and any advisory service, some of the balance of the report,including the General Trading Recommendations, often provides the mostvaluable information. There are limitations to specific trade recommendationsthat can be made in a weekly report. Traders often formulate many tradingstrategies around the general trade recommendations.Options: Provides the important considerations for option positions. Becausethere are many option strategies that may be implemented for any one optionposition, specific option recommendations are only occasionally made in theweekly report.Mutual Fund Switchers / Investors: Recommendations are made when toenter or exit stock, bond or precious metals mutual funds.Current and Recent Trading Recommendations Table: The weekly reportprovides a profit/loss summary table of the recent, specific trade recommendations. IT represents intermediate term trader and ST is for short term trades.Each table only includes the activity of a specific market. The table followsthe commentary for that market.We'll start by looking at the S&P from July 1996 through the lime thischapter is completed, March 1997, and see how the Dynamic Tradinganalysis and trading strategies taught in this book were successfullyapplied in the real world.
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Robert Miner's DYNAMIC TRADER WEEKLY FAX REPORT - July 13, 1996 - Page 1 of 7Trading Strategies and Recommendations For The Week Of July 15-19S&P- Position Summary as of July 13,1996 (Chart on Page 2)
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Robert Miner's DYNAMIC TRADER WEEKLY FAX REPORT- July 13, I996 - Page 2 of 7Trading Strategies and Recommendations For The Week Of July 15-19
Follow-up comments to the July 13,1996 report: The chart above was includedwith the July 13,1996 report. How did this outlook for a corrective low followedby a continued bull trend to new highs turn out? See the following pages.
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FoUow-Up Comments To The July 13 and July 20, 1996 Weekly ReportsThe dynamic time, price and pattern analysis for the July 16.1996 corrective lowshown in these two reports was dead-on. The S&P continued to rally to new highsas anticipated. You may recall that right at this time, a very well publicized "gum"sent out tens of thousands of promotional letters for her investment newsletter thatsaid something like "sell everything now, a bear market has begun." I'll bet youwere on a mailing list that received this "warning." Traders and investors usingDynamic Trading techniques knew just the opposite was likely to happen. Not abear market, but the resumption of the bull market to new highs.The "Minimum Bull Market Objectives" shown in the July 20 report are justthat, minimum objectives. As of mat period of time in late July when the S&P wasat 642.00, the bull market was anticipated to reach at least 708 and probably 730or higher and not make a top prior to Oct. The bull trend continued as anticipatedand the S&P reached 718.00 in Oct. As new swings were made, new price andtime projections were also made which pointed to even higher prices in the monthsahead.
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Follow-up Comments To The Aug. 31, 1996 ReportHow did the projection for a corrective low no later than Sept. 16 followed by acontinued rally to new highs turn out? See the follow-up chart on the next page.The Aug. 31, 1996 report also projected that the minimum bull market priceobjective was 708 and the S&P would probably reach 730 or higher.
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On Sept. 3. one day before the Sept. 4-6 PTPP (Projected Turning Point Period)for a low, the S&P made a corrective low as anticipated at 642.70. precisely withinthe 646.30-640.05 projected support zone.
The S&P continued to rally to new highs as anticipated. Note above that the Aug.high was considered a Wave-1 and the Sept. low a Wave-2. This implies that Waves3-5 to new highs should still unfold.The Aug. 31, 1996 report projected that the minimum bull-market price objectivewas 708 with a probable objective of 730 or higher.How did this outlook turn out? Let's move ahead to the Nov. 21,1996 report tofind out.
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Follow-up comments to the Nov. 21,1996 Report. The chart above, included withthe Nov. 21, 1996 report, showed Oct. 29 as a Wave-4 low counting from the July low.It appeared minor Waves-1-4 of Wave-5 were also complete, implying the five waveadvance from the July low was near completion.The Nov. 21 report projected that the S&P had a high probability of completingthe bull trend in either the Nov. 22-26 or Dec. 5-15 PTPP for a high. Time, price andpattern each seemed to be pointing to a major top.On Nov. 26, precisely within the time zone for a high, the S&P made a reversal-dayhigh followed by the sharpest decline since the July low. All of the factors seemed to bein place to signal the completion of a bull market and the beginning of a bear trend.How did it turn out? Let's move ahead to the Dec. 14 report.
