
the larger whole structure. In this
case, the smaller component is the
2000–2009 expanding flat being the
first wave of the larger expanding
flat. The entire structure could have
culminated with a multi-year decline
following the May 2015 peak.
There’s no predestination in any
market. The mass mind can, like an
individual, change. The 2015–2016
decline became an intermediate-
FIGURE 4: THE 2009 WAVE STRUCTURE. The movement up from the 2009 bottom now looks like a completed degree correction, changing the
five-wave Elliott structure. Note the pattern is replicated within Primary wave “3.” Is a major top in place at the wave structure from the major
September 2018 top? 2009 bottom. See the monthly SPX
2009–2018 chart in Figure 4.
Later in 2015, this peak was exceeded, which opened the The movement up from the 2009 bottom now looks like
door to the next Fibonacci extension ratio of 1.618. In May a completed five-wave Elliott structure. Note the pattern is
2015 the DJIA peaked at 18,351, not even close to the 1.618 replicated within Primary wave “3.”
ratio of 18,974. However, the SPX had a near bull’s-eye hit. The big question: Is a major top in place at the September
See the 2007–2018 SPX monthly chart in Figure 3. 2018 top? There are reasons to be suspicious. First, markets
The SPX 1.618 Fibonacci extension point was 2,138 and tend to gravitate toward round numbers. The SPX high in
22 • Bonus Issue 2019 • Technical Analysis of Stocks & Commodities
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not authorized to do business. TD Ameritrade, Inc., member FINRA/SIPC. © 2018 TD Ameritrade.
September was 2,940; it’s curious that it couldn’t reach the
tantalizing 3,000 target. Second, there’s a strong seasonal
pattern for US stocks to rally from November to May. Third, Is a major top in place at the
the daily wave structure after the January 2018 high has
been choppy—a signature of a corrective pattern. (See my
September 2018 top? There
various Traders.com Advantage articles at this magazine’s are reasons to be suspicious.
website, traders.com, for a detailed explanation of the SPX
2018 price pattern.)
On the bearish side of the coin, the monthly slow stochas-
tic lines have a bear cross, implying more downside action.
With a mixed picture perhaps, the answer can be found in major bottom made in 2009 could be complete. Historical
the time dimension. comparison suggests the bull market from 2009 is old. Even
if it continues into early 2019, you need to prepare for a pos-
Time dimension sible large decline.
How long can a stock bull market continue? Figure 5 shows the US long wave completed count scenario.
Some analysts believe a bull market begins This is the worst-case scenario: a multi-decade decline for the
after a 15% decline. Others use declines of US stock market. In this wave count, the SPX at a minimum
greater than 25%. The SPX rally from 2009 would need to go below the major bottom at 666.79 made
to 2018 has some interesting parallels to the in 2009.
1990–2000 bull market. Both markets had only one cor- An alternative scenario is shown in Figure 6, the US long
rection greater than 20%. The 1990–2000 bull had a 22.4% wave incomplete-count scenario. Based on time proportions
correction in 1998. The move up from 2009 has so far had between the two prior Super Cycle–degree bull markets, I
the 2011 decline of 21.5%. The 1990–2000 bull market was believe this is the more likely scenario. Super Cycle wave (I)
nine years and five months long. The bull market that began was 139 years, 1790 to 1929. Super Cycle wave (III) was 68
in March 2009 was nine years and five months old in August
2018. It continued higher into September and then had a sharp Continued on page 31
October drop. Perhaps the bull market
is complete as of September 2018…
or is there a later time target the SPX
could reach?
As noted earlier, US stocks have a
strong seasonal pattern from Novem-
ber to May. The 10-year anniversary
of the current bull market would be in
March 2019. If the seasonal pattern
is functioning, this is the more likely
endpoint for the bull market.
Could the bull market continue to
2022? Instead of using 1990 as the
start date for the bull market, if you FIGURE 5: THE COMPLETED COUNT SCENARIO. This is the worst-case scenario: a multi-decade decline for
the US stock market. In this wave count, the SPX at a minimum would need to go below the major bottom made in
used 1987 as the beginning point, this 2009 at 666.79.
would be a 13-year bull market with
two corrections greater than 20%: the
20.3% decline in 1990 and the 1998
correction. If the SPX decline that
started in September 2018 developed
into a 20% correction, the bull market
could continue to 2022.

Long-term cycle
In the last quarter of 2018, there is
enough evidence to suggest the US
stock market could be at or near a
significant top that could hold for
several years. Upside momentum is FIGURE 6: AN ALTERNATIVE SCENARIO. Based on time proportions between the two prior Super Cycle–degree
weakening. Five waves up from the bull markets, this may be the more likely scenario.

24 • Bonus Issue 2019 • Technical Analysis of Stocks & Commodities


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It’s Just An Estimate

Forecasting A Market Recovery


After A 10% (Or More) Correction
Market declines can cause the powerful emotions of fear and into consideration the percent of the decline, the length of the
greed to take over our decision-making abilities. When you decline, and the level and change in Fed interest rates. Based
notice that happening, try to think rationally. on my analysis, I found that changes in interest rates and their
level can’t accurately forecast the market’s decline.
by Gideon Vigderhous, PhD Let’s look closely at the recent market correction, which

W
started moving into correction territory on September 10,
hen a market declines more than 10%, it’s reason 2018. The S&P 500 was at 2,930 and as of October 26, 2019
enough for investors and traders to be concerned. it declined to 2,658. That’s a little over 10%. To forecast the
CHART: IMAGE FLOW/STOP WATCH: DROGANTINE/

Do you hold your positions and ride out the drop time of recovery of the recent decline, I analyzed historical
even if it gets worse, or do you exit your positions data to estimate the lengths of recovery time. I used data
SHUTTERSTOCK/COLLAGE: NIKKI MORR

and reenter after the market has begun its road from the CNBC.com article “The Stock Market Loses 13%
to recovery? In A Correction On Average, If It Doesn’t Turn Into A Bear
Market” from October 26, 2018.
Down the quant path Simply observing historical data when the market declines
I developed a statistical model to determine the recovery time 10% or more would be incomplete without considering the
for the stock market using the S&P 500 stock index. I took changes in interest rates during the decline period. To forecast
26 • Bonus Issue 2019 • Technical Analysis of Stocks & Commodities
FORECASTING

the time of recovery, you would have to At low, 95% At high, 95%
build a statistical model that will take into Recovery Coef. Std. Error z P>z
confidence confidence
consideration the following factors: Length of decline 0.0401 0.0095 4.24 0 0.0216 0.0586

