StageInvesting +Elliot Waves

Intellect Design
423

It is very difficult to decide whether a stock has reached its bottom , but let’s try.

This stock has corrected 61.8 % (Fib number ) and is formaing a base near that for last 3 months.
Generally good stocks tend to recover from these levels (off course market and sector conditions should also rhyme)
Monthly chart

On weekly chart , we can see some hidden divergence on RSI as well as C=A .
It indicates that may be we’re near the bottom ( but we can’t depend upon only on this single indicator !)

So we’ve three things that might suggest that we’re near the bottom - 61.8 % retracement of last few years rally , A=C are equal now and a positive RSI divergence on weekly charts.
This only helps us that it should be in our watch list.

But here are few more positive signals that are yet to come :
a) It is in sell mode on daily,weekly,monthly MACD
b) It is still trading below 20 DMA,40 DMA,20 WMA,40 WMA.
c) We are yet to see volumes , big hands should show some inclination to buy.

Even if it starts showing some more postive signs, we would not go all in at once . As market index ,sector as well as stock should show overall positive sentiments.

So if we plan to ride this, we would to take some position when it closes above 20 dma, has buy signal on daily MACD and then we would keep on adding as it crosses and closes above 40 DMA, 20 WMA, 40 WMA with buy signals on weekly.
But major position would be added if it crosses and close above 500-510 with volumes as that is big gap zone on daily.
Disclaimer :This post is just for learning few methods of price-patterns. Views are personal. No buy/sell recommendations. These are probability study methods and chances of success/failure depend upon various factors.

8 Likes

KPR Mills
524

On charts ,from longer term prespective ,there is nothing to suggest that the correction is over.

Monthly Chart


Weekly Chart

As per stage analysis method, we can see that it is either in S1 or S4. Is trading below 20 WMA as well as 40 WMA. Till the time it does not cross and closes above these fore few weeks , we can assume that it is either in downtrend or would remain sideways.


Disclaimer :This post is just for learning few methods of price-patterns. Views are personal. No buy/sell recommendations. These are probability study methods and chances of success/failure depend upon various factors.

3 Likes

Thanks StageInvesting for the replies.

Please give your recommendation for gujarat fluorochem, krbl and wabag

Hi- we’re really sorry to say that we don’t do any recommendations.

We just analyse the stock-price movements based on historical patterns and wrt certain technicals-methods and share the same.

Intention of this thread is to make the readers aware about diffferent tecnical-methods of trying to understand the price-behaviour on the basis of the past price/volume actions.

That’s why we go into detials of explaining the technical methods while giving the analysis.

For a very simple analysis , for a beginner, we always recommend that one should study stage-analysis method. This can help one to avoid common mistakes of investing.

Thanks for understanding.

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Stage Analysis

Here are some early S2 (Stage 2 ) starters. Let’s see if they can sustain the momentum in coming weeks.

This post is to make the readers aware about the Stage Analysis method.

Examples are from US - from ETFs ( exchange traded funds).

US market has ETFs of almost every sector , every country . (ETFs contain major companies of a particular sector or a particular country)

Have a look at the charts, they tell the whole method.
EWW- Brazil ETF

KWEB- ETF of China Internet Business companies

GLD - ETF of Gold mining companies

EWY - ETF of South Korea

BOTZ- ETF for Robotics and AI business companies

Let’s keep a track whether these early S2 breakouts/attempts sustain or fail in February!

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Stage Analysis- Bottom Fishing

PLTR -Example
CMP 6.95

Let’s try to bottom fish a stock with help of stage investing method.

Keep in consideration that it might go wrong . We only get into this by using some additional indicators and that too where we find risk-reward ratio in our favor and with a strict stop-loss (SL)
Weekly chart

As is obvious in the chart, that we’re far away from 30 WMS as well as 9 WMA.

So why we’re trying it.

Four reasons :

  1. Clear divergence on RSI indicator - price is making lower low but RSI is not making a new low for last few weeks
  2. It is now moving in a range , may be a Stage 1 formation

Reason 3rd and 4th come from Daily chart

  1. Price has gone and closed above 20 DMA and 40 DMA
  2. MACD has gone in buy zone.

Like mentioned before, it can go wrong and Stage 2 might not come as of now . But just for learning and tracking purpose, we’re putting this post.

