Trading Lesson: Can We Really “Time” The Market?

MoneyShow |


The question I posed in the headline of this article has been debated ad nauseum by market participants for decades. While we clearly have “cycles” analysts who claim that the market can be timed, there are significantly more doubters than believers, writes Avi Gilbert.

For those that know me, you would know that I run several trading rooms accommodating approximately 3700 subscribers and over 450 money manager clients after providing public analysis for about six and a half years. So, one can say that I have a significant amount of experience in seeing many forms of analysis and methodologies through the years.

Being an Elliottican myself, I believe there is a certain amount of symmetry within the market wherein we can identify high probability targets based upon Fibonacci mathematics. However, I am not of the belief that we can time the market to the extent that the common cycles analysts claim.

While I have studied different types of cycles methodologies in great depth and have debated and discussed cycles analysis through the years with many cycles analysts, I have yet to find a single cycles analyst that can claim a success rate of greater than 50% based upon only their cycles analysis.

During my in-depth study of cycles and debates with cycles analysts, I have one theoretical question which has yet to be answered by a single cycles analyst: How can we fit a non-linear environment into a relatively linear timing box?

I have never received a single answer that has addressed this theoretical conundrum. Moreover, I have not found a single analyst who only uses cycles timing as their primary methodology that can claim an accuracy percentage of greater than 50%. In fact, I have seen cycles analysts blow up more subscriber accounts than any other type of analysis methodology I have studied through the years.



After many years of in-depth study of many different market analysis methodologies, it has led me to the conclusion that, while a highly skilled analyst can identify high probability targets within the market, timing is still the elusive factor which has yet to be conquered by market analysts to any degree of higher probability, especially when it is based upon general linear timing patterns.

Now, this is the point at which I will qualify my perspective based upon my experience. You see, whereas I have not seen compelling proof that one can time the market based upon the relatively linear timing cycles commonly followed by the masses, I have found that one can “time” the market based upon a Bayesian probabilistic analysis of fund flows.

Luke Miller, who runs our Bayesian Timing Signals service at Elliottwavetrader.net, analyzes options pricing to determine market direction and timing of market turns and provides a much more reliable market timing technique than traditional cycles analysis. Luke’s Bayesian timing research has been presented all over the world and most recently won Best Presentation Award at the 18th International Conference on Business & Finance in Paris.

So, Luke’s timing methodology has clearly satisfied me when it comes to the issue I have with traditional cycles analysis, as it does not place its timing parameters within a linear box, but, rather, calculates market timing based upon the fund flows he tracks through his proprietary analysis of options pricing. Luke has certainly been blazing new trails when it comes to timing a market.

Avi Gilburt is a widely followed Elliott Wave technical analyst and author of ElliottWaveTrader.net (www.elliottwavetrader.net), a live Trading Room featuring his intraday market analysis (including emini S&P 500, metals, oil, USD & VXX), interactive member-analyst forum, and detailed library of Elliott Wave education.

About MoneyShow.com: Founded in 1981, MoneyShow is a privately held financial media company headquartered in Sarasota, Florida. As a global network of investing and trading education, MoneyShow presents an extensive agenda of live and online events that attract over 75,000 investors, traders and financial advisors around the world.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Comments

Emerging Growth

Margaux Resources Ltd.

Margaux Resources Ltd is a Calgary based resource company. The Company is focused on its Jersey Emeral Tungsten-Zinc property located in the southeast portion of British Columbia.