Gerdau (NYSE:GGB) stock analysis is a classic example of extended wave 5

The stock of Gerdau SA (ADR) (NYSE:GGB) was a huge mover on Friday Dec 9, 2016. About 10.7M shares traded hands. Gerdau SA (ADR) (NYSE:GGB) has risen 98.53% since May 6, 2016 and is up trending. It has outperformed by 89.34% the S&P500. The move comes after 7 months negative chart setup for the $5.76 billion company. Analysts await Gerdau SA (ADR) (NYSE:GGB) to report earnings on March, 21.

Gerdau S.A. (Gerdau) is a manufacturer of long steel in the North and South America. The Company is engaged in the production and commercialization of steel products in general, through its mills located in many countries.

On Sep 20, 2016 a close friend of mine alerted me to the possibility that Gerdau S.A.(NYSE:GGB) may be completing an extended fifth wave. I am quoting what he said, so that you get a sense of how someone who is closely following the markets could think. This friend is a very experienced player and I pay attention to what he points me to. “This one should be fun to trade…..appears to be an extended fifth wave (wave 5 equals length of 0-3). Looking for a retracement now back to what I think is Wave ii within the fifth wave @ $1.58 approx.” and he sent me this chart. You can see that he is following the guidelines we discussed on my Elliott Wave book, Five Waves to Financial Freedom, quite diligently.

Have we finished an extended wave 5?
Have we finished an extended wave 5?

I responded to his analysis of Gerdau S.A. (NYSE:GGB) as follows:

“This is interesting, However, be careful, We could get a full test or even new highs before turn, And even then, I would ask you to check with me if we should sell. Maybe what we just saw was wave 3. However, I am inclined to call that an extended wave 5. Let me know when we retest recent highs please. thanks” What made me say that I don’t remember now. But after nearly 3 months, I see that things have changed quite a bit for this stock. Let us see that now. Open all the images on separate tabs!

Gerdau S.A.-11dec2016a

Gerdau S.A-11dec2016b

Gerdau S.A-11dec2016c

Gerdau S.A-11dec2016d

Gerdau S.A-11dec2016e

Gerdau S.A-11dec2016f

Gerdau S.A-11dec2016g

Gerdau S.A-11dec2016h

Gerdau S.A-11dec2016i

Gerdau S.A-11dec2016j

 

Gerdau S.A. (NYSE:GGB) thus is poised interestingly. I have showcased how detailed is my Elliott Wave analysis of any stock. When my members stake their hard-earned money, they need to be able to make an informed decision. Merely presenting a few charts and a nonchalant recommendation does no one any good. I hope you enjoyed the above work and learnt from it. Please feel free to share/ post comments about it.



10 Comments

  • Malik Imran

    Hi Ramki, I agree we have finished wave 3 and wave 4 is in process but if we consider your friend advice where he points wave 4 near 2.54. This is the point where wave 1 finished and wave 4 overlaps, hence the wave count of your friend becomes wrong otherwise it would be leading diagonal triangle. Do you think m I right?

    Excellent analysis. I’ve also bought your book 5 waves to financial freedom and found how clearly you have explained the EW concept. I’m new to EW but you have really make it very easy. It would be great if you can share few more videos on you tube like of TCS,Silver and few more. Thank you

    Imran

    • Ramki Ramakrishnan

      Malik, I have just responded to another comment about the minor overlap. Also, remember we are not discussing whether my friend was right or wrong. We are merely discussing another point of view. I am glad you found the book FWTFF useful in your pursuits. Wish you good luck!

    • ganesh

      How do find first wave? Where we should entry & Exit? Is it useful for intraday?

      • Ramki Ramakrishnan

        Ganesh, thank you for writing. This area has been covered in my book FWTFF. When you see the end of 5 waves of a prior C wave, you should look out for a reversal, and when that reversal goes past a pivot point in 5 waves, you know that this is a wave 1 in the new direction.

  • piyush sharda

    very good analysis..

  • Fahad

    Dear Mr. Ramki

    Back in may 30, 2010 you have mentioned that SABIC in Saudi stock market will reach down 65 nevermind all missed opportunities. The price was around 90 by that time and moved up to 135 then down to 60 in 5 years. Is this aligned with that analysis! Hope to have an update as a lesson learned with thanks Mr. Ramki.
    Fahad

    • Ramki Ramakrishnan

      Fahad, It will help other readers if you posted the comment under the appropriate blog post. So here is the link for that old analysis: https://wavetimes.com/wp-content/uploads/2010/05/SABIC-31-May-2010.jpg. You asked whether the decline to 60 after 5 years is aligned with the original analysis. I have often conceded that the very big picture is best left to those who specialize in making such long-term forecasts 🙂
      But seriously, if you had asked me this question when the price was at 136 in 2014, I would have presented you with a new set of charts and a fresh perspective. The lesson for you (and others who read these comments) is let us use waves to make trading and investment decisions. We can discard our old wave counts once their purpose has been served.

  • Tim

    Interesting as always Ramki. Thank you for this post. Looking at the charts this stock reached a high of 2.48 in April (wave 1) and a low of 2.47 in September. As per the rules of Elliott wave doesn’t that confirm that the September decline can not be wave 4 and was in fact part of a longer wave 3, as you suggest?

    • Ramki Ramakrishnan

      Tim, Couple of points. (a) We should always allow for the possibility that it was a bad tic, or some poor small time trader got his stop done for 5 shares at that low. That won’t count as a real market trade. So a tiny blip deserves a wink and looking the other side (b) we should use waves to ‘trade’, i.e. we should form our ‘paradigm’ in order to trade. Later on we can make adjustments to this paradigm.

  • Malik Imran

    Dear Ramki,

    I can only say Great trade as I watched it went down to 3.14 in wave 4 and now 4.05 today. Excellent trade!!!

    Kind Regards
    Imran

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