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Sunday, July 4, 2010

Targets, and time-lines

Re: Targets: I am often asked, "where do you see the S&P 500 going over the next year, or what are you long term projections"? This question screams, "I want it all and I want it now, and if you don't give me the answer I want, I'll find somebody - else - who will. 

I'm not one for Bullshitting my clients in order to keep them, so I gave him this answer - paraphrasing:

"I keep several valid long term projections, because no matter how good of technician you are; nobody knows where the market is going 2 weeks from now. This is why the charts need to be revised continuously." 

Of course this isn't the answer an impatient person wants to hear, so I suppose he's off chasing unicorns somewhere... 

If you want to hear the bear truth on how it's going to be, read Prechter, but realize the market trades on it's own time, not yours!   

Re: Timelines: Timelines are hard to predict, but generally, after a period of selling it's reasonable to expect a much longer period of consolidation. Timelines also vary according to individual wave characteristics, as well as the larger wave sequence. Wave 4's tend to consolidate for longer periods of time - naturally - because wave 3's are typically more powerful and longer, and sideways triangles - many stocks continue to trade in. 

In a high volatility environment you see timelines speed up, and this is why we call it a traders market. The secret to beating the market consistently is to avoid sideways markets, and to not trade when direction is unclear, but most traders don't have the patience to wait for golden opportunities.

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