Investing in Hindalco at the right time using Elliott Waves

There have been persistent requests from my readers in India for articles on how to use Elliott Waves to invest in Indian stocks, and this post looks at Hindalco. Let us start from the February 2016 low of 58.80. A lot of traders would have been reluctant to buy Hindalco when it was falling like nobody’s business. But in the short span of six months, Hindalco has already reached the 150 level, returning 150%. Such spectacular returns go only to the astute investor, who lies patiently in wait for the right opportunity and goes in aggressively.

The careful investor

You don’t always have to be picking the bottoms to make money. You could have invested in Hindalco at the right time using Elliott Waves at many junctures on the way up. In my book ‘Five waves to Financial Freedom” , I have discussed the concept of reflex point. Once Hindalco went past the reflex point in a five wave move, the careful Elliott Wave investor would have watched the stock on a daily basis to see when he could join in the upcoming third wave. The first chart below shows the reflex point as well as the five wave rally that took it past that point.
A five wave rally past the reflex point

You can see from the above chart that wave 2 was brief, falling only slightly below the 38.2% retracement level. When the explosive rush to the upside happened with a gap and an expansion in volume, you would have immediately committed some funds. That is because you now know that wave 3 is very likely underway.

Buying in the midst of a third wave

I teach many strategies for real-time trading in my seminars and workshops. Today, you get a snippet. Read this post as well as the one below (Walldan Group Inc analysis) and you will see what I am hinting at. The following two charts suggest that Hindalco could have potentially reached the end of an extended third wave. Mark my choice of words! I try to remind myself everyday that no matter how smart I think I am, the market is determined to show me my place! Also bear in mind that we can never be sure where an extension will finish!

Hindalco reaches a possible top wave top

Here are the internal waves of Hindalco’s third wave to support my hypothesis.

Hindalco's internal waves of its third wave
Minor fourth wave

Finding out Hindalco’s minor fifth wave target

As you know from FWTFF book, you can anticipate where the fifth wave will finish by measuring the distance from point 0 to point 3, and then computing some Fibonacci ratios of that. Here you can see that Hindalco’s minor fifth wave finished exactly at the 38.2% measure of 0-3. Not bad at all!

Computing a wave 5 target

Using the guideline of alternation to your advantage

One of the advantages of learning Elliott Waves is you can anticipate the level of difficulty in an upcoming move by looking at what happened earlier. Since Wave 2 was a simple correction, we should expect wave 4 to be complex. This is as per the guideline of alternation. You will see this explained well in FWTFF book. The key point with respect to Hindalco is we should be patient now for a proper dip to at least the 38.2% levels. While we are waiting, there could be a brief period of a price over throw to around 155.50. Let that pass! If you are like me, you will rather miss a move than trying to chase a rally that is potentially near its end. This is different from jumping on to a running train as it is leaving the station.That analogy is for joining a wave 3 in its early stages.

Wait for a wave 4 correction in Hindalco

How high can Hindalco’s fifth wave go?

Well, once you have purchased Hindalco on a wave 4 dip, you can do some calculations yourself. This calculation is no different from what you did earlier for the minor wave 5 of the third wave! But because wave 3 was extended, there is also a chance that wave 5 could become equal to wave 1. These are all explained in FWTFF book in detail. So maybe you should give it another read! Enjoy.


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shanghai stock index 27 March 2012

Shanghai Stock Index Update

On 18 March I posted a rather lengthy discussion about HOW we should wait for a particular sweet spot which offers a low risk buy level. I used the Shanghai Stock Index as my example, and made the following points.
shanghai stock index 27 March 2012
“If we now get a move above the reflex point in five waves, then we can be more confident of buying (in stages) from a 50% correction because any subsequent rally will be a third wave in the progression. This is ‘how’ we should really be using Elliott Waves. To plan ahead, and be aware of when the odds shift in our favor. The right plan and an ample supply of patience to wait for those sweet spots will reward you handsomely”.

The Key point above was a requirement to move past the reflex point to confirm the recovery was indeed an impulse wave worth risking money. Once the reflex point was crossed, we will still wait patiently for a 50% correction before buying. This was the plan. In the meanwhile, we came with up tentative labels that will alert us should something go wrong. So I proposed calling the first move up as wave 1, and said that we should not come below that level.

Guess what! The index has closed below the top of wave 1, effectively sending all the bulls to McDonald’s to become a value meal. Because we are using Elliott Waves the way it should be, we managed to neatly sidestep the whole chop, ie we avoided the bull trap. Even if you have only been a spectator, the lesson is very valuable. The scenario we just witnessed in Shanghai could happen in any other instrument and in any other market! From that point of view, what you have seen here is a lesson in real time. Enjoy!

Oh, do I hear someone asking what is the outlook from here. Well, once again, there is no question of playing from the long side until we know a bottom is in place. We could get a mild recovery from the 2230 levels, but then again, as a WaveTimes reader you don’t want to be playing that move because we need to see a 5 wave decline finish first before even considering whether we should buy at all. Alternately, we should see a massive rally higher that will take out wave (1) around 2380 directly, and I doubt this second scenario will happen immediately. Lets see.


If you love my book FWTFF, then you will love my online course even more! That course will take your understanding of Elliott Waves to a whole new level, because it teaches you how to APPLY what you learn in my book to actually make profits in the markets. Here is the link: https://elliottwaves.com

Elliott Waves work in all time frames

Just a quick one, to catch your imagination.
Whether you are trading the weekly charts, or the 5 minute chart, Elliott Waves work wonderfully well. You just have to acquire a feel for it, and you have won half the battle. See this example of the INR (Indian Rupee) which has come down in a nice five wave pattern today. If you are a day trader, you can spot similar opportunities in almost all well traded stocks or currencies.
Enjoy.


Quick Question: Did you wish that you could learn directly from me on how to trade using Elliott Waves? Then you need not wait any longer. I have published what is now being acknowledged as the BEST course available online for traders. Check out https://elliottwaves.com and judge for yourself. Listen to the testimonials of people from around the world! Act now! 

Jai Ho! Nifty reached 4800!

Jai Ho! Nifty reaches 4800! (Thanks to Vidhan for the catchy comment) This is a moment of elation for all those who believe in Elliott Wave Analysis, and how one can use it to profitably trade the financial markets. I think I did 5 posts in all about the Nifty, starting with this one: Dec 14, 2010 update and then pin pointed that once we break below 6069, we are all set. See this link..If you really benefitted from these examples, maybe you can tell as many of your friends as possible about Wave Times. I really believe that by sharing what we have, especially if it is information and knowledge, we are doing our bit to make this world a better place. Best wishes, and to all my Indian friends, Jai Ho!

Crude Oil Outlook

Hello folks, It has been a busy few weeks as I was spending all my evenings putting together my book. Almost done, now! Between, I noticed that Crude Oil came quite close to the target of $71. Remember we have been bearish on this from the time it was around 110? (when some leading investment banks were calling it to $150).

The outlook for Crude Oil in the near term is for a failure between 88.10 and 89.50 and come down once again. Hopefully, this time we will reach the target of 71 levels. Stops should be placed on two closes above 89.80 Take a look at the attached chart and stay tuned for the announcement regarding the book!

New Zealand Dollar NZD Kiwi outlook

It’s been a long easy (!) road for the New Zealand Dollar, the currency that Forex traders know more affectionately as the Kiwi. But it is increasingly looking like the honeymoon is over.Take a look at the attached chart of the NZD that gives you an Elliott Wave Analysis of the currency. The New Zealand Dollar embarked on its journey back in 2009 from around the low of 0.4900 and it peaked on Aug 1st as 0.8840. That is an 80% appreciation, and I am sure exporters of the tasty butter and soft wool and healthy lambs must have been hurting all along.Well, your troubles are probably over, because over the next few months, we should come off to 0.7970 initially, and shortly thereafter to 0.7760. Further out, we will see a continuation of the decline down to 0.7170 area. Some of the unwinding could happen with a reversal in Gold, and also a decline in the price of Oil. Commodity currencies should generally suffer in the process. But enough of the fundamental stuff. You already know my views in Oil – it will go down to around $71. So let us look at the outlook for NZD, or Kiwi.
Update on 29 August 2019:Quick Question: Did you wish that you could learn directly from me on how to trade using Elliott Waves? Then you need not wait any longer. I have published what is now being acknowledged as the BEST course available online for traders. Check out https://elliottwaves.com and judge for yourself. Listen to the testimonials of people from around the world! Act now! 

Elliott Wave Analysis of Natural Gas (MCX) India

Elliott Wave Analysis of Natural Gas Futures traded on MCX India. To be honest, this is the first time I am looking at this contract, and what I see is fascinating. There were so many easy opportunities to trade the Natural Gas Futures profitably on the MCX in India!So what do the Waves tell us? First of all, we can see a clear five wave down move on the left of the chart. There was an extended 3rd of the 3rd wave, a move that covered 4.618 times the distance of the first wave. Next, you would have prepared yourself for a complex correction because the 2nd wave was simple. Sure enough, you got an irregular ‘B’ wave. The 4th wave ended nicely at the 38.2% retracement level of the 3rd, and the final 5th wave also finished at a technical level (50% of the distance from 0-3). You would have gone long the Natural Gas futures contract near the end of the 5th wave. There was a bit of choppy correction that ensued, because the B wave also was an irregular correction, but hey-presto, it finished at the 50% retracement level. Anyone who was patient could have loaded up nicely near there (waiting to add at the 61.8% lvls, but which never showed up!). Then we embarked on the “C” wave, which I think has just finihed its own 4th wave, and we are in the fifth wave of this move. So it is rather late in the day to consider buying now. Rather one will watch to see what happens near the 210.60/80 and sell there if the momentum fades. That concludes this short lecture on Natural Gas Futures on the MCX in India. Share it with all those whom you think want to learn how to trade commodities using Elliott Wave Analysis.Update on 29 August 2019:If you love my book FWTFF, then you will love my online course even more! That course will take your understanding of Elliott Waves to a whole new level, because it teaches you how to APPLY what you learn in my book to actually make profits in the markets. Here is the link: https://elliottwaves.com

Medium Term Outlook for Crude Oil using Elliott Wave Analysis

 

Many of you will remember that I had called for a sell-off in the price of Crude Oil from the $140 level to $50 in 2008. (see old posts in Wavetimes, especially how Fifth wave extensions can make you rich!). The main reason for my bearish call at that time was we had completed an extended 5th wave at $147. You are now seeing another such ‘magical moment’ when yet another extended 5th wave has been completed at $114.83. The new target for Oil is now just below $71, which means there is another 26% downside left.

As I never tire of repeating, nothing works like Elliott Wave analysis when it comes to the markets. The trouble is, one has to be alert to recognize the patterns as it is happening. For example, I could have warned you of the top if I was watching it every day. Still, it is not too late even here. If Crude gets back to above 104, we would have missed only about $10 of the move. There is still about $25 left even from current levels!

Is it possible that I am wrong? Of course, I could be wrong. But we are working with stops, aren’t we? If you can afford a stop of $3 and make $30 in the bargain, I call that a fair risk-to-reward ratio! In case you are thinking of taking a short position in Oil, I urge you to do the selling in stages. 104.30-70 is one level, but we also have 107 as the 61.8% pull back level. By leaving some room to add there you will be doing yourself a favor should the market decide to turn choppy. But the best way to add to your first position is when it starts moving in your favor. You might not catch the top doing that, but at least you would be trading with the trend! Good luck.

By the way, you can get some of these alerts via twitter, in case you haven’t noticed. Once you sign up, you can share with your friends easily.

Update on 29 August 2019:

Quick Question: Did you wish that you could learn directly from me on how to trade using Elliott Waves? Then you need not wait any longer. I have published what is now being acknowledged as the BEST course available online for traders. Check out https://elliottwaves.com and judge for yourself. Listen to the testimonials of people from around the world! Act now!

Silver Outlook: Elliott Wave Analysis

The recent sharp swings in Silver has caused consternation among traders and investors alike. What is the outlook for this metal?

In the last Elliott Wave Analysis of Silver, posted on 24th April, we saw a case made out for a test of the $50 level. It reached 49.51 and boy! whatever happened there is a trader’s nigtmare, especially if he was caught long! In just 4 days Silver has lost over 18%. Could this have been anticipated? What can we do from here? Where is Silver going in the medium term? These questions are uppermost in the minds of traders. Let us address them one by one.

If you were using Elliott Wave Analysis, then you would have had anticipated a top near the $50 level without too much trouble. (We had actually done that in this blog). However, I did not warn you that the top was already in for the short term because I am not watching Silver on a daily basis. Look at the first two charts shown here. When the extended fifth wave covered a distance equal to the distance travelled by waves 1-3, any serious trader would think of taking profits. What is more important is the fact that any correction that follows the completion of an extended fifth wave is expected to be BOTH sharp and deep. This phenomenon has been covered extensively in this blog (see Fifth wave extensions can make you RICH!).

What can Silver traders do from here? First of all, be prepared for a move down to the $34 level. That level is the 2nd wave of the extended fifth. Will we get there directly? This is not so easy to answer, but there are supports at 40.10 and 39.70. There is a reasonably good chance for a bounce from either of these levels, but lookout for selling to emerge again around 44.60. Only above 45.60 will I breathe easy if I was caught long above 49! Yes, it is that serious, buddy.There is always some hope that we will get the so-called 2nd retracement of the extended fifth wave, a move that can take us back to the top of the move before a collapse happens. But we cannot rest on hope. We need to manage any open positions with care. So keep an eye on the resistances mentioned above.

What is the medium term outlook for Silver? As I said before, I am currently working on the paradigm that we have just finished the 3rd wave, and the anticipated dip to $34 area will be the fourth wave. Once that correction is finished, we should look for a fresh move higher. That rally might run out of steam near the $50 again if there are not enough reasons for the commodity run to carry on. This blog will surely update you on how to trade that rally when it starts. For the time being, though, let us concentrate of navigating the down move to $34 without getting killed.

Update on 29 August 2019:

If you love my book FWTFF, then you will love my online course even more! That course will take your understanding of Elliott Waves to a whole new level, because it teaches you how to APPLY what you learn in my book to actually make profits in the markets. Here is the link: https://elliottwaves.com