Registered User
Joined: 12/19/2004
Posts: 457
|
Back on 2/15/06, I wrote the following...
I bit the bullet
"HnC,
Have it take a look at NEM. By my count, we are likely in wave 5,4. My target for the correction is not much lower than $49-50.00 before the start of wave 5.
I'd expect some sort of B wave bounce here, probably not much higher than 58, before heading on down to 50."
Interestingly enough, the MT-Predictor software confirmed this outlook at the time.
I managed to get filled for March 55 puts for 1.05 last Monday. I sold them today for 3.70. Not a bad return for a week.
NEM hit the initial target with a low of 50.20 today. It is looking a bit oversold as we speak, and I expect at least a pause for a few days, before a resumption of the downtrend.
When all is said and done, I think this correction will likely end somewhere around 48.50. Will it meet that before March expiration? I don't know, so I booked the profits on my puts.
|
|
Registered User
Joined: 12/8/2004
Posts: 1,301
|
The program shows you HIT THE NAIL ON THE HEAD. It basically shows the stock will not go below 50 before at least a minor uptrend will bring the stock back up. GREAT JOB!!!!!
|
|
Registered User
Joined: 12/31/2004
Posts: 102
|
if it's a 5-3-5 zig zag correction down from 62ish, if we haven't seen 5 down from the 58 level you correctly called for, does that suggest we have more downside? 5 down seemed clear on the first leg down, but this second one is less clear.... with no TSV divergences underneath, maybe we're still in a minor 3?
and on another note-- I believe the three of us spoke about HAL, et al, and the ABC it was likely in... any updates from yalls software? interesting how most recent congestion pulled out a classic "flat"... perhaps that means ANOTHER 10% downside before this is over with and it's cheap enough to offset any commodity correlation (if additional gas/oil weakness is in the cards)... if A = C, I think I came up with 60ish for an eventual target ???
|
|
Registered User
Joined: 12/19/2004
Posts: 457
|
HAL: It looks like 60 is a reasonable target for some sort of support. The count is hard to visualize, because the trend is so strong, with very little fluctuation. Having noted that, the high is something I'd consider a so-called "irregular" correction, where wave B exceeds the high of the prior impulse. I see this as being at the start of wave 5 of C down.
NEM: Looks like I sold just a bit early, but I count NEM still in wave 3 of C, which should end around here. The intraday seems to indicate 5 waves down starting yesterday, ended sometime early this morning.
|
|
Registered User
Joined: 12/31/2004
Posts: 102
|
thanks-- i was just confused bc i saw the 5 down at the start of Feb in NEM, saw the corrective move to 58... AND the minor 5 down from 54... but had trouble figuring out how 58 and down was unfolding as a 5 (seemed more ABCish) vs Feb1-13th which had a 5 feel to it (as the A leg down)
|
|
Registered User
Joined: 12/19/2004
Posts: 457
|
NEM Update:
A good chance Newmont is close to the end of the downtrend from the February high. We had a pretty strong day from a candle POV. I'd still like to see volume pick up if the stock gains strength. Regardless, there is likely to be a low risk buying point somewhere around here.
|
|
Registered User
Joined: 12/8/2004
Posts: 1,301
|
I just checked my software and I had to take off today to get a trade setup.
Typ Wave 5 is
63.90 to 65.97
a risk/reward of 6.2:1
Max Wave 5 is
71.57 to 73.89
a risk/reward of 9.4:1
|
|
Registered User
Joined: 12/8/2004
Posts: 1,301
|
Good call again RMR. I wanted to buy some but by the time I got into the office it was already up .80.
|
|
Registered User
Joined: 12/19/2004
Posts: 457
|
HnC,
I'm a bit disappointed in NEM today. It started out OK, but didn't follow through. We will need next week to really confirm if the correction is over or not. But it looks like a start.
|
|
Registered User
Joined: 12/8/2004
Posts: 1,301
|
There was a gold stock that I was playing previously EGO. It's cheaper and it moved up quite a bit today. I don't like the chart right now, but I think gold will make a strong comeback in the next 6 months.
I didn't like the action either for NEM, but personally I think there were a lot of people holding at much higher prices that were waiting to get out on the first rally. It may take a little while, but I think gold is NEM will make a nice comeback.
|
|
Registered User
Joined: 11/8/2004
Posts: 8
|
Rmr & HnC, good call on this, thanks
|
|
Registered User
Joined: 12/31/2004
Posts: 102
|
To HNC/RMR-
If I zoom into 1/2 hr bar... I can see TSV divergence in this last move... likely a minor 5th of this first move higher? Is this Jan selloff simply an ABC with higher high eventually in the cards?
