StageInvesting +Elliot Waves

Sharing few latest charts based on my learning on combining Stage-Based investing with Elliot Waves method.

Would request contributions from other EW and Stage Based Investing practitioners.

For starters, just sharing 2 images wrt Stan Weinstein Stage Based investing rules as well basic EW theory .

Stages in Price-Life-Cycle

Stage Investing method is good for long term investments and is based on tracking price movement on weekly charts wrt 30 weeks moving average.

The best entry in a stock is when it breaks out in Stage 2 and exit should be made when it enters Stage 4.
Stages are clear in the above pic.
Elliot Wave Theory:

Picture1

Elliot Waves principle is based on mass-psycology principle and as per this theory ,every stock moves in 5 waves (up or down ) and then corrects in 3 waves (a,b,c)

Here are few examples of stage based and EW method.

**Sell in Stage 4 or when 5 Elliot waves are complete **
One of the key rule is that you don’t buy or stay in any stock that is in Stage 4.

Because you don’t know how far it would go in to correction-phase.

FB & Netflix are 2 recent examples (charts are given below)


Buy when the stock enters in Stage 2 or new impulsive EW starts:

Combining Elliot Waves with Stage-based investing :

The following chart is of CaterPillar - a US based company involved in farm machinery, construction etc etc.
Here one can see how these 2 methods can be combined - stage-analysis + Elliot Waves.

Caterpillar is in Stage 2 and now also in bigger Wave 3 . EW can help in calculating the future targets - for example , CAT (CMP -235) may go upto 500 in coming months as per equality principle of EW .

Again all of these are probability set-ups. Risk management is key whether one invests on the basis of fundamentals or by doing technical studies.

Would love to hear the views of other technical analysts who follow these methods.

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Sharing Gold Chart (CMP 1951)

As per this , Gold is in stage 2 and is progressing well .Stage 2 is an ideal state to be in for a longer term investment.

As per Elliot Waves count, as of now, gold is pulling back in minor wave ii of Wave III (of larger Wave 3)

Longer term target wave 3 is US $3000 /Oz whereas shorterm resitance is 2072.

As gold has global economic implications- the movement and timelines can be very different as compared to individual stock-movements ( though 3rd waves happen to move faster than wave 1 or Wave 5 , but still in case of gold the speed is relatively slower as compared to any individual stock)

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Rossell India

Nice set-up - volumes also building up -Stage 2 as well as Wave 3

Long way to go.

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Kirloskar Ferrous

Other beautiful set-up - Stage 2 as well as Wave 3 - should do well as volumes also good.

Keep in consideration that, none of these are investment advise. These are just studies for tracking how these two mehods work when combined with each other.

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It’s very easy to (draw/comment) spot buy/sale point after completing the chart/pattern with maximum accuracy. But It’s way far more difficult to predict the future price direction. correct me :wink: if I’m wrong!!!

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Future prediction can never be accurate - it is just a game of probabilities . You find the best probabilities based on patterns and play along keeping your risk-management tools.

In the above charts - have given longer term targets for Gold, CAT as well as shared good set-ups of Rossel India and Kisrloskar Ferrous ( can give targets for these 2 also).

Keep a track on these 4 set-ups and see whether these work in future. We can only tell in future whether these worked or not. Better to keep a track to develop a trust on any system/method.

Thermax -other beautiful set-up

In Stage 2 from November 2020

Decent volumes accumulation at every levels.

Now in wave iii of larger wave 3.

As per technicals - 1st target close to 2800-3000 ( channel top)
Long Term target - close to 6000 - equality rule - wave 1=wave 3

Timeline - the most difficult to predict .

Risk Management : The best way to ride the trend is to track 30 week moving average . If it cracks 30 WMA decisively with volumes, one can exit.

Again - not an investment advise- just sharing for interested - ones to track and check whether Elliot waves +Stage Analysis work !

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Max Healthcare

Another good set-up- in S2 and seems to ave started the new wave.

Short term target can be near 600 (channel top) but long way to go.

Next entry can be after a pullback from current levels as it has run a lot in last few days… a retracement and green closing after that can be 1st entry point.

One can track it with 30 week moving average for exit-signals.

Just for learning purposes.No recommendation at all.

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ICICI Securities

A stock in Stage 4 and that has completed 5 EWs , now going in ABC correction.

As the stock enters stage 4, it is an exit call for a long term investor as one does not know how far it can go in downtrend ( price or time-wasting)

Now it is at a crucial level, if it breaks belwo 578 with volumes- a further downslide is expected.

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Elecon Engineering

Another good set-up to watch out

Early days in Satge 2 , and starting new wave.A break over all time high of 215 would be next confirmation point.

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is this in stage 2?

Godawari Power (GPIL)

Another stock in Stage 2.

Moving up in bigger Wave 3.

Currently correcting in wave ( iv ) of Wave ( I ) with in bigger Wave 3 .

Wave (v) whould follow to complete Wave ( I ) and then a correction in Wave (II). Bigger Wave 3 would be completed once we go through impulsive Wave (III), corrective Wave ( IV) , impulsive (V) …and then a correction in Wave 4 and so on.

Keep in cosideration that overall sector movement/trend is also improtant when we track a stock.
Risk Management
One can ride till it does not break 30 week moving average , but if someone really wanna stick for very long term , 40 week moving average can be used as a risk-management tool.

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Yes.

Here is the likely path.

Previous ATH is the first resistance.

Should go there and come back to retest and then it should rebound- that would be the ideal set-up

Keep in mind that these are probability set-ups based on pattern studies. There is no certainty - risk management is the key.

If money-making was so easy, everyone would be travelling in Ferari :slight_smile:

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Vimta Labs

One more set-up in Stage 2 - starting wave iii of (III)

But needs volume to gain momentum.

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HAL

Hindustan Aeronautics -A PSU-Defence Sector stock
CMP 1710

In S2 stage and good wave structure -should go long way.

Disclaimer- Holding as part of long-term portfolio.Not a recommendation, just sharing the chart structure.

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Alphabet -Google

Another one of FAANG enters in Stage 4

Netflix, FaceBook - already rolling in dust.

Amazon still hanging on with a thin rope and Apple too is struggling.

Check TEXMACO RAIL, HT MEDIA , jagran , all start of stage 2

Nifty 50

Hanging like a Trishanku between S3 and S4.

Will Fed kill the US markets by taking real action as per its recent rhetoric or it would reverse its stand on hiking intrest rates?

If Fed really follows up what it is saying , we might see Nifty as well as many global indices may plunge deep into S4.

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TexMaco is far above the moving averages, RSI overheated, heading towards channel-resistance -EW also lot of 1-2,1-2 waves -as per technicalanalysis rules, one should avoid fresh entry .

Waiting for channel breakout and restest thereafter might be the right entry place + keep a watch on overall market sentiments in coming days.

HT Media- hanging with very thin margin in S2- Daily/Weekly MACD still in sell-zone- has broken 20 DMA - so at a caution zone.

Jagran :Looks ok- but needs to break 78.50 & later-on its recent ATH decisively and retest -only then we can see a bigger move .

All the above views are in context of long-term - I don’t see charts from 5-7% moves. I only see check them if there are bigger moves coming.

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What’s your observation on Cupid, and NGL Finechem