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Impressions from Elliott Wave revisionist Glenn Neely's seminar

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Wavepicker and I attended a promotional seminar with Glenn Neely last night in Melbourne, so I thought I’d post up my impressions. While the purpose of such promotional events is to sell services, we still thought it would be interesting to see Neely in the flesh and see what he had to say. What followed was eye opening.

Glenn Neely for those who don’t know about him made several key market forecasts over the last 20 odd years, and won a host of trading competitions in the US.

He wrote, "Mastering Elliott Wave", which departed from traditional Elliott Wave principles and founded the “NEoWave Institute” and concluded: “in its original form many concepts and ideas concerning real-time application of the Elliott Wave Theory are not always clear”. Neely developed concepts such as “mono waves” and “poly waves” (but focuses on starting at the largest degree and working down). Just do a search for more information.

Just let me say from the outset that I have a lot of respect for Glenn Neely, and that he made some exceptional market calls in the past (certainly when I had absolutely no idea of how markets worked back in the 1980s), and is obviously a very gifted analyst, and certainly developed an elaborate revision of traditional Elliott Wave theory.

The first half of the seminar was quite interesting, and it was worthwhile to see him in action since most of the people in the room were familiar with Elliott Wave principles, so he got straight into the detail about where traditional Elliott approaches fail, and gave examples of how to avoid having to change counts by eliminating simple errors in analysis.

Wavepicker noted that there were parallels with Poser’s works. Neely showed where common errors are made in interpreting a range of patterns, which included the time different waves need to play out in proportion to each other, and in terms of price proportions to each other. This was really interesting work, and although I see this intuitively myself in charts, seeing this crystallised in a systematic way was beneficial (even at a simplistic level for a seminar). It certainly inspired me to continue to think more about wave structure.

For the second half Neely introduced his new flagship concept “River Trading” technique, which was essentially explained through an analogy as the market is like a kind of river, and the traders (fish) float downstream. Essentially the idea is that there is “turbulence” at the banks of the river, and the faster flow is in the middle of the river as it meanders and turns flowing to the ocean, hence if you can figure out where the “banks” are, you’ll be able to interpret this turbulence and set entries, exits and stops. He claims to have developed a proprietary approach to do this.

Another aspect of the approach was that there are 24 conditions where traders and investors of various sizes will get into or out of positions depending on their resources and time frames, and that essentially if you can work out which player is doing what, then you can use this to your advantage.

Frankly I wasn’t impressed. Sure psychology is involved in how markets work, and this subject has been covered in depth for a long time. If you’re a chartist, and you use a concept like Elliott waves, you’re partly looking at a representation of crowd psychology in the market, and the detail in the charts tells you something about sentiment. Looking at patterns is I believe an important part to this.

I got the impression Neely may have lost confidence in his forecasting ability, saying things like “I’m tingling just thinking about it” referring to his new “River Trading Technology”, but didn’t convince me sufficiently to pursue this right now. I think I’ll watch and see how it goes, rather than shell $5000 - $6000 out for a seminar on “River Trading”.

Wavepicker and I got a chance to talk to him at the end of the seminar, and while we didn’t want to disrupt his selling efforts still wanted to ask some in depth questions, some of which were challenging. I must say that I was both impressed on one level at the wave material, and disappointed on another about the “River Trading” concept. The teaser about “River Trading Technology” just seemed like a rudimentary version of wavepicker’s envelope cycles to me, but not as developed.

His view is that at certain times in the macro structure of markets, that forecasting becomes impossible using his methods since there are key times that wave structures allow very detailed forecasts, and times they don’t. The recent period he contended was very difficult to call since the wave structure was at a juncture which didn’t allow for good forecasts. This made a lot of sense to me, since I think a range of methods tend to vary in their effectiveness depending on a range of variables.

My suspicion is that Neely has had a crisis of confidence, and little hints he made during the seminar about losing $70,000 US in a day makes me think that he may have recently suffered psychologically as a trader, and may be going through a syndrome I’ve observed for many traders who have had excellent results with a system for a long time, and then a series of sustained losses during times when their approach/system is less suited to a market phase that they haven’t recognised at the time.

When I asked him if he believed that there is order in the markets, his response was dismissive. During the discussion, I found that he has a very limited concept of time and its importance, citing “positive time” and “negative time”, and certainly noting time in Elliott patterns in terms of the time a first wave and second wave in an impulse are related, which I salute.