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Follow-up Comments To The Dec. 14, 1996 ReportThe March S&P and DJIA charts on the previous page that were included with theDec. 14 report clearly showed what appeared to be the completion of a five waverally into the Nov. 26 high. The assumption was Nov. 26 completed a bull-market.The initial decline from the Nov. 26 high was labeled assuming Waves 1 and 2were complete (see the S&P chart on the previous page). If the 722.20-718.20support zone was exceeded, the bear market would he confirmed. This supporttone included typical corrective price targets (see the Price Support commentsin the Dec. 14 report). If they were exceeded, the odds were the decline was nota correction, but an impulse.Don't forget that we trade market behavior, not forecasts, no matter howconfident the technical analysis appears. The objective is to always considerwhat market activity will confirm or invalidate your opinion of the marketWithin two weeks, the market signaled that a major top was probably notcomplete and the stock indexes would continue to rally to new highs. The markethad quickly signaled that not only was the immediate bearish outlook probablyincorrect, but new highs should unfold soon.Let's skip ahead to the Jan. 18, 1997 report for an update.
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Follow-up Comments To The Jan. 18, 1997 ReportThe chart above, included with the Jan. 18 report, illustrated the revised wave countwhich now considered the Nov. 26 high a Wave-3, not a Wave-5. The marketbehavior itself quickly invalidated the opinion that Nov. 26 was a Wave-5 high andprovided new time and price projections for the bull trendNote that the Jan. 18 report projected the Feb. 5-11 period as having the greatestprobability of making a top at the projected price zone of 813.00-822.00 where short,intermediate and long-term price projections coincided. The projection in mid-Jan.was for at least another three weeks and 20+ points of rally.The S&P continued to rally to new highs as anticipated. Let's jump forward a fewweeks for an update.
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Follow-up Comments To The Feb. 15, 1997 ReportThe March S&P made a key-reversal-day on Feb. 19, precisely within theFeb. 17-19 PTPP for the final Wave-5 high. The top was 820.40, preciselywithin the ideal objective for Wave-5 of 818.40-824.90!As of mid-March 1997 when this chapter is being completed, the S&P has onlydeclined about 6% from the Feb. 19 high and has not yet confirmed whether the Feb.19 high completed a major bull market. But, the time, price and pattern factors thatwould confirm or invalidate if the top is complete have been clearly identified.Remember, we will trade the market, not the forecast.
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S&P 500; July 1996 - March 1997The daily S&P chart below includes the period since the July 1996 low described inthe previous reports. Except for a brief period in Dec, when it appeared a Wave 5:5had completed, the Dynamic Trading analysis and trading strategies continued toproject higher prices as the market moved up from one price objective to the next.
If you review these S&P reports again, the importance of Dynamic Tradinganalysis should become obvious.1, Dynamic Price Analysis is much more than obvious support and resistance levels.Comprehensive Dynamic Price Analysis often provides the minimum price targetanticipated for the market position. Dynamic Price Analysis also often providesthe specific price levels that should not be exceeded if the opinion of the marketposition is valid.2. Dynamic Time Analysis provides the specific time periods with a very highprobability of trend reversal. Almost every intermediate-term high and low shownon the chart above was made within one trading day of a time projection.Dynamic Time Analysis also provides the trader and investor with the minimumtime objectives probable for any degree swing.
