How Elliott Waves Warned Of Impending Disaster In Dewan Housing Corp Stock

Friday 20 September 2018 will not be easily forgotten by investors in Dewan Housing Corp (DHFL) stock. This was the day when, seemingly out of the blue, news emerged  of some holders liquidating commercial paper of DHFL for raising liquidity. Rumors swirled the market and pretty soon, everyone was dumping the shares of DHFL. In a matter of a couple of hours, $1.45 billion of market cap was wiped out just in this stock, and the bench mark indices experienced losses not seen in a single day since February. Could we have anticipated at least some of this? Even a warning that we should NOT be long this stock would have helped, right? Enter Elliott Waves.

Just FOUR days earlier, a client of WaveTimes Management had approached me for consultation on this very stock. I am sharing that with you, readers, to demonstrate how Elliott Waves warned us of the impending fall. This blog exists to share my knowledge with the world, and is often considered a living book, an extension of the concepts explained in my Elliott Wave book “Five Waves to Financial Freedom“.  That book sells for under $10 on Amazon, and clients from around the world approach for personalized consultation using this link: https://wavetimes.com/consulting

We start with the price chart of Dewan Housing Finance Corporation at the end of Friday.

A black swan event
A black swan event

Next I will share some of the headlines that flashed on my Thomson Reuters screen.

News alerts about Dewan Housing sell off
News alerts about Dewan Housing sell off

And finally, the link to the file that I had sent to my consulting client. You will see that I warned we should not invest in this stock until a minimum down move of 20% happened. Note the word minimum. And here we are, in one swift down move that took off over 50% from this stock’s value. That is the edge we have, the power of Elliott Waves.

Here is the link for that file: DHLF

-Ramki Ramakrishnan



10 Comments

  • Failedhonesttrader

    Aha! What happened to Nike and Dhampur Sugar? One went up and the other went down! Could it be a coincidence! Need to ponder. It is better to fill up the blog with posts that worked so that they appear at the front. Dhampur was posted *because* it started moving Up! And now since both started disregarding the orders of the House, here comes Dewan to the rescue! And remember, all who state the truth are trolls! Heh.

    • Ramki Ramakrishnan

      FailedHonestTrader, Thank you for writing. I am happy to approve your critical comments because lots of people share your perspective on both the Elliott Wave Principle as well as trades that seemingly appear to go wrong. I wish you good luck in your pursuit for financial freedom. I make no claim any success that might have been seen already.Just one minor point. We use this technique to gain an edge in the market. Otherwise, we will simply be shooting in the dark.

  • VYC

    Investors can mistaken the 5 completed waves of failed wave 5 as wave 1 since it has almost the same height as wave 1 & 2 from 2013 to 2016.

    • Ramki Ramakrishnan

      VYC, Indeed you have a point. More precisely, at any point in time, traders and investors who have differing views actually create the market. Else it will be a one way bet and there will be no market. We have to decide whether the odds favor continuing higher or for a correction, and then expose ourselves to risk, always being aware that should things go against our view, we will have to get out when we meet our pre-determined stops.

  • Himansu Mehta

    sir,

    for the final w 5 . sub wave 4 at 581 ENTERS into sub w1 at 590.

    ew rules confuses me over here.

    regards

    • Ramki Ramakrishnan

      Himansu, I allow this overlap in fifth waves based on my personal experience. There are many such examples in this blog, and if I remember correctly, I have mentioned this in FWTFF book as well.

  • Prabh Singh

    Ramki Sir,

    On higher time frame,Wave 3 was 4.236 and hence extended.Now ideally when Wave 3 gets extended it should retrace just a part of it which is 23.6% fib ratio but this is again tendency and there are no specific rules as you have stated this couple of times.Now in this case Wave 4 has retraced Wave 3 by 61.8% fib ratio.Do you think this is still acceptable and moreover cuts are so deep that it can move beyond 61.8% fib ratio.If this happens then can we say that Elliot wave not necessarily works everywhere and with every stock?

    • Ramki Ramakrishnan

      Prabh, The market always does its own thing. It is NOT following the Elliott Wave Principle. On the other hand, WE, the investors and traders, USE the Elliott Wave Principle to give ourselves some degree of an edge. This is a system to trade the markets. It is not a system to predict teh future. Therein lies a subtle difference, and hence the inherent flexibility and need for experience.

  • narayan singh

    good evening sir
    sir I have your book and things which I have learnt from book is nothing less than a magic…for that thankyou sir…

    sir
    I want to know about a first normal wave…this is the only topic which I am unable to understand..could you please provide us a chart so that we the learners can learn more..
    thank you sir

Leave a Reply