In today’s Financial Times, I read an interesting article by Paul Murphy that started off like this: “About 40 teams of sell-side analysts cover Tesco, the nation’s leading grocer, slavishly updating their forecasting models with every grain of fresh shopping info. Did any of those number crunchers fully anticipate the recent “strain” on Tesco’s profitability and the subsequent warning that profit growth in the coming year will be “minimal”? Not if the share price reaction is any guide: down 16 per cent on the day of the news” Here is the link That opening statement got me thinking. If we had looked at this chart a few weeks ago, what would have been our recommendation? Well, the chart is presented for you to study. Some of the non-believers might say that this is all after the fact. But our response to them is two fold. First, take a look at the hundreds of examples in this blog that anticipated prices before the event. Second, we are saying where this stock is headed – GBP 245, and we are giving some reasons for that. When an extended fifth wave finishes, we should look for a swift sell off to the second wave level within this fifth. Pass this on to your sell-side analysts, and certainly to your friends exposed to UK stocks.Maybe they haven’t heard of “Five Waves to Financial Fortune” yet! Enjoy!
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13 Comments
Hello Ramki,
What do you think of a currency pair USDRUB. I have some money in rubles, some of them I sold at the rate of 31.69. In my opinion now is a flat correction and in the near future the price will fall to 29.00.
Best regards,
Alexander
Hi Alexander, I think we have finished an extended fifth wave at 32.90. After than the theree step decline to 29.60 is only the first leg of the correction. There is a decent chance we will edge higher from current levels to perhaps 32.65/70 and then it will be time to think about where to sell for a move down to 29.50
Thank you for answer
Dear Sir. can I buy L/T now since it has crossed 1190 and wave 4 of C has retraced
more than 50% of the previous fall from 1400?
Regards
Dr Sanjay Pote
Hi dr Sanjay, I always wait for assets to reach my levels, never chase them. I you seek low risk trades, then that is the way to go. If it runs away without reaching safe levels, I don’t worry about it.
Sir, thanks for the reply but I am not able to read in between the lines of your answer.
Kindly accept my ignorance for the same. I am reading your book on EWP and trying
to apply the principles to the stocks like the above one. But I have not gained enough
confidence still and get confused many times. So Sir what is the the safe level to buy L/T
which would be a low risk trade? Pl clarify and I am aware that I am taking your precious time and sorry for that.
Regards
Dr Sanjay Pote
Hi Dr Sanjay, I mistook your L/T to mean Larsen and Tubro. I guess you mean for the long term. Well, there is nothing like a safe level. A low-risk level is something where you risk a small amount for a large gain. A small risk is what you can afford to lose, and this depends on your individual financial circumstance. You should change the size of your trade to suit your risk. How to identify a low risk buy level is explained in detail in my book. I must aplogise but this is the best I could write on this topic for now.
Hi Ramki,
I read your book and I’m now on the second detailed go at it. It’s a very EWP user-friendly book as is this site. Much better than my rather random attempts at picking highs and lows of the back of technical data pieces that explain the past, but rarely give any solid prediction or reasonable estimation of pivot points in the future.
Was wondering about your thoughts on Tesco if you have a moment after your holiday.
I have wave 1 and 3 of wave C being equal and therefore wave 5 prime for an extension. 100 % of 0-3 would give us a 1.45 pounds drop. Assuming we finish wave IV at 3.50 pounