Elliott Wave Training

Are you looking to learn the Elliott Wave principle? Or maybe you already have some experience and want to find the ways to improve your skills better.

Click on this post for details:

http://wavepatterntraders.blogspot.com/2012/04/elliott-wave-training.html



Tuesday, November 25, 2014

Elliott Wave Analysis of Visa (V) & MasterCard (MA)

VISA

 The advance from the 2009 lows appears to be in a 5th wave, so is suspect its a terminal wave. It met its objective where wave [5] = [1], just a general look suggests it counts well for a 5 wave move, so that's generally a clear sign of an impulse wave.


A closer look at wave [5] also suggests a 5 wave advance, although wave 5 of [5] could do with a bit more upside to complete its move, a strong break back under 250 would offer evidence that wave [5] is complete.



1st targets are 195 - 180

MASTERCARD

This stock virtually has the same look to Visa, so i strongly suspect when Visa reverses, so will MasterCard, it may see a bit more upside 1st, but a strong break back under 80.00 would be the 1st signs that wave [5] could be completed.

Target is 65 - 60










Elliott Wave Analysis of Walmart (WMT)

The recent strong move suggests Walmart could be approaching a significant top, with sentiment now very bullish, that would align nicely with a terminal 5th wave from a triangle 4th wave. The sideways price action over the last year or so has created what seems to be a triangle, so the thrust to the upside is the expected move, triangles are commonly seen in the 4th wave position of a 5 wave impulse move,

If this idea correct we are likely on the cups of a significant reversal. A strong break back under 80.00 would suggest a possible peak to wave [5].

The 1st target is the $70 - 72 area.



Sunday, November 23, 2014

Elliott Wave Analysis of EURUSD

Do you remember the cheer leading for the EURUSD back in April - May 2014? All I read was EURUSD is going to 150 160, sell the US$ etc .

Back then I was looking for a major peak for EURUSD I posted a couple of charts on Stocktwits.

See here: http://charts.stocktwits.com/production/original_22387342.PNG?1398488058

Sentiment was really bearish for the US$, but the complete opposite pattern was also setting up for the US$ (aka DX). Its not easy looking to fade the majority at major turns, but this is where Elliotticians have a distinct advantage.

Fast forward to today, we now have the same setup for the US$, sentiment has completely reversed against the EURUSD, In May 2014 everyone loved EURUSD, but now everyone hates it.Yet we are actually looking for a major low for EURUSD, we feel there is a high reward and once again we find ourselves looking to fade the crowd, just like we did at the May 2014 highs.

There is a strong reward trade setting up for those that are looking to fade the majority.



A 5 wave advance appears to be close to ending on the DX, so subsequently we see a 5 wave looking decline on EURUSD, we can clearly see a large RSI divergence also setting up for both markets.



If we are correct (we think we are) then expect a larger reversal, a turn that the majority will miss, just like they missed in May 2014.

Target is 132-134, that's going to be a great trade for those on the right side, another way to trade the move is to sell USDCHF, either way we think a larger move lower is setting in for the US$

So the trade will be to sell DX (aka USD) and USDCHF, buy EURUSD and GOLD



Elliott Wave Analysis of GDX

The reversal is no surprise to us, we have been expecting it, what happens from here is the important part.

In my last post  http://wavepatterntraders.blogspot.com/2014/09/elliott-wave-analysis-of-gdx.html

We were still looking for a bit more downside around the 17-16 area, so far the low is on that area, so a great start for our ideas. However, we still don't have the important clue of a 5 wave advance from the November 2014 lows.

Above 18.76 we are targeting more upside, wave [iv] may already be in place, if so we should see a move higher early next week. Another idea is that wave [iv] could take the shape of a triangle, which would suggest a bit more sideways price action, followed for a "thrust" for a 5th wave.

Currently bullish above 18.76.

If we do see a 5 wave advance, the bulls would have strong evidence of an intermediate low, any subsequent pullback would be a setup to buy at a future date.

Below 18.76 negates the idea.

Come join us, you can see our ideas for GDX along with the HUI and GLD, all 3 markets are part of the commodities package.

Actionable ideas at a great price that everyone can afford.

$15 a month will get you access.



Sunday, November 16, 2014

Elliott Wave Analysis of the SPY (SPX)

I decided to get the book out and look at a detailed look at each of the characteristics of a 5 wave impulse wave and see if it fitted well to the move we have seen from the Oct 2011 lows. Its my belief that we are nearing the end to the trend from the Oct 2011 lows and a significant decline is setting up.

I initially thought we had a peak back in Sept 2014, you can read that here: http://wavepatterntraders.blogspot.com/2014/09/brk-vs-spx-where-buffett-goes-so-does.html

However with the last rally I have been forced to adjusted the idea. whilst its was a great move that I forecasted it was not the move I was expecting. I am expecting a larger move than 200 points on the SPX.

