You Can't Argue with Success

I have been an "elliottician" since 1995, and thought I had reach success with the Elliott wave theory when I combined my counts with long call option's trading. Retrospectively, I think I was at the right place at the right time. The bottom line is, I made good money in an extremely bullish market, trading the usual suspects, CSCO, YHOO, AMZN, SUNW, etc. Never mind that I was not diversified, I picked stocks that worked.

As stocks began to decline, and knowing that the bull market had reached an end (my counts were telling me so), I was at a loss as to how to trade a down market. Buying puts, I though, since I had been successful buying calls in the way up. I soon began to question my own counts, as periods of strong decline were followed by strong rallies. Buying puts definitely did not work.

I took the Optionetics courses (basic and advanced). I learned all kinds of strategies, but the promises of quick profits with their "strategies" never turned into reality. In fact, I lost more than I care to mention here. Suffice it to say, that I was not happy with the results of my Optionetics experience. Yet, I learned a many options strategies that could serve me well, if I could tell with certainty where the market is going. But I also lost a lot, quickly learning that a bull call spread can only be a winner if the stock goes the way you are hoping it will do. Time does not help either, since you have to know the long-term direction, a very difficult thing to figure out.

No matter what your approach to investing: long-term, short-term, options or stocks, shorting or long, you could only make money if you can accurately predict the direction of the market you are in. My dirty little secret is that I was not making money with optionetics basic strategies, so I dived into the advanced courses and strategies.... I did not do any better. I said to myself, if Tom and George can make money, eventhough they seem to have a limited knowledge on TA (at least from what they seemed to be doing) so could I. But Tom and George make money in their business, not necessarily in their trading. No amount of TA seem to be helping much. I tried every strategy and tested and tested and tested again. Paper trade and backtest. My success was limited, after almost 3 years of trials and tests. I do NOT believe that options is the road to success, at least not as a stand ALONE system. The closest you can get is to apply the PCRCC and hope the stock makes a strong move in either direction or that at least there is a volatility spike. My tests have shown that this is a good approach, but the rules to enter a trade are stringent. If you have a small account (i.e. 10K), you may not be willing to risk it all in a single trade. If you have a lot of cash, this approach is OK.

This market has claimed many casualties, and some of my colleagues have just lost faith. It can still turn on a dime and go south some time soon. Look at my Nasdaq predictions elsewhere in this site. I have been happy with the "Sarmiento system" I described in my web site "http://pathometrix.com/SOTD.html" which include such winners as DNA and AAPL. To follow through with success like DNA, one needs to be clear as to where the target should be. I have shown here that the Elliott wave analysis is probably the best TA approach to follow up stocks that have trigger my system. The Advanced GET, has proven to be a disaster in my hands. Right off the bat, I recognize 11 Elliott patterns, Advanced Get recognizes only 2 (1-2-3-4-5, impulse waves and a-b-c, corrective waves). The time consuming "Neely method" is only for the intellectually curious and perseverant. It is so time consuming that if you do the count on a stock you are interested in, it probably exhausts the rally before you can figure out what the count is.

The only viable alternative, at this time for me, anyway, is the "Refined Elliott Trader" (RET) program (check Elliottician.com). I have told you about it, but I could not recommended. The truth is a $3000 price tag is quite high, if you don't have what it takes to learn and apply Elliott theory. But the Elliottician, Rich Swannelle, surprised me last month when he issued the "trading challenge" http://www.elliottician.com/challenge/ Here he was, going public with predictions that could go wrong, apparently very sure of himself. I said this I have to see. Interestingly, his 5 trades were on AMGN, S&P500, Nasdaq, CL and IBM. He places some limit orders and some stop loss orders, and he traded with a 90% margin! Buying the stocks themselves, no options trading here. Now we know if a stock goes opposite to our expectations overnight, we can loss all of our money (limited to our options' debit or requirements. But to trade with 90% margin is rather daring, in my mind. So I decided to follow up his calls with CRC's. I placed the trades (paper trades using platinum) and went on vacation. When I came back, every single one of the trades made me money, but specially AMGN. I was so impressed, I have to try out the software. I suggest that you do too. BTW, I have no association with the vendor, so what I am telling you is only for your consideration and investigation. DO YOUR OWN HOMEWORK.

If you have a small account, then your best opportunity may be to use the Sarmiento system (please ask me for a PDF describing it) in combination with a proper Elliott wave count, that you may obtain with the RET software.

Here are the trades suggested by the Elliottician: