Of course, everything is really wave based and so the saying goes that the cure for high prices is high prices and the cure for low prices is low prices.
In the backlink I provided the model below. That model predicted the finish up of a 4th wave HT and then another wave lower.
This is essentially what we got even though the E wave was not a throw over and in fact was a short stroke E. Below is today's snapshot with wave count added. Note that the falling green line from green 4 was my internal model for the predicted wave down. It was looking for the e wave throwover from the last posted model and then expected slightly lower lows before bottoming than what actually occurred but the shape of what has actually occurred is clearly motive as expected. So now I expect a dramatic reversal of UGAZ to at least $4 and that is a very healthy percentage move from current levels.
The question I have is whether the recent low is really the 5th wave down or just red 3. For now of course it does not matter. The EW trade is to buy UGAZ with both hands and then set stops 1 penny below the recent low. Then you observe whether the move back up is 3 waves that stop at red 4 OR whether it blows through that region in 5 waves.
If 3 waves then you sell in the high 3s or low 4s and wait for the trip down to $2 where confidence will be 90% that a huge bottom is in with subsequent bounce being to at least $12 and perhaps to $17.
In any case, I bought the dip at 2.83 yesterday and have my stops set @ 2.73.
ODDS, folks. Odds and never certainties. The very nature of this universe, viewed through the eyes of man at least, is uncertainty. To expect something more than that from a trading system is to be unrealistic at best.
4 comments:
$natgas dropped lower at the open today. Getting close to the end of this down wave and a retracement of sorts?
http://stockcharts.com/public/1836019/chartbook/302113709
I got stopped out but am already looking for a re-entry potentially as soon as Monday. I expect rapid percentage change (volatility) per unit time as this tries to bottom out and shake off as many as possible while not picking up as many new players at the low as possible. These 5th of 5th of 5th can be tricky and commodities tend to extend wave 5. In that case, UGAZ (currently $2.57) could actually see one final shake out down to the $1.50 to $1.20 level into the first few days of Dec. If you see it begin to plummet straight down then odds are very high at this point that it is putting in a unicorn tail. and will soon be up huge from that final bottom. Where ever it finally bottoms to, the level of the prior 4th is already set to ~$11.
I will also point out that on log scale the current wave that your link shows is now about the same length as what the author marked as blue 1. So the rally could begin as soon as Monday. I actually think it is safer to go long UNG at current price of $8.73 with stops at $8.60 than it is to short here with stops at $9.75 recommended in your link. He's risking a whole buck on a $8.73 stock. I would risk 13 cents... I just wonder why, since he has this marked as blue 5, why he isn't more afraid of a sudden reversal upward than anything else especially since way 3 already extended.
I am not sure why the author is short either. It seems the risk/reward is better on the long side as you mentioned. I am positioning myself for a turn to the upside. Like you said, wave 5 looks almost equal to wave 1...thinking we are much closer to a sizable bounce than a big drop. He initiated his short mid Oct I do believe.
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