Gee, Think.

I’ve read several books lately and the combination of their indeas gives
me a mindset focused on preparedness and individuality. “Conquer the
Crash” by Robert Pretcher warned me about the significant stock market
crash. I just finished that book last week, and it looks like the
downtrend which will sap 15% of the Nasdaq’s value by February will
start this week! If only I had started paying attention to his writings
last winter!
“The |orld is Flat” by Thomas Friedman has inspired me to think about
the global pool of competition for jobs and opportunities. His writing
both inspires me to continue with my blogging and independent
entreprenuership and to think about my opportunites in a global sense.
Is it possible that I could network with people across the globe?
I’ve become a readaholic lately, and I’m loving every minute of it.

I love this book!!
It is really inspiring. Friedman’s outlook seems very optimistic and
positive so far. I am on page 118, about a fifth of the way through.
He’s been talking heavily about the internet as a powerful flattening
force. He mentions numerous instances where inidviduals are able to
collaborate and succeed using the new tools from today’s technology.
As a computer scientist, I already knew a lot of the content in these
first 120 pages. But even for me, someone who has watched the internet
grow and change since the early days of Netscape, friedman still added a
lot of insight, interviews, and valuable commentary.
The general feeling of this book is inspring. Friedman continually
enumerates the great potential for people of our times to use their
creativity to choose their own adventure. I look forward to reading his
book on my daily commutes.

Okay, I have to admit it. I am convinced that Pretcher’s perspective
(along with the Elliot Wave International Team) on the wave theory is
right on. Today, a friend asked we why I thought that the market
couldn’t stay up after gapping up. He started talking about various
news items, and I had to say that I don’t think it has anything to do
with news. I’ve been converted to thinking that it is this robust
fractal driving the markets.

Sociotimes.com is mentioned in the Elliot Wave Financial Forecast that
I’ve been reading over the past several days.
From my quick perusal I think that this website is focused on
interpreting the social implications of events. I think the
interpretations there are based on the theory that the stock markets are
barometers of aggregate social mood of the world’s population.
In the “Elliot Wave Principle” by Frost and Pretcher the theory that the
stock markets is a measurement of “man’s progress” is discussed. The
five and three wave pattern of the wave theory is likened to a natural
law that emerges from a wide variety of observations. The tenet that
nature follows the path of least reisistance bolsters the 5-3 numbers
since any lesser numbers would not allow for both progress and
alternation.
So the financial markets are seen as indicators of the social mood of
the world through the elliot wave theory. This sociotimes.com site
interprets events to see what they could indicate about social mood. It
seems like they are looking for correlations between public sentiment
and what the market is showing about our mood. Very intriguing.

It’s only been two days that I’ve had a subscription to the Elliot Wave
Financial Forecast service and already I am sold. This could have
something to do with the fact that their forecast suggests what I need
in order to exit my option position profitably, but let’s just assume
that I’m objective for a moment.
I’ve read through Frost and Pretcher’s “Elliot Wave Principle” over the
last couple months. It was by no means a light read. It was filled,
make that jam packed, with rules, guidelines, ratios, and plenty of
chart examples. I re-read most of it and found that I absorbed much
more on the second time around.
After my second reading I decided to try and put the theory into
practice. This was a triumphant day for me. I was quite pleased. If I
remember right, my very first wave count was no correct, who would
expect it to be? I thought to myself that I would practice the
art/science of wave counting until I become proficient enough to publish
my own forecasting service.
I knew that Robert Pretcher was still actively forecasting the markets,
however, and I was quite curious to see HIS wave counts.
I have since subscribed and so far I love it.
In the half dozen issues inlcuded with my subscription, I have found
incredible detail in the elliotwave.com team’s analysis of the financial
markets. They set specific targets and also include when to asume
they’ve been wrong. Even better, they don’t forecast when the aren’t
certain what the market’s next move will be. If they cannot find a
satisfactory wave count they admit it. I think this is much better than
constantly forecasting whether or not you are sure.
It remains to be seen if I am able to correctly interpret their reports
and put them to profitable trading use consistently.
I am really impressed with the ammount of work that must go into these
reports. It looks much better than something that ibcould manage to
create on a part time basis. However I am still holding out that if I
continue to study the application of the wave theory through this
newsletter, I will one day be able to use it on my own.

