A new article has been posted on Forbes.com and will be yet another learning experience for readers of this blog.
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 🙂
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.
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.
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 🙂 ]. Enjoy!
Elliott Wave analysis works in all freely traded markets. The last time I offered you my Elliott Wave analysis of Egypt’s equity index, EGX30, it was back in August 2012. You can access that blog post by looking at the menu at the top of WaveTimes, under ‘Equities, Index, Africa, Egypt’.
You will see how we identified that the Egyptian index was likely to make significant gains. At that time, the index was trading at 5049. A lot of water has since flown down the Nile, but the Egyptian stock market almost doubled. I am sure a lot of investors made handsome profits in individual stocks.
However, the inevitable Elliott Wave correction set in once the five wave cycle was completed. If you had read my book Elliott Wave book “Five Waves to Financial Freedom’ you will be able to spot how so many of the observations there has played out in the Egyptian Stock Index or EGX30 index.
In the following Elliott Wave charts, I demonstrate some of the salient points. Remember that this blog exists as a resource for the student of Elliott Waves. Whether you are a professional trader, a casual investor or a serious student of Elliott Waves, the examples available here will fascinate you and help you better understand the nature of financial markets and how you could anticipate the market turns. So without any further ado, present you the charts of the Egyptian Stock market index and how Elliott Wave analysis was so powerful in its play.
Now that you have seen how Elliott Waves work, go back to FWTFF and try and see if you could figure out the likely ending point of the on going correction. Good luck.
I have been seeing several queries on the blog asking if the move to 7700 (as discussed on CNBC) is still coming, now that we have rallied up in 5 waves. So let’s try and clear up the air a bit.
The real goal of any analysis is to make money. Some people, however, want to keep proving to themselves that Elliott Waves work ( or doesn’t work). Their goal is to keep producing accurate wave counts and are happy if they get it right. Some are delighted if they can spot an occasion where someone else has got it really wrong 🙂
Remember an important point folks. NO ONE CAN TELL THE FUTURE. What we are trying to do here, with Elliott Waves, is to provide ourselves with a framework to base our trades upon. Knowing we are going to recover from around the time I gave the interview is sufficient value to make money in itself. Knowing that 8420 was a key level is additional money in the bag. (I don’t read others’ analysis, but you probably know how many others anticipated 8420 as a key level).
So what about the expectation for 7700? Is that coming? The answer is something like the following. Elliott Wave analysis is about the only approach that allows you to adjust your market expectation as you get new clues. It is a dynamic approach. You cannot draw a few lines and expect the market to follow your command. Instead, you listen to it and make changes to what you should do next.
Members of my Exclusive Club did not receive any trade ideas on the Nifty during this period. Why is that? We should know which battles to take part and which one to side step. But we did make over 13% during the rally to 8420 in one stock. Actually it moved 20%, but as conservative traders, we were content with taking 13%.
Don’t forget that I also discussed Tata Motors in that interview!
The following interview was aired by CNBC TV18 on 11 June 2015. At that time, the Nifty index of India was trading well below the 8000 level. Watch it and see the power of Elliott Wave analysis.
Today, the index tested a high of 8421. Will it go down to 7700? That depends on a fresh analysis of the index, but anyone who sold at 8420 levels would have already made enough money intraday to celebrate as the index plunged to 8339 in under two hours.
(The interview’s link appears in the prior post as well. Hence I removed the link here)
CNBC India reached out to discuss the outlook for Nifty, Tata Motors, ICICI and SBI. Here is the link for that:
Trading is all about listening to the clues that the market sends us, and taking appropriate action. A few weeks ago, when I was in NYC, I had mentioned that we will likely get a bounce from 8080 or 100 points below that. We did get a recovery, but the personality of that recovery clearly indicated that it was not the real thing. The next level where I might get interested in discussed in the video you see in the link. Good luck.
It is two months since I posted something, and I looked up the Polaris chart. Well, we certainly have reason to smile. Here are two charts. The first chart was posted here on 23 Jan and the second chart shows that Polaris did indeed come down quite close to the lower target mentioned, a move of over 16% from the time we discussed this stock. Enjoy.
Whether you are in Indonesia or Norway or Cape Town, the examples posted in this blog will help you to get better at using Elliott Waves. The concept is the same. The example may come from a different market, but that doesn’t diminish the value of the lesson. So let’s take a look at Mahindra & Mahindra.
I was approached by a member of the Exclusive Club on 30th June to do an analysis of this stock. THis is what I presented him. Take a look. Best to right click and open each chart in a new tab!
Start with the weekly chart where we can locate a significant low around 2002. You can see that 4 major waves have already been posted, and we are in wave 5.
I have also suggested that we are in minor wave 4 inside the fifth wave as minor wave 3 was already finished as well.How did I figure that out? Here is how. I looked at the daily chart to see the pattern and relationships.
As outlined in the first chart, I was pointing the member towards buying the stock as we complete the fourth wave. It seemed reasonable to expect supports around 1114. The next chart also supported this idea.
However, my approach has always been one of ‘safety first’ and that required me to consider what else could be going on, and where I might be making a mistake. Also, if I made a mistake, can I safely parachute out without crashing with the stock?
So you see that I have defined my risk tolerance, as well as my profit objective. How did I arrive at the profit target? Simple. This is explained in my book Five Waves to Financial Freedom as well.
And what do you think happened to this stock?
Well folks. That is nothing but the power of Elliott Waves at work! Needless to say this member is very happy!
You might ask me two questions. First, we had a buy level of 1120 and the low was 1128. So whats the big deal? Well, the big deal is this client is dealing big! And he is not stupid enough to wait for the last few cents to buy. To him, what mattered was the next direction, and the size of the next move. He is a trader and investor, not someone who idly watches prices to check if it reached the target or not. The second question is have we reached the top in M&M? i.e. should we exit our position here, or perhaps consider selling short? Well, that is a question you can answer yourself by looking at the internal waves of wave 5 within the fifth, and also considering whether we will get an extension etc etc..besides, I don’t know what my client is thinking either. He hasn’t told me or asked my views yet!
Remember, this blog is only trying to teach you Elliott Waves and its application. There are no trading tips here. Enjoy.
Many traders blindly trade without paying attention to the market clues that tie up with Elliott Wave. This article discusses some strategies.
This morning, I saw a news item that went as follows “South African telecom firm MTN is keen to enter the Indian shores. CNBC-TV18 learns from sources that MTN may go for a strategic acquisition route for its India entry. Interestingly, a lot of buzz was created on Twitter after Harsh Goenka, chairman of tyres-to-software conglomerate RPG Enterprises tweeted from his handle @hvgoenka: “MTN doing due diligence of a large Mumbai-based telecom company. Will this mega deal happen?” He, however, did not answer the subsequent questions from Twitteratti. Sources told CNBC-TV18 that MTN is open to picking up financial stake in existing Indian telecom player. They say MTN is in talks with three Indian telcos — Reliance Communications , Tata Teleservices and Idea Cellular . However, Goenka’s nudge could be towards the Anil Ambani-owned Reliance Communications that has twice in the past held talks and even agreed to part with majority stake for management control in one instance.
Read more at: Moneycontrol
So three companies are being mentioned and I looked at all of them, and decided to present some of the charts for you to learn from. As I have often been saying, this blog is to help you learn Elliott Waves. For those who are seeking trade ideas, the place to go is wavetimes.net, but again, that forum is meant for traders and investors who have serious money at risk, and for the experienced traders. If you are already a member of that exclusive club, be sure to add the email wavetimes.member @ gmail.com to your contact list as otherwise my trade ideas and notifications could land in your spam folder.
The following are only some of the charts relating to Idea Cellular Ltd because, of the three companies, I believe this stock is the most likely candidate, even though Mr Goenka thinks it is RCOM (I continue to own shares in RCOM from the time I discussed buying it here at wavetimes.com when it was less than half its current value)
The first chart shows the labels for the wave 1 to wave 4 of Idea Cellular Ltd. This exercise allows you to figure out where we are in the bigger picture for this stock. You can see that wave 3 was extended, having reached 223.6% of wave 1. I suggest right-clicking each image and opening it in a different tab!
Further examination reveals that wave 4 has come down by 38.2% of wave 3. You will also see the principle of alternation at work. As wave 2 was a simple correction, wave 4 became complex, in the form of an irregular correction.
Now that we have satisfied ourselves that wave 4 has been completed, and that we are in wave 5 for Idea Cellular Ltd, we can go about deciding the targets for wave 5. As explained in my book Five Waves to Financial Freedom and elsewhere in this blog, we can usually compute easily three possible targets for wave 5. This is shown in the following chart.
But many beginning traders and analysts fail to pay attention to other clues. For example, being aware of nearby resistances as shown below.
And finally, they also fail to take into account the possibility of being wrong. Even with 30 years of doing this stuff, I make allowances for errors, which is why the trades discussed in wavetimes.net are carefully chosen to give us the best chances for success. With Idea Cellular, despite the fact that there are certain additional clues that the MTN stake speculation is pointing in their direction, Elliott Wave analysis warns us to be aware of a different possibility.
Having examined the various sides of the picture, we can now decide whether we should buy, and if yes, where we should buy this stock. And more importantly, where we should place a stop loss. But you can do that yourself, given the vast amount of inputs shared with you over the last so many years on this blog.