Welcome to the new Elliott Wave Down Under blog.
This being my first post to this new blog, I would like to introduce myself.My name is Rusty and I have been fascinated by the financial markets from an early age. I was introduced to technical analysis by a friend back in the early 1980s and to the Elliott Wave Principle toward the middle of the 1980s - I guess this gives you an idea of how old I am. An Old Dog some might say. I've been around the block a few times, am forever curios and have an insatiable drive to continue learning in all elements of my life, My journey over the years with Elliott Wave is exactly that, a journey and its really only beginning for me.
My Elliott Wave journey:
Having analysed charts, starting with Point and Figure charts manually updated daily and on paper, I recognised that the market was full of repeating patterns similar in their form but different just the same. Frost and Prechter's book titled Elliott Wave Principle Key to Market Behaviour, was a most exciting discovery for me, an important milestone, as it turned out. It provided answers to many of the questions I had about market behaviour and was like someone had flicked a switch, shedding light but at the same time raising further questions. Questions that largely have been unanswered for me until fairly recently.Like many novices to Elliott Wave, I have made my share of mistakes and fallen into a number of traps. They say that a little knowledge is a dangerous thing and for me it surely was. More out of luck than by good management I saw the 1987 sharemarket selloff coming. I guess at the time you could call it a crash.
When analysing my point & figure charts it was obvious that nearly all of the stocks that comprised the then NZSE 40 index had traced out four waves up of a five wave sequence and were well into wave 5.
The inevitable sell off came to pass and here is where I made my first major mistake, I assumed that the "crash" was the start of something bigger (just the start of a major Zigzag ) that would take the financial world to the brink of collapse. As it turned out of course the 1987 selloff was just a wave 2 correction in a much larger bull market. A market that is still advancing. This is one of the traps that you can fall into with the Wave Principle. Hey I've been in good company, with a number of very high profile "Elliotticians" forecasting the end of the world for years. You see it's very easy to lose perspective when it comes to Elliott Wave. In fact that is probably the most important lesson I have learned over the years.
I'm not saying the Wave Principle has all the answers but it does provide you with a sense of context as to the size of upcoming market moves and can forewarn the investor that the market is approaching a critical juncture. What you do with that information is up to you, after all you don't know what you don't know - right? Socrates put it better than I ever will when he said "True knowledge exists in knowing that you know nothing".
My MBA taught me the value of triangulating information from multiple sources when it comes to analysing a business, a business sector or indeed an investment opportunity. Perfect information does not exist for market participants, we need to make decisions based on the best information available. The wave principle and the insight it can provide, is in my mind, one of those important information sources. Ignore it at your peril.
Back to my journey...
The next eureka moment for me in terms of the wave principle was reading the blog by Joe the Elliott Trader over at the Study Of Cycles Website. If you haven't already, visit his blog site, I highly recommend it. I have learned a huge amount from Joe's posts. Joe uses what he calls the "The Eight-Fold Path Method for Counting an Impulse". A must read. His work on US Equity Markets are as good as it gets.Anyway, following the Recommended Reading list provided by the Study of Cycles, I came across a number of online video's and books written by Bill Williams. I will discuss his research and insights in later posts but his work on fractals, chaos and trading are brilliant,
It appears to me that we are now approaching another important inflection point, just like in 1987.
Analysing index charts for the World's major markets leads me to believe that a large number of markets may have already formed major tops or are in the process of forming the same. To me its all about risk management when it comes to investing. There are times when and the risk is just too great and shouldn't be ignored. Now is one of those times.
What you can expect in this blog.
Living in New Zealand, I have a natural interest in what's happening down under in financial markets. With this in mind this blog will largely focus on NZ and Australian equity and bond markets. This blog will be about these markets and the Elliott Wave. I expect to post two or three times each week.My second post will take a look at the the AXJO and offer some thoughts on where we are in terms of its wave structure and the implications on this for investors.
Hopefully you're curious like me, have an open mind in terms of learning new things and will take the opportunity to bookmark this blog and revisit.
Bye for now.
Rusty