• Percent decline % Decline 0.0564 0.0057 9.91 0 0.0453 0.0676


Change in Fed rate 0.0881 0.0176 5.01 0 0.0537 0.1226
• Duration of decline, in months
Fed rate -0.0453 0.0232 -1.95 0.051 -0.0908 0.0003
• Change in interest rates
Constant 0.6073 0.1995 3.04 0.002 0.2162 0.9983
• Interest rate levels FIGURE 1: MARKET RECOVERIES AFTER CORRECTIONS. The percent decline has the highest relative
importance, which suggests that the larger the percent decline is, the longer the recovery time will be. Fed
I used a poisson regression, which is a interest rate changes are a negative factor and shortens the recovery period.
generalized linear model form of regres-
sion analysis that is typically used to predict values. It is used six months to recover the percent loss. (See sidebar, “Histori-
to model count data. (I used poisson because we are using non- cal Data Of Market Decline And Recovery.”)
negative numbers, or the number of days it takes the market It has become a common argument in the financial media
to recover.) In this case, I will predict the number of months that an increase in interest rates is to blame for the market’s
for recovery using the fac-
tors I just mentioned. The
table in Figure 1 presents Historical Data Of Market Decline And Recovery
the results of the poisson % Length Recovery Recovery
regression analysis. Duration
Decline (months) (months)
INT1* INT2** DIF VALID
forecast (mos.)
Feb 1946 to Feb 1946 10 1 1 0 0 0 N/A 0
The analysis May 1946 to Feb 1948 28 21 28 0 0 0 N/A 0
From Figure 1 you can learn June 1948 to June 1949 21 12 7 0 0 0 N/A 0
June 1950 to July 1950 14 1 2 0 0 0 N/A 0
that all the factors con-
Jan 1953 to Sept 1953 15 8 6 0 0 0 N/A 0
sidered in the model were Sept 1955 to Oct 1955 11 1 1 0 0 0 N/A 0
very statistically significant. Aug 1956 to Oct 1957 22 15 11 0 0 0 N/A 0
The percent decline has the Aug 1959 to Sept 1960 14 14 4 0 0 0 N/A 0
highest relative importance, Dec 1961 to Jan 1962 28 6 14 0 0 0 N/A 0
which suggests that the Aug 1962 to Oct 1962 11 2 1 2.93 2.9 -0.03 1 3.2
larger the percent decline, Feb 1966 to Oct 1966 22 8 7 4.6 4.94 0.34 1 7.3
the longer the recovery time
Sept 1967 to March 1968 10 5 2 3.99 5.05 1.06 1 3.6
Nov 1968 to May 1970 36 18 21 5.82 7.94 2.12 1 26.7
will be. The second most im- Aptil 1971 to Nov 1971 14 7 2 4.15 4.91 0.76 1 4.7
portant factor is the change Jan 1973 to Oct 1974 48 21 69 5.94 10.06 4.12 1 70.3
in the interest rates from the Nov 1974 to Dec 1974 14 1 2 9.45 8.53 -0.92 1 2.5
Federal Reserve. It is inter- July 1975 to Sept 1975 14 2 4 6.1 6.24 0.14 1 3.4
esting to note that a change Sept 1976 to March 1978 19 17 17 5.25 6.79 1.54 1 9.6
in Fed interest rates is a nega- Sept 1978 to Nov 1978 14 2 4 8.45 9.76 1.31 1 3.4
tive factor and shortens the Oct 1979 to Nov 1979 10 1 2 13.77 13.18 -0.59 1 1.7
Feb 1980 to March 1980 17 1 4 14.13 17.19 3.06 1 3.4
recovery period. At today’s Nov 1980 to Aug 1982 27 20 3 15.85 10.12 -5.73 1 5.5
Fed rate levels, it won’t make Oct 1983 to July 1984 14 9 6 9.48 11.23 1.75 1 4.4
a significant impact on the Oct 1987 to Dec 1987 32 2 14 7.29 6.77 -0.52 1 8.3
recovery time. Jan 1990 to Jan 1990 10 1 4 8.23 8.24 0.01 1 2.3
The correlation between July 1990 to Oct 1990 20 3 4 8.15 6.91 -1.24 1 4.0
the model forecast and Oct 1997 to Oct 1997 11 1 1 5.5 5.52 0.02 1 2.8
actual time of recovery July 1998 to Aug 1998 19 1 3 5.54 5.51 -0.03 1 4.3
July 1999 to Oct 1999 12 3 1 4.99 5.2 0.21 1 3.3
was 0.98, which is almost March 2000 to Oct 2002 49 31 56 5.85 1.75 -4.1 1 54.0
perfect. Nov 2002 to March 2003 15 3 2 1.34 1.25 -0.09 1 4.5
I used the model to fore- Oct 2007 to March 2009 57 17 49 4.76 0.18 -4.58 1 48.8
cast the recovery time from April 2010 to July 2010 16 2 4 0.2 0.18 -0.02 1 4.9
a recent market decline of April 2011 to Oct 2011 19 5 5 0.14 0.07 -0.07 1 6.5
20%, where on November 7, May 2015 to Aug 2015 12 3 11 0.12 0.4 0.28 1 4.2
2018, the S&P 500 was at Nov 2015 to Feb 2016 13 3 4 0.12 0.38 0.26 1 4.4
Jan 2018 to April 2018 10 3 4 1.33 1.67 0.34 0 3.5
2813 and on December 24 Nov 2018 to Dec 2018 20 1 1.18 2.5 1.32 0 6.1
it was at 2351. The forecast * Fed rate at beginning of period ** Fed rate at end of period
indicated that it would take
Bonus Issue 2019 • Technical Analysis of Stocks & Commodities • 27
decline. Statistical analysis indicates that we couldn’t forecast
market declines from changes in interest rates. Interest rate
increases can affect the length of recovery, but can’t forecast Interest rate increases
how large declines will be. can affect the length of
Summarizing recovery, but can’t forecast
In summary, I developed a model to forecast the length of how large declines will be.
time the market will take to recover after a correction, using
historical data. The most recent forecast, as of this writing
on December 28, 2018, is that the market will recover in six
months, if the market does not decline further. The greater the Street’s expectations. He may be reached at fcearnings@
market decline in percentage terms, and the longer it takes to gmail.com.
decline, the longer the market takes to recover. The level of
interest rates and their percent change can’t accurately forecast Further reading
the market’s decline. Franck, Thomas, and Kate Rooney [2018]. “The Stock Market
Loses 13% In A Correction On Average, If It Doesn’t Turn
Gideon Vigderhous has a PhD in statistics and was chief Into A Bear Market,” www.cnbc.com, October 26.
statistician for many years at Reader’s Digest. He currently
works with DRD Investments. The main focus of his work is
developing econometric models to forecast corporate earn-
ings and identify those stocks that will most likely beat Wall

