Investors and traders are infamous for comparison of their results to benchmarks or as relative performance vs others. An obsession with bragging rights, or one's pride, can be dangerous to long term performance. Meanwhile, a measured approach based on understanding how corrections evolve can be a guide during market volatility. Attempting to "Call the (exact) top" is ideal, but a longer term perspective will likely provide greater gratification and better performance.
Through turbulence in early 2018, based on understanding and analysis, the goal I used led to new highs and continued rewards from the trend started in 2009 as extended from the low in 2016. It pays to remind yourself of the rewards and gains obtained in that period and then by understanding how a corrective process relates to the prior trend. A quick look at the steep drop in October 2018 shows how small the decline is relative to long term gains since 2016 or 2009. Understanding corrections, even severe ones, puts the process in perspective and allows for building expectations.
Elliott Wave Theory (EWT) is an excellent tool to shape expectations and is useful when developing plans for expected outcomes. This week's chart pivots from the many earlier charts focused on Wave 5 and shifts to a simplistic and corrective A,B,C pattern. The actual shape and pattern will be determined in the market. The decline since September's peak has now surpassed all relevant peaks since February's low and thus confirms the corrective process. A significant element of corrections is they don't happen immediately, but evolve.
Corrections in EWT normally decline to the area of wave 4 of the previous 5 wave pattern. The current decline is approaching the lowest level of wave 4 (early 2018) of the upward move since 2016. Further potential decline to 2554, or even 2532 (lower yellow support line) will provide more information in the days ahead. Once a near-term bottom is found, wave "B" retracement is anticipated and will be watched closely. At present expectation is for a moderate wave "B" and a subsequent decline of wave "C" to then correct the larger move since 2009. A decline in wave "C" would correct down to the area of wave 4 of the 2009 move.
Here is a worthwhile exercise for anyone regretting not acting during the recent decline. Look at the chart and identify the start in 2016 through September 2018 and the large market gain. Note how little (in days, or price) has occurred above the current level. Then look DOWN at the levels of wave 4 of lower degree (2532-2554 and 2150-2333). Then ask yourself "how will you feel?" at those levels. Of course there is no single answer since we're all under different circumstances. Manage your comfort level and expectations, but by understanding and looking forward, not back. There is always time to plan and act whether you called the top, or not.
The above is not a recommendation and is for information purpose.
ps: If you did call the top, then Good on You! The better news is that as time passes more-and-more (just about everyone) will say they called it, too. Human nature, it drives markets.
Through turbulence in early 2018, based on understanding and analysis, the goal I used led to new highs and continued rewards from the trend started in 2009 as extended from the low in 2016. It pays to remind yourself of the rewards and gains obtained in that period and then by understanding how a corrective process relates to the prior trend. A quick look at the steep drop in October 2018 shows how small the decline is relative to long term gains since 2016 or 2009. Understanding corrections, even severe ones, puts the process in perspective and allows for building expectations.
Elliott Wave Theory (EWT) is an excellent tool to shape expectations and is useful when developing plans for expected outcomes. This week's chart pivots from the many earlier charts focused on Wave 5 and shifts to a simplistic and corrective A,B,C pattern. The actual shape and pattern will be determined in the market. The decline since September's peak has now surpassed all relevant peaks since February's low and thus confirms the corrective process. A significant element of corrections is they don't happen immediately, but evolve.
Corrections in EWT normally decline to the area of wave 4 of the previous 5 wave pattern. The current decline is approaching the lowest level of wave 4 (early 2018) of the upward move since 2016. Further potential decline to 2554, or even 2532 (lower yellow support line) will provide more information in the days ahead. Once a near-term bottom is found, wave "B" retracement is anticipated and will be watched closely. At present expectation is for a moderate wave "B" and a subsequent decline of wave "C" to then correct the larger move since 2009. A decline in wave "C" would correct down to the area of wave 4 of the 2009 move.
Here is a worthwhile exercise for anyone regretting not acting during the recent decline. Look at the chart and identify the start in 2016 through September 2018 and the large market gain. Note how little (in days, or price) has occurred above the current level. Then look DOWN at the levels of wave 4 of lower degree (2532-2554 and 2150-2333). Then ask yourself "how will you feel?" at those levels. Of course there is no single answer since we're all under different circumstances. Manage your comfort level and expectations, but by understanding and looking forward, not back. There is always time to plan and act whether you called the top, or not.
The above is not a recommendation and is for information purpose.
ps: If you did call the top, then Good on You! The better news is that as time passes more-and-more (just about everyone) will say they called it, too. Human nature, it drives markets.