Jul 032014
 

This Elliott Wave update on Alliant Energy Corporation is a sequel to the detailed analysis posted on 1st June 2014 in Wavetimes.com. Here is the link for that post: http://www.wavetimes.com/elliott-wave-analysis-of-alliant-energy-corporation-nyse-lnt/
For your convenience, I have also appended this new chart at the bottom of the older post as well. As most of you know, this blog is dedicated to all the traders and investors who seek to improve their financial market performance. I would like to call this a “Living Book”, an extension of Five Waves to Financial Freedom.

(Some of you might be interested to check out the other website, wavetimes.net which caters to professionals who have significant money at risk)

Elliott Wave Ending Diagonal

Elliott Wave Ending Diagonal

Elliott Wave Cycle Explained

Jun 152014
 

C.R.Bard, Inc designs, manufactures, packages, distributes and sell medical, surgical, diagnostic and patient care devices. Its market cap is $10.48 billion and the stock posted its 52-week high at $150.13 on April Fool’s day. Why are we looking at this stock? It is because it has the distinction of being the top loser on the S&P index yesterday! Elliot Wave analysis of C.R.Bard Inc shows some interesting patterns. As you know, Elliott Wave Principle holds that once a five wave move is completed in an upward direction, we should look out for a large move on the opposite direction. Elliott Wave analysts look for Fibonacci relationships between the various waves in order to validate their conclusions. If you take a look at the first chart below, we can see that wave 5 finished exactly at a 61.8% measure of the distance from the starting point 0 to the end of wave 3. This has been covered in detail in my Elliott Wave book “Five Waves to Financial Freedom”.

Elliott Wave Theory further holds that each of the three impulse waves that are seen in the broad five wave rally will have its own subset of five waves. You can clearly observe this phenomenon from the next Elliott Wave chart. Interestingly, you can see that not only the third wave is made up of five sub waves, but even the third wave within the third wave has its own minor five waves. Moreover, sub wave v inside the third wave finished exactly at a Fibonacci measure (50%) of the distance from 0 to iii.

The final chart shows how we can figure out some targets for the next leg of the large correction that is expected. We measure 138.2% of the distance traveled by the first move down and project that distance from the top of wave B. The target for the C wave is thus around 125.75. It is important to understand that no move will be a straight line move. However, generally speaking, C waves tend to travel fast and so anyone who is still nursing a long position is well advised to get out of that position on any recovery.

The charts and analyses posted in this blog are for educational purposes, and supplement what you learnt in my book FWTFF. I have another website, www.wavetimes.net which offers serious traders an opportunity to learn how to trade the market using my techniques.

————
27 June 2014 update.

A member asked about the internal waves of the C wave.Take a look at the chart below. We did not reach 125.75, but did manage to get to 135.80 after first recovering to 142.37. That was a decent enough move for most people. THe key point is when we have a trade, we need to watch how the market is moving. Elliott Waves is not a black box. When the minor 4th wave reached 142.37 and it started coming off, we have to get ready for the end of the move. I have explained in FWTFF how to compute these end points. One should lighten up the exposures starting from the earliest target. I use Elliott Waves to trade, not to make predictions. Sure, the target was 125.75, but if I wait indefinitely for that target to be reached even when new information is being presented, it will be an incorrect application of the wave principle. Enjoy.

End of 5 waves in CRBard

End of 5 waves in CRBard

Elliott Wave Rules Explained

Jun 012014
 

Alliant Energy Corporation (NYSE: LNT) has been part of David Van Knapp’s Dividend Growth Portfolio since 2010. In his article in Seeking Alpha, David celebrates the 6th birthday of his portfolio and showcases the stocks that go into that portfolio. The first stock in the list of 18 stocks is Alliant Energy Corporation.

As most of you know, I look at stocks from an Elliott Wave perspective first, and so decided to do a detailed study of Alliant Energy Corporation. Elliott Wave analysis is a method that many professional investors embrace because it gives them several clues about where in the market’s progression we currently are. Briefly, Elliott Wave Analysis says that all impulse waves are made of 5 waves, and once a five wave movement is completed we should expect a correction.