PS: absolutely killed me to miss the entry on AAPL... what a pretty ABC correction with clear divergence in TSV18... now it's up 18 in 2 frickin days. I realize it could count to 90-- but still painful to watch all day tick higher and higher...
Any thoughts on above from wave friends would be appreciated--
Sam
|
|
Registered User
Joined: 12/8/2004
Posts: 1,301
|
I see it as a wave 4 (abc) correction, and we should be in wave 5. Juat about every gold stock I have looked at is still beginning its wave 5.
AAPL has be great. I've made 1600 dollars in two days. When it dropped to 61.40 I almost bought 200 more. Of course, I really haven't made anything because I didn't sell it. It's wave 5 could be shortened if they disappoint in earnings, but I can't see it happening. A typical wave 5 will take this stock from 92-114 so there will be plenty of time to buy on a dip.
|
|
Registered User
Joined: 12/8/2004
Posts: 1,301
|
a MINMUM WAVE 5 on aapl is 80-99.
|
|
Registered User
Joined: 12/19/2004
Posts: 457
|
As for Newmont, I think this will be over 60 by June.
As for Apple, there are a few possibilities, which should be eliminated in a few days.
1. The obvious impulse count, as HnC alluded to, which could take us to new highs.
2. The more bearish possibility, which is my ongoing thesis at this point, is a wave 2 correction, implying the decline from January is wave 1 down. There is a chance that this could correct up to 75 before resuming the downtrend to below 60.
Given the rate of the move in the past few days, I'm not sure which is which. The wave 5 looks like a good possibility, but then again, I'm not so sure.
Lots of weird action in the market. Long term, either the market is strong--making those who buy gold wrong, or those who buy gold are correct, implying economic uncertainty and increasing risk, making the stock bulls wrong.
|
|
Registered User
Joined: 12/19/2004
Posts: 457
|
NEM had its conference call today, and reported almost a double in earnings vs. last year.
It was down sharply today, due to the sell off in gold. Yesterday, I decided to hedge my calls by selling some May 60 calls against my 4 June 55 and 3 June 60 calls.
If I'm right, I don't think the correction that appears to be starting in NEM should fall below 54.25.
Do note how the 58 level acted as strong resistance. I had used that level just a few months ago as a likely target to sell.
|
|
Registered User
Joined: 11/8/2004
Posts: 8
|
For you EW'ers does this wave 5 look like a series of 1, 2's at this point? Thanks
|
|
Registered User
Joined: 12/19/2004
Posts: 457
|
Hard to say, although it doesn't look like wave 5.1 is complete yet.
A few possibilities (all bullish) occur to me at this point:
Starting from the 3/22 low, we could have ended wave 3 of 1, and are starting wave 4.
We could have also completed wave 3.3 from the April 4 low.
I think this is going to trade sideways to up for the next month or so. If we breakout above 61 in the next few weeks, I'd be surprised, although I do see NEM trading above that later in May.
|
|
Registered User
Joined: 12/8/2004
Posts: 1,301
|
I don't think there is much question it is in a wave 5. If you get the true wave 5 out of it you should make it to the 64-66 area.
Typ Wave 5 is
63.90 to 65.97
a risk/reward of 5.8:1
Max Wave 5 is
71.57 to 73.89
a risk/reward of 8.8:1
|
|
Registered User
Joined: 12/19/2004
Posts: 457
|
Newmont Update:
Here is a post to show I follow up all my trades, vs. my winners.
Back in April on this thread, I wrote:
"NEM had its conference call today, and reported almost a double in earnings vs. last year.
It was down sharply today, due to the sell off in gold. Yesterday, I decided to hedge my calls by selling some May 60 calls against my 4 June 55 and 3 June 60 calls.
If I'm right, I don't think the correction that appears to be starting in NEM should fall below 54.25.
Do note how the 58 level acted as strong resistance. I had used that level just a few months ago as a likely target to sell."
NEM broke below support at 54.25 during the sell-off in mining related stocks.
What does this do to the current wave count? Due to the short, sharp nature of the correction, I suspect that wave 1 of 5 is complete on 5/11/06.
It isn't the prettiest count, but it follows Elliott guidelines, and it did put in a nominal high at 59.70 compared to the wave 3 high at 57.72.
If this structure is the correct outlook, wave 5.3 should be comming. The problem--wave 2 could be a complex correction, and NEM could trade in a 10 point range until the resumption of the uptrend. That could be for the rest of the summer.
Fortunately, I had hedged my calls before this sharp sell off. I haven't made as much as I would have liked to on NEM, although I've taken in enough premium on my spreads (and my countertrend put trade) to make the trade worthwhile.
