Markets develop impulses which displays some similarities with what you experience at sea. After a big anomalous wave you can expect a period of lower waves. That is when you want to change the course of your ship because it is easier to turn. A second series of waves will then challenge your ship; they can be weaker than the first series or bring a renovated impulse to mounting seas. We have experienced in the market a first big impulse to the downside with increased volatility, followed by a rebound characterised by lower ranges and volume. A good opportunity to exit the market in the short term. The second series of waves has now started toward the downside. It remains to be seen whether it has less strength than the first and it will not reach or only test previous lows. Or it will surge higher and bring the market to print new lows.





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1 Comment so far

  1. Denise Shull on August 30, 2007 1:42 pm

    Almost from the day I began learning about intraday trading (while finishing my grad work at Univ of Chicago in 94), it appeared to me that market moves are very much like the waves of the ocean. In fact, sometimes in the midst of volatility, I shut my eyes and imagine the prices as waves on the beach. Surely others (besides the EW crowd) must have seen this but I think this is the first time I have read it in such a well-articulated way.


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