Saturday, March 12, 2016

[ORIG] update

In the backlink I provided the model below.

ORIG is a good example of how to play the charts using EW.  Over the past few months I have pointed out at least 3 possible bottoms for ORIG.  All of those could have been the bottom but each time they broke down and the model went bust.

But I didn't go bust even though I was playing the models because I only buy the dip and then I set stops.  So each time this went lower, it mainly did so without me.  But none of these "failures" discouraged me because this is simply my EW trading strategy. 

I carefully pick an EW-defined entry point and then stop myself from catastrophic loss using stops.  If I get stopped out, I just step back and patiently/unemotionally look for the next EW defined entry point.  Sooner or later the shorts are going to have to cover because this company simply isn't in such a weak condition that it is ready to BK.  Might it BK some day?  Sure!  But NOT YET.  The shorts are hoping that they can short it to zero and then the company will BK and then they will just never cover and thus have no taxable event.

But if the company is not so weak that it will BK and then market conditions for its product improve (or even threaten to improve) then the shorts will scramble to cover their bets and you see the shares triple in just a couple weeks.  The key is not to enter too often and the tool for achieving that is EW.

As you can see from below, the EW defined entry point (blue 5) in the chart from the backlink marked the exact bottom so far.  And as you can also see, the shares subsequently exploded to the upside in 5 waves.  Was this just a coincidence?  Again?  Really??

Going  forward, fives never travel alone and so we should expect at least one more strong wave to the upside as 3 or C plays out.   If you make money on this trade, please remember The Captain during your celebration.  My tip jar is available 24/7.

The chart above is fine for normal trading but just for fun I sometimes like to spend the extra time to do a microchart.  Yes I know that many believe that it is beyond arrogant to think that anyone can possibly predict the minute moves of the chart like this.  I do agree that it is clearly impossible for mortal man to achieve this with perfect accuracy.  But I like a challenge and so here is my best model for the 3 minute scale:


The Captain said...

Here you go Macka. Thanks for your support.
-The Captain

macka said...

Capt, thanks mate appreciated. I purchased Friday end of day for reasons above. Will let you know how it plays - you'll see by your tip jar :-)

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