In retrospect, I'd have been better off simply selling the calls, and putting the calls back on once NEM moved to lower levels.
After expiration tomorrow, I plan on lengthening my timeframe by rolling out to some far out options--either the September or December 55's, and selling the June 60's.
This type of spread will profit from a modest rise in NEM, take advantage of time decay, and also provide better downside protection should NEW break below 50--the low of wave 1, which I don't expect.
But then again, I've been wrong before.
|
|
Registered User
Joined: 12/19/2004
Posts: 415
|
Another way to look at it is that wave 1 ended on 060501 and we have been in a corrective wave Likely a flat, since we had a gap in it, indicating a wave 3) since that time. The final wave of the correction would then start at 060511. I need to look at the wave structure intaday since then to see if it is an impulse or not.
|
|
Registered User
Joined: 12/19/2004
Posts: 415
|
rmr
I looked at the hourly data and I think you had it right that the impulse ended on 060511, and we are in a probable zigzag(or maybe a double zigzag) with the end of the zigzag at midday or at least wave 3 at midday. Looks like a buy at 50.85-48.85. The lower end if we haven't finished wave 5 yet.
Good job.
|
|
Registered User
Joined: 12/19/2004
Posts: 457
|
bknight,
I sure hope this isn't a double zig-zag down!
If you followed my other count, I placed the low of wave 1 on 3/23/06, NOT the low on 3/10/06.
In essence, I consider the move from the Feb peak at 58 to the 3/23/06 low as a wave C of a zig zag from the January high--in essence, a failed 5th on the downside.
Keep in mind that wave 2 should not move lower than wave 1. If we break below 47.70, then I'd say we have a failed 5th in NEM, and that this wave down is of much larger degree, and could be nasty.
I have the sinking feeling that the gold miner stocks are going to tank along with the broad market, should the market also go down.
The alternate scenario, which is possible, but looking less likely--a divergence between precious metals, and the industrial commodities--copper, steel, oil, etc.
As I posted in the SP-500 thread, I expect the market to halt at the 1250 level (plus or minus 5 points), we are likely to tread sideways, perhaps rally to 1300 if the Fed pauses in June. That would be wave e of C of my triangle. From there, it looks like it is DOWN.
As we have seen, breakdowns from triangles are sharp and swift. If this outlook is correct, the sell off could be reminiscent of 2000, or worse.
|
|
Registered User
Joined: 12/19/2004
Posts: 415
|
That is another way to look at it, I think the low you are looking at is 46.60 on 060310 about midday.
One way of determining if this is a zz or dz, the move from the low of this move shoud be implusive if it is part of an impulsive move. No impulsive waves then very likely a dz (but be cautious the 2nd wave of a dz can be a zz).
I'm looking for 1250 also (so is HNC) and that probably means that it will fail miserably.
|
|
Registered User
Joined: 12/19/2004
Posts: 457
|
bknight,
Perhaps this will clarify the bearish possibilities.
For NEM, there is a wave 4 zig-zag that took price from 62.72 down to the wave 3 of C low at 46.60. I actually counted a 5th wave failure for wave 5 of C, and placed the end of the correction at the 3/23/06 low at 47.70.
From there, I count 5 waves up to the 5/11/06 high at 59.70 as follows:
wave 1 hi 3/30: 54.25 length 6.54. (+13.73%)
wave 2 lo 4/4: 50.63 length 3.62 (48.1% retrace)
wave 3 hi 4/19: 58.72 length 8.09 (+15.97%)
wave 4 lo 5/8: 54.78 length 3.94 (41.9% retrace)
wave 5 hi 5/11: 59.70 length 4.92 (+8.98)
wave 3%/wave 1% = 1.163 dollars 1.237
wave 5%/wave 1% = 0.654 dollars 0.752
Wave 5.2 should have not traveled much lower than 51.74 for a normal wave 2 correction.
Today, NEM closed 50.97, with no end to the decline in sight.
There are 2 radically divergent possibilities at this point:
1. Wave 5.3 should start very soon OR
2. Wave 5 for NEM has ended with a failed 5th wave, and the primary trend is DOWN, and this is the start of a major wave 2 with a potential decline to the 2005 lows in the low 30's.
|
|
Registered User
Joined: 12/19/2004
Posts: 415
|
QUOTE (rmr1976) bknight,
Perhaps this will clarify the bearish possibilities.
For NEM, there is a wave 4 zig-zag that took price from 62.72 down to the wave 3 of C low at 46.60. I actually counted a 5th wave failure for wave 5 of C, and placed the end of the correction at the 3/23/06 low at 47.70.