However, he has totally moved away from “forecasting”, and claims his “river trading” approach is applicable in all market conditions. He is closed to the idea of using a range of cycle approaches in order to time the market.

I cannot be certain, but it dawned on me that perhaps Neely isn’t a pattern trader at all, although you would think that trading EW styles is inherently based on pattern, but perhaps not. Perhaps some people just see the waves, but can’t see (McLaren styled) patterns of trend. I suspect that if he both understood patterns of trend, and in particular (McLaren based) counter trends, and combined this with time cycles, this may ameliorate the problems he has been having with his analysis.

Neely despite using the term “counter trend” I think doesn’t really understand this concept, certainly not in the McLaren terms. Also, I suspect the way Neely has set his chart filters to highlight wave structures may to some extent actually obscure important elements of chart patterns that he’s not aware of. Interestingly he’d never heard of McLaren, or Miner, or a series of other players I would have thought he should have known about.

wavepicker and I discussed the ground he’d covered on the way home and both concluded that there are 3 core elements to effective technical analysis in the charting/forecasting realm, and they are (in order):
• Pattern
• Time
• Price

For wavepicker and I, pattern includes wave structure (wavepicker sees these as inherently linked), but I can see that there are patterns without wave structure included, or wave structures without other patterns included, hence I can see now how there may be some confusion here.

But a key element to technical analysis wavepicker and I agreed on is TIME. Whether Yogi, Frank Delernia, or I have different approaches to various concepts, we’re all lining up on the importance of time. Yogi and I for instance can trade primarily by time. I don’t think Neely has explored this area much, and the “positive” and “negative” time concept seemed very rudimentary to me.

I suspect that Neely is very focussed on his new theory to the exclusion of all other works in different fields. Not only is he unaware of whole bodies of technical analysis concepts, he is also apparently quite closed to even considering them.

While I respect the work he has done in the past, and respect that he has every right to think whatever he likes, and develop in his own way, to write off all other alternative paradigms without even understanding them I think is potentially a serious omission in pure technical analysis thinking. I suspect that he has missed several important pieces of the forecasting puzzle which may have the potential to restore his faith in his earlier works, which in my view were inspired.

To abandon the premise that there is order to markets and his revisions to Elliott Wave theory and forecasting altogether, and shift to what I interpreted to be essentially a “random walk” perspective embracing some kind of chaos notion about markets, is a monumental shift in thinking (he called it a paradigm shift – I’d call it a retrograde step).

In my view, Neely would have a much wider audience if he focussed on what he is good at, and that is explaining the pitfalls of traditional Elliott Wave theory, and how to correctly interpret wave structures. This is his core ability. I found his departure from this body of knowledge and forecasting in general, bizarre.

I hope he really has found the Holy Grail to trading, but I have to say, both from what I saw of the second half of the seminar on “River Trading”, and his unconvincing answers, that he is not open to alternative views that might help him to actually fill in the missing pieces of the puzzle and improve on his Elliott revisions.

I really hope he resumes his excellent work in wave structure, and considers looking at cycle based approaches more, and returns to the notion that there is order in the market.


Regards


Magdoran
 
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:)

Many thanks for your overview of Neely's work, Magdoran .....

..... great stuff, as usual ... !~!

happy days

paul

:)

=====
 
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Hi Mags,

Good to see that you managed to go to the seminar.

Thanks for the synopsis.

Cheers,
Les.
 
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Wow, great write up..

Although I understand the words, reading that really impresses upon me the sher amount of knowledge that's required in tech analysis..

From a beginners point of view, it feels reassuring that there are people out there being intelligently critical of high priced trading plans... and posting on public forums too! :)
 

doctorj

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Magdoran, I barely understood a thing you said, but it sounds impressive :) I look forward to revisiting this thread in a couple of years.
 
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:)

Many thanks for your overview of Neely's work, Magdoran .....

..... great stuff, as usual ... !~!

happy days

paul

:)

=====
Hello Paul,



You’re most welcome. I thought you might find the rejection of time techniques interesting.


Regards


Magdoran
 
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Hi Mags,

Good to see that you managed to go to the seminar.

Thanks for the synopsis.

Cheers,
Les.
Hello Les,


How is all the testing and development going?

Glad the synopsis was of interest. I thought you might find it interesting that Neely despite his brilliance at forecasting in the past, and his genius in revising Elliott Wave theory just didn’t seem even remotely interested in time techniques.

wavepicker is a consummate EW practitioner, and he has had Neely’s book "Mastering Elliott Wave" for years, and noted the rigour involved in his works, but noted that it wasn’t really practical for many people other than professionals, or very dedicated people since it was so involved.

