number one rule is to protect principal. Our timing strategies
look for turning points in the market based on predictable Elliot wave
patterns, using Fibonacci support and resistance ratios (see chart
below). We only reinvest these funds when acceptable major turning
points are again achieved, and we use stops to protect against loss.
If we do not see a pattern with predictable results, we wait on the
sidelines until we do.
Our timing analysis always alerts subscribers "ahead of time"
of potential turning points in the markets, and "always" sets stops
and projected profit points.
What are Fibonacci Ratios? Leonardo Fibonacci was a 13th
century accountant who worked for the royal families of Italy. In 1242
he published a paper entitled "liber abaci." The basis of the work
came from a two-year study of the pyramids at Gizeh. Fibonacci found
that the dimensions of the pyramid were almost exactly the same as the
golden mean or (.618). Fibonacci is most famous for his Fibonacci
Summation Series which enabled the Old World in the 13th century to
switch from Arabic numbering (XXIV=24), to the arithmetic numbering
(24), that we use today. For his work in mathematics, Fibonacci was
awarded the equivalent of today's Nobel Prize.
The Fibonacci Summation Series takes 0 and adds 1. Succeeding
numbers in the series adds the previous two numbers and thus we have
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89 to infinity. At the eighth
series, by dividing 55 by 89, you have the golden mean: .618. If you
divide 89 by 55 you have 1.618.
These ratios, and several others derived from them, appear in
nature everywhere, and in the financial markets they often indicate
levels at which strong resistance and support will be found. Combined
with our extensive technical analysis tools and over twenty years of
real-time experience, these ratios have become a mainstay of our
Elliot Wave Patterns, in short, are usually a three or five
wave series of advances, or declines, that define a trend. They are
the result of crowd psychology, and thus are usually more reliable
when found in broader based indices, such as the S&P 500 Index, Nasdaq
Composite Index, etc.
Typically, if the S&P 500 Index moves higher in a 5 wave pattern, and
then falls below the top of wave 3, it signals the start of a
retrenchment that normally consists of 3 waves. It works the other way
too with a five wave pattern defining a bear trend, which is then
reversed by a 3 wave rally, which eventually reverses and another five
wave pattern begins to the downside. Finding a wave pattern that
completes at a strong Fibonacci support or resistance level, can be a
very reliable indicator of a change in trend.