Disclaimer :This post is just for learning few methods of price-patterns. Views are personal. No buy/sell recommendations. These are probability study methods and chances of success/failure depend upon various factors.

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2 More Examples of the stocks that are in Stage 2 but still in a trading zone- have to decisively break the nearby left -side resiatances

Tata Investment
CMP 2314

In a bigger scale S2 from March 2020 lows.

On MACD , it is in buy on daily and monthly timeframes but yet to give a buy-signal on weekly.
To make a decisive upside move, it needs to cross its nearby trading zone.
Weekly Chart

LOUIS VUITTON (LVMUY)
CMP 171.47

It is at all time high now . Although it is in a larget Stage 2 , but it has started a fresh S2 on a smaller scale.

Beauty here is that oncce it starts trading above ATH for 1-2 weeks, then the upward journey can be resistance -free ( no left side resistances). It is called ble-sky zone.
Target can be upper end of the channel ie near 230 and recent price range ie. 160-170 will become resistance as well as stop loss levels.
Weekly chart


Let’s keep a track and keep learning.
Disclaimer :This post is just for learning few methods of price-patterns. Views are personal. No buy/sell recommendations. These are probability study methods and chances of success/failure depend upon various factors.

3 Likes

Macros - a long but deep and interesting take

Summary of Russel Napier Paper

Happy reading.

3 Likes

Gland
CMP 1375
We have been bearish on it from the levels of 2600. Now it is reaching near the target.

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Hello Stageinvesting, wanted to know your views on ETF investing/trading.

Strategy where one buys ETFs based on charts with having broad view on fundamentals of the sector. Similar to TechnoFunda but only limited to ETFs.

Something similar to this as well: Momentum based ETF rotation - Amazing backtested results - Need Reviews

If you could share any resource on the same that will be great.

Regards.

Hi

ETF or Mutual Fund investing for us is to play a theme when we’re not sure about a particular company to ride in a sector or a country.

For example,in US we’re not aware of several companies fundamentals but if on macro levels we are bullish on a certain sector or country then ETF investing can be a good way to play the theme.

For example, we feel that India, Mexico and Vietnam can be beneficiary of global China+1 trend , so how to take advantage of this likely trend !

We understand India so we can select few companies to take advantage of this likely trend but we have no knowledge about the companies in Vietnam and Mexico. If we want have some allocation,one way is to invest in US based ETFs (US has ETFs for almost all the countries ) e.g. VNM and EWW are ETFs for Vietnam and Mexico .

Other reason can be lack of knowledge of a particular sector.For example in India , we are not having deep knowlege of Pharma sector , not sure of future growth path of most of the companies due to complexity and regulatory issues .
But we are long term bullish on this sector, so we try to ride it via MF . MF is a proxy to choosing a basket of stocks and some sector expert managing the same.

Pros and Cons of ETFs can be shortlisted as follow:
Pros
1, Can play a sectoral pr a country theme even if are not sure of specific companies in those sectors/countries
2. You get experts’ services to manage those funds
3. You don’t need to worry about particular companies as it is a basket-approach. If the theme plays out, you will make money.
3. In case of ETFs , there is no exit load .These can be traded like stocks ( MFs have little disadvantge in this cae as they have exit loads)

Cons

  1. In MFs, ETFs ,one might get only compounding returns if the call goes right but multibagger returns can only come if you can choose the best company in the sector.
  2. Entry /Exit loads in MFs
  3. Choosing the right MF/ETF in a particular sector becuase there are multiple choices in every sector/country.

Techicals do work in these cases as they are just like index-tracking in a particular sector/country.

Hope our response is helpful.Regards.

5 Likes

Thanks for sharing.

Just saw your chart on ETF of gold mining companies. What is your view on GOLD today?

If you listen to Ritesh Jain, he seems to be bullish on GOLD because of the uncertainty with dollar dominance and soon stopping of FED rate hike.

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We’re bullish on gold.Had posted the following about 16 days back.

In current environment , we find risk-reward favorable ( no investment is without risk).

It makes sense for people in India.

The logic is as following :

Gold price is closely linked to dollar-INR exchange ratio.We’re expecting that with falling DXY ,the international price ( US$/OZ) of gold may touch all time highs in coming year .

What if the opposite happens ?

DXY does not fall, then rupee may depreciate further thus making the gold (in INR) costlier.

So it might work in both scenarios - whether DXY falls or it rises.

Risk is that in India, gold price is inclusive of GST. In case government decided to lower the gst ,then it might impact it negatively ( a bit) .

In short term, keep in consideration that we’ve run a lot in last few weeks (5-7% movement in short period this kind of asset class is very fast) , hence it might correct or may consolidate in a narrow range for next few weeks.

Hope it helps.

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Hi @StageInvesting . Thank you for sharing your thoughts. Are you tracking Gabriel India? What’s your view on auto ancillary sector in the market?

Gabriel
CMP 176.85

Well the stock doubled in beteween May to November (6-7 months). After such a fast run , stocks either go into consolidation (time-correction ) or price- correction .

That’s the way to shake off the weak hands as well as to pause and check whether the promised expectations from the company bear any fruit .

This run of last few months happened on the basis of expectations, now those expectations should come true as well as overall market-sentiments should be positive.

In short term ,we see it to remain range-bound or price can correct. In short term ,it can go down near 170 ( 20 WMA and lower end of the channel) . If it breaches this level too ,then it can fall near 155.

Big bearish as well as longer upper-wix candles (in blue circle) don’t give a confidence of upside in short term. They signal that huge supply is coming near 200 levels.

Would reveiw it in future if the situation changes.

As far as Autos and auto-aniclliary sector is concerned, it had a good run in 2022 . Post -covid pent-up demand helped in setiments. Now most of these are either correcting or are in a consolidation mode (very few have a good structure for short-term upside move) .

Let’s see if there is some trigger for this sector in coming budget and that can change chart-structure.

Disclaimer :This post is just for learning few methods of price-patterns. Views are personal. No buy/sell recommendations. These are probability study methods and chances of success/failure depend upon various factors.

4 Likes

Commodities Stocks-Status

Are commodities (especially metals ) starting a new wave on upside !

Let’s analyse:

1st US Markets :

US Steel ETF -SLX

It is an ETF of major steel companies of US.

Seems to be in early stages of Stage 2 - is above 40 WEMA as well as above 9 WEMA -both are curving up and 9 WEMA crossed over 40 WEMA few weeks back.

Monthly/weekly /daily MACD in buy zone as well as RSI is above 60 in all time frames.

XME - Metals and Mining ETF

Again in early stage 2 , yesterday closed above first trading zone and obviously it is above 40 WEMA and 9 WEMA .
While MACD is in buy zone on daily/weekly time frame, it is yet to do on monthly.
RSI is above 60 on all key time -frames.

Key Commodity exporting countries

Australia is convincing trading above 1st trading zone in Stage 2.
It is just-2-3% away from all time highs - a kind of triple top - f that is taken out in coming weeks, that would be a strong signal that commodities are back in favor.

South Africa

It is showing very strong signs of Stage 2 .

MACD in buy zone on all time frames . RSI above 60 on all time frames.

It is now trading in blue-sky zone ie. no resistance on left hand side - well above all time highs.
As per EW theory, it is now wave 3.

Indonesia

This is weakest among major commodity exporting countires.
Yet to cross over 40 WEMA ,although closing above curving -up 9WEMA . Although not showing much relative strength on all time-frames.

Although MACD is in buy zone on daily/monthly time-frames but still in sell zone in monthly.

May be the index here is impacted by internal inflation issues.

What about India ?

We track metals stocks from Nifty Metal index.

We’re back to all time high . Crossed APRIL 22 top few weeks back and now facing resistance there.
We are in early phase of Stage 2 but we’re yet to convincing close and cross above first trading zone ( shown by blue line) . Hence fingers are crossed.

Let’s keep a close watch on all of these key indices. If they work out , 3rd wave in metal-stocks can start . And as usual , 3rd waves are fast and furious.

Disclaimer :This post is just for learning few methods of price-patterns. Views are personal. No buy/sell recommendations. These are probability study methods and chances of success/failure depend upon various factors.

6 Likes

Hello Stageinvesting

Can you post charts for…

  1. IEX
  2. LTTS
  3. Lal Path Labs
  4. Mastek
  5. Tanla
  6. Neuland labs

Long term viewpoints…

Thanks in advance…

Let the market settle down .

Let the stocks make a base i.e. let the price move at bottom level in a range for few weeks . That is called Satge 1.

2 Likes

got it…

would still love it if u post long term charts for them :blush: