Catching Tails

A B C - 1 2..... this is all you need to know for finding the third wave.

If you can count it out, you may have a tail on the way.

A telltale sign of wave 2 is it tends to be very flat and low volatility.

FB exploded to the upside this morning then traced out a corrective wave on low volume.

Volume is now coming with price increases, not decreases. A reasonable observer would probably conclude that the buyers are now in control, but you never know......

 

FB has been in a narrow range for a while now, I think next week it will have a sharp breakout - either over 20 or down to the low 18s. It is a bizarre stock to watch - doesn't follow the market at all.

 

Sold FB @ 18.32 for 1.5% loss.

Opened below the pattern low and kept going. :eek:

 

What's up, money makers.

Time for the weekend self evaluation.

This week's big lezzon involved what to do with a stock lingering on break even. Last week taught not to put stops anywhere above the bottom of wave 2. This week was an exercise in ambiguity over just where that actually is.

There were two opportunities to dump FB at B/E after adding size on weakness, but I held for a move that was not to happen.

One obvious solution is to impose a time limit from initial commitment to higher highs. I'm thinking a couple of days would be a good start.

Next, the long term trend was down. -1

Fundamentally, the stock is a POS. -2

From a capital flow standpoint, prevailing insider sentiment is to dump, and more was on the way. -3

In other words, I put more faith in the third wave than in the general conditions.

Here is where it's healthy to remind myself that EW is no guarantee - it only describes the resonant nature of securities after some fundamental displacement has set them in motion. When this forcing function is working against my ultimate motives, it's not easy to justify losses.

Time to go back to the top gainers list and apply these tactics to items that have some force behind them. Whatever happened to RPRX, BWS & AFFY?




:eek:

 

Here's a perfect example. Found this little jumper on Friday after having to cut FB. I'm still trying to figure out a better way to buy these (I just love buying breakouts). Anyone have any tips?

I've got a page full of these on my yellow legal pad. This one was on the top gainers list a couple days ago and surprise! It kept going up.

 

Greetings, my good friends.

Top gainers ABC12 setup illustrated:

 

Another:



This is very similar to the famous Sperandeo 123, with an added 1-2 at the end.

 

Successful launch:

 

Dud:



Where to put the buy stop? Above the B wave is probably the most conservative trigger. I usually just look at how the price acts after the opening pop.

 

ACAD taking the shape: