Silver Update: How I'm Playing Silver

INTERMEDIATE TREND BEARISH

IMO, the most recent rally in silver is mature, if not already complete. There is no secret to the fact that many larger players are net short of this market and manipulate price. I believe the powers to be will not let price significantly go against their positions and price suppression is likely. 

A few days back I detailed how market participants break nodes (see YM post for details). A similar set up may be on the horizon as juicy stops lie just below 2615. 

While the price structure seems to imply that the overall long term up-trend in remains intact, when I evaluate this chart pattern from 2615 lows, there is no high percentage way to label the move up as a new impulse 5th wave that would eventually make new highs.  Therefore, it's prudent to say that this market will spend more time consolidating it's gains before retesting the 4982 top. 

Best of Trading

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ElliottwaveLive is not an investment advisory service or broker dealer. None of its contributors are registered investment advisors, licensed stock brokers or CTA's. The author may hold short term and long term positions in the futures, stocks and ETF's discussed herein. The author may also trade around those positions which may be in direct conflict with your positions. Complete trade disclosures of the contributor’s holdings are posted at www.elliottwavelive.blogspot.com. See Trader Disclosure. 

Trade at your own risk. The blog site, Newsletter and all other information, material and content accessible from this Site (collectively, the "Content")  provided herein provides the context for market analysis with respect to a market's, a security or a commodity's general position utilizing the Elliott Wave Principle. The Content contained herein are the opinion and general comments of the author and is based upon information that Mr. Sinibaldi considers reliable but neither ElliottWaveLive nor he warrants it's completeness or accuracy and it should not be relied upon as such. Mr. Sinibaldi or ElliottWaveLive (collectively, referred to as “EWL”) are not under any obligation to update or correct any content provided on this website. Any statements and or opinions are subject to change without notice. The content and comments contained herein neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person's investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade. 

A more and comprehensive Risk Disclaimer and Disclosure Statements is available within the left margin of this blog site.   

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Fair Disclosure Notice: I do not have a position in any of the aforementioned futures markets or securities related to this article.    

Bed Bath & Beyond

Volume Scans Identify Potential Winners / Losers

Stock scanners are nothing new to most of us yet many investors don't know how to effectively use them. 

On the the basic tenants of the Elliott Wave Principle, is wave personality.  One criteria that you should become familiar with is "volume signatures" that are associated with both impulsive and corrective structures. 

Using Volume Scans

When applying the wave principle, I like to run volume scans using three sets of criteria:

1) Daily Volume Greater than 50% - I use this scan to identify stocks that may exhibit bullish/bearish 1st waves. 

2) Daily Volume Greater than 200% -  I use this scan to identify stocks that may exhibit bullish/bearish 3rd waves. 

3) Weekly Volume Greater than 50% - I use this scan to monitor institutional support or lack thereof for stocks. 

Volume Scan - 9/18/2012

Bed Bath & Beyond Inc. (NASDAQ: BBBY) is a chain of domestic merchandise retail stores. The stock showed up in a scan for stocks showing daily volume greater than 200%.

Accordingly, I'm looking for 3rd wave price action.  

On August 19, 2012, Bed Bath and Beyond Inc. reported earnings of 98 cents per share for the period ended Aug. 25. That fell short of the $1.03 per share that analysts surveyed by FactSet expected.

Shares of Bed Bath and Beyond dropped sharply in premarket trading on Thursday, August 20, 2012 as the housewares company's second-quarter earnings disappointed and it provided a weak third-quarter forecast.

As you can see from the chart that the handwriting was already on the wall as the corrective phase from 6/26/2012 to 9/17/2012 appears to be complete. The high volume signature on 9/18/2012 had this stock on my watch list as a candidate that should exhibit further downside pressure. 

At the weekly chart level, the decline from 6/29/2012 began after what appears to be an ending diagonal which typically warns of a very swift reversal. That's exactly what transpired. 

As of the time of this post, price action appears to exhibit the personality of a third wave which is being confirmed by the acceleration of price to the downside. If my assessment and use of volume signatures is correct, price should fall well below $58.77. 

Reading the Chart

Should the wave pattern prove to be only a corrective three waves, then  I'm looking for a move to $54.54 with much greater potential to the downside should a five wave decline play out.

In conclusion, I hope that readers can see how I use volume scans to identify possible trades. before the larger move occurs. 

Best of Trading  

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ElliottwaveLive is not an investment advisory service or broker dealer. None of its contributors are registered investment advisors, licensed stock brokers or CTA's. The author may hold short term and long term positions in the futures, stocks and ETF's discussed herein. The author may also trade around those positions which may be in direct conflict with your positions. Complete trade disclosures of the contributor’s holdings are posted at www.elliottwavelive.blogspot.com. See Trader Disclosure. 

Trade at your own risk. The blog site, Newsletter and all other information, material and content accessible from this Site (collectively, the "Content")  provided herein provides the context for market analysis with respect to a market's, a security or a commodity's general position utilizing the Elliott Wave Principle. The Content contained herein are the opinion and general comments of the author and is based upon information that Mr. Sinibaldi considers reliable but neither ElliottWaveLive nor he warrants it's completeness or accuracy and it should not be relied upon as such. Mr. Sinibaldi or ElliottWaveLive (collectively, referred to as “EWL”) are not under any obligation to update or correct any content provided on this website. Any statements and or opinions are subject to change without notice. The content and comments contained herein neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person's investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade. 

A more and comprehensive Risk Disclaimer and Disclosure Statements is available within the left margin of this blog site.   

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Fair Disclosure Notice: I do not have a position in any of the aforementioned futures markets or securities related to this article.     