MERWE/KONDRATIEFF WAVE
Continued from page 16
A major WAVE C correction
could bottom sometime
point decline during a single trading day. The market then
rose strongly in the days leading up to December 28, 2018. between 2019 to 2023 as
This is a sign that market volatility is rampant. Caution for suggested by the K-wave.
the year 2019 is therefore a must.

Koos van der Merwe has been a technical analyst since


1969, having worked as a futures and option trader at a stock Technical Analysis of StockS & commoditieS, Volume
brokerage firm in Johannesburg, South Africa. He may be 36: Bonus Issue.
contacted at petroosp@gmail.com. [2016]. “Gann Fans & Kondratieff Waves,” Technical
Analysis of StockS & commoditieS, Volume 34: Bonus
Further reading Issue.
Frost, A.J., and Robert Prechter [1985]. Elliott Wave Principle: [2015]. “Where Is The Market Heading?” Techni-
Key To Market Behavior, New Classics Library. cal Analysis of StockS & commoditieS, Volume 33:
Gann, W.D. [1927]. Tunnel Thru The Air, Or Looking Back September.
From 1940, Lambert-Gann Publishing. [2014]. “Looking At Cycles,” Technical Analysis of
Gann, W.D. [1942]. How To Make Profits In Commodities, StockS & commoditieS, Volume 32: September.
Lambert-Gann Publishing Co. [2011] “Today’s K-wave And Beyond,” Technical Analy-
Elliott, Ralph Nelson [1946]. Nature’s Law: The Secret Of sis of StockS & commoditieS, Volume 29: April.
The Universe. [2010]. “Gann And The Time Factor,” Technical Analy-
[2013]. The Wave Principle, Alanpuri Trading. Origi- sis of StockS & commoditieS, Volume 28: August.
nally published in 1938. [2010]. “Kondratieff Wave Comeback,” Technical
[2012]. The Wave Principle (The Original 12 Fi- Analysis of StockS & commoditieS, Volume 28: April.
nancial World Articles), Alanpuri Trading. Originally [2008]. “My Kondratieff Wave,” Technical Analysis of
published in 1939. StockS & commoditieS, Volume 26: November.
Kondratieff, Nikolai [1925]. The Major Economic Cycles. ‡Advanced GET, ‡eSignal
[1984]. Long Wave Cycle, Richardson & Snyder. Origi- ‡See Editorial Resource Index
nally published in 1925.
van der Merwe, Koos [2018]. “What To Expect In 2018,”
28 • Bonus Issue 2019 • Technical Analysis of Stocks & Commodities
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MORGAN/WHAT’S CONTROLLING THE MARKET V
Continued from page 10 2.272
5
Related Tops Galore B 27064
14280
2.28
2
3
where it’s been, and it knows where it’s going.” This profound 1 11908

statement is now mathematically proven. I doubt if there is any 2.2823 2747 6440
other financial fractal that is as mathematically beautiful as III
C

this one. These relationships are not the result of using filtered 1001.11
7178 4

or smoothed data. This is real, raw, unadulterated data. The I 2.262 1616
A

universe is mathematical and so is the market. This is anything 195.59 2

but a random walk with an upward bias, which decades of Wall


570
IV
Street dogma has suggested. In my opinion, no market theory 92.69
II
comes close to the Elliott wave theory in explaining how the
40.56

market behaves. FIGURE 11: BIG TOPS ARE ALL RELATED. Every other major peak since the Cycle
There have been many Wall Street pundits who have derided I top in 1937 is related by some power of 2.28 all the way to the final peak of 27064
on October 3, 2018.
the DJIA as outdated and archaic, saying it should be retired
to the dustbin of history. In reality, with its long history, it is
the best index to analyze in order to gain deep insight to the this relationship is the adjacent peaks of Cycle I and Cycle III,
behavior of the market. which was a 2.262 relationship, which would have been a 2.282
Looking at the fractal movement gives us a glimpse into relationship if the Cycle III top had ended at 1,015 instead of
the real nature and character of the market, and the tool that at 1,001.11 (we saw this earlier). Here is the math:
can provide that glimpse is Elliott wave theory. It’s as if an
algorithm is running in the background. The question is, “Who 11,908 / 1,001.11 = 11.89 = 2.2823
is behind the curtain controlling the destiny of the DJIA?” or 14,280 / 2,747 = 5.198 = 2.282
does it have no master and it just plods along silently running 27,064 / 11,908 = 2.272
until the end of time?
A beautiful dance partner
Beyond 2007 This cannot be random! An algorithm is at work here and it
The perfect Dow fractal appears to be is clear that 2.28 is the most important ratio, the cosmological
embedded within a larger fractal (see constant if you will, in the whole history of the DJIA since the
Figure 10). The wave down from 14,280 1932 bottom, along with its first cousin, 1.205. These repeat-
to 6,440 (7,840 points) is related to the able mathematical relationships bring a beautiful order and
move down from 11,908 to 7,178, which understanding to the seeming chaos of the market. The DJIA
was 4,730 points. 4,730/7,840 = 0.60, is clearly moving in a mathematically prescribed path, just as
which is a common relationship between the planets are orbiting the sun in a mathematically prescribed
waves. Also, by dividing the magnitude of path. Is something controlling the market? Obviously. Is the
these two waves, the result is 2.217/1.658 random walk alive and well? Hardly!
= 0.75, another common relationship. Therefore, these two
waves are part of an ABC pattern. Primary wave 5 started Eric Morgan graduated from Purdue University with a degree
from the end of the ABC and ran from 6,440 to 27,064. The in electrical engineering and is an electronics engineer with
length of this wave is 27,064 - 6,440 = 20,624. The length from Kratos Defense working at the Naval Surface Warfare Center
the start of Primary wave 1 to the 14,280 top was 14,280 - 570 at Dahlgren, VA. He is a longtime practitioner of the Elliott
= 13,710. And 20,624/13,710 = 1.50, another common ratio. wave theory. He can be reached at morganed@verizon.net.
More importantly, with the Cycle V peak at 27,064, another
near-perfect mathematical relationship can be established as Further reading
shown in Figure 11. Frost, A.J., and Robert Prechter [1985]. Elliott Wave Principle,
Notice that every other major peak since the Cycle I top in New Classics Library.
1937 is related by some power of 2.28 all the way to the final
peak of 27,064 on October 3, 2018. The only one not showing