I’ve been reading more of John Murphy’s “Intermarket Analysis” book
lately. He has a couple chapters that discuss various business cycle
theorys and what they mean for the financial markets. As I understand
it, the idealized behavior is this:
1. Bond prices rise
2. Stock prices rise
3. Commodity prices rise
4. Bond prices fall
5. Stock prices fall
6. Commodity prices fall
Steps 1, 2, and 3 are part of an economic expansion. Steps 4, 5, and 6
are part of an economic contraction. The expansion is positive growth
and the contraction is negative growth. The time between steps 3 and 4
is when the economic growth actually turns negative, but it is decling
from the middle of step two to the midlle of step 5.
So, having read this theory on the business cycle and it’s relation to
financial markets, I’m going to try and plot our position in the steps.
Everyone who’s paying attention to the stock markets can see that we’ve
just experienced a major downturn. We also know that commodity prices
were soaring during this downturn. The commodities were corrected as
well if I remember correctly but I think they are still heading up.
This last week was a great week for the Dow, Naz, and S&P, but are
stocks done falling?
I think bond prices have been falling because yields have been
increasing. I think this means we are somewhere around step 4, which
would nake this an early recession. If that’s true we should see stocks
and bonds continue to fall over the next months. Commodities should
join the fall eventually as well.

Ahhhhhhhhh… A giant sigh of relief. Today the real getaway begins.
I’ve got no cell service, no internet access, and no sleeves. It’s
great! Today we’re going to spend a while in tandem kayaks touring
around the southwest harbor waters. We could see some seals, there’s
always a chance. I hope I’m wearing swim trunks all day long.
Our motel, the Edenbrook, is nice enough. It’s a short walk from
downtown Bar Harbor. The rooms are really quaint. I think the “coffee
maker” is an antique. I’ve never seen one quite like it before. The
rooms were a little musty whenwe first opened them too. But this is all
inline with what I would expect, nothing too fancy, nothing modern.
Everything just right.

I’ve been reading Barry Ritzholt at bigpicture.typepad.com for about 3
months now, and I’ve got to say that I admire his work. He frequently
presents well thought out posts on the stock market and economic data.
It’s a great pleasure to read his analysis several times a week. He’s
got something going for himself that I would eventually like to
establish for myself.
I dream of having a blog where I document my thought process on the
financial markets and offer my analysis through words and charts daily.
What’s the business model?
The blog is an archive. Each day I add to it, the archive becomes more
of a testimony to my capabilities and skill. After several years,
anyone visiting my site will be able to easily search for any of my
writings since the blog started. This would be a wealth of financial
knowledge, similar to a book. Of course, my early years will be full of
mistakes and fumbles, but to err is human and perhaps showing my
progress will also be of value.
As I become well versed in topics of technical, intermarket, and elliot
wave analysis I can share this knowledge with others. I’ll be
simultaneously using the analysis I post as a basis for my own trading.
When I become a profitable trader I’ll make money off the trades and the
distribution of my “expertise.”
The best part about this model is that it will leave me free to work
from home or travel. I strive to spend more time at home and with
family. The job I’ve described would certainly make that a reality.

The remarkable aspect of the elliot wave principle is that it applies on
all scales. In Frost and Pretcher’s book, “Elliot Wave Principle” the
author’s assert that the wave formations described by Elliot appear in
timeframes as short as an hour and as large as a decade or century! In
their book they cite whole years as parts or a particular wave
formation. That is striking! Imagine knowing what the overall trend in
the market could be for the next year?
I’m aspiring to take my analysis to a larger time frame. Hopefully I
can use some of the labelled waves in their book as a guide. Of course
I still have a long way to go in terms of accuracy.

Okay, so I’ve been reading about intermarket analysis in John Murphy’s book lately. It all seems to make a lot of sense. I am beginning to grasp the ways that the bond, commodities, currency, and stock markets are related. Now that I’ve gotten this far, how do I look up the charts for these markets? Where do I get the chart for the Nikkei? Where do I look for the chart of light sweet crude? How do I track the Euro vs. the Dollar? What about the Chinese yuan? I’m using the optionsxpress website, and the answers to these questions aren’t immediately apparent. Maybe I just need to find the right ticker symbols. I’m just not sure. I did find a page that offered day by day charts and commentary at the optionsxpress site, but I want to be able to make my own.

This is the next step, learning how to analyze with the tools I have.