Using Wave Patterns In Isolation: Aussie Dollar

All too often I see  traders struggle with longer term wave patterns. Their desire to correctly label the chart often leads to one's inability to be nimble. 

The weekly chart of the Aussie Dollar shows a triangular wave pattern. All an elliottician needs to know is that  price should remain in a sideways fashion until the pattern resolves. Since, triangles can only be found in w.4 and w.B or w.e of a triangle, labeling the adjacent waves becomes irrelevant (except under 3 below) and we know that price will make a final thrust move to new highs in this case.

This frees up a trader's mind and allows one to trade the pattern! 

Since triangles are present right before a terminal move, traders have the following options when day trading triangles:

1. Trade the three wave swing of w.b, w.c, w.d, w.e.
2. Wait until w.e concludes and go long.
3. Reverse after the trust out of the triangle reaches it's termination point.

Of course, you must follow your individual trade plan for entry. The wave principle is only a guide to market position and an anticipated market direction.  

In conclusion, I find that KISS (keeping it simple stupid) applies best to using elliott wave in isolation.  I've been wrong many times as to the duration of the move, but getting the initial direction correct improves the probability of a successful money making trade. 

I hope you found this lesson helpful and ...

Best of Trading

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ElliottwaveLive is not an investment advisory service or broker dealer. None of its contributors are registered investment advisors, licensed stock brokers or CTA's. The author may hold short term and long term positions in the futures, stocks and ETF's discussed herein. The author may also trade around those positions which may be in direct conflict with your positions. Complete trade disclosures of the contributor’s holdings are posted at www.elliottwavelive.blogspot.com. See Trader Disclosure. 

Trade at your own risk. The blog site, Newsletter and all other information, material and content accessible from this Site (collectively, the "Content")  provided herein provides the context for market analysis with respect to a market's, a security or a commodity's general position utilizing the Elliott Wave Principle. The Content contained herein are the opinion and general comments of the author and is based upon information that Mr. Sinibaldi considers reliable but neither ElliottWaveLive nor he warrants it's completeness or accuracy and it should not be relied upon as such. Mr. Sinibaldi or ElliottWaveLive (collectively, referred to as “EWL”) are not under any obligation to update or correct any content provided on this website. Any statements and or opinions are subject to change without notice. The content and comments contained herein neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person's investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade. 

A more and comprehensive Risk Disclaimer and Disclosure Statements is available within the left margin of this blog site.   

Chart of the Day: XBI

A Bearish Warning

The stock market has fallen hard since May 3, 2011. Most sectors and stocks never escape the claws of a bear market. Today's chart of the day is ticker symbol $XBI , the S&P Biotech ETF. The chart, in my opinion, provides a warning that the resumption of the bear trend is underway in the Biotech sector. It also clearly illustrates an ongoing five wave sequence.

At the weekly chart level, XBI completed cycle w.b at $75.93 and fell hard along with the broader market. To date, three waves have been completed, possibly four if w.(4) doesn't turn into a complex pattern.

If the interpretation is correct, and w.(4) is complete, then price should  make a new low to where w.(5) = .618 w.{(1)-(3)} at $51.32 to complete w.1 circle.

As the wave pattern and count suggests, a long term bearish view of this ETF would be appropriate that eventually draws price well below w.a ($42.95).

I'll be making periodical updates to this post for those readers who are interested in following along.

Best of Trading

Before The Bell: Updated $ES_F chart

Last night I left readers with this chart and I'd like to expand upon the subdivisions of w.(v) which at the time didn't count well. Well I slept on it and with a fresh pair of eyes, I decided to look at additional chart levels to gain more confidence in the fact that w.iv circle had ended.

Here's my findings:

At the 360 min. chart level the wave pattern from 1193.5 looked like an ending diagonal which as you know is a terminal pattern. Also note the selling pressure that came in right at my 1227-28 target as shown by the long upper tail of the candle. This bodes well for the previous conclusion that w.iv circle had ended. Yet I wanted to dig deeper... looking at tick charts to get a birds eye view of the subdivisions.

From w.(iv) low, I can count a series of 3's for each subdivision of waves {i-v}
of w.(v). Subsequent price actions counts well, working w.(iii)  but I'd like to see another down sequence to complete w.1 of w.(iii) for the count to remain on track. Of course the market doesn't care what I'd like but it would be great if it would oblige me!

Ultimately 1193.5 needs to be broken for the bears to really get excited.

Let's watch the open.

Best of Trading

$ES_F : An Intraday Perspective

Wave patterns that start in three waves often spell trouble as there are a number of possible outcomes. Often an analyst will not be able to clearly identify the wave pattern until the pattern has completed!

In last night's blog post, I stated that I am unable to make a high probability forecast. Nothing has changed as the market appeared to be on a verge of following though, but a negative Philly Fed report coupled with a shortened trading week has at least temporarily beaten back the bulls. 

The chart attached is purposely marked without subdivision wave labels as of w.3. Each diamond represents a three wave pattern. If 1335.75 isn't taken out, then the possibility exists that price may rotate back into the previous range in 3 wave setting up a triangle w.4.

Note: I have also noticed that certain commodities exhibit a similar pattern. Sticking with the all-in-one theme of markets rising / falling together based upon the USD movement, there is a possibility that commodities are projecting the next move for equities as they appear to be slightly ahead in terms of pattern development. 

Should 1335.75 be taken out to the upside, then the wave structure will be limited to a few counts.Look for me to expand on the commodity theme and updated wave counts for the emini's during this weeks edition of "Heard On The Street".

Best of Trading