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.

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 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 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

Jun 112015
 

Hello folks,

CNBC India reached out to discuss the outlook for Nifty, Tata Motors, ICICI and SBI. Here is the link for that:
http://www.moneycontrol.com/news/market-outlook/exit-longs-till-nifty-hits-8400-wavetimescoms-ramki_1405518.html

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.

Jan 232015
 

(Please read important update at the end of this post)

Ever so often, Elliott Waves helps the investor from making mistakes. For example, when I read the news that Rakesh Jhunjhunwala, the ace investor,had increased his position in Polaris, I decided to see what Elliott Waves had to say. Sure enough, it warned against following the Badshah this time.

Many investors don’t even read the news fully. Here are the headlines, and the final paragraph from the Economic Times.

Polaris rallies after news that Mr Jhunjhunwala upped his stake

Polaris rallies after news that Mr Jhunjhunwala upped his stake


The additional investment was made in Q3 of 2014

The additional investment was made in Q3 of 2014

Maybe I am reading this news all wrong, and he actually made fresh investments just the previous day! But it was essential to see what Elliott Wave analysis would say. Here are a couple of charts.

Polaris Consulting completed a 5-wave rally

Polaris Consulting completed a 5-wave rally


As you can see from the Elliott Wave chart above, Polaris Consulting has already completed a five wave rally near the highs, and the fifth wave was 38.2% of the distance from point ‘0’ to point ‘3’. Many of you are familiar with this approach to anticipating where a fifth wave will end. I have also explained this in detail in my Elliott Wave book, ‘Five Waves to Financial Freedom“.

The next Elliott Wave chart shows how the correction is unfolding. As you know, once a five wave upmove is completed, we will get a three wave correction. And the most powerful of the three waves down will be the ‘C’ Wave. It is clear that Polaris is in the middle of such a ‘C’ wave.

Polaris Consulting in C Wave

Polaris Consulting in C Wave

It is also useful to look at some Fibonacci retracements as shown in the next Elliott Wave chart. You can see that Polaris had paused briefly at a couple of prior Fibonacci retracement levels on the way down, but clearly, it shouldn’t appeal to any Elliott Wave trader to be blindly following the Polaris News.

Fibonacci Retracements in Polaris Consulting

Fibonacci Retracements in Polaris Consulting

IMPORTANT UPDATE:23 Jan 2014: I have heard back from some WaveTimes members that I have not taken into account the fact that Polaris has demerged with “Intellect Design Arena”, and that stock has its own value, and hence it is incorrect to say that investors in Polaris who purchased the stock in the last two days have made a mistake. I am indeed guilty of not knowing this development. However, I did take care to check if there was any news about Polaris that caused it to reverse exactly one day after the news I referred to above. There wasn’t! This merger has been in the news much earlier. The stock has simply adjusted lower today. This should give us pause to think about a company that has a stock split.The chart of a stock that has been split is immediately adjusted historically. But in the case of a demerger, where a portion of the company is separated, how do we treat that stock? What is the value of the demerged entity 1 year ago, 2 years ago? If you know the answer, please post in the comments area.

Oct 182014
 

(updated below on 25 Oct 2014)

Elliott Wave theory says that a bull cycle has five waves, and if you look at the chart of Facebook Inc, it looks very probable that the stock has completed its bull cycle. Facebook embarked on its bull run in September 2012 from a low of $17.55. The high seen so far is $79.71, a huge gain indeed. Let us now look at come Elliott Wave charts of Facebook. You should use this example as a supplement to my Elliott Wave book – “Five Waves to Financial Freedom”. Almost the first thing you can see is Facebook has completed five waves in its bull run. You will also see that I use the term ‘probably’ or “highly likely’ in my descriptions because that is the right approach when using Elliott Waves for your trading and investment decisions. There is no tool in the world that gives you a definite answer about the future, and when dealing with the financial markets, it pays to always keep in mind that you are trying to determine the odds of something happening, rather than the certainty. Elliott Wave Theory gives you the framework to do this analysis, and your confidence grows as you see the ‘crowd’ behaving as anticipated by the theory. As you read further, I suggest you open the charts in a new tab.

Facebook has probably completed fives waves

It is easy to see 5 waves in a completed bull cycle as shown in this Facebook chart

Interestingly, wave 2 took a lot of time in correcting the wave 1, but it went quite deep, just a shade over the 61.8% level. You will recognize that 61.8% is a pretty important Fibonacci Ratio. Now the key point here is this. Even as early as Q3 of 2013, you would have said to yourself that once the third wave develops, the next correction, namely, wave 4, would be deep and will happen relatively quickly. This is the principle of alternation. Please refer to FWTFF for more information on that, but there are many more examples in this free blog too.

Wave 2 was a deep correction

Facebook Wave 2 corrected wave 1 by 61.8%

A smart investor would have been ready to buy Facebook as it rallied up from the 61.8% retracement because we were then in a 3rd wave. As many of you probably know, wave 3 of any impulse bull market is the strongest up move, and it also has the highest chance of becoming an extended wave. In the case of Facebook, its wave 3 went to a measure of 323.6% of wave 1, as shown in the next Elliott Wave chart.

The 3rd wave of Facebook was an extended wave

Facebook wave 3 was an extended wave

Now some of you might wonder about my use of 323.6% as this is not a ratio that has been discussed by Frost & Prechter. During my over 30-years of dealing with financial markets and experience with Elliott Waves over that time, I have seen this ratio often enough to include it in my offering to the fund of knowledge. You can find many more examples in Wavetimes.com.

The main challenge for traders is to figure out WHERE an extended wave will end. Unfortunately, there is no certainty about that, and anyone who attempts to pick a top during an extending third wave is honestly asking for trouble. However, once the correction starts, in the case of Facebook, it was bound to be swift because, remember, wave 2 took long to develop! Take a look at the following Elliott Wave chart to see this.

Facebook wave 4 was shallow but sharp

Facebook wave 4 was shallow but sharp

The final stages of the bull run begins with wave 5. As with all impulse waves, this wave 5 needs to have its own set of five sub waves, and incredibly, these sub waves are also related to each other quite like the waves of the larger degree. But first see how one could have anticipated the end of wave 5 by computing 161.8% measure of wave 1 and adding it to the bottom of wave 4.

Determining the end point of wave 5

Anticipating the end of wave 5 of the bull cycle

And to add come confirmation, we can look at the relationships of the sub waves of wave 5 as shown below.

Sub waves of wave 5

The sub waves for Facebook’s wave 5 also follow Elliott Wave guidelines.

Now that I have shown you how to read a chart using the clues that Elliott Wave theory gives us, you should attempt to anticipate how the ensuing bear cycle will pan out. One clue I can give you is the correction will travel a distance greater than the larger of the two prior corrective waves. A second clue is the correction will take more time than wave 2 did. If you are an investor who is seeking to buy Facebook, it might be a good idea to focus on some other stock for the next several months while Facebook goes about its business of being moved back and forth by a fickle market. Eventually, it WILL come down by the measures discussed above and that is the right time to invest in this stock for its next bull run.

25 Oct 2014 UPDATE:
The recovery in the last few days to a new high has brought back the need to recompute the targets for the end of wave 5. Here are two more charts to guide you.

FB25Oct14a

FB25Oct14b

The goal of this blog is to share with you some of my experience and teach you how to use Elliott Waves. My other website, wavetimes.net, is where I discuss live trades.