30 • Bonus Issue 2019 • Technical Analysis of Stocks & Commodities


RAZAQZADA/CHALLENGING YEAR
Continued from page 19
Unlike in the past several years
the upside, but the medium-term directional bias could be
when the only strategy that
favoring the bears, even if the very long-term picture is still seemed to work was buying the
bullish. So, 2019 could be a challenging year for stock market dip, 2019 could be a year for both
bulls who are used to basic trend-following strategies. the bulls and the bears to enjoy.
Fawad Razaqzada is an economist and market analyst who
has been involved in the financial markets for almost 10 years.
He has worked for several leading brokerages as a market A version of this article originally appeared in our Traders.com
analyst in London. Specializing in forex, commodities, and Advantage online publication at the Stocks & Commodities
stock indexes, Razaqzada has expertise in reading price action website at Traders.com.
on the charts. He uses his knowledge of economics together
with fundamental analysis to forecast short-term price fluc-
tuations. He has also been trading his personal account for
many years. Follow him on Twitter at @Trader_F_R.

RIVEST/US LONG WAVE FURTHER READING


Continued from page 24 Frost, A.J., and Robert Prechter [1985]. Elliott Wave Principle:
Key To Market Behavior, New Classics Library.
Prechter, Robert R., Jr. [2003]. Beautiful Pictures From The
years, 1932 to 2000. 68/139 = 0.48 or 0.50 Fibonacci ratio. 68 Gallery Of Phinance, New Classics Library.
years × 0.50 targets 34 years for Super Cycle wave (V). Rivest, Mark [2015]. “The US Long Wave,” Technical Analysis
of StockS & commoditieS, Volume 33: Bonus Issue.
GET DEFENSIVE [2015]. “The Golden Section,” Traders.com Advantage,
Whether it’s a multi-decade, multi-year, or multi-month traders.com, June 8.
decline, be prepared. After nearly a decade of rising stock [2016]. “Bullish Divergences Abound,” Traders.com
prices, evidence indicates a decline could be on the horizon. Advantage, traders.com, February 25.
Good traders know how to ride the waves up but also have a [2018]. “S&P 500—Deadly Ground,” Traders.com
plan for the eventual wave down. Advantage, traders.com, February 15.

Mark Rivest is an independent investment advisor and trader.


He can be reached at markrivest@gmail.com.

Confidence level—The degree of assurance that a specified failure cian Leonardo de Pisa in the 13th century and the mathematical
rate is not exceeded. basis of the Elliott wave theory, where the first two terms of
Elliott wave theory—A pattern-recognition technique published by the sequence are zero and 1 and each successive number in the
Ralph Nelson Elliott in 1939, which holds that the stock market sequence is the sum of the previous two numbers. Technically,
follows a rhythm or pattern of five waves up and three waves down it is a sequence and not a series. Prices sometimes tend to find
to form a complete cycle of eight waves. The three waves down support or resistance at points indicated by this series.
are referred to as a “correction” of the preceding five waves up. Golden mean or golden ratio—The ratio of any two consecutive
Fibonacci ratios are applied to the price spans and price targets numbers in the Fibonacci sequence, known as phi and equal to
may be projected. 0.618; a proportion that is an important phenomenon in music,
Fibonacci ratio—The ratio between any two successive numbers art, architecture, and biology.
in the Fibonacci sequence, known as phi (f). The ratio of any Kondratieff, Nikolai—Developer of a wave theory. The Kondrati-
number to the next higher number is approximately 0.618 (known eff wave is a 54-year rhythm of wholesale prices, politics, and
as the golden mean or golden ratio), and to the lower number culture.
approximately 1.618 (the inverse of the golden mean), after the Regression analysis—A method of comparing two investment
first four numbers of the series. The three important ratios the variables to determine an independent variable’s impact on a
series provides are 0.618, 1.0 and 1.618. dependent variable, with the end result providing a prediction
Fibonacci sequence—The sequence of numbers (0, 1, 1, 2, 3, 5, 8, 13, on future performance.
21, 34, 55, 89, 144, 233...), discovered by the Italian mathemati- For more glossary terms, visit www.traders.com.

Bonus Issue 2019 • Technical Analysis of Stocks & Commodities • 31


2019 Readers’ Choice Awards
READERS’ CHOICE INDEX
Real-time/delayed data 32

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End-of-day data 33
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32 • Bonus Issue 2018 • Technical Analysis of Stocks & Commodities


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First Runner Up NinjaTrader NinjaTrader Group, LLC www.ninjatrader.com

eSignal, Advanced GET eSignal, an Interactive


Finalist www.esignal.com
Edition Data company
These packages provide the
tools for charting markets VectorVest 7
and indicators, performing Semi-Finalist VectorVest, Inc. www.vectorvest.com
RealTime/IntraDay
technical and sometimes fun-
damental analysis, and some Semi-Finalist MultiCharts MultiCharts, LLC www.multicharts.com
include advanced system
development capabilities. NeuroShell Trader
Some packages may focus on Honorable Mention Ward Systems Group, Inc. www.neuroshell.com
a particular area of technical Professional
analysis, such as cycles.
Honarable Mention AbleTrend AbleSys Corporation www.ablesys.com

STANDALONE Winner MetaStock MetaStock www.metastock.com


ANALYTICAL SOFTWARE,
$500–$1000 First Runner Up NinjaTrader NinjaTrader Group, LLC www.ninjatrader.com

Finalist VectorVest 7 EOD VectorVest, Inc. www.vectorvest.com


These products will provide
charting and technical analy- Semi-Finalist Wealth-Lab Wealth Lab www.wealth-lab.com
sis. Some will include system
development, ready-to-go
trading systems, or may focus
Honorable Mention OmniTrader Nirvana Systems, Inc. omnitrader.com
on a particular style of technical
analysis.