Both of us I must say were stunned that he was so anti-forecasting. The vehemence was so pronounced that it caught me off guard. I thought I was meeting a leading light of the ordered market perspective/paradigm, only to find the abandonment of his earlier works - which surprised the hell out of me, and meant I couldn’t ask him a range of questions on his perspectives on EW flaws I was hoping to raise with him.



Regards


Magdoran
 
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Wow, great write up..

Although I understand the words, reading that really impresses upon me the sher amount of knowledge that's required in tech analysis..

From a beginners point of view, it feels reassuring that there are people out there being intelligently critical of high priced trading plans... and posting on public forums too! :)
Hello Andy,


Thanks!

Yup, T/A is quite a beast, and just when you think you’ve got it figured out, something new jumps out (well hopefully – if you want to keep growing of course).

Glad it was of interest.



Regards


Magdoran
 
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G'day Magdoran

Thanks for the excellent write up of the Neely Seminar (written like it should be in a newspaper or something).

It was interesting to read the analysis you and Wavepicker discussed.

I suppose that either Neely thinks, like you say, that he has developed the holy grail with his "River Trading" (and has devoted his time and effort to it), or he has developed something that is easier to sell to punters (at $5-6k , maybe the latter).

However, his previous work is still very interesting for EW students.

Cheers

Dutchie
 
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Magdoran, I barely understood a thing you said, but it sounds impressive :) I look forward to revisiting this thread in a couple of years.
Hello doctorj,



Oh, was I that esoteric? Damn, I was trying to put in sufficient explanations to make it accessible for everyone that uses technical analysis, and especially for Elliott Wave users.

Essentially what I was getting at is that there are those who believe that there is an inherent order to markets, and those that don’t.

Further, that the forecasting/predictive technical analysis styles attempt to identify techniques and perspectives (paradigms) in order to develop effective methods for appraising probabilities (in my school we do this by observing past patterns in market behaviour, and try to estimate when to use these perspectives for making estimates in time and price in order to develop effective trading plans).

Me, I’m firmly in the ordered market camp, but respect the other point of view. The great divide is between those that believe that markets are ordered, and that therefore if you can identify key aspects, you can make consistent and (hopefully) accurate forecasts to trade from, and those that see much of the way markets trade as essentially random. It comes down to what you believe.

While I strongly believe in the order of markets, I recognise that there are complexities in everything that exists, and that at the highest level that this debate is really in the realm of philosophy (which is partly why I think people who studied philosophy like George Soros did under Karl Popper have a distinct edge provided of course they are capable in other key areas necessary to profit from the market).

Elliott Wave theory involves trying to predict the future and position based on this perspective based on a coherent set of rules based on Elliott’s expansive works on wave structures in markets. Neely was a significant revisionist in this field, and his works attempted to address a whole raft of deficiencies in the traditional approaches. He made a host of great calls like predicting the1987 crash, and the subsequent call that the 1987 low would hold for example. But at the heart of these calls in the past, he was very much involved in the process of developing rigorous forecasts.

When Neely clearly departed from forecasting, and to some extent adopted an approach that seemed more in keeping with the “random walk” styles (try looking this up on the net to get more information on it), this was a huge shock, when a person who had formerly been firmly in the ordered market camp, essentially from my perspective abandoned this paradigm for the opposite school of thinking. That’s a radical departure in my view, and quite unexpected, and frankly a bit of a jolt.

I hope that explanation puts my comments in perspective.


Regards


Magdoran
 
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Magdoran,
I enjoyed reading your thoughts on the seminar.

Thanks
Snake
Hello Snake!


Connichiwa!

Glad you found it of interest. I know you’re still working through Wyckoff and looking at EW, hence you may find it worthwhile to have a look at Neely’s earlier works at some stage.

I certainly found his coverage on basic errors in EW theory inspiring given that I think there is a lot of value in understanding wave structure - which I firmly believe exists, and is valuable as a component for making effective forecasts.

The value Neely seems to bring (since I’m still trying to get my head around his works) is in being able to fit the right interpretation of actual charts and recognise flaws in the original and even revised theory.

I think at a level he is acting as a kind of enlightened chartist looking for a set of patterns specifically in wave structure (I don’t think he is actually a pattern trader in the boarder sense, but probably a kind of "wave pattern" trader). I think he was able to research many markets and start to see sequences of smaller wave structures that were components of a larger structure, and apply this real time in the past. In the seminar he specifically stated that you should start with the largest (macro) degrees and work down, not the other way.

