Category — High Probability Trades

I have been corresponding with a mathematically oriented gentleman who is quite brilliant in his approach to the markets but who is very close to going off the deep end. He wrote me the following email:

“I have given the 45 degree – phenomenon a lot of thought. I pretty much would like to know how you figure out the inner workings.

“What I think is:

“(a) The route of the 45 degree cuts the Elliot 3 pivot and the 4 reverse pivot in half. The retracing swing from 3 to 4 (starting off with what looks like a congestion) is the playing field of the insiders. It quickly develops into a squeeze to the downside before the final 5th wave shoots up.
“(b) Those who know what is happening, take full advantage of the less informed by jumping on their resting orders. The key is the knowledge that the 5th wave lies ahead. Then the load of contracts could be transferred to the public’s ‘greed-panic.’”

While I would like to agree with what he has stated above, I’m not really sure of what he actually said: Are you? I submitted the following answer:

I know virtually nothing about how to count Elliott waves or the meaning of Elliott wave counts. I have no reason to believe in them and many reasons to believe that they are nothing more than a THEORY. Personally, I want to trade based on facts and the reality of what I’m seeing. My belief that Elliott Waves are virtually worthless comes from the results others have obtained from following them. I am very familiar with these results. I know that Elliott practitioners have been dead wrong about the stock market for over 12 years running. Elliott wavers missed the bull market of the 1990s. I know that they wrongly predicted the fall of the U.S. dollar this year. The U.S. dollar rose early this year. I know that people who follow Elliott Wave Theory were wrong about gold and silver for many year, predicting rises as those metals fell to multi-year lows. It is difficult for me to understand why anyone would want to trade based on a theory when they could trade based on what is plainly seen in the markets.

If people are pulling out of high yield stocks, what are they doing with that money?

Right now, investors are far more interested in commodities, emerging markets, and inflation plays… not stocks with high yields.

A great play right now is to be long silver. Silver futures, options on silver futures, silver ETFs and Options on silver ETFs. Silver coins are good if you can get them without paying outrageous prices.

Playing the gold silver ratio, long silver and short gold has produced around $10,000 in a very short time. In Traders Money Club, I’ve been beating that drum for quite some time. The gold/silver ratio was way out of whack. Either gold had to come down hard, silver soar, or a little of both. Right now silver is soaring.

New and updated trades in the Traders Money Club.  We are hot. Lots of winners.

Traders Money Club

Investors should buy put options on the Standard & Poor’s 500 Index because the benchmark for U.S. stocks may fall back to the 11-year low it reached in November, Goldman Sachs Group Inc. said.

“Dismal” fourth-quarter profits and forecasts from companies as well as waning investor confidence in President Barack Obama’s economic stimulus plan may drive the S&P 500 toward 752.44 in the next month, Goldman strategists said.

For investors using a “put spread” strategy, the highest payoff would be generated through buying March 825 puts and selling March 745 puts, Krag “Buzz” Gregory and John Marshall wrote in a report distributed to clients today. That trade would produce $1.85 in profit for every $1 invested should the S&P 500 drop to its November low, they said. The index slumped a third day, losing 0.1 percent to 825.44 today.