36 • Bonus Issue 2019 • Technical Analysis of Stocks & Commodities


2019 Readers’ Choice Awards

CATEGORY AWARD PRODUCT COMPANY WEBSITE


STANDALONE
ANALYTICAL SOFTWARE, Winner TC2000 Worden Brothers, Inc. www.TC2000.com
$500 AND LESS
® First Runner Up NinjaTrader NinjaTrader Group, LLC www.ninjatrader.com

Here, technically based soft- First Runner Up AmiBroker Standard AmiBroker.com www.amibroker.com
ware may be part of a data
subscription service aimed at eSignal, an Interactive
the introductory level partici- Finalist eSignal www.esignal.com
pant, or offer a special product
Data company
at a good price. Some of these
products have rich feature Semi-Finalist OmniTrader Nirvana Systems, Inc. omnitrader.com
sets that technical analysts
can utilize. Honorable Mention Sierra Chart Sierra Chart www.sierrachart.com

Winner VectorVest ProTrader 7 VectorVest, Inc. www.vectorvest.com


SOFTWARE PLUG-INS
Dr. Elder Trading Room
First Runner Up MetaStock www.metastock.com
for MetaStock
Bollinger Band System
Finalist MetaStock www.metastock.com
If you need a specific function for MetaStock
that your software doesn’t Jurik Research Jurik Research
already include, a third-party Semi-Finalist www.jurikres.com
Software Software
developer may fit the bill with
a software plug-in. Listed here VectorVest
Honorable Mention VectorVest, Inc. www.vectorvest.com
is just a sampling of third-party Options Analyzer
software that complements
some of the major technical
analysis packages.

ARTIFICIAL INTELLIGENCE NeuroShell Trader Ward Systems Group,


SOFTWARE Winner www.neuroshell.com
Professional Inc.
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First Runner Up OmniTrader Nirvana Systems, Inc. omnitrader.com
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Trading Software for Stocks, VantagePoint Trading www.vantagepointsoftware.
Commodities, Futures and Forex! Finalist Market Technologies, LLC
Artificial intelligence is a sys-
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tematic approach to trading. An
expert system designed by the Semi-Finalist AIQ TradingExpert Pro AIQ Systems www.aiqsystems.com
vendor provides the trader with
signals. A neural network trains Honorable Mention NeuralWorks Predict NeuralWare www.neuralware.com
itself on the data and creates
its own rules. These packages
are best suited for traders with
an analytical bent.

PORTFOLIO VectorVest 7
Winner VectorVest, Inc. www.vectorvest.com
MANAGEMENT RealTime/IntraDay

First Runner Up TradeLog TradeLog Software www.tradelogsoftware.com

Portfolio management soft-


Finalist Market System Analyzer Adaptrade Software www.Adaptrade.com
ware automates the analysis of
returns, cash flow, tax impacts,
Wolters Kluwer
Semi-Finalist GainsKeeper www.gainskeeper.com
and profit & loss. Financial Services

Bonus Issue 2019 • Technical Analysis of Stocks & Commodities • 37


2019 Readers’ Choice Awards

CATEGORY AWARD PRODUCT COMPANY WEBSITE

THE TRADER’S
Semi-Finalist TradersCoach.com www.TradersCoach.com
ASSISTANT
www.fundmanagersoftware.
Honorable Mention Fund Manager Beiley Software
com

Honorable Mention JBL Risk Manager Park Avenue Consulting www.jblriskmanager.com

OPTIONS ANALYSIS Winner thinkorswim thinkorswim, Inc. www.thinkorswim.com


SOFTWARE
First Runner Up Interactive Brokers Interactive Brokers www.interactivebrokers.com

Finalist TC2000 Worden Brothers, Inc. www.TC2000.com

Finalist OptionStation TradeStation www.TradeStation.com


Software packages have been
developed to handle option
OptionVue Systems
analysis. Many packages offer Semi-Finalist OptionVue 7 www.optionvue.com
both analytics as well as an International Inc.
education in option trading.
Honorable Mention OptionsPro VectorVest, Inc. www.vectorvest.com

FUTURES TRADING Winner TradeStation TradeStation www.TradeStation.com


SYSTEMS
eSignal, Advanced GET eSignal, an Interactive
First Runner Up www.esignal.com
Edition Data company

First Runner Up OmniTrader Nirvana Systems, Inc. omnitrader.com


Software in this category is
aimed at providing you with
a more systematic approach Finalist AbleTrend AbleSys Corporation www.ablesys.com
to the futures markets. Some
packages are a trading system, VantagePoint Trading www.vantagepointsoftware.
Semi-Finalist Market Technologies, LLC
while others include analytical Software com
capabilities.
Honorable Mention MESA9 MESA Software www.mesasoftware.com

Honorable Mention Hurst Signals Sentient Trader www.sentienttrader.com

Honorable Mention R-MESA MESA Software www.mesasoftware.com

OPTIONS TRADING Winner thinkorswim thinkorswim, Inc. www.thinkorswim.com


SYSTEMS
First Runner Up TradeStation TradeStation www.TradeStation.com

eSignal, Advanced GET eSignal, an Interactive


Finalist www.esignal.com
Edition Data company

Finalist OptionsPro VectorVest, Inc. www.vectorvest.com


While many traders may track
the underlying security to

38 • Bonus Issue 2019 • Technical Analysis of Stocks & Commodities


2019 Readers’ Choice Awards

CATEGORY AWARD PRODUCT COMPANY WEBSITE


generate signals for the op-
tions, there are packages that Semi-Finalist OPTIONETICS OPTIONETICS, Inc. www.optionetics.com
generate signals based on the
options activity itself.
Honorable Mention AbleTrend AbleSys Corporation www.ablesys.com

STOCK TRADING Winner TradeStation TradeStation www.TradeStation.com


SYSTEMS
VectorVest 7
First Runner Up VectorVest, Inc. www.vectorvest.com
RealTime/IntraDay
eSignal, Advanced GET eSignal, an Interactive
First Runner Up www.esignal.com
A disciplined technical ap- Edition Data company
proach is also applicable to
your stock portfolio. Make Finalist OmniTrader Nirvana Systems, Inc. omnitrader.com
sure the package employs a
method that you are comfort-
able with. In addition, check
Semi-Finalist AbleTrend AbleSys Corporation www.ablesys.com
the data format requirements to
ensure that your own database
Chaikin Stock Research, www.chaikinpowertools.
Semi-Finalist Chaikin Power Tools
is compatible. LLC com

Semi-Finalist GorillaTrades GorillaTrades, Inc. www.GorillaTrades.com

Greg Morris’ Indicators www.wallstreetsoftware.


Honorable Mention Wall Street Software
& Trading Systems CD com

Honorable Mention AIQ TradingExpert Pro AIQ Systems www.aiqsystems.com

TRADING CENTERS, Winner TradeStation Training TradeStation www.TradeStation.com


SCHOOLS, TRAINING
First Runner Up TopDogTrading.com Top Dog Trading www.topdogtrading.com

The Chicago Board The Chicago Board


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Options Exchange Options Exchange
When you’re just starting out in
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to the next level, some profes-
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VectorVest
it’s the support provided by a Semi-Finalist VectorVest, Inc. www.vectorvest.com
daytrading center, courses, Educational Services
or tutoring. Market Technicians
Honorable Mention CMT Program www.mta.org
Association

TECHNICAL ANALYSIS Winner stockcharts.com StockCharts.com, Inc. www.stockcharts.com


WEBSITES
First Runner Up TopDogTrading.com Top Dog Trading www.topdogtrading.com

finviz
Finalist finviz.com www.finviz.com
Some websites provide a financial visualizations
wealth of technical information,
indicators, charts, sentiment, Semi-Finalist Investing.com Fusion Media Limited www. Investing.com
and opinion.

Bonus Issue 2019 • Technical Analysis of Stocks & Commodities • 39


2019 Readers’ Choice Awards

CATEGORY AWARD PRODUCT COMPANY WEBSITE

Semi-Finalist traders.com Technical Analysis, Inc. www.Traders.com

Semi-Finalist tradingview.com TradingView www. tradingview.com

Honorable Mention BarChart.com Barchart www.barchart.com

Bollinger Capital
Honorable Mention BollingerBands.com www.BollingerBands.com
Management, Inc.

CATEGORY AWARD ARTICLE TITLE AUTHOR ISSUE

FAVORITE S&C ARTICLE Winner Daytrading ADX Breakouts Ken Calhoun January 2018
FROM 2018
Price Action And
First Runner Up Ken Calhoun February 2018
Volume Correlations
RocketRSI— A Solid Propellant For
Finalist John F. Ehlers May 2018
Your Rocket Science Trading
Probability—Probably A
Finalist John F. Ehlers October 2018
Good Thing To Know

Finalist Adaptive Moving Averages Vitali Apirine April 2018

Semi-Finalist How To Trade Volatility Andrew Sachais March 2018

The V-Trade Part 1:


We asked readers to vote for Semi-Finalist Sylvain Vervoort March 2018
their favorite Stocks & Com- Five Basic Trading Rules
modities article from the past Profit-Taking And Resets Part 1:
year. Find them all at our web- Honorable Mention Perry J. Kaufman January 2018
site at www.Traders.com!
Trend-Following

Subscribers can revisit past articles online in the archives at our website, www.traders.com. If you are not a subscriber,
you can purchase individual articles from the Stocks & Commodities online store at store.traders.com.

SUBSCRIPTION GIVEAWAY RECIPIENTS


Congratulations to the following 10 subscribers
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time to vote!

1. Charles Maguire 6. Daniel Granville


2. Joe Sullivan 7. Steven Wunder
3. Mark Keller 8. Ray Bennett
4. Andreas Williams 9. Richard Forno
5. Franklin C. Weinkauf 10. Chris Gambol

40 • Bonus Issue 2019 • Technical Analysis of Stocks & Commodities


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If you weren’t subscribing to Technical Analysis of Stocks BONUS ISSUE 2018
& Commodities, The Traders’ Magazine, throughout 2018, • Your Trading Brain Hack
you missed out on a lot of information. Here is some of what • Strong Bullish & Bearish Candles
you missed: • What To Expect In 2018
• Building A Custom Sentiment Indicator
• interview Get The Gann Skinny From Hima
JANUARY 2018 Reddy
• Daytrading ADX Breakouts • 2018 Readers’ Choice Awards
• tips The CAM Indicator For Trends And • How Far Down Can It Go?
Countertrends • traders’ resource Software For Traders
• Profit-Taking And Resets, • 2017 S&C Articles
Part 1: Trend-Following
• Energy Sector and S&P 500: A Look At
Pairwise Correlation APRIL 2018
• Two For The Price Of One • Survivorship Bias — A Wake Up Call
• Measuring Risk With The • The V-Trade, Part 2: Technical Analysis
Normalized Risk Index • tips Adaptive Moving Averages
• Dip One Toe Into The Forex Pond • Volatility: What’s The Best Measure?
• interview Master The Markets With Gatis and Grayson Roze • q&a Futures For You
• q&a Futures For You • RaS: An Alternative Charting Technique
• q&a Explore Your Options • interview Pivot Levels With Gareth Burgess
• Socially Responsible ETF Investing • q&a Since You Asked
• traders’ resource Trading Systems • Tape Reading Breakouts
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• traders’ resource Forex Brokerages
REVIEWS
FEBUARY 2018 • Elliott Wave Turning Points
• tips Weekly & Daily Percentage • NeuroShell Trader Version 6.5
Price Oscillator
• Price Action And Volume Correlations
• Profit-Taking And Resets, MAY 2018
Part 2: Short-Term Trading • tips RocketRSI—A Solid Propellant For Your
• Capitalizing On Sector Rotation Strategies Rocket Science Trading
• What’s The Fib Pinball? • The V-Trade, Part 3: Technical Analysis—
• q&a Explore Your Options Fibonacci Projections And Daily Pivots
• A Simple Approach To Gap Trading • q&a Explore Your Options
• interview Trading Systems With Michael • Trading Support & Resistance Levels In FX
Bryant • q&a Futures For You
• q&a Since You Asked • The Four Market Dimensions
• q&a Futures For You • interview Building Trading Systems With
• Your Intuition’s Role In Trading Decisions Cesar Alvarez
• traders’ resource Online Trading Services • Moving Average Hammer Pivots
QUICK-SCAN • Retail ETFs Are A Mixed Bag
• XTF.com • Get More Value Using A Trading Checklist
• traders’ resource Advisory Services