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3, Practical Elliott wave analysis often provides a very confident opinion of marketposition. When Elliott wave pattern analysis is combined with dynamic time andprice analysis, high probability time and price projections are possible. The failureof many Elliott wave analysts is they trade their forecasts, not the market behavior.Any market will usually confirm or invalidate an Elliott wave forecast veryquickly. To fail to recognize the confirmation or invalidation of The Elliott waveopinion is to fail to understand the practical application and true value of Elliottwave analysis.By applying Dynamic Trading analysis methods you have learned in this book,you will be prepared for the highest probability market activity in the same mannershown in these reports.Now, let's move on to examples from other markets.
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NIKKEI: The Nikkei has probably completed a major top In June. Summer time is an important period forseasonal change in the Nikkei. Note on the weekly chart that the last three major trend changes took placeIn Aug., June and July, The decline from the June 1996 high has exceeded the 100% Alternate PriceProjection and reached the 61.8% retracement of wave five. While the long term trend remains unclear InThe Nikkei, it appears June has began a decline that should fit least correct the entire rally from the July1995 low.
The following page shows the outcome of the Nikkei from the June 1996 high.
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Follow-up Comments To The Nikkei In The Aug. 1996 ReportThe Nikkei has declined over 25% from the June 1996 high through March 1997. Asimple analysis of wave structure and the time of prior highs, and lows signaled the highprobability outcome from the June high.The chart below shows the Nikkei through March 1997. Do you think the bear trendfrom the June 1996 high through the Jan. 1997 low is a correction or [he beginning ofan impulse trend to new lows? What is your rationale?
The Jan low was made at the coincidence of the 61.8% retracement and 162%Alternate Price Projection. Based on simple price projection analysis and wave form, theodds are high the Jan. low was not the completion of a corrective low. The odds are theJan. low was a Wave-3 not a Wave-C of an ABC correction. The C-Wave is more oftenequal to 100% of the A-Wave, not 162%. A Wave-3 is often equal to or greater than162% of the Wave-1.If we consider the Jan. 1997 low the end of Wave-3, what would be the pattern factorthat would invalidate this idea? A Wave-4 should not trade into the price range of Wave1. If the Nikkei rallied above what is shown as the Wave-1 low, the bearish outlook forthe Jan, low to be exceeded is at least questionable.
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Strait Times (Weekly): The Feb. top should not be exceeded for years. The ST shouldcomplete a five wave decline within the relatively broad supporl zone of 2032-1948 whichincludes the 78,6% retracement. W.5=100% W.1, W.5=61.8% W.1-3 and W.5=162% W.4.
The following page shows the outcome of the Strait Times Index following thecomments from the Nov. 1996 report
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Follow-up Comments To The Strait Tunes Index In The Nov. 1996 ReportThe Wave-5 low of 2035,0 was made just three points short of the ideal price projectionfor Wave-5 of 2032-1948.
Elliott wave analysis and Dynamic Price Analysis prepared traders and investorsfor a major low chat was followed by the largest rally in almost a year.
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Cattle (Feb.)Resistance: 65.30-65.54Support (11/14H): 64.45-64.21, 63.96-63.88, 63.61-63.45, 63.11The sell order was not elected last week. Cattle made a five-wave decline into the Oct. 25 low. Cattlehave rallied to what should be the maximum objective if the rally is corrective. The Nov. 14 highappears to have completed an ABC correction at the 65.20-65.54 resistance zone which includes the78.6% retracement, wave-four high, 100% alternate price projection (W.C=W.A) and 262%retracement of W.B (W.C=262% W.B). A close over 65.54 signals the rally is probably not correctivebut should continue to rally and exceed the Aug. high. Seasonally, Feb. catlle have a high probabilityto be down from Nov. into Jan. or Feb. We should continue to initiate short position strategies as longas cattle have not closed above 65.54.Short and Intermediate Term Traders: As tong as cattle have not closed above 85.54. sell cattle atthree ticks below the prior day's tow. Adjust the protective buy-stop daily to one tick above the 3DH(three-day-high).