From there, I count 5 waves up to the 5/11/06 high at 59.70 as follows:
wave 1 hi 3/30: 54.25 length 6.54. (+13.73%)
wave 2 lo 4/4: 50.63 length 3.62 (48.1% retrace)
wave 3 hi 4/19: 58.72 length 8.09 (+15.97%)
wave 4 lo 5/8: 54.78 length 3.94 (41.9% retrace)
wave 5 hi 5/11: 59.70 length 4.92 (+8.98)
wave 3%/wave 1% = 1.163 dollars 1.237
wave 5%/wave 1% = 0.654 dollars 0.752
Wave 5.2 should have not traveled much lower than 51.74 for a normal wave 2 correction.
Today, NEM closed 50.97, with no end to the decline in sight.
There are 2 radically divergent possibilities at this point:
1. Wave 5.3 should start very soon OR
2. Wave 5 for NEM has ended with a failed 5th wave, and the primary trend is DOWN, and this is the start of a major wave 2 with a potential decline to the 2005 lows in the low 30's.
The wave 3 vs wave 1 is "normal", wave 5 was a little short(or long depending on your perspective either .618 or 1) but acceptable. Where did you get the statistics for wave 2? I've looked in Prechter's book and I don't see that but I do see that a wave 2 personality: "Second waves often retrace so much of wave one that most pf the profits gained up to that time are eroded away by the time it ends."
|
|
Registered User
Joined: 12/19/2004
Posts: 457
|
bknight,
If this downwave corrects much more, then wave 2 is of a larger degree down wave. On the weekly/monthly charts, NEM has already completed 4 of 5 waves up, and this looks to be wave 5.5. So I base my targets on the weekly/monthly charts, using the May high, and the 2000 low.
Understand why I'm concerned about a failed fifth?
|
|
Registered User
Joined: 12/19/2004
Posts: 415
|
QUOTE (rmr1976) bknight,
If this downwave corrects much more, then wave 2 is of a larger degree down wave. On the weekly/monthly charts, NEM has already completed 4 of 5 waves up, and this looks to be wave 5.5. So I base my targets on the weekly/monthly charts, using the May high, and the 2000 low.
Understand why I'm concerned about a failed fifth?
Yes, I understand the concern. (DISCOLSURE: Not long or short NEM)
Where did you get the statistical move relationship for wave 2 that you referenced? I couldn't find any particular reference. Just curious to enhance my underfstanding of EW.
|
|
Registered User
Joined: 12/19/2004
Posts: 457
|
Those ratios I posted were just descriptive of the moves in NEW, to see how closely to the ideal structure it came.
For wave 2, if I see a retracement below the 61.8% level, I get concerned that the correction is going to be steeper, and the count is possibly wrong.
Of course, the only way to know is on a close below the wave 1 low. But for actual trading, would you like to sit through such a correction?
|
|
Registered User
Joined: 12/19/2004
Posts: 415
|
True about the trade lower than the beginning of wave one, but I have seen a lot of wave 2's that approached 1, almost pulled the trigger, but then it pulled away. Of course sometimes the analysis is incorrect and the trade goes below wave 1 forcing a re-evaluation.
|
|
Registered User
Joined: 12/19/2004
Posts: 457
|
FWIW, I convereted to the bear side on NEM, at least for a few weeks.
I had been long some June calls that had been part of some calendar spreads. I decided to use them as a hedge, and shorted the June 50 calls. From the looks of things, it certainly doesn't look good for gold miners in the near future. I'm becoming more convinced that we are at the start of a failed 5th wave for NEM, an the downside could be ugly.
I think the market is topping out, and the primary trend is ending. Since gold, oil, etc. have been strong on the way up, at least on the initial leg down, they will probably sell off sharply.
|
|
Registered User
Joined: 12/19/2004
Posts: 415
|
Damn, Scottrade won't allow shorting of options, only buying or covered calls. Good luck though on the trade.
|
|
Registered User
Joined: 12/19/2004
Posts: 457
|
I will tell you, the action in this stock is maddening!
My gut tells me this can break either way.
On one hand, I can see the argument for calling this a bottom of some sorts. High volume day, open near the low, close near the high--could be promising.
Yet, I can also see this selling off one more time before the real bottom is in. I don't think the broad market is quite done with the correction just yet.
|
|
Registered User
Joined: 12/19/2004
Posts: 415
|
Oh, I think the SP500 put in a bottom today, or maybe Thurs. The symetry of the count today is better, IMHO, than Thurs but both are acceptable. I think a rally to 1270-1287 over the next week is in order..
|
|
Registered User
Joined: 12/19/2004
Posts: 457
|
Bknight,
Got out of those calls this am. NEM was acting as it should if it wanted to go higher.
|
|
|
Guest-1 |