MARCH 2018
• tips Recursive Median Filters JUNE 2018
• The V-Trade, Part 1: Five Basic Trading Rules • Inverse ETF Breakouts
• Gain International Exposure Through ETFs • tips A Technical Method For Rating Stocks
• Through The Stratosphere On The @NQ • q&a Futures For You
• q&a Since You Asked • The V-Trade Part 4: Technical Analysis—
• interview Put Option Selling With Lee Lowell Trends & Reversals
• How To Trade Volatility • Five Big Dan Zanger Money-Making Patterns
• q&a Explore Your Options • Early Warning System Dynamic Model
• q&a Futures For You • interview Finding Dynamic Moves With
• Bull Flag Swing Trading Breakouts Robert Miner
• traders’ resource Exchanges • q&a Explore Your Options
QUICK-SCAN • q&a Since You Asked
• VantagePoint 10 • Calculating Equity Risk Premium
• traders’ resource Data Services
REVIEW
tips This article is the basis for Traders’ Tips this month. • dxFeed Bookmap

42 • Bonus Issue 2019 • Technical Analysis of Stocks & Commodities


JULY 2018 OCTOBER 2018
• tips The Deviation-Scaled Moving Average • Inside-Range Gap Breakouts
• The V-Trade Part 5: Technical Analysis— • tips Probability—Probably A Good Thing
Moving Average Support & Resistance And To Know
Volatility Bands • The V-Trade, Part 8: The BasicTrading Rules
• In Search Of The Best Trend • ETFs vs. Mutual Funds: Which Way To Go?
• q&a Futures For You • One-Day Wonder Trades
• interview Building Automated Strategies With • interview Walking Forward With Dion Kurczek
Andrea Unger • q&a Futures For You
• Trading Vertical Spreads For Income • q&a Since You Asked
• q&a Explore Your Options • q&a Explore Your Options
• Biotech ETFs: A Slice Of Medical Science • The Trend Is Your Friend
• Daytrading Tall-Candle Breakouts • Safety Is More Than A Dance
• q&a Since You Asked • traders’ resource Courses & Seminars
• The Role Of Evolutionary Psychology In Trading QUICK-SCAN
• traders’ resource Publications For Traders • MarketClub

AUGUST 2018 NOVEMBER 2018


• q&a Since You Asked • Wide-Range Chart Breakouts
• tips Portfolio Strategy Based On • tips The Stiffness Indicator
Accumulation/Distribution • The V-Trade, Part 9: Trading Examples
• The V-Trade, Part 6: Technical Analysis— • The Options Risk Curve, Part 1
Divergence Indicators • Diamonds Are A Trader’s Best Friend
• Acceleration Ramp Breakouts • interview Trading The Headlines With
• The Diving Board Trade Kathy Lien
• Seven Forex Myths Dispelled • Timing Consumer Staples &
• An In-Depth Look At Weekly Options Discretionary ETFs
• interview Sloping Upward With Tim Knight • q&a Futures For You
• q&a Futures For You • q&a Explore Your Options
• q&a Explore Your Options • Trading Perspectives
• Investing: An Objective-Based Primer • Decision-Making: Why Is It So Difficult?
• traders’ resource Consultants For Traders • traders’ resource Brokerages
REVIEW
• MarketScope Advisor
DECEMBER 2018
• Dual-Candle Momentum Breakouts
SEPTEMBER 2018 • Identifying High-Probability Buy Signals
• q&a Since You Asked • Testing The Engulfing Bullish Pattern
• tips Weekly & Daily Stochastics • The Options Risk Curve, Part 2
• The V-Trade, Part 7: • How Market Psychology Works For Traders
Technical Analysis—V-Wave Count • How Averaging Down Could Hurt You
• The Truth Behind PEG • interview Build Your Trading Skills: An
• Two-Day High Cup Breakouts Interview With Alex Spiroglou
• Double Bottoms Revisited • q&a Futures For You
• interview Travel The Trading World • q&a Explore Your Options
With Tomas Nesnidal • Trading Perspectives
• q&a Futures For You • traders’ resource Books For Traders
• Small-Cap Growth ETFs In The Spotlight QUICK-SCANS
• q&a Explore Your Options • Candle Profit System 2.0
• Optimize Your Mind For Analysis • TC2000 Version 18
• traders’ resource Mutual Funds
REVIEW
• SlopeOfHope.com

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Bonus Issue 2019 • Technical Analysis of Stocks & Commodities • 43


JULY 2018
If you’re looking for near on-the-spot commentary about what’s happening in the
• Starbucks
markets, you may be interested in Traders.com Advantage, which now comes free
• Trade War - USA Vs. China
with a paid subscription to Stocks & Commodities magazine. Found at Traders.com,
• Kicked out of the DOW
it offers articles almost daily that are of immediate interest to traders and technical
• Stock Market Time Tunnel
analysts, covering a range of markets, industries, and sectors, as well as indicators,
• A Look At The DOW’s Newest Member
chart patterns, and indexes.
• Trading With Stochastic RSI
Here is a sample of the articles you missed in 2018 if you weren’t a subscriber. To
find out about subscribing to Stocks & Commodities magazine and gaining access to AUGUST 2018
Traders.com Advantage, visit Traders.com or call 800-TECHNICAL for information. • A Look At Microsoft
• When A Bank Says Buy
• Forecasting Facebook?
• Finding A Winner
• Looking For The Best
• End Game for the Stock Market?