Lets take a look at the chart and see if we can cross reference the thoughts at the time to what we have now.



Source:http://en.wikipedia.org/wiki/Elliott_wave_principle

1) Wave one is rarely obvious at its inception. When the first wave of a new bull market begins, the fundamental news is almost universally negative. The previous trend is considered still strongly in force. Fundamental analysts continue to revise their earnings estimates lower; the economy probably does not look strong. Sentiment surveys are decidedly bearish, put options are in vogue, and implied volatility in the options market is high. Volume might increase a bit as prices rise, but not by enough to alert many technical analysts.

I think we can all agree, at the time it was very bearish, and the bounce was considered a "dead cat" the bears were expecting much more downside as the next bear market hard begun or so the bears thought. So we can tick the box on that wave.

2)  Wave two corrects wave one, but can never extend beyond the starting point of wave one. Typically, the news is still bad. As prices retest the prior low, bearish sentiment quickly builds, and "the crowd" haughtily reminds all that the bear market is still deeply ensconced. Still, some positive signs appear for those who are looking: volume should be lower during wave two than during wave one, prices usually do not retrace more than 61.8% (see Fibonacci section below) of the wave one gains, and prices should fall in a three wave pattern.

Well wave [2] did correct wave [1] and that would have got many bearish as that's what a 2nd wave does. Volume was lower as well, prices retraced around 61.8% of the prior wave [1]. So we can tick the box on that wave.

3) Wave three is usually the largest and most powerful wave in a trend (although some research suggests that in commodity markets, wave five is the largest). The news is now positive and fundamental analysts start to raise earnings estimates. Prices rise quickly, corrections are short-lived and shallow. Anyone looking to "get in on a pullback" will likely miss the boat. As wave three starts, the news is probably still bearish, and most market players remain negative; but by wave three's midpoint, "the crowd" will often join the new bullish trend. Wave three often extends wave one by a ratio of 1.618:1.

Well we can count a large 3rd wave, the news was getting better and more positive economic reports were seen, even earnings were getting better if you believe the financial bubble media. Hardly any pullbacks so that's a characteristic of a 3rd wave as well. By the mid point many are joining in and "buying the dip" aka BTD or was it BTFD. I cant remember these days, there is a new one as well which is BTFATH. Wave [3] is longer than a 2.618 extension of wave [1]. So we can tick the box on that wave as well. 

4) Wave four is typically clearly corrective. Prices may meander sideways for an extended period, and wave four typically retraces less than 38.2% of wave three (see Fibonacci relationships below). Volume is well below than that of wave three. This is a good place to buy a pull back if you understand the potential ahead for wave 5. Still, fourth waves are often frustrating because of their lack of progress in the larger trend

Wave [4] is clearly a corrective decline, its in 3 waves, so that's the definition of a correction, its not in 5 waves, hence we are seeing a new ATH. In a strong uptrend when a 3rd wave is far more than a 2.618 extension of the 1st wave, we tend to see shallow 4th waves around the 23.6% of the 3rd wave, that's an acceptable 4th wave target. The Oct 2014 low was almost a 23.6% correction of wave [3]. The only negative is there was no alternation between wave [2] and [4], although not a rule it would have been nice to have seen that. So we can tick the box on that was as well.

5) Wave five is the final leg in the direction of the dominant trend. The news is almost universally positive and everyone is bullish. Unfortunately, this is when many average investors finally buy in, right before the top. Volume is often lower in wave five than in wave three, and many momentum indicators start to show divergences (prices reach a new high but the indicators do not reach a new peak). At the end of a major bull market, bears may very well be ridiculed (recall how forecasts for a top in the stock market during 2000 were received).

Well the news is "almost universally positive"  Investors have now bought into the trend (see the last weeks readings )

Survey Results

Sentiment Survey
Results
Week ending 11/12/2014   Data represents what direction members feel the stock market will be in the next 6    months.
 
Bullish 57.9%
up 5.2
Neutral 22.8%
down 9.5
Bearish 19.3%
up 4.3
Generally this is considered to be the reading of the public I believe its a new high since the Oct 2011 lows. so the "public is on board". What can go wrong?

Volume is showing a clear trend moving lower as price moves higher. We have many momentum indicators showing divergences, and the bears are well and truly being ridiculed, if you mention that the market can move lower you are labelled a pariah, i have first hand knowledge of this, i was suggesting (although telling members to expect a strong decline) to people that the market was setting up for a significant decline in Sept 2014, only to be abused. so we certainly have the bears being abused and laughed at. So we can tick the box on that wave as well.

Conclusion

I believe this is a standard text book 5 wave impulse from the Oct 2011 lows and I think the risk for a significant decline is very high. so i strongly suggest anyone that is invested, take appropriate steps to protect yourselves, You saw how fast these markets can unwind, the Sept -  Oct  decline was speeding down before anyone even thought about a correction and fooled many. The next decline may shock many.

Time will tell.