Let's take a look at a few of the stocks that bounced from their recent lows.
in a previous article, I talked about the double zigzag (a-b-c-x-a-b-c). This count can be compressed into W-X-Y, where W and Y would be the first and second a-b-c series respectively. In the example below BBY, wave Y is in progress already, and the last c may take the stock to new lows. We can estimate this c wave will reach some where between $35-$40
Meanwhile, RRGB is in the middle of wave X, we are just waiting for wave X to conclude and enter to ride wave Y down, which should be quite profitable. Wave X should not exceed $50, but we shall use our oscillators to enter the position, as soon as we get our "sell" signal. We will enter our usual PRC ATM option trade.
For those of you concerned about RHAT, perhaps a look at the long-term expectations would help decide what to do.
14 comments:
Juan,
Are you sure about RHAT.
To be honest I have a contingency order to get out, at what I paid.
Slightly nervous on this one.
I have a trade at $3.8 limit (Nov. 20 short, March 20 long). So far no takers.
If you feel nervous about it, just get out! your own feelings count here too. You don't have to trade something just to follow along. Gut feeling is one of our tools too. PLUS I have been wrong before!
The purpose of this blog is to learn a system, not to give you trading tips, so paper trade if you are not sure, and we will all learn in the process.
My account is close to $5000 in profits (in spite of the losers) so learn to take the winners with the losers.!!!
Juan,
It has just gone to $3.85 on IB, so you should just about get that RHAT...
Yeah, guts is the best indicator of all.
:)
Market overall is very bearish. Juan, you have some stocks which are bullish. Would this matter to you in the system.
Fortitude: About RHAT spread at $3.8 did not fill. This is a debit limit order, the ask may have reached $3.85, but that is not good enough..... Perhaps that is OK, as Varum noticed, the market feels bearish now.
Varum: Feeling the bearishness is using your guts. I have been trading AAPL over the last 3 years, suscessfully too, eventhough I have been bearish all along.
I would focus on entering bullish and bearish trades as they show up, and try to have a balanced bull/bear portfolio. the contingency orders will help you avoid large losses. Having said that, it looks like the DE trade was exited too soon. Well, then, just wait for a better spot and re-enter. Overall, I am holding well with my account near 15K. I change my contingency orders daily, so that I adjust for strong rallies. The decline on AMLN after a strong rally in the morning did not force me out of the trade, the balance on the trade changed little because the short gets affected more than the long with the put back. This is why I like CRC's and PRC's, to moderate my losses on strong moves, and get out (if needed) with good gains.
Juan,
RE: "This is why I like CRC's and PRC's, to moderate my losses on strong moves, and get out (if needed) with good gains."
Having watched these over the last few days, I see why you like these as a trade.
Exited remaining DBD trade for $0 profit. It came back to nothing. Just like the DE trade, as you said the signs were there.
Reviewing ADX, I see that both AMLN and RHAT could turn down. I am now just in both, having exited DE also today.
It would be good to see your projection of RHAT on the board as you used to do.
As a 'minor' participant in your trading strategy, it has been an experience. So far, I have learnt quite a bit. Thanks. Keep up the good work.
Hopefully, we will find another AMLN together!
The chart shows two target areas for BBY. The Y wave target is between 38.5 to 44 whereas the c wave is 35-40. Which is more reliable ?
Juan,
RHAT is short term down in my opinion. The ADX and -DI(14) and +DI(14) are not favourable.
Also AMLN. If you are thinking bearish, it could be time to exit all, or half your position shortly. The ADX is high, but -DI(14) is still falling and +DI(14) is still rising for AMLN. Unlike RHAT, where they have turned.
I am just trying to use the indicators to give an early sign of exit. As they say exiting is harder than entering.
I am going to try and get out of both RHAT and AMLN today.
For AMLN I have reviewed my position in Platinum and What if? at $39 gives a profit of $525 and that is how I have processed my position to exit. Look at volume, it is not there as before for AMLN, an early sign of a turn. Hopefully it will get back to $39 today.
For RHAT a contingency order to sell at $5 more than I paid. Yesterday I would have got it. I can't get online until 12:30 market time, so it be interesting to see what happens today.
As to BBY, until I can get my head round the exits, I shall wait until later perhaps.
Fortitude:
I want to focus on the system methodology, rather than the merits of each position. The system calls for stop loss contingency orders unless there is an overshooting large enough to make it worth it to take profits, or if my specific Fibonacci targets have been met (I use RET software to set targets and candlestick patterns and oscillators to confirm). I will stick with that methodology in a disciplined manner and live with the results. The objective is see if this system produces good results. The advantages are clear: if you follow it, you would stop thinking of your positions every minute of the day and work at your trading for 1hr a day.
Having said all that, I respect your command of the ADX, which I don't use, so I cannot discuss much. Also, since my RHAT trade did not fill, I'll be watching the stock for a 38.2% retracement of the previous rally and an oscillator signal. I will do the same for AKAM.
I would like people to contribute by proposing stocks that may have triggered my system and that they consider have strong catalysts and explain why. This will be a good way to learn about the catalyst, which is the most subjective part of the system.
Juan,
In respecting this is your Blog and Blogger, with due respect exiting is also an subjective important part of the system, which cost on DE, and is now costing on AMLN. A refinement here possibly.
As to other trades and catalysts, I will hopefully find some soon...
Still in AMLN and RHAT. **Smiles** My contingency orders have not been taken so far.
BTW, I am posting here as a record as well, so I shall update with my trading positions. You might get frustrated with me, but that is how it is. **Smiles** Ignore my ramblings if you want. I am no expert.
Juan,
On BBY, you exited when the Refined Elliott Oscillator turned downwards. You got that exit correct.
Exiting on a retracement fibonacci line as a stop loss is also an entry point, if you haven't entered the trade.
All the time we are talking about the balance of probabilities on forward projections. Certain shares work better with particular oscillators/indicators. That is something I am going to do on Metastock using the Systems Tester in the future.
Fortitude
I am compelled to answer all your questions, but it is getting hard to keep up with you!! hehehehe, lol....
Please DO post as much as you want, the blog is to promote discussion.
Overall, I tend to stay in bullish trades and exit quick on bearish trades (that is my bias). I suppose I could have exited AMLN and stay with DE yesterday. BUT I am testing this system, and I have to be disciplined and only exit when there is a compelling reason to do so. My point is, you do what you feel is right. I want to see if my system is profitable, and so far it is, so I am sticking with it. The goal is to see how long it takes to reach 100% returns. Your reason for exiting the trade before the contingency order is filled are quite valid. My point is that CRC's and PRC's tend to limit loses.
Since you have Platinum, you could take a look at the trades we have done so far, if only long puts and calls would have been entered.
We have enough cash for 2 new positions in the account, we have an excess of bullish positions. We should keep an eye open for those bearish trades!
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