SEPTEMBER 2018
• US Small Cap Stocks Lead the Way
• Impeach And Crash
• Interest Rates Basing for a Breakout?
TRADERS ADVANTAGE: IDEAS, INSIGHTS, EVALUATIONS, TIPS • Another Look At Gold
AND TECHNIQUES THAT CAN HELP YOU TRADE SMARTER.

OCTOBER 2018
• How High is UP? - Part Two
JANUARY 2018 • The Crash Trigger • A Look At Amazon
• A Look At The Presidential Cycle • So, Where And When Is The Bottom? • Another Look At Marijuana Stocks
• Manias And The Madness Of Crowds • US Stock Market at Support or Prelude to • The Stock Market Crash Ratio
• When A Step Back Is Revealing Crash • Another Look At The K-Wave
• Natural Gas Bull Market • The Death Cross • Buying A Put
• RSI - The Super Indicator • What A Breakout Looks Like? • The Stock Market Crash Ratio - Part Two
• Another Look At The Indexes • Facebook
• Pulling The Trigger Can Be Difficult • ABBV’S Band of Resistance NOVEMBER 2018
• Utility Stock Bargains • A Share To Keep An Eye On • Stock Market Seasonal Patterns
• A Few Shares To Watch • Grand Theft Auto’s Parent • Amazon - A Harbinger of the Bear?
• Momentum and Simple Moving Averages • A Look At Canadian Marijuana Stocks • Elliott Wave Interpretations
• Intermarket Analysis: Alternative Way Of
FEBRUARY 2018 MAY 2018 Spotting Opportunities In FX
• How High is Up? • It’s Over When It’s Over • Market Diagnostic - The Yield Curve
• Looking For Income • Signals From The Hang Seng • Gold Below $1000
• Utility Stock Bargains - Part Two • Looking At A Head And Shoulders • Is the Worst Over?
• So, Is This The Start Of The Correction? • Where Next for the Dow? • Assessing the Fall FAANG Bite
• A Stock To Keep An Eye On • Taking A Gamble • Don’t Assume You Know
• S&P 500 - Deadly Ground • Could Symantec be Ripe for a Fall? • Elliott Wave Interpretations - Part Two
• A Market Crash • Global Bullish Confirmation
• Price Of Prescription DECEMBER 2018
MARCH 2018 • Trading The False Break Effectively
• Buy On The Dips JUNE 2018 • Is Now a Good Time to Buy General
• Stocks To Look At • Looking At The Indexes Motors?
• Stock Market Rosetta Stone • Another Look At FANG • Stock Market Sector Analysis
• How Much is a Star Performer Worth? • Staying Mindful • LAM
• The New Chairman • Bearish Chart Patterns - The Gap, Inc. • The Story Is In The Charts Not The News
• Trend Confirming Tools • Is MGM Resorts International A Bad Bet? • WTI Daily December 17
• Home Depot • Going For Income • Finding Tops
• Looking For A Winner
APRIL 2018 • What Now Brown Cow?
• Weaponizing Facebook • Have US Small Cap Stocks Topped?
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TRADERS'
RESOURCE

TOP 10 VIEWED Software Listings


LINKS
In this day and age, the choice of software
Product Company
with which to analyze and interact with
the markets is rich, with different packages 1. ASCTrend Indicator AbleSys Corporation
offering different capabilities, methodologies,
and price ranges to fit every style of trader. 2. Professional Traders Starter Kit Technical Analysis, Inc.
Are you interested in a basic software package,
3. VectorVest Options Analyzer VectorVest, Inc.
but also find that you need to write custom indicator formulas?
Are you interested in ranking, screening, and producing a list of 4. John Murphy’s StockCharts.com, Inc.
candidates based on your favorite technical indicators? Or are you Chart Pattern Recognition
a daytrader, a position trader, or a professional trader? Are you 5. RSX—Relative Strength Index Jurik Research Software
looking for software to run from your hard drive, or do you prefer
to rely on your Internet connection for interactive analysis? 6. NeuroShell Day Trader Power User Ward Systems Group, Inc.
Software packages for each of these needs are out there, but
7. NinjaTrader NinjaTrader Group, LLC
tracking them down can be daunting. To help Stocks & Commod-
ities readers make the right choices for themselves, we surveyed 8. VectorVest 7 EOD VectorVest, Inc.
the industry and collected the responses. The top 10 list is shown
here, with expanded information available at our website. 9. VectorVest Watchdog VectorVest, Inc.
In this listing, resellers of software may be included, so software
10. VectorVest ProTrader 7 VectorVest, Inc.
is not always listed by developer.
These are the 10 software listings viewed most often on the Traders’ Resource website, where each
company is listed in order of clicks received. This is not an editorial rating. For more information on
Traders’ Resource at traders.com specific products, try checking Traders.com for archived S&C product reviews.

At our website, Traders.com, you’ll not only find out more about
the software listed here, but you’ll also find information on products sultants, and more. Just click on the Traders’ Resource link. Then
and services in other categories, such as brokerages, mutual funds, follow the category link, or use the search feature to find products
data services, trading systems, hardware, seminars, books, con- or services with specific attributes in this and other categories.

The information in Traders’ Resource is the most accurate at the time of posting and is subject to change. Because the vendors posting to Traders’ Resource are responsible for their own listing, Technical Analysis, Inc. declines any and all liability
for any representations made by the businesses and individuals listed. Nor can Technical Analysis, Inc. endorse any business or individual listed on Traders’ Resource. Technical Analysis, Inc. makes no warranties, express or implied, as to the
accuracy and reliability of claims herein. You agree to release Technical Analysis, Inc., together with its respective employees, agents, officers, directors and shareholders, from any and all liability and obligations whatsoever in connection with or
arising from your use of Traders’ Resource. If at any time you are not happy with the information posted to Traders’ Resource or object to any material within Traders’ Resource, your sole remedy is to cease using it. This list is updated frequently.
If you are aware of a business that should be listed, please email us at Editor@Traders.com.

Bonus Issue 2019 • Technical Analysis of Stocks & Commodities • 45


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