Thursday, March 30, 2017

American Express update [AXP]

On several occasions in the past I wanted to make a point about how Elliott wave analysis is far different than what most people think of when they hear "technical analysis".  I have done this several times on this blog in order to try to communicate my strong feeling that Elliott waves are something special in nature.  My topping call on IBM has to go down as a classic not just because I was in fact the only one calling it down at the time but also because of the background I provided at the time which was that IBM was looking like a big leader of vastly advanced tech - game changing things in the case of atom manipulation and of Artificial Intelligence.  All of these things signaled blue skies and fair weather for the share price.

Despite these bullish appearing conditions I clearly called the top almost exactly and I didn't hem or haw in my explanation of why I had high confidence in my view.  If you haven't read it lately it is well worth a read at the link above IMO because while it looked like a very risky public point to make at the time by those unversed in Elliott waves, it was actually the most likely thing to happen from the Elliott wave model point of view.  My trading experience tells me to follow the wave model and you won't go far wrong.

I've made other similar posts which just seemed to be insane at the time.  Anyone invested in Western Digital when I presented my Elliott wave model which indicated high probability that it was peaking and ready to come falling back to Earth would have gotten angry at me to no end for talking that way about their little darling when I wrote that "is is looking not just a little bit peaky but scarily so."  Of course I presented a model analysis of the data to back up my fears but people tend to fall in love with an idea and they don't want to consider other viewpoints.  That goes double when they hear chartists speaking chart jargon because there are so many well meaning hacks out there.  Of course that didn't stop WDC from collapsing back down to ~$35 before catching a bid again.  Again, I challenge you to carefully read what I wrote back then and why I wrote it, especially the part, "From every outward appearance, WDC is a solid buy.  So why can I confidently predict a major collapse in the share price of this company over the next 5 years?  Why am I confident enough to write it down and promise never to erase this post? The answer of course is the chart.".

You might recall me also challenging Wall St veteran technical analyst Sam Collins on several occasions.  He's the kind of pseudo expert that people tend to follow only to conclude later on that technical analysis is "bullshit".  For example there was his call on Gilead Sciences (ticker:GILD) being a "cornerstone holding" of your portfolio.  My response was clear: run away from GILD.  Not because I know a damned thing about the health-tech sector mind you, but rather because I know a lot about Elliott waves. You can (and should) read my post on that here.  Long story short, if GILD was your cornerstone then your investment house would look like the leaning tower of Pisa because whereas GILD was trading at $109 back then (red circle is when I made my post), it trades at only $67 today.

In that post I also mentioned another challenge that I had made to a Sam Collins call and I just noticed I have not followed up on it for a long while.  Here is my first and original post on American Express (AMEX) in which I told people clearly that this looked like a corrective formation from an Elliott wave perspective.  In fact I wrote, "anyone buying this thing at these levels needs to get a stiff beating by the Ponzi Police for the crime of cluelessness".  Now I know it seems like I'm taking a real chance making these kinds of posts but experience is that Elliott wave analysis will be correct about 70% of the time for a good analyst.  The shares were trading at ~$90 at the time.  2 scant years later they had collapsed to $50 before catching a bid.  And both of these collapses happened in opposition to the broader indices like the DJIA, SPX and NDX.

An important event is likely coming soon to the markets.  Those who have some advance warning and triggers to look for will be able to do the right thing at the right time.   Everyone else isn't going to see it coming.  If you want to be among those with the best odds of navigating the coming waves and staying afloat then I recommend not waiting until events engulf us before subscribing to my service.  If I haven't convinced you about the value I bring to the trading table with all of these free examples over the years then it really makes me wonder what it will take to convince you.

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