Aug 122016
 

There have been persistent requests from my readers in India for articles on how to use Elliott Waves to invest in Indian stocks, and this post looks at Hindalco. Let us start from the February 2016 low of 58.80. A lot of traders would have been reluctant to buy Hindalco when it was falling like nobody’s business. But in the short span of six months, Hindalco has already reached the 150 level, returning 150%. Such spectacular returns go only to the astute investor, who lies patiently in wait for the right opportunity and goes in aggressively.

The careful investor

You don’t always have to be picking the bottoms to make money. You could have invested in Hindalco at the right time using Elliott Waves at many junctures on the way up. In my book ‘Five waves to Financial Freedom” , I have discussed the concept of reflex point. Once Hindalco went past the reflex point in a five wave move, the careful Elliott Wave investor would have watched the stock on a daily basis to see when he could join in the upcoming third wave. The first chart below shows the reflex point as well as the five wave rally that took it past that point.
A five wave rally past the reflex point

You can see from the above chart that wave 2 was brief, falling only slightly below the 38.2% retracement level. When the explosive rush to the upside happened with a gap and an expansion in volume, you would have immediately committed some funds. That is because you now know that wave 3 is very likely underway.

Buying in the midst of a third wave

I teach many strategies for real-time trading in my seminars and workshops. Today, you get a snippet. Read this post as well as the one below (Walldan Group Inc analysis) and you will see what I am hinting at. The following two charts suggest that Hindalco could have potentially reached the end of an extended third wave. Mark my choice of words! I try to remind myself everyday that no matter how smart I think I am, the market is determined to show me my place! Also bear in mind that we can never be sure where an extension will finish!

Hindalco reaches a possible top wave top

Here are the internal waves of Hindalco’s third wave to support my hypothesis.

Hindalco's internal waves of its third wave
Minor fourth wave

Finding out Hindalco’s minor fifth wave target

As you know from FWTFF book, you can anticipate where the fifth wave will finish by measuring the distance from point 0 to point 3, and then computing some Fibonacci ratios of that. Here you can see that Hindalco’s minor fifth wave finished exactly at the 38.2% measure of 0-3. Not bad at all!

Computing a wave 5 target

Using the guideline of alternation to your advantage

One of the advantages of learning Elliott Waves is you can anticipate the level of difficulty in an upcoming move by looking at what happened earlier. Since Wave 2 was a simple correction, we should expect wave 4 to be complex. This is as per the guideline of alternation. You will see this explained well in FWTFF book. The key point with respect to Hindalco is we should be patient now for a proper dip to at least the 38.2% levels. While we are waiting, there could be a brief period of a price over throw to around 155.50. Let that pass! If you are like me, you will rather miss a move than trying to chase a rally that is potentially near its end. This is different from jumping on to a running train as it is leaving the station.That analogy is for joining a wave 3 in its early stages.

Wait for a wave 4 correction in Hindalco

How high can Hindalco’s fifth wave go?

Well, once you have purchased Hindalco on a wave 4 dip, you can do some calculations yourself. This calculation is no different from what you did earlier for the minor wave 5 of the third wave! But because wave 3 was extended, there is also a chance that wave 5 could become equal to wave 1. These are all explained in FWTFF book in detail. So maybe you should give it another read! Enjoy.

PS: I don’t do any hard sell of my premium service. It is mostly by word of mouth. But numerous investors have benefited by engaging me for a consultation regarding their market exposures.

Aug 122016
 

Elliott Wave analysis of the Willdan Group stock (NASDAQ:WLDN)reveals some interesting clues. The most important one of course is it has likely embarked in wave 3, and that means a minimum upside target of 7% from even the current levels, but likely much more.

Willdan Group, Inc. is a holding company. The Company provides professional technical and consulting services to utilities, private industry and public agencies at all levels of government. It operates through four segments: Energy Efficiency Services, Engineering Services, Public Finance Services and Homeland Security Services.

As always, WaveTimes members would like to enter a position when it is advantageous. But pull backs during a wave 3 phase is usually limited. The purpose of this blog is to share with you my approach. If you remember, WaveTimes is an extension of my book Five Waves to Financial Freedom. Those seeking specific analysis on individual stocks might want to look at the premium service.

Before we begin, you might wonder what prompted me to look at this particular stock. Truth be told, I have never heard of it until this morning, when good old Bob D suggested that we might be in Wave 5. As it has been a while since I wrote something on WaveTimes, I thought why not share it with you too.