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Follow-up Comments To Cattle In The Nov. 16, 1996 ReportFor markets other than the S&P, the weekly report often provides specific traderecommendations. Specific trade recommendations are not provided for the S&Pbecause of the enormous volatility that can occur during the week, making itimpossible to provide judicious protective stops with trade recommendationsfrom a weekly report.The Nov. 14 high was made at the ideal price projection for a Wave-C correctivehigh. While the Dynamic Trading book has not discussed seasonal tendencies inmarkets, many of the agricultural markets have very reliable seasonal tendencies thattraders should be aware of.Note that the recommended sell strategy was to wait for a prior daily low to beexceeded before entering the short position. In other words, a minor confirmation ofa bear trend. The sell strategy was voided if cattle closed over the upper extreme ofthe resistance zone. If cattle exceeded the extreme resistance zone typical for an ABCcorrection, the odds are the rally was impulsive, not corrective, and new highs wouldeventually be made.The following page shows the next week's report and how the analysis andtrading strategies worked out.
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Fallow-up Comments For Cattle To The Nov. 21, 1996 ReportCattle declined sharply, electing the sell-slop for a short position as anticipated.Dynamic Trading analysis prepared traders to take advantage of a low-risk andlow-capital exposure trade. What ever your trading time frame, short, intermediateor long-term, you must have the patience to wait for the best opportunities.
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Gold (Dec., daily): The decline below the wave-B low signaled the rally from the Oct. 1 low isprobably corrective and not impulsive. The odds favor a continued decline to the 378.0-376.4support zone. Only a close above 386.5 (10/22H) will void this immediate bearish outlook.
Follow-up Comments For Gold To The Nov. 1996 ReportWhy was a new low below the Oct. 1 low anticipated? Gold had declined below theWave-B low signaling the rally to the Oct. 22 high and 38.2% retracement was anABC correction, not the beginning of an impulsive trend- If the Oct. 22 high was aWave-4, the ideal price projection for a Wave-5 low was 378.0-376.5. Nov. 4-6 wasprojected as the ideal time for a Wave-5 low.Did gold make a Wave-5 low in the time and price targets as anticipated? Thenext page shows what transpired in the following weeks.
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Gold continued to decline to a new low just as anticipated. On Nov. 1, one tradingday prior to the Nov. 4-6 PTPP for a low, gold made a reversal-day low at 377.8,precisely within the price zone projected for a Wave-5 low. Time, price and patternplus a daily reversal signal seemed to coincide for an important low. Gold rallied $8and then fell out of bed and continued to decline to new lows.The Time and price projections were right on for alow, hut not a major low asanticipated by the Elliott wave interpretation that considered the Nov. 1 low thecompletion of a five wave decline.Dynamic Trading analysis and trading strategies will not project the marketposition correctly all of the time. No method of analysis is capable of doing that.The time, price and pattern position of the Nov. 1 low provided the trader andinvestor with a definitive, maximum protective stop-loss for long positions of one tickbelow the Nov. 1 reversal-day low.When the Nov. 1 low was exceeded, traders could hold no bull market illusions,at least for the time being. The market itself had invalidated Nov. I as a major lowand signaled the bear trend would continue.
Trade marked behavior, not forecasts- Always identity the market activity that willinvalidate your opinion of the market position and do not fail to act when the markettells you in no uncertain terms that you are wrong.
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Follow-up Comments For Bonds To The Sept. 7, 1996 ReportAlthough the larger degree pattern position is not shown in the limited period of thechart above that was included with the Sept. 7 report, the Aug. 13 high wasconsidered a major Wave-2 high. If it was indeed a Wave-2, it was not anticipated tobe exceeded prior to a continued decline to new lows. The rally from the Sept. 6 lowwas anticipated to be a correction to the five wave decline from Aug. 13 to Sept. 6.How did it turn out? See the next page for a follow-up chart and more comments.
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The chart below shows the bond activity following the Sept. 7 report. Bondscontinued to rally from the Sept. 6 low just as anticipated The buy-stop to enter along position was elected the following trading day, Monday, Sept. 9. Bonds ralliedalmost straight up from there. The minimum price objective for the rally was 108.18(50% retracement) and was reached within a few days.The "correction'1 was projected to last at least to Sept. 19. The rally continued toSept. 19 as anticipated, and beyond.
