Nov 172008
 

The objective of every investor is to buy as early as possible at the beginning of every new, major up move. Establishing a target for Wave 5, then, is the most important aspect of Elliot’s Wave Principle. I have presented you with a chart of Google (Nasdaq:GOOG) Let me state at the outset that there are some major objections to the way I have labelled the chart. Instead of a 5-wave pattern, one could actually label this as a zig-zag correction. But either way, the 5-wave pattern from the top of 602 is in its final leg (or possibly already finished at 280). Once we agree on that, we have a frame of reference. After every 5-wave move, a correction has to take place, and because the 5th wave of the move from 602 has been an extension, we should see a move back to 452 in the coming weeks. Please make a note of the level somewhere, and the date and level when I am making this call. The pre-market level for Google today 17th Nov 2008 is 306. If this analysis is correct, we should be looking for a 47% move up in Google over the next few months. Since we are looking for a move of $146, we need to decide how much we can risk losing on any position. This is a personal decision for each investor. However, as a starting point, we should be willing to see a retest of 280 and potentially a move down to 267. Buying below 290 would be a low risk trade, in my opinion. However, how much to buy will depend on your own risk appetite. Let me know if you have any questions. Your best way to reach me will be via the comments. Good trading!

Nov 142008
 

Two closes below the wedge is certainly not good news. I am loath to push my luck when the trade doesn’t go as expected. There are countless opportunities in the market, and the one main goal for any trader should be to preserve his/her capital to be able to trade again. So I am going to get out of my Citi position at a small loss today. My average rate is $11.05, and as I made 25% on my previous trade, I am willing to give it all back on this trade. (unfortunately I made the 25% on half the size, hence I can lose only about 12% on this trade). Hence anything above $9.75 should be ok for me, but I don’t know how it is for you. Remember one thing, folks. Our goal is to make sensible trading decisions. That I was looking to double my money is not the criteria for when I should get out. The criteria is the markets did not play out as I originally planned, hence I am out. With the S&P500 making a strong come back from near the 830 support level, we might see some follow-through buying today, and that will be a nice window to exit gracefully. Ramki

Nov 142008
 

Just a quick post to record the fact that the Sterling Pound has met its larger objective near 1.4570 last night and bounced sharply. (refer this post that says stay short in sterling for now). It has been a very tough week for most traders and most are licking their wounds. The question many finance managers will ask me when I return to work after the weekend is whether we will get another dip in the Pound to buy! Provided we don’t run away to the upside, we should get a decent move to retest the downside. It is typical of markets to make sure that the bottom is a strong one. We will look at the charts on Monday and determine our next move in the currency markets.

Nov 132008
 

Well folks, you all know that I have been working on the paradigm of a diagonal triangle, and provided for a throw-over at the end of the 5th leg of the pattern. This throw over has happened last night and we should ideally look for a strong close today. Take a look a the chart and you can decide for yourself.

Nov 132008
 

Its been a while since I posted a Yen chart. We have been running into some selling at 96.23. Considering that the low seen earlier today was 94.50, even this is a strong move. Part of the credit for the recovery goes to the Japanese Finance Minister who said that rapid forex moves was undesirable for economy. and there is a need to avoid rapid forex moves at all cost. Now we all know that this market is not going to turn around unless all the G7 central banks show up in concert (and even that will work only if the market is spent on one side). Yet, some knee-jerk reaction is to be expected, and if we break the resistance at 96.23 in New York today, maybe we will get a move to 96.64. When we get there, we should try and sell some dollars with a stop above 96.74. That is a very close stop, and we could see both the sell and stop-loss order done within seconds of each other! But then we do have a resistance at 96.69 and if one wants a really, really close stop, this is it! Enjoy.