WaveTimes Philosophy on using Wave counts

You might remember that my philosophy is to leave the long-term forecasts to others, and focus instead on what can be used in the near term. I also abandon a wave count once it has served its purpose. That means I am not married to it and will never try to justify a wave count. It is what I feel! (I am referring to the wave counts). A few weeks from now, if you show me the chart of WLDN, I might offer you a different count. What matters is whether we can use the wave count to trade. It is precisely for this reason why traders from around the world value what WaveTimes has to offer. Having gotten that off my chest, let us jump straight to the first chart which shows the internal waves of wave [1].

Wave 1 of WLDN

Lo and behold, minor wave 3 had extended to reach 238.2% of minor wave 1. A newbie might say ‘hang on, 238.2% is not a fibonacci ratio!’. As explained in FWTFF, this number shows up often enough in the real world that it is futile to quarrel over whether we need to see only a Fibo number to allow us to include it in our armory. You also notice the alternation between wave 2 and wave 4 in terms of extent, time, and complexity. Kapish!

The next chart shows you how we could have identified the end of minor wave 5. It finished at 50% of the distance from point 0 to point 3.
End of minor wave 5 in WLDN

Trading wave 3

Now we need to discuss something rather important. How on earth could we have known that the wave 2 will go no lower than a 38.2% retracement shown in the following chart?
Wave 2 dipped only to 38.2% in WLDN

Alas, if only everything was given to us in a platter we would all be dancing in Hawai with pretty girls. There is really no way one can tell how low a second wave can go. All we know is it cannot go below the bottom of wave 1. So how can we ever get on board a third wave move? Now that is a legitimate question. I can share with you dozens of stories (actually it is hundreds of stories over my 30 year career) where I have missed a third wave move because I was waiting for it to dip. Some lessons are never learned, and some are learned after great struggles with one’s self. When you see a sharp rally, accompanied by gaps and increasing volume, you just have to BUY first and ask questions later.If you wait for a third wave to pause and come back for you to finish your coffee and discuss with your team or whoever else you check with, then you will miss great levels to buy.
Just remember one thing. This advice works only for 3rd waves! And for you to know that it is a 3rd wave, you should know that the first wave is finished! How will you know that? I suggest you read FWTFF again. Most people say they have read it three or four times and every time they learn something new.

Now for the last chart in this episode. How high can wave 3 go? I have learned the hard way that we should take things one step at a time. Let us start with the equality measure. And who knows, maybe we will get lucky and get a dip as sub wave ii of the 3rd wave from the equality measure.
How high can wave 3 go in WLDN

The goal of all analysis is to make money. With the methods you learn here, you should be able to improve your score. All the best.

Jun 252016
 

Elliott Wave analysis of the German DAX (DE30) index would have guided us well ahead of time about the deep correction that is underway in the European stock markets. This post discusses how we could have used Elliott Wave analysis to anticipate key turning points in the benchmark index, and taken steps to lighten our equity exposures. The steps I use have all been explained in detail in the Elliott Wave book “Five Waves to Financial Freedom”. Let us start by looking at the various waves since the significant low of 3588 on 13 March 2009.
Wave 1
The first wave, or what we label as wave 1, went from the low of 3588 to a high of 7442. If you look at the intra-day charts of the German Dax during this period, you will be able to see that this wave 1 had its own set of five sub waves. You will also notice that sub wave 3 within this wave 1 was extended, in that it traveled more than 161.8% of sub wave 1. Thus, I would have determined that wave 1 was extended, giving a low probability for either of the upcoming impulse waves to extend. However, the more interesting development happened subsequently. But first, let us look at the chart.

Wave 1 of the German Dax index

Wave 1 and wave 2 of the German Dax index

Wave 2
Wave 2 was a complex correction. It has traced what is described in the Elliott Wave book “Five Waves to Financial Freedom” as an irregular correction. Notice that sub wave b posted a high that went above the end of wave 1. We then got a deep sell off as wave c to compete a three-step complex correction. The fact that wave 2 was deep is important at that time because it signaled to us that wave 4 will likely be short and simple.

Wave 3
Next we look at the third wave, or wave 3. Observe that it reached slightly higher than the 123.6% Fibonacci ratio projection of wave 1.

Wave 3 of the Dax index was a normal wave

Wave 3 of the Dax index was a normal wave

Wave 4
As anticipated earlier on, wave 4 was a brief and short correction. It was also a normal zigzag correction. Traders and investors would have added to their holdings on this dip. When I advise my high-net-worth clients and fund managers, I recommend them to add more to their core holdings during this fourth wave dip.

Wave 5
And finally, Wave 5 finished exactly at the 61.8% measure of the distance traveled from point 0 to point 3. This is quite an amazing phenomenon, and has been described in detail in my book. Now you tell me, which other approach to the financial markets can be more accurate than this in anticipating the end of a bull cycle!

