Oct 192012
 

As regular readers know, all wave counts are work-in-progress. I identified 32.55 as a low-risk buy in Silver before it happened with the count that an extended 5th wave was highly likely to finish there. Sure enough, we got a smart rally to 33.10. It was possible to make out that this move was made up of 5 sub waves, although it looked like a leading diagonal. As a trader, I continued to watch the position, still keeping my stop loss at 32.50. When the inevitable correction came down to the 50% retracement level followed by a smart bounce, I was all smiles. The speed of the rally from the end point of wave (2) was also perfect. But I couldn’t relax, because real money is involved. This is no arm-chair analysis. The stop loss had to be moved promptly to the low of wave (2) so that not only we preserve some profits, but also ensure we won’t get taken out by any unexpected event. As it happened, Silver came down and stopped the trade just below the wave (2) low. Then we got another rally, but there is no question of chasing it now. A trade has to work as anticipated. Any recovery after an extended fifth wave down move should be both RAPID and clean!

You now have an example of how one needs to monitor a trade even when it looked good. This is where a good adviser will help. I would have shared with you the need to move the stop loss to 32.80. Without that advice, you would still be thinking that everything is working out just fine. Some others might even attempt buying at 32.60 on the second attempt there, not realizing that professional traders are no longer interested in trading Silver from the long side just now. This is a terrific example for beginning traders to learn from. Nothing in the market is certain. However, we have to take risks at precise levels at the right time. Failure to act at the right time, both to enter a trade and to exit it will cause financial loss.

Oct 172012
 

My detailed Elliott Wave analysis of Silver was posted via a video on You Tube on 8th October. That analysis is typical of how a general update in this blog appears. The aim is to teach people how to approach the market. The same goes for my comments on Forbes, MarketWtach or Seeking Alpha. Those comments are meant to give a general sense of direction. Occasionally, I might slip in a key level, but the trader would need the comfort of knowing whether the timing is right as the market approaches the anticipated levels. Take my Silver comments of last week, for example. I anticipated that we will come down to 33.16 when the commodity was trading around 34.45. Was 33.15 a good level to buy? It was not, because by the time it reached there, the market had revealed additional clues. A ‘relatively’ safe level to buy was lower down at 32.55, something which I was able to determine by the analysis produced here.
When it was clear that we are getting an extended fifth wave within the C wave of the fourth, I knew that the support was not at the 23.6% retracement level discussed in the video. A quick computation revealed that each of the sub waves within the C wave was respecting all the tenets of Elliott Wave Principle – details that you would have learned by reading “Five Waves to Financial Freedom”. For example, wave 2 was 70.7% of wave 1 as shown in the first chart to the right.
Wave 3 of the C wave traveled exactly 161.8% of the first wave.
The fourth wave recovered to the 50% retracement level of the third wave.
I figured out the target for the extended fifth before it got there by projecting a 100% measure as shown in the next chart. And I obtained added confirmation by analyzing the internal waves of the fifth wave of the extended fifth wave as shown in the final chart. At the time of writing this post, Silver has already reached 33.20. I received a few emails from readers that they have gone long of silver around 33.15 based on my video! First of all, please bear in mind that Wave Times is only there to teach. Secondly, we have to take into account new information as it comes up. And the nature of Elliott Waves is such that it is very dynamic, and allows us to adjust our focus as the subject is moving. When I launch my exclusive program for the high net worth traders, they will get more precise information, including a recommended stop level. I will also be able to recognize early if something is going wrong and share that intelligence with the group. However, the key take away for you is this. Learn my techniques, and you can do the analysis yourself. You don’t need any Guru to tell you what to do! More importantly, don’t risk real money on an update that is 2 or 3 days old, especially if you are a risk-averse trader who can afford only a small loss. Good luck! P.S. If you recall my various comments on how Extended Fifth Waves can make you rich, you will also know that sometimes we get a double retracement! But at other times we don’t! Watch Silver and learn! You should also learn where to take partial profits, how to adjust your stop loss etc etc! All the best