How To Be Wrong And Still Make Money!Bonds eventually exceeded the Aug. 13 high, contrary to expectations. As it turnedout, the rally from the Sept 6 low was more than a correction to the Aug. - Sept.decline. It was part of a larger degree correction begun from the June 1996 low. Youdon't have to be right to make money trading. But you do have to quickly respond tothe market, which is always right.The excerpts from subsequent reports on the following pages follow-up on thebond position and trades.
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Bonds (Dec.): Bonds also mode a wide-range reversal today, with a close near the high. Todayslow was made in the 61.8%-78.6% retracement zone and should be a wave 2 of 5 low. Unlessbonds exceed today's low of 110.11, the odds favor a continued rally to test or exceed the Oct. 4high.Short Term Traders: Buy a break above the first hour's trading tomorrow. Place a buy stop onetick above the first hour's trading. Place the sell stop one tick below the first hour's trading; OR,buy at 110.23 OB. Place the protective sell stop at 110.10.
Update CommentsNo charts were included with the mid-week update report. The daily chart below showsbonds from the Sept- low through Oct. 23, the date of the mid-week report.
Bonds appeared to have completed a minor wave 2 of 5 low on Oct. 23, the day ofthe report.
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Follow-up CommentsThe 110,23 OB buy order was elected on Thursday, Oct., 24 and stopped out thefollowing day, Friday. Friday made a wide-range outside-reversal-day. The Oct. 16,Wave-4 low had still not been violated nor had the outlook for a continued rally to113.05 or higher.The trade resulted in a minor loss but the market had not violated the outlook for acontinued rally. The stop on the trade was placed below the previous low. It could havebeen placed below the Oct. 16 low of 109.26, but that would have resulted in almost a$1000 capital exposure from the 110.23 OB entry. The Oct. 26 report considered newtrade entry strategies on the long side as long as the Oct. 25 reversal-day low was notexceeded.Let's take a look at the following week's report to see how it turned out.
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Follow-up CommentsWhile the OCT. 24 long trade resulted in a loss, the Oct. 29 trade was a winner. Even if atrade is stopped out, there is no reason to abandon the market if the market activity hasnot invalidated the longer term outlook, in this case, for higher prices.The profit/loss trade recommendation table shown above includes the recent bondtrades up to the time of the report. Did the bond market complete the wave-five for atop as anticipated? I reported in the Nov. 6 mid-week update report the trend was about toreverse.
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Bonds (Dec.): Cancel the buy set-up recommendation from last Saturday's report. Minor cyclesexpand the upper end of the resistance zone to 114.09. 2CHDCA 114.09 Signal a continuedadvance to 115.29 or higher. We are now in the ideal time period of Nov. 1 -6 for a corrective top.Bonds have made at least a marginal new high as anticipated in last Saturday's report. Althoughthe pattern is not ideally formed to signal a final top, a short strategy is recommended on thestrength of the time and price projections.Short and Intermediate Term Traders: Sell Dec. bonds tomorrow at 113.07 on a stop. Place theprotective buy stop at 113.24.
Follow-up Comments To The Nov. 6 Update ReportEverything seemed to be in place for bonds to complete a five wave advance. The sellstop order was a few ticks below the low of Nov. 6 (chart not included with the updatereport),
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Follow-up To The Nov. 7, 1996 ReportThe short position was elected on Nov. 7 per the Nov. 6 update report but was stoppedout the same day on the wide-range outside-day for a small loss. Even though this tradewas not successful, bonds had still not exceeded the maximum time and price zone fora corrective high.There is an important analysis and trading strategies lesson to be learned from theNov. 7 report. Bonds were at the extreme projections of time and price for a correctivetop. The trading strategy was to sell if a minor low was exceeded or buy if the priceresistance zone were exceeded. Note that the Resistance section commented that therewere no price projections between 114.18 to 115.29. In other words, if atop was notmade as anticipated and bonds continued to rally, they would probably continue 10 atleast 115.29. Trading strategies would place the trader in a position no matter whichdirection bonds took. Trade market behavior, not forecasts.
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Follow-up Comments For Bonds To The Nov. 16 and 27, 1996 ReportsAs you can see from the Trading Recommendation Profit and Loss Table For Bonds,the Dynamic Trading analysis and trading strategies had nailed the bond market forseveral months. There were two relatively small losses and a number of significantprofits during this period.The outlook for a corrective top to be made below the Aug. 13, 1996 high wasdead wrong, yet the trading continued to be profitable. Trade market behavior, notforecasts. The important lesson is there was a consistent application of the DynamicTrading analysis methods and trading strategies. While small losses were incurred,the net result was profitable.The Nov. 27 report stated the Nov. 26 reversal-day high, which was made at a directhit of projected time and price for a major corrective high, was probably the completionof a corrective lop. The report also stated that if bonds made a new high, the final topshould be complete by Dec.6 (Dec. 4-6 PTPP). A stop-and-reversal from a long toshort position was taken on the break below the first hour's range on Nov. 26, the dayof the high.
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How did this short position turn out? An Update Report was issued on Dec. 4. Thecomments from this report are shown on the following page. No chart was includedwith the update report.
Bonds (Dec.)Bonds exceeded the high of Nov. 26 and elected the protective buy-stop on the short position onthe gap opening at 116.15, Tuesday, Dec. 3.Tuesday's high probably completed the correctiverally one day prior to the Dec. 4-6 PTPP for a top.Short and intermediate term Traders: As long as bonds have not traded above 116.12. sell bondson a stop one tick below the low of the first 30 minutes trading. Exit on the close of entry day if theclose is above the current day's open. If not stopped out on entry day, place the initial protectivebuy-stop at 116.13.
Follow-up comments to the Update ReportAlthough the short position taken Nov. 26 was stopped out, bonds were still in the timeand price zone for a major corrective high. As long as a market is in the time and pricezone for a trend change, traders should take every opportunity to enter the trade. The Dec.3 high did not quality as one of the daily reversal signals even though the close was in thelower half of the daily range and below the day's open. The recommended sell signal wasa decline below [he trading range of the first 30 minutes, a minor signal of bearish trend.The sell signal was only valid if bonds had not traded above 116.12, minor resistanceon the intraday chart (not shown) that should not have been exceeded if the bear trendwas to continue.How did the Dynamic Trading analysis and trading strategies work out for this shortposition in bonds? The chart on the following page shows the outcome.
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The sell signal of the break below the range of the first 30-minutes was made thefollowing day, Dec. 5. Bonds continued straight down without electing the initialprotective buy-stop at 116.13 recommended in the Dec. 4 Update Report. The chartbelow is [he March contract in order to show the bond trend through Jan. which waspast the Dec. contract roll-over.
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How did It turnout?
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British Pound (weekly): The pound has reached the important resistance zone of 170.99170.04 descrlbed in last month's report. The pound is at or near a wave-five top. This idealprice zones for a wave five high are either 170.90-171,10 or 173.65-174.40. The Dec. 31high at 171.28 was just a few ticks above the first zone. Dec. 31 appears to be a wavethree high which implies the pound should make one more minor swing to a new high. Ifthis should unfold, the top should be made no later than Jan. 14. A close below 167.25signals wave-five is complete and a greater decline in time and price than any since theMay low should unfold.
How did it turn out?
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Follow-up To The British Pound Analysis From The Jan. 1997 ReportSimple price and pattern analysis prepared traders and investors for the largest declinein price in over a year. Take another look at the chart of the BP from the Jan. 1997report on the prior page. What does it imply for the long term position of the BP? Ifthe wave count is correct, the Jan, high was the completion of a long term correctionwhich should eventually be followed by a decline below the May