AA skew and positive Elliott Forecast

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1. Try clicking on the name of the most recent article in the column on the right. This will remove the "Archives" list.
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I am sorry that I cannot always make the chart small enough to fit neatly on the left column. I want you to be able to see the details I want to point out.


I Hope this helps,


Juan

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A few days back I identified AA as a possible candidate for a PCCRC, but is al honesty I thought that being a blue chip it would carry the momentum necessary to justify a PCCRC. Remember, this trade works like a calendar straddle and you need a strong move in either direction to produce Delta gains. But the stock came to my attention using the Skew Finder II in platinum. There was a favorable differential in IV between front and back month so I enter the trade without telling you, thinking that it was not a good candidate to advertise. Today, the situation has changed.

The stock has move up strongly, and my Elliott wave forecast is now quite bullish. There is in fact more of a skew now, as the IV has jumped and a good entry point may have developed. First, let's take a look at the historical analysis using RET, starting at the lows of 1987:



The best fitting count is a double zigzag with wave X concluding in Oct. 2005. The series that has formed since then has several posibilities, but the best count is show below:



Should this count turn out to be correct, the stock price may have a gain of 50% in the next few weeks.


Here is my trade in AA, that you could paper trade starting on the next market day.