Jimmy Buffett and Technical Analysis?!

By Todd Gordon
March 20th, 2023

“I can’t change the direction of the wind, but I can adjust my sails to always reach my destination”. 
Jimmy Buffett 

As you may or may not know, I’m a big Buffett fan. Jimmy in this case and not Warren. He’s not the greatest musician out there (by a long stretch), but his ability to tell stories, some true and some semi-true, remind us to work hard, play hard, and take it all with a grain of margarita salt is very unique and made him one of the highest earning musicians in history. His quote above is quite applicable to our preferred methodology of market analysis; Elliott Wave. 

You can never influence the market direction despite how strong a signal is from your indicators or analysis.  You simply have to go in the direction the market wants to blow, whether you agree with it or not, and make tweaks and adjustments to your strategy along the way to accommodate these natural forces much larger than you and I. If you try to fight either force you will quickly be reminded how puny and insignificant you are relative to mother nature and the capitalistic fear and greed forces driving stock market trends.

The other reason I included a Jimmy Buffett reference is people often misspell both my favorite musician and market methodology.  For ‘Buffett’ it’s two “f’s” and two “t”s. In Elliott is two “l”’s and two “t”’s. 

Back to Elliott Wave, it’s a methodology that is often a hot button of debate, praise, and criticism because well frankly, it’s hard.  It’s subjective as it requires you to constantly monitor the changing weather (market) patterns and make course corrections to navigate in the calmest waters avoiding the chop and rocks that can ground or sink your ship. 

I’ve heard the comparison / criticism of technical analysis that every boat that ever sunk to the bottom of the ocean had a chart on board with a navigational route planned out.  If you think about it, that’s a stupid comparison. How many boats in history have successfully navigated their course using charts to arrive at their destination vs boats that were unsuccessful and sank?  Probably 99.9% successful to 0.1% unsuccessful?  I’ll take those odds.

I think Jimmy Buffett, being the self-proclaimed son of a son of a sailor,  would approve of charts, on both his boat and his stock market analysis managing the many hundreds of millions dollars he’s made in his career.

The main reason I’m writing this it to not just share my love for Elliott and Buffett, but to tell you about a webinar we’re doing Wednesday that will be talking about our preferred charting software that helps to easily manage our Elliott Wave analysis – MotiveWave.  

MotiveWave software streamlines Elliott Wave in a huge way for us and helps us navigate these treacherous market waters and avoid the hazards.  

How did I first start to learn Elliott Wave?  Well, the story goes back to 2006.  I was working on Wall St in New York city as a technical analyst for a retail brokerage company and also a trader for the parent company’s hedge fund.  We would get technical research from the investment banks we traded with to hedge the customer order flow such as Goldman, Morgan Stanley, Barclays, even Lehman Brothers. The guys who put out the Elliott Wave and Fibonacci reports were the only technical analysts who were able to call market turning points with a relatively high degree of accuracy, but the key differentiating factor was not where the market would turn, but when. The guys focused on indicators would tell us what happened in the past and how the market responded.  

This was a major lightbulb moment for me in my trading career.  Elliott Wave was not just an analytical forecasting technique, but a trader’s methodology that helped you set up trades (with proper risk controls in place) well ahead of time.  

Being that I was writing a research report for brokerage clients around the world I had to give them actionable advice with a fair degree of lead time that would allow them to take action on that analysis.  As I became more and more comfortable with Elliott I began eliminating my shoddy unplanned trades in the hedge fund and trading only my single well researched trade that made it into my “Strategy of the Day” research report that went out to clients around the world. And guess what? My profitability improved significantly. 

As I sailed further along on my Elliott Wave career I thirsted for more repetition, guidance, and implementation of charting waves.  My only option was to wait patiently for my favorite investment bank analyst’s technical report to hit my inbox every few days. I would perform the Elliott Wave count on my preferred markets before the reports hit my inbox and then compare how my work looked compared to their work.  I would get 2 or 3 opportunities for education per week.  

That was almost 20 years ago. With today’s technology you can drastically shorten your learning curve of Elliott Wave and watch in real time during the trading session as my team and I update our wave counts directly on your charts on your computer via a cloud connection. 

For more information please watch the following video. Also, be sure to register for Wednesday night’s webinar at 8 PM EST!