Sep 132013
 

In this Elliott Wave Analysis of Kuala Lumpur Stock Index, you can see the challenges facing the trader who has to decide whether the index has completed a five wave move already, or perhaps it has just posted a third wave top, and we are currently in the fifth wave. Let us start by looking at the first Elliott Wave chart. Here, you can see my Elliott Wave labels marked out clearly. The fourth wave has corrected the third wave by exactly 38.2%.
KL Index fourth wave
Elliott Wave Analysis of Kuala Lumpur Stock Index by Ramki from WaveTimes.com

Even by looking at the proportion of wave 1 relative to wave 3, you can make out that the third wave had extended.The Wave Principle says that we should expect one of the waves to be extended, but it doesn’t rule out the possibility of two extensions in a five wave sequence. This is illustrated by looking at the next chart which zooms into the fifth wave. In the Elliott Wave count shown below for the fifth wave, you can see that there are two ways to count the waves.

KL Index extended fifth wave

The first count is to label the sub wave 3 as having finished just above the 1600 level, and assuming that we have posted an extended fifth wave at 1827. This is currently my preferred count. As you know from my book “Five Waves to Financial Freedom”, when a fifth wave is extended, we should expect two things to happen. First, there will be a swift correction, but second, and more important, is the possibility of a double retracement of the extended fifth. This means we could see a full retest of the highs, and occasionally even an overthrow to a new high, before another swift sell off. Perhaps this is what is happening now. Should this hypothesis be correct, we should be extra careful near 1835 levels. Be alert for a reversal there, and join in on any swift down move with a stop above the high posted. However, there is another possibility that I have indicated in the chart. This is we have only seen wave 3 finish at 1827, and we are currently in wave 5. You will then compute a 38.2% and a 61.8% of the distance from 0 to 3 to figure out where the 5th wave will finish.These come in at 1860 and 1980. I think there is a better chance for 1860 to cap the move, and so we can summarize by saying that the index will probably post its top between 1835 and 1860 and come off towards 1600. We shall see. Trading the markets of course is a completely different game. It requires you to be patient for the right moment, and for the risk-reward to be properly aligned before you risk real money. I try to implement this strategy at wavetimes.net. But this blog gives you the tools so you can try your hand at it yourself. Remember, picking a top or a bottom is a vanity that the trader needs to entertain with great judgment. It is often safer for the first down move to start and join in on the first pullback. All the best.

Ramki

Sep 122013
 

Hello Traders from the Middle East. So Dubai Stock index, or the DFM Index, has collapsed today, losing over 7%. Shocking, but the writing was on the wall all along. With the increase in rhetoric about Syria, we just needed a small push and it would have fallen over the cliff! When a move is approaching the end of its 5th wave, any informed investor would have sold off all his shares and waited for the inevitable correction to start. Elliott Wave Analysis of Dubai Stock Index shows that the 5th wave has indeed been completed. a fact that has become evident today, but something we should have anticipated. You can observe from the Elliott Wave charts attached that Dubai index had earlier seen an extended third wave. When you already have an extension in either the first wave or third wave, you should expect the fifth wave to be of normal proportions. Finally, by examining the sub waves of the fifth wave, you could have gotten out of most of your investments close to the top. This is shown in the last chart below. What is the outlook for Dubai Index from here? Well, there are mild supports at the fourth wave level within the just completed fifth wave.But expect any recovery to be mild and short lived. We should choose to exit on a pull back, waiting for the next bull market to be signaled by Elliott Waves sometime in the future.

Sep 122013
 

This post originally appeared on Wavetimes.com on 26August 2013 and has been restored after a crash of the database. Hence the date is shown differently above. My apologies to those who posted comments, as these have been lost too:

What is the outlook for BHEL? Has BHEL seen a significant low at 100.35? Should we buy BHEL on the next dip? What does Elliott Wave analysis suggest for BHEL? Let us start with a long term (weekly) chart of BHEL. Wave 5 that started around Rs 270 seems to have posted a 50% measure of the distance from 0 to 3.

BHEL28Aug13c

Next, let us look at the moves from 270 in detail. The first chart below shows that at 161.97, wave 3 was exactly 161.8% of wave 1. And the second chart of BHEL shows that we have already been to 78.6% of the distance from 0 to 3.

BHEL28Aug13a

BHEL28Aug13bOn top of that , we seem to have just exceeded a reflex point. Despite all this, the weekly chart looks quite bearish and we shouldn’t be surprised if the stock fails to overcome the 140 levels, and to attempt another test of the recent lows.

Next, take a look at another Elliott Wave count for BHEL, shown in the chart below.

BHEL28Aug13d

This chart would suggest that we have just finished a 3rd wave, and a complex fourth wave is likely to be seen. A complex correction could take many forms, and one of the most common corrections is a ‘flat’ correction where wave B reaches or exceeds the starting point of wave A. So, if you see a failure around 140, that could well be a trigger for a retest of the lows. It might be a good idea to consider buying some BHEL near there for the medium term. We will revisit the charts when it gets there, just to make sure that the decline has the personality of a B wave. Will someone please send me a reminder at that time.

 

Sep 122013
 

This post originally appeared on Wavetimes.com on 24 August 2013 and has been restored after a crash of the database. Hence the date is shown differently above. My apologies to those who posted comments, as these have been lost too:

Well, are happy days here again for MSFT investors? Steve Ballmer has finally decided to hang up his boots and MSFT stock surged. Is this a relief rally, or is it a new uptrend? It is too soon to tell, but as Elliott Wave traders, we will keep an eye on the $35.46 level. At that level, we have a confluence of two Fobonacci projections. The first is a 200% projection for what could be either a 3rd wave rally, or a C wave. In order to see if that level can be assigned some more confidence, one can take a look at the sub-waves of the 3rd wave (or C wave, if you will). This wave should have 5 mini waves, and one would expect that the internal relationship will likely follow the typical Elliott Wave ratios.And sure enough, exactly at 35.46 we can arrive at ONE possible end point for the 5th mini wave of the latest rally. When we see two levels coinciding, we should be extra alert for at least a reaction. For the day trader, a reaction is all one needs. After all, his trading horizon is but only a few hours! Here are the Elliott Wave charts. Enjoy!

MSFT24Auga

MSFT24Augb

Jul 132013
 

Elliott Wave Analysis can be applied on any well traded market, and that includes the Karachi Stock Index. There are two main indices in Pakistan. One is the KSE30, which I believe comprises of the leading shares. The broader KSE100 index is defined by Wikipedia as follows: Karachi Stock Exchange 100 Index (KSE-100 Index) is a stock index acting as a benchmark to compare prices on the Karachi Stock Exchange (KSE) over a period. In determining representative compaines to compute the index on, companies with the highest market capitalization are selected. However, to ensure full market representation, the company with the highest market capitalization from each sector is also included.

In today’s Elliott Wave update, I am presenting you with the analysis of the KSE100 index. As always, a picture is worth a thousand words. Pertinent Elliott wave comments and wave counts are given on the Elliott Wave chart itself. Remember an important lesson that I have oft repeated in these posts, as well as in my replies to many comments., any analysis is the first step towards making sensible trading decisions. Before you actually risk real money in the markets, you should wait for the right kind of set up that increases the odds for your success significantly. Elliott Waves give you the tools to do that. All the best.

Karachi Stock Index KSE100

Karachi Stock Index KSE100