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.
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.
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.
On 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.
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.
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!
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.
Hello Traders from India. I know you have all been patiently waiting for some indication about your famous NIFTY index. This post will attempt to give you an idea of my current thinking. As you all know, I am not offering any trading advice on this blog. Members of the exclusive club get to see how I would actually trade using Elliott Waves. However, there is enough material here for you to do your own thinking. Good luck!
Hello Traders, In this Elliott Wave update, I am presenting you with a trade idea that was shared with the members of the exclusive club about 10 weeks ago ( April 4 to be precise). That trade idea was to invest in Reliance Communication and I am happy to note that today the stock has returned 100% profits to those who have held it in their portfolio. The reason for posting it in this blog is solely to demonstrate how one should go about using Elliott Waves. This blog seeks to teach you that. Enjoy.
4 April 2013 Many of you have been following my recommendation on Reliance Communication on my blog. The recent news about the rapprochement between the Ambani brothers augurs well for this stock, and the technical picture supports this view. Take a look! Good luck.
8 April 2013 I wonder if you have read my book “Five Waves To Financial Freedom”. In one of the chapters there, I have described a common scenario where a trader waits patiently for a 2nd wave and buys a stock. It starts moving in his favor, and he watches rubbing his hands with delight. But quite suddenly, something happens, and the stock starts coming off, this time it breaks below his purchase price. Our trader’s mood swings from joy to despair. He cannot bear to see his paper profit all vanish, and now he sees a paper loss. Of course, his original stop loss is still far away, but that is a different thing. In his mind, all that matters is he has lost all profits that he could have made, and now he has the compulsive urge to cut his loss before it runs away. So he either immediately gets out, or he gets out as soon as he sees a break-even price. After a few sessions, the stock roars higher, leaving him in the dust. Our trader tells anyone who would listen, including his wife, friends and his cat/dog that he was long at the right level, but was shaken off by the stupid market. I am narrating this story because you should not make the same mistake. We had 2 buy levels for RCOM. The first one was done, but if it dips again to the second level, you should still consider buying there. Don’t rush to sell! If your stop loss is done, well, that is the price of trading the market. You cannot hope to trade without expecting to lose some trades. But if you sit on your hands for most trades, and get into one when you feel you cannot wait any longer, then that is the trade that will most likely result in a loss! Be consistent, trade amounts that wont bother you too much if it results in a loss. *But trade a size that makes sense*. You cannot invest Rs 10,000 in a trade, pay me $50, pay the brokerage etc and still hope to make money. This is why I had said that members of this exclusive club are not meant to be small traders. You should know what is the correct position size for any trade. This size depends on your individual financial situation. You should know already that money is there in the markets for the intelligent trader. Take all trades, and over time you will see your bottom line is growing nicely. Good luck.
Hello Traders, Its been a few weeks since I updated this blog. Incidentally, I had not suggested any trade to the members of the Exclusive Club also for quite a while (if you leave out the trade on an Indian Stock that reached within a whisker of its profit objective). There is no need to be super active in order to make money! The best trades are those where you know the odds of success are stacked in your favor. I try to be patient for those set ups. Last Thursday, I spotted such an opportunity in USDYEN and I am happy to share parts of that with you. You can see from what follows below that trading is a completely different game from doing analysis. Regular readers of my blog (and my responses to comments) would know that I have always maintained that the Raison d’être for any analysis should be to make money, not to showcase one’s ability to come up with fancy charts! A key advantage that I enjoy is my knowledge that the markets can do whatever it wants, no matter how clever I try to be! Armed with that knowledge, I can sidestep some of the traps that snare most traders. This is not to say that I haven’t experienced any losses. It is just that these losses are less frequent and usually quite small compared to the winning trades. What follows is how I began my trade idea. 6 June 2013 I started preparing for this update when the USDYEN was at 98.52 around 6.30pm my time. Around 6.50, my wife reminded me that I have to go for my walk. The Yen was trading at 98.09 by then. You can see the last prices on the 3 charts. About 40 minutes later, it was already below 96! Such is the power of a C wave or a 3rd wave. You CANNOT afford to stand in its path. Of course, you could have positioned short, but that is ‘what could have been’ not what we need to do from now. Anyway, the key lesson for you is when a 3rd wave or C wave is developing, NEVER, NEVER try and pick obvious supports to go against that move. Now for the trade idea. By the time I am writing this, the USDYEN has bounced back to 97.23. In case it stops around 97.30 and starts coming off, there is a reasonably good chance to retest the 95.95 low, and possibly break it to reach 95.60. I suggest that you be patient for that move to happen. Place a small buy order at 95.82 and add some more at 95.62. Your stop can be placed at 95.40, risking some 30 pips. You are looking for a move back to 97.30 at least.
A little later I added an update that suggested that while we were waiting for the dip to our supports, we might head higher and if we see 97.65, we can actually sell there with a stop at 97.80. The USDYEN went only as high as 97.49 and from there it collapsed to a low of 95.53. We were now long of USDYEN. The recovery from there went to a high of 97.24, but I sent out an alert that we should take profits on part of the position at 97.05. Later on, when the USDYEN was around 96.70, I once again warned traders that we should get out of all remaining longs because the wave structure indicated another sell-off was ready to happen.The USDYEN subsequently declined to a new low of 95.02 before rallying strongly again. The key take away for you should be the following. Elliott Wave analysis is a great tool for traders. But you will be better off if you realize that it requires a lot more than an ability to compute Fibonacci ratios in order to make money at the market. All the best.
The stock market provides ample opportunities to make money. All you need to do is to stay alert, and have a watch list of stocks that you wish to be involved in. Typically, these stocks should be well traded, i.e. there should be wide participation in order for Elliott Waves to work. In my Premium Service, we only look at well traded stocks. However, the technique works well in most traded instruments. In today’s example, I will show you two charts of Burnpur Cements. I really dont know if this is a well traded stock, but when I was scrolling down the Indian Stocks alphabetically, and managed to reach “B”, this stock looked interesting. So I did some quick analysis and thought of sharing with you. You can see that I haven’t done the extensive analysis that usually goes in to my recommendations. This example is only to show you what is possible if you remain alert, meaning you should not quickly run to the market to buy this stock without doing a full analysis. Elliott Waves works wonderfully well in the stock markets too. However, don’t be fooled into thinking that all you need to know is how to compute a few Fibonacci ratios and extensions. Elliott Waves is more than that. I normally use Fibonacci relationships to confirm my wave count and to compute targets (not the other way around!). With best wishes
The Pound has been steadily gaining ground and is poised to reach the 61.8% retracement of its last swing lower. This comes at 1.5664, and is worth looking at closely. Besides, if we consider that the recovery is a double zigzag, the second wave ‘c’ has a 123.6% measure of wave ‘a’ at 1.5666. If we look at the internal waves of wave ‘c’ we see that the 5th minor wave will have its 61.8% measure of the distance from 0 to 3 at 1.5680. We also see that an Elliott wave channel top comes around that level. Considering all this, one might consider a SMALL short position at 1.5663 with a stop at 1.5683. If stopped, one should wait for 1.5778 and sell a bit more aggressively there with a stop at 1.5798. These are really counter-trend trades and I present them here so you could learn how I think about waves. It is not a recommendation!