Alliant Energy Corporation’s Elliott Wave charts reveal that we are in the fifth major wave higher, and within that fifth wave, we could potentially be in the fifth sub-wave. Usually, investors should start planning on a strategy to exit their holdings during this fifth-of-the-fifth wave. However, with Alliant Energy Corp the story is slightly different. The first and third waves that we have seen so far were both of normal proportions. Besides, the two corrections in wave 2 and wave 4 positions were both relatively brief. This leads one to anticipate an extended wave 5. So, we might as well be patient and wait for a move to around 60.50 before we take a fresh look at this stock. What follows are a set of 11 Elliott Wave charts of Alliant Energy. Study them carefully to see how the market seems to dance to the magic wand of Elliott Waves. Good luck. (I suggest you right click on each image and open in a new tab)

Alliant Energy Corporation -chart 1

Alliant Energy Corporation -chart 1

Alliant Energy Corporation -chart 2

Alliant Energy Corporation -chart 2

Alliant Energy Corporation -chart 3

Alliant Energy Corporation -chart 3

Alliant Energy Corporation -chart 4

Alliant Energy Corporation -chart 4

Alliant Energy Corporation -chart 5

Alliant Energy Corporation -chart 5

Alliant Energy Corporation -chart 6

Alliant Energy Corporation -chart 6

Alliant Energy Corporation -chart 7

Alliant Energy Corporation -chart 7

Alliant Energy Corporation -chart 8

Alliant Energy Corporation -chart 8

Alliant Energy Corporation -chart 9

Alliant Energy Corporation -chart 9

Alliant Energy Corporation -chart 11

Alliant Energy Corporation -chart 11

Date: 3 July 2014 Elliott Wave update for Alliant Energy Corporation
On 1st July, Alliant Energy Corp reached a high of 60.89 and today, just 2 days later, it is down at 58.25. WHat new clues are available? Take a look at this chart.

Elliott Wave update for Alliant Energy

Elliott Wave update for Alliant Energy

Mar 102014
 

Today’s FT carries an interesting report filed by Miles Johnson, their Hedge Fund Correspondent. This report says that Seth Klarman, one of the most respected investors, has raised the alarm over a looming asset price bubble, and specifically mentions Tesla Motors , (TSLA:NSQ). He has warned of the potential for a brutal correction across financial markets. See this link: Seth Klarman warns of asset price bubble

So I decided to check out the charts for Tesla Motors to see if Elliott Waves could offer us additional clues that might help us play along with the view professed by Mr Klarman.

Take a look at the first chart below. It clearly shows that we are in the fifth wave of a move that stated back in Q3 of 2010. According to the Elliott Wave Principle, it is normal for one of the three impulse waves within a five wave sequence to be extended, i.e. for it to move a greater distance than the other two impulse waves. The chart below shows that the first and third waves were roughly equal is measure (i.e. they were of ‘normal’ proportions). This also ties in with another feature of Elliott’s observations that often enough, two impulse waves tend to be equal in dimensions. You will also observe the principle of alternation in the two corrective waves seen, whereby when wave 2 was shallow, we got a wave 4 that was deep.

The next chart shows how to anticipate a possible end point for wave 5. Because we are expecting wave 5 to be extended, one possible terminal point is at a place where wave 5 would have traveled a distance equal to that from point 0 to point 3. This comes at $295.

 

We will now zoom in to the fifth wave and see if the sub waves of the fifth wave can give us additional information. As you probably know, every impulse wave is composed of its own set of five sub waves. We can immediately see that sub wave (3) was extended to reach about 300% of sub wave (1). Wave (2) was 50% of wave (1) and wave (4) has already corrected to a 23.6% measure of wave (3). All these Fibonacci Ratios are common measures used by Elliott Wave Analysts to add confidence to their reading of the waves.

 

The final chart below uses the technique I have described in my book “Five Waves to Financial Freedom” where we measure the distance form point (0) to point (3) and compute a 38.2% and a 50% measure. These measures, when added to the bottom of wave (4) will give us potential targets for wave (5). Interestingly, if we add a 38.2% measure to wave (4) at 235, the target comes just below $295 which we already saw earlier. And should wave (4) come down some more to reach a 38.2% correction of wave (3) – that is reach $217, then we will get wave (5) to land at 291 if we add a 50% measure of (0) to (3).

