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.

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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 102014
 

Elliott Wave analysis can be applied to any number of securities, be an individual stock or index or commodity, or just about anything that is traded in a liquid market. Today, we will take a look at the Elliott Wave analysis of Arabtec Holding Co. This us a popular stock that trades in the Dubai financial markets. In case you haven’t heard, Arabtec Holding Co. (ARTC) headed for its biggest three-day rout since March 2013 as some investors speculated Aabar Investments PJSC, its second-largest investor, is cutting its stake in the Dubai builder. To tell you the truth, I hadn’t heard the news either until AFTER I prepared the charts and mailed them to a friend who runs a large trading desk in Dubai.

The first chart below shows a couple of interesting things. For example, we have a failed 5th wave within the larger first wave. That was followed by a deep correction that went past the 50% retracement level.

Wave 2 of Arabtec

Wave 2 of Arabtec

We then got a fantastic rally was an extended third wave, which went to the 361.8% projection level of wave 1.

Wave 3 went to 361.8% projection of wave 1

Wave 3 went to 361.8% projection of wave 1

After an extended third wave, it is usual for wave 4 to come down to the 23.6% retracement level. This is what happened with Arabtec

Wave 4 down to 23.6%

Wave 4 down to 23.6%

We can anticipate the end of wave 5 by establishing relationship with wave 1. With Arabtec, it was 123.6% of wave 1.

Anticipating end of wave 5 in Arabtec

Anticipating end of wave 5 in Arabtec

If you are wondering how far the fifth wave went past the target, take a look here
Arabtec-5

And what happened at the end of a five wave move?
Arabtec-6

Arabtec probably has a little more ground to the downside, so we have to look at the near term charts to figure that out. I am sure you are now capable of doing that exercise. Go ahead, and give it a shot.

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

Apr 232014
 

In this post, I am going to present you with Elliott Wave analysis of Wockhardt Ltd. One of the members of my exclusive club had approached me for a consultation back in January 2014. It was the 14th of January, to be precise, and the stock was trading at Rs 413.65. The member sent me the following brief note:

“I consider myself as long term investor. I hope your advice/analysis will help in some of my long term investment decisions. By long term I mean I could hold for more than a year, if required.

Could you please look into the following stock for me: (I understand this will cost me 2 credits)
Market – India – NSE
Company – Wockhardt limited
Symbol – WOCKPHARMA
Exposure – None at this time.

Comment: This stock has comedown from around Rs. 2000 and currently trading at 420. It saw a low of 350 about 3 weeks back. Did it start its uptrend? Since the company is in pharma industry, it is subjected to lot of FDA regulations. I think FDA’s adverse observations made the stock to drop in recent times.”

I looked at the chart, and could make out that it was going to be a challenge to come up with a sound analysis. I prepared a set of 10 charts and will share with you some of them here. Please note that this is not a marketing message. The idea is to allow readers to see the value of Elliott Wave analysis, and how someone with experience with Elliott Waves could come up with a sound strategy. I recommend that you open the charts in different tabs.

Wockhardt Big Picture

Wockhardt Big Picture Elliott Waves

Wockhardt First Target for C wave

Wockhardt First Target for C wave

3rd wave target within the C wave

3rd wave target within the C wave

Verifying 4th wave as correct

Verifying 4th wave as correct

Identifying possible end of wave 5

Identifying possible end of wave 5

Analyzing minor waves of wave 5

Analyzing minor waves of wave 5

As can be seen from the above, I have finally come to the conclusion that a major correction is now over, and the rally that started off from that low is the first wave of a new cycle. Now comes the more interesting part, the one about where to buy.

Have we finished 5 waves of wave 1?

Have we finished 5 waves of wave 1?

WCKH-10-14Jan14

So we have identified a low-risk entry point. However, there were other considerations like risk-management and what size to expose. Yet, an initial entry point has been identified.

This member went long a decent position size at an average rate of 430. He probably purchased some on the way up after the dip, a smart investor I must say. He understood the size of the upcoming recovery, and wasn’t penny wise when it was the right time to take a risk. A majority of traders do the opposite. They take big risks when they should be cautious, and take small risks when everything points to a favorable move! Anyway, this is what happened. I am sharing with you just the plain chart without any notations. We got a dip down to below the 400 mark twice in the days that followed and the stock is up by nearly 70%.

The power of Elliott Waves

The power of Elliott Waves