A little while back, EWI's Futures Junctures Service editor Jeffrey Kennedy asked his subscribers to send in any and every burning question they've been aching to get off their chest with regard to trading markets via the Elliott Wave Principle and various technical indicators.
In no time, Jeffrey's inbox was as stuffed as Santa's letter drop in late November. Hundreds upon hundreds of emails came pouring in. Jeffrey sussed through them and found they all fell into three main categories: Analysis, Trading, and Forecasting.
Not wanting to lose the rawness of the questions OR the passion of his answers, Jeffrey went ahead and turned on his webcam, cued up his mic, and started filming a 3-part video series to address each category on its own.
Aptly titled
"Jeffrey Kennedy: Uncut," these educational videos provide a rare and uncut behind-the-scenes look into how EWI's premier commodity analyst goes from hand-drawing Elliott wave labels on a market's price chart -- to hand-picking high-probability trade set-ups.
On December 6, Jeffrey completed the first Analysis video and released it to all Futures Junctures Service subscribers. Here, Jeffrey lets the tape roll for over one hour! And in that time, he opens the floor to these and many more penetrating questions: (All quoted/italicized text comes directly from the video)
Q1: Is it true that in order to be a successful commodity trader, you have to know a guy who knows a guy who gives you back-door access to some highly classified charting software?
Jeffrey: No way. "There is no super secret technical proprietary algorithm to identify high probability trade set-ups." The most basic, readily available technical tools will do the trick. The trick is to learning to use those methods properly.
Q2: What is your favorite technical tool?
Jeffrey: "The first tool that I will always say is the best one to work with is Trendlines... They show how powerful a ruler and a pencil can be on a price chart."
In the Analysis video, Jeffrey shows exactly how to draw trendlines in a classic five-wave Elliott structure, AND applies his own "Kennedy Channeling Technique" to the price chart of Ford Motor Co.
Q3: When I look at a commodity price chart, I get overwhelmed by the volatile, up and down swings and can't see a clear pattern in the chaos. Any suggestions?
Jeffrey: "One tool I use quite frequently to 'Take out the Noise' is Moving Averages."
Jeffrey then illustrates how a "valid breach" of a 10-period simple Moving Average in the Dow Jones Industrial Average signaled the long-term trend was turning down in October 2007.
Q4: Are Stochastics a reliable oscillator?
Jeffrey: Traditional stochastics define a reading above 70 as 'overbought' and a reading below 30 as 'oversold.' "I do not like these terms. They have probably cost more traders more money than any other actual thing I can think of." After 20-years of trial-and-error, I've discovered a much more reliable "signature" for stochastics using the 50 handle.
In the Analysis video, Jeffery uses a real-world chart of soybeans and corn to demonstrate his revised stochastic settings.
Q5: Is more better when it comes to technical analysis?
Jeffery: No, and No. "You have five fingers and you should never have more than five things working at the same time, preferably less." Too much stacking of technical measures ultimately leads to "Analysis Paralysis... The best advice I can give you is to keep is simple."
To prove this point AND end his video on a cliff-hanging note, Jeffrey applies three simple tools to a price chart of Alcoa, Inc (the world's largest aluminum producer). And, one look at this chart reveals exactly where prices could be moving forward in time.