TBT

TBT appears to have completed an Elliott Wave impulsive 5 waves up. If that is the case, look for a retracement to the 46.09 to 47.23 area. The price may not reach the 46.09 because of the strong support at the 47.23 level, which is the 38.2% retracement.

 

Sorry! I posted the price levels for PST before I corrected it.

 

Really? Impulse, eh?

Here, try this:



As a sidenote, I was around at the secular bottom in the bond market circa 1981. I willing to wager YOU weren't.

 

WHAT?

You didn't like that chart?

Too steep?

Let's try one since inception:

 

This is what I said in the last update, “I have labeled the Elliott Wave count for TBT correction from the 11/6/09 high as a double zig-zag. If I am correct in my count, the 11/30/09 low must hold support. A break out above the 11/23/09 high will confirm the correction is over. The 11/23/09 high is the wave-B high and a break of that high rules out an impulsive five-wave pattern down to lower lows.”

The 11/23/09 high has been broken and I can count five waves up from the 11/30/09 low. With that said, I can expect a small correction from here (emphasis on small).

The previous fourth wave is where many corrections find support. That would be around the 47.00 level. What other facts could potentially make this a good stop for a short-term correction?

The 50% Fibonacci retracement level is 46.67. The 55 EMA is also near that level. There is also an unfilled gap at the 38.2% retracement level at 47.24. Does this mean that the price cannot go higher from current levels? No, the price can extend from current levels before it makes its wave 2 correction. That would be a good thing!

Signs that a potential trend change is taking place are the facts that the price and 13 EMA is now above the 55 EMA. Will it stay that way? We will see. We do need to see the price to break out above the 233 EMA.

 

TBT gapped up at the open today and it broke the previous high. TBT has made it to the 233 EMA and we will have to wait and see how strong the resistance will be.

 

I have Elliott Wave labels on the chart showing my interpretation of the count. This is significant due to the price moving above the previous high. Wave-I topped 11/6/09 and wave-II bottomed 11/30/09. Now we have wave-1 and wave-2 complete as shown on the chart. That means that wave-3 of wave-III is at hand. This indicates that the move higher will be intense.

Notice the gaps the last two days. This is normal due to the above-mentioned situation. The price may not fill these gaps for a long time.

I have placed Fibonacci Price Extension Lines using the wave-I and II, which is not shown on the chart. I have also placed Fibonacci Price Extension Lines using wave 1 and 2. The 161.8% price extension line from both rests at the 54.75 level. This is where I believe wave-3 will top. After that, there will be a wave-5 top, which will be wave-III. Then wave-V will be next. I expect the price to reach the 65 level minimum when it reaches the top of wave-V.

I know that is well above the current price. It will not happen overnight, but I do expect it to get there eventually. Time will prove me right or wrong.

 

TBT has continued to make higher highs. It even poked its head above the 233 EMA for a couple of days. It is only the beginning.

I will continue the discussion of the Elliott Wave analysis from the last update from 12/22/09. TBT keeps moving higher and higher. As you can see from the chart, we now can count waves I and II, waves 1 and 2, and so far wave-i. We could be complete with wave ii or may need one more push lower to complete the pattern. For the bullish case to continue standing, the wave-2 low of 12/18/09 cannot be broken.

I cannot express in enough words to you the significance of the above analysis. If my count is correct, it implies that wave iii of 3 of III is about to begin. That set up in Elliott Wave analysis is what makes trends and strong ones at that, especially with the degree of wave count. If my count is correct, the rise from current levels will be fast and it will be furious. It will be intense as people recognize that interest rates are really heading higher instead of speculating they will move higher.

How high can the price go? I can give you an approximate answer based on Fibonacci analysis. A target price of 56.86 is achieved by multiplying the move of waves 1 and 2 by 1.618 and adding it to the high price of wave-1. Do the same for waves I and II will give you a target price of 58.03. Therefore, now we have an idea about where to take profits!

Do not look at the MACD or Slow Stochastic! It will cause you to doubt it can go any higher right now. I do not use indicators for buy or sell signals. I only use them to signal divergences and warnings of pending changes in trend. So far, the indicators have been moving higher with the price. At some point, the indicators will start giving us a warning that a temporary top may be around the corner, maybe around the 56 or 58 levels. We should only worry about that when it gets here.

 

If you had been following my Elliott Wave counts, the recent pull back did not surprise you. You should have expected it. So far, TBT is in wave ii of 3 of III. I can see where wave ii could be complete when viewing the 15-minute chart. If that analysis is correct, the price should rally tomorrow or the next day and not look back for weeks.

My count could be wrong and you need to prepare for that. The critical level for my analysis is the 12/18/09 low. I know that is almost too many points to give back if the trade goes sour. However, the reason that level is critical is that that date was wave-2. A drop below that level will cancel the anticipated impulsive wave and break the Elliott Wave rules. Wave-ii cannot retrace more than 100% of wave-i. A drop below wave-2 means there will not be a wave-3.

What helps support my analysis? First is the horizontal support that crosses the 49.00 level. That level has been strong resistance before and therefore, should be good support now that the price is above it.

Second, that level is also near the 50% retracement level for wave-i. Retracement of 50% is common for most pullbacks.

Third, the price has dropped to the previous wave four of wave-i. I do not show that count on the chart. However, the previous wave four is usually a good stopping point for a pullback.

Fourth, the price has tipped its toe back into the TAZ. TAZ is usually an area that the price will turn back around. Since we have the other factors listed above, the resumption of wave iii should start tomorrow or the next day.