Because of these confluences, we should go with the belief that there is a high probability for Tesla Motors to complete its extended fifth wave just below $295 and commence a very sharp decline that can take it all the way down to $137. This is the level where the extended fifth wave had its sub wave (2) end. There are numerous illustrations of this phenomenon explained in this blog as well as in my book so much so that I have often informed readers that fifth wave extensions can make us rich! Good luck and happy hunting.

Feb 112014
 

I had prepared the following article for publication in Seeking Alpha on Sunday, but I decided to share it here with you folks directly. Meanwhile Chevron Corp is already moving nicely.

Chevron Corporation is an integrated energy company with operations in countries located around the world. The company produces and transports crude oil and natural gas. Chevron also refines, markets, and distributes fuels as well as is involved in chemical operations, mining operations, power generation and energy services.

Let me be honest about one thing upfront. I don’t have a Dividend Growth Portfolio at the time of writing this article. I have been involved with the financial markets for over 30 years, and have always been in the thick of action in a variety of markets. But I neglected building a DGP. Yes, it is a serious lapse! But it is never too late to start. The goal is to reach an yield to cost of 10% within 10 years. Perhaps, Elliott Wave Analysis would help me reach that goal in a shorter time frame!

The stock had a closing price of $112.05 on Friday, 7th February 2014. If I were to buy this on Monday at $112, my own yield will be 3.59% which looks good. My Bloomberg screen shows that the 5-year Net Growth rate for dividends is 9.04% and the 3 year and 1 year dividend growth rates are respectively 11.15% and 11.11%. The P/E for the stock is 10.09. As many fundamental analysts have done adequate research on Chevron Corp and awarded it high marks, all I wanted to know before I placed my buy order was whether Elliott Wave Analysis offered me some additional clues. Is it time to add Chevron Corp to my brand new Dividend Growth Portfolio?
Let me give you a quick summary about Elliott Wave Principle. The theory was put forward by Ralph Nelson Elliott in the 1930s and has stood the test of time. Elliott discovered that all market moves in the direction of the main trend developed in a five wave pattern. Two of these five waves served to correct the first and third waves. But once the fifth wave completed, the next correction served to correct not only the fifth wave, but also the entire sequence for five waves. Hence that correction is usually bigger and lasts longer than the two minor corrections seen on the way up.
With that introduction, let us take a look at the first chart below. You can see that starting from the significant low posted in the early 1980s, Chevron Corp has a clear five wave move to its recent top. The third wave traveled a distance of 161.8% of the first wave, a classic measure for third wave moves. Some of you might recognize this ratio as a Fibonacci number. You will also notice that wave 4 and wave 2 were alternating in length and complexity. This too is as per Elliott Wave Principle.

Chevron Corp is in wave 5

Chevron Corp is in wave 5

I then zoomed in to view the fifth wave to see if that had its own five minor waves. And sure enough, I could make out a clear five wave pattern there too.

Elliott Wave Analysis of Chevron Corp

Elliott Wave Analysis of Chevron Corp

So does this mean we will now experience a decline that will be longer than wave 4 seen during the great recession of 2008? If that happens, won’t the price go down to around $79?
This is where one more important guideline from the Wave Principle will help us decide. According to the theory, we should expect at least one of the three impulse waves to extend, i.e. travel an unusually long distance. From the above two charts, it is evident that both waves 1 and 3 were of ‘normal’ proportions. Hence, it is likely that wave 5 will be extended. That means what we have seen in the second chart above is not the end of wave 5, but probably only the first sub-wave within an extended fifth wave. Seen from that angle, it would be very tempting for the investor who seeks dividend income to get a full exposure of his/her maximum position size that the portfolio would allow. It is true that we could still get a dip under $100, but that dip should be used to add some more exposure to CVX. I am going to buy my first lot on Monday, before the stock goes Ex-Dividend.