Great to hear from you Snake!


Regards


Magdoran
 
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G'day Magdoran

Thanks for the excellent write up of the Neely Seminar (written like it should be in a newspaper or something).

It was interesting to read the analysis you and Wavepicker discussed.

I suppose that either Neely thinks, like you say, that he has developed the holy grail with his "River Trading" (and has devoted his time and effort to it), or he has developed something that is easier to sell to punters (at $5-6k , maybe the latter).

However, his previous work is still very interesting for EW students.

Cheers

Dutchie
Hello dutchie,


You’re most welcome for the write up (thanks for the compliment too!).

As for relevance to EW students, Oh, I agree, Neely is one of the all time Elliott greats, no argument.

He was calling major tops and bottoms and significant moves when I knew next to nothing about technical analysis, and contributed a significant body of knowledge to Elliott Wave theory.

In fact I’m hoping to immerse myself in his earlier works and examine them in more depth in the future. So fully agree, I think if you’re serious about EW theory, you really should read Neely, Poser, Miner, Fischer… but wavepicker is way ahead of me here…

You’re quite right, Neely’s original works are quite involved, and is probably way over the head of the average punter who essentially wants to spend as little time as possible to make a few bucks, rather than view technical analysis and trading the market as an art in itself.

For me it is a passion, and the art appeals to me just as much as the monetary reward. Hence I’m probably the exception when it comes to an interest in the “Neo Wave” approach, so you may be right, maybe he wanted to put a simple approach out there for the majority that he can sell to a wider audience, I really don’t know.



Regards


Magdoran
 
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Hello Les,

How is all the testing and development going?

Glad the synopsis was of interest. I thought you might find it interesting that Neely despite his brilliance at forecasting in the past, and his genius in revising Elliott Wave theory just didn’t seem even remotely interested in time techniques.
Hi Mags,

The testing and development is going well and provides for a bit of fun and experimentation.

The main aim is developing filters to identify particular patterns or characteristics that are of interest. Really a system/strategy trader at heart, with an increasing focus on futures and currency as opposed to stocks.

Have finally managed to put together the remaining outstanding parts of my Wyckoff collection, or as much as I can without doing the SMI course.

Reading Hank Pruden's "The Three Skills of Top Trading: Behavioural Systems Building, Pattern Recognition and Mental State Management" at the moment, as well Wyckoff's book on Tape Reading.

From an EW perspective, my preference is for Neely's approach. Have copies of Prechter, Miner, Bolton and Droke, as well.

While Neely may have changed his view, for whatever reason, his EW work still covers the method in a manner that appears to fill in some of the holes or missing aspects when compared to other works in this area.

At the end of the day, understanding wave structure is one element. Whereas, consistently interpreting and applying it in practice, while keeping it simple, needs to be the end game.

Regards,
Les.
 
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Thanks for the overview Magdoran

There appears to be similarities between Frank Dilerna's central zone methodology and Neely's River Trading model.

Cheers
Happytrader
 
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Hi Mag,

Certainly the Neely seminar showed up some common problems most EW practioners encounter when dealing with EW Analysis.

Like the conventional EW practioner, Neely does not like ambiguities, subjectiveness, and multiple wave counts. As such he has attempted to rectify this by creating a more objective approach. There is some brilliant content in his book such as some of the ratio's patterns are priceless and often don't get the recognition they deserve.

Personally, I don't use his polywave or monowave stuff... just his very detailed info of wave structure in both time and price that ties in very well with the original Elliott works that helps to gain, more of a "feel" for the different types of wave personalities.

In his effort to make EW more objective however, and arrive at only one wave count, there is a plethora of extra rules and guidelines, way above and beyond what most EW parationers would use. Even contruction of his monowave charts are very time consuming and simply not feasible to trade. basically great for learning but too much work for too little gain.


I too have encountered the subjectivess, too many wave counts and ambiguities. I have in the last 3-4 years changed my approach by recognizing that there are 3 elements in overal market analysis:

-Pattern
-Price
-Time


The pattern aspect is the most important, and EW analysis as such will identufy most patterns one hopes, but there are other aspects that one should look at too. But pattern is also not always easily quantified. Time(time cycles) is the next most important. TIME is more important than price much more. It is the only thing that is constant and never changes, and when integrated with fibonacci relationships within price, one can have a powerful combination.


With the combined application of these 3 EW ambiguities and subjectiviness can be greatly reduced.

Cheers
 
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Hello Snake!


Connichiwa!

Glad you found it of interest. I know you’re still working through Wyckoff and looking at EW, hence you may find it worthwhile to have a look at Neely’s earlier works at some stage.

I certainly found his coverage on basic errors in EW theory inspiring given that I think there is a lot of value in understanding wave structure - which I firmly believe exists, and is valuable as a component for making effective forecasts.

The value Neely seems to bring (since I’m still trying to get my head around his works) is in being able to fit the right interpretation of actual charts and recognise flaws in the original and even revised theory.

I think at a level he is acting as a kind of enlightened chartist looking for a set of patterns specifically in wave structure (I don’t think he is actually a pattern trader in the boarder sense, but probably a kind of "wave pattern" trader). I think he was able to research many markets and start to see sequences of smaller wave structures that were components of a larger structure, and apply this real time in the past. In the seminar he specifically stated that you should start with the largest (macro) degrees and work down, not the other way.

Great to hear from you Snake!


Regards


Magdoran


Hi Magdoran,

Nice to see you back posting.:)
I appreciate the effort you put into your posts. It has helped me particularly with EW. As you know I am busy with some study that takes time so I am unable to contribute much in the sense of elaboration when it comes to EW. Wyckoff is a piece of cake compared to EW and is the basis of my discretionary approach. This thread has helped immensely and Wave and others have posted some thoughts which I appreciate too.

Regards
Snake
 

jammin

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Hi Magdoran,
I caught Glenn Neely in Sydney on the 31st of May and concurr with the general thrust of your critique. The first half of the night concerning the revision of EW theory I found most interesting. Of particularle interest was the inclusion of time parameters when calculating wave counts. I was motivated to investigate the book. The second half of the evening concerned with the new "river trading" as you have indicated, shows a depature from EW forecasting and a shift towards techniques to improve trading results. Whilst his "River" analogy was useful to convey his ideas, I kept thinking of similar techniques pulled from a wide range of trading legends. I am sure that the 5-6k course has a lot of detail that refined and enhanced his River theory, but it did seem, at the basic level he divulged on the night, he was trading a channel pattern. His theory provides the added explanation of the "tubulance" that may occurr at the "banks" of the channel and the accelerated price movement than can occurr in the middle of the channel; but it is still trading a defined channel pattern.

The highlight of the evening IMHO was meeting Catherine Davey ;) author of Making Money From CFD Trading: and How I Turned $13k Into $30k In Three Months. It would appear she has written an article relating to the Neely presentation for Investorweb.
 
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Thanks for the overview Magdoran

There appears to be similarities between Frank Dilerna's central zone methodology and Neely's River Trading model.

Cheers
Happytrader
Hello happytrader,

That’s an interesting comparison. Indeed, I suppose there are overlapping concepts in the two approaches, but without fully understanding both approaches, it is hard to fully compare and contrast the two.

My understanding of Frank’s approach is that he essentially uses a Fibonacci extension from a weekly bar to establish a price level which is then moved as new weekly bars emerge in order to establish one price level, and then uses the daily bars for the other level, and then generates a 50% level.

I can see how the upper and lower Fibonacci price levelsin the AMT model could be viewed as similar to the “North” and “South” ban k concepts in the “River Trading” analogy.

However, channelling styles have been around for a long time, and there are a variety of approaches such as Bollinger bands for example, and a host of “envelope” and “beam” approaches out there which try to determine where trends will oscillate around the major trend. Where these differ is in the configuration and the trading methodology.

Since I haven’t seen Neely’s “River Trading” approach in action and in detail, I can’t really comment since all I have to go on is the teaser I saw at the seminar, and the description in the link in post 15. As for the AMT model, again, I haven’t read Frank’s book and can only go on what I’ve seen on his threads on ASF and RC, hence my perceptions are incomplete.

What I do know is that these approaches do not really give precise time increments say like Yogi’s approach does, but are primarily price driven (although there is a time aspect to Frank’s approach). Wavepicker has been looking at “delta” timing recently, and of course those who follow my style can see that I use time and pattern as the primary drivers in most cases.

I am beginning to see that there is a kind of “class” distinction that can be made between a range of charting styles in this area, although that discussion probably needs a whole new thread of its own, doesn’t it?

Anyway happytrader, thanks for the observation.


Regards


Magdoran
 
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