Wave 5 of the German Dax index finished exactly at 61.8% of 0-3

Wave 5 of the German Dax index finished exactly at 61.8% of 0-3

Conclusion:
I agree that it is not easy for traders and investors to be able to label waves with confidence, which is why many high networth individuals and hedge fund managers seek the advice of professionals. But, you too can improve your performance in the stock market by paying simple attention to some relatively straight forward rules and guidelines. I wish you all the best. Ramki

Apr 012016
 

Readers of the Elliott Wave Analyses on this blog would remember that on 8th February it was suggested that investors in Freeport-McMoran Inc. might consider buying on a dip between 50% and 61.8% of the rally from the $3.52 low. That low came on 11 Feb at $4.65 (over 18% below the $5.72 when we had discussed this stock). Wonder of wonders, the market decided that the correction below the 50% level was adequate for wave 2, and we saw a magnificent wave 3 unfold.

As you all know, Elliott Wave Principle says that the third wave is the most power of the three impulses. And the upward cycle will be made up of 5 waves. Those who took the risk and the signal have seen their money double is just about a month. Now isn’t that a great example of Elliott Waves at work!

Here is the Elliott Wave chart of Freeport-McMoran Inc (FCX) as it appears today.

Elliott Wave Analysis of Freeport-McMoran Inc

Elliott Wave Analysis of Freeport-McMoran Inc

Feb 232016
 

Truth be told, I first heard of this index some 15 minutes ago when I received an email from good old Bob.D. So I googled it and read the entry in Wikipedia.

“The Value Line Geometric Composite Index is the original index released, and launched on June 30, 1961. It is an equally weighted index using a geometric average. Because it is based on a geometric average the daily change is closest to the median stock price change.

The daily price change of the Value Line Geometric Composite Index is found by multiplying the ratio of each stock’s closing price to its previous closing price, and raising that result to the reciprocal of the total number of stock”

Can’t say it made me any wiser ๐Ÿ™‚

But a look at the charts was quite revealing, and I am happy to share them with you.
I suggest that you open each chart in a new tab so it will be easy to go back and forth. Like always, my comments appear on the charts themselves and so I won’t add any more fluff. Enjoy and share with friends.

This first chart is a monthly chart going back almost to the time I was born. Pay attention to the time frame and the color coding that will help you spot where we are in the progression.

Valug23Feb16a

Valug23Feb16b

Valug23Feb16c

Valug23Feb16d

Valug23Feb16e

Valug23Feb16f

Valug23Feb16g

Feb 082016
 

The global stock market is so vast that the more eyes there are to spot the approaching end of a five-wave pattern, the better off we are! I should thank Bob D for drawing my attention to Freeport-McMoran Inc (FCX) -NYSE. The following discussion covers the Elliott Wave analysis of this stock. You will see how the various twists and turns in FCX were all following the dictates of the Elliott Wave Principle.

When we commence the analysis of any instrument, it is always better to start with the bigger picture. So we commence our study with the weekly chart of FReeport-McMorRan Inc.You got to remember that the goal of any analysis is to provide you with a framework to base your investment or trade. Such a framework will give you an orderly way to approach the market. It doesn’t guarantee you profits, but you will know quite early whether you are on the right track or not, and that knowledge alone is well worth the time you invest in this process. So lets get started with our first Elliott Wave chart. I suggest that you keep opening each chart in a new tab to save you time.

On 20 January 2016, FCX made a low of $3.52. We see from the chart below that a complex correction has developed from the high near $61, probably unfolding as a double zigzag. The end of the second zigzag was projected to land at a 138.2% projection just a shade above the $4 mark. Perhaps the 3.52 low marked the end of this major correction?

FCX4Feb2016a

Now let us quickly go down to the more recent moves. Notice the green arrow in the chart above? I suggest we start our next wave count from there, as it looks like a pivot point.Two things stand out clearly. We can make out a set of five waves from near the $24, and to our delight, there is a further set of 5 minor waves inside the fifth wave that is quite clear.

FCX4Feb2016b

In order to give us more comfort that about this fifth wave, we will delve deeper to see if the waves hold some Fibonacci ratio relationship to each other. The chart below shows that sub wave ii corrected the sub wave i by 50%

FCX4Feb2016c

Next we see that the sub wave iii was extended. An extension is when an impulse wave travels more than 161.8% (Note: this is my own interpretation of when to label a wave as extended). In this case, sub wave iii went as far as 223.6% of wave i.

FCX4Feb2016d

You might remember from your reading of my book ‘Five Waves to Financial Freedom” that when a third wave is extended, it is normal for the fourth wave to be short and typically correct to just 23.6% of the just completed third wave. You can see from the Elliott wave chart of Freeport-McMoRan Inc below that sub wave iv went exactly to the 23.6% retracement target. This sort of reinforces the feeling that we are on the right track!

FCX4Feb2016e

And finally, we see that the fifth wave was exactly 50% of the distance from the point ‘0’ or the starting point of subwave i to the terminal point of subwave iii. This is again quite text-book-like, and is something to be looked at in wonderment!

FCX4Feb2016f

I leave you with two more charts for careful consideration. My Elliott Wave comments are on the charts themselves. Remember, this blog aims to teach you some of my methods. I am not making a recommendation here. But if you are patient, and if you can identify 5 waves up from the bottom, then buying into a 50% to 61.8% pull back is a most logical thing to do, especially if you are a believer that Elliot Wave Principle works! In case you are not convinced, simply look at the hundreds of other examples in this blog! All the best.

FCX4Feb2016g

FCX4Feb2016h

Dec 202015
 

In this post you will learn how to trade Chipotle (NYSE:CMG) using Elliott Wave analysis. I had sent these charts to members of the exclusive club on November 24, 2015 when the stock was around $559.The main idea was there was a good chance for a move lower after recovering to around $585. The stock reached $585.80 the following day. It moved slightly above 585 on December 1 and 2, but on both days it closed below $585. And then we got a 12% move down to $515 on 7 Dec.

This blog aims to share some of my techniques with you, so you too could refine and improve your trading style. Used in conjunction with my book “Five Waves to Financial Freedom” the numerous charts that are presented in WaveTimes will open your eyes to what is possible using Elliott Waves. Enjoy and share with your friends.

Chipotle Mexican Grill in Wave 2
Chipotle Mexican Grill in Wave 2

Chipotle Mexican Grill in Wave 4
Chipotle Mexican Grill in Wave 4

Chipotle Mexican Grill reaches Elliott Wave 5 target
Chipotle Mexican Grill reaches Elliott Wave 5 target

Chipotle Mexican Grill sub waves illustrated
Chipotle Mexican Grill sub waves illustrated

Chipotle Mexican Grill reaches target of sub wave 5 inside wave 5
Chipotle Mexican Grill reaches target of sub wave 5 inside wave 5

Analysis of Chipotle Mexican Grill stock after a five wave move is completed
Analysis of Chipotle Mexican Grill stock after a five wave move is completed

Dramatic wave 3 in Chipotle
Dramatic wave 3 in Chipotle

Witness how a day trader can benefit from Elliott Waves using Chipotle stock as an example
Witness how a day trader can benefit from Elliott Waves using Chipotle stock as an example

See how Elliott Waves and Fibonacci ratio analysis tie in using Chipotle Stock as an example
See how Elliott Waves and Fibonacci ratio analysis tie in using Chipotle Stock as an example

How to anticpate the next move in Chipotle using Elliott Wave Analysis
How to anticpate the next move in Chipotle using Elliott Wave Analysis

Nov 232015
 

As many of you know, I also have a professional website which caters to the needs of high net-worth individuals and experienced traders. This website is at www.wavetimes.net. I have today posted an example of a consulting assignment in that website, and thought that you will appreciate a link to that post.

http://wavetimes.net/news-20151123-recent_consulting_outcomes

I will try and post a few more examples in the coming weeks for your learning. This blog is a living book, an extension of Five Waves to Financial Freedom [ or vice versa ๐Ÿ™‚ ]. Enjoy!

Nov 062015
 

I will post you a couple of charts that I prepared for my old friend Bob D (remember the person who gave me so much of his valuable time in proof reading your favorite book, Five Waves to Financial Freedom?)
With Elliott Waves, you should never struggle to count the waves. When it becomes hard, just step back and look at the bigger picture. The best trades are done when you are able to see the waves easily and clearly, while the rest of the world is stressing out about the next few points. You, on the other hand, having read and understood my way of approaching the market, would place your bids or offers near the anticipated targets and wait for the fruit to land on your lap! Of course, occasionally you will get a lemon, but often enough it will be a sweet fruit.

Here are the Elliott Wave charts of WalMart. The second chart shows the third wave in detail. As I point out, you really don’t need to go very deep! Just keep it simple. All the best.

The Fifth Wave of Wall Mart has met its initial target

The Fifth Wave of WalMart has met its initial target

Each impulse wave is made up of five sub waves

Sub waves inside the third wave of WalMart