HDRR ready to roar after completing five waves and triangle formation

The Elliott Wave chart of Hindustan Dorr Oliver (HDRR) stock has an interesting chart formation. Let us start from the significant high of 159.40 seen in August 2010. Since that time, the stock has been nothing short of decimated, and investors have been pulverized. The low seen was 7.55. The recovery from that low has been slow, which is natural. Let us see if we can count some waves from the top. Actually, it may make better sense to present a wave count from a more recent top, 39.80 seen on 9 July 2012. DO you see a five wave pattern completed from there?

 

What happens at the end of a Five Wave Move?

Hindustan Dorr Oliver seems to have completed a five wave move from a significant high of 39.80. What happens when a five wave move is finished? Elliott Wave theory says we will get a correction that should be bigger than either of the two minor corrections seen in the just finished five wave move. Wave 2 was from 21.69 to 31.43, traveling 9.74. So we should anticipate the current rally to reach 9.74 or more from the low of 7.55. The minimum target then becomes 17.29, which is 30% higher than current levels.

 

A Triangle Formation?

Do you see a bullish triangle pattern? Perhaps this is an X wave separating a zigzag correction? Or more optimistically, perhaps we are in a complex wave 2 after which we will get an explosive third wave? In any case, a close above the upper trend-line of this Elliott Wave chart will send the bears scurrying for cover, and give the bulls more confidence.

 

Using Elliott Waves

The main reason why traders use Elliott Waves is because it gives them an edge, which I would like to call an Elliott Wave Edge. While there are no guarantees about making money, this edge allows traders to anticipate which direction the next move is likely to be, and also compute how far the move can take us. Traders are also able to figure out where they should place a stop if the next wave that develops doesn’t meet the Elliott Wave rules, or Guidelines. You can read about the Elliott Wave edge and how traders win in this article here. You can also read detailed explanations about Elliott Wave Theory, the rules,and wave personality in this reference article.



10 Comments

  • waquar

    Hi Ramki,

    Love the new format of the site, but unable to maximize the chart images 🙁

    • Waruar, Thanks for bringing this to my attention. I am not great at tweaking websites, and by mistake i switched on a feature that caused this problem. Hopefully it is now all working fine. Always welcome suggestions and ideas from readers. This blog is meant for you all!

  • Raju

    Old website of wave times was good looking

  • Mahesh

    Hi Ramki,
    I am half way through your book as i write this comment and I am loving it. I am from software programming background and was wondering what your opinion was on automating elliott wave analysis. Do you think it’s possible? If ‘no’, then why? Also do you recommend any of the current elliott wave charting tools like ELWAVE or AdvancedGET.
    Regards
    Mahesh

    • Hello Mahesh, Thanks for your pertinent question. I don’t believe that the markets can be predicted by anyone, let alone a software program which cannot differentiate subtle clues that the waves put forth. What an experienced Elliottician can do, however, is to recognize these clues as they emerge,perhaps better than the less experienced person. And then he makes adjustments to the path he is taking. So, if a person’s goal is to learn Elliott Waves in order to predict market turns, he may succeed a few times, but he will just as often fail. What he or she needs to learn is how to develop a trading strategy using Elliott Waves. A software can produce an array of possible counts, and will ask you to choose from them. This decision can be made by you without the software. Let me ask you something. If either of the two software you mentioned can produce consistent results, why would the vendors still be trying to sell them? After all, they can just sit back and make their money day-in and day-out. Let me ANSWER another question that may cross your mind. Why do I offer an exclusive membership if I can ‘predict’ the market? The answer is, just like an experienced lawyer or programmer I charge for my insights, my strategy, my ideas and importantly, my time. I am NOT predicting anything. I have made it very clear that there will be some losing episodes, but because of the way I USE Elliott waves, we stand a pretty good chance of making decent money.

      • Mahesh

        The only problem with non-automated approach is that there is no credible performance/backtesting figures to go by. Let me explain my point, for example if you look at the multi-timeframe momentum approach (for example buy when daily and weekly does a bullish crossover, sell when daily and weekly does a bearish crossover) it can easily be backtested for the last so many years data for any instrument. Although actual trading results will most certainly vary but the backtesting result serves as a yardstick. Also in the backtesting report could see each and every trade in detail which will let me calculate R/R, Profit factor etc. Since elliot-wave approach is difficult to automate it will be quite difficult to produce backtesting result for example Nifty lets say from year 2001. Only way would be to do it manually which is just not feasible. Perhaps this is the reason there are no performance report of the elliott wave approach on any stock or indices for any duration anywhere, even Robert Prechter’s website does not have it. Please correct me if i am wrong.

        • Mahesh, your observations are quite accurate. The main point I would like to reiterate is Elliott Waves is not a fixed input system. Rather we have to adapt to the market as it marches on, requiring regular adjustments. It is an aid to trading, and the trading decisions are made by humans.So you can say it is a completely different approach to trading from the automated one.

  • sandy

    Hi Ramki,

    HDRR reported -20.87 Net Loss for the Period Q2 2013. Do you see stock hammer from hereon rather than achieving minimum target of 17.29 as per EW?

    • Sandy, I have often mentioned in my writings that we have to use Elliott Waves to ‘trade’ the market. When I posted my comments, I had a certain paradigm of the waves that allowed me to anticipate a sharp recovery. We went from 12.95 at the time of writing to 15.65 , almost 21%. Sure, we didn’t quite see 30% on the move (at least not yet) but who cares. When a wave count has served its purpose, it goes out the window and we look at a new idea. As for HDRR, we have come down 50% of the most recent 3rd wave rally within the 5th. Perhaps this will hold and we could still recover, perhaps on the notion that the worst is over. Let us see.

  • […] back, I had suggested that Hindustan Dorr Oliver stock (NSEI:HDRR) Was set to roar having already completed a five wave down move and looked ready for a bullish triangle breakout. Well, the stock has delivered with the upside breakout from the triangle, and reached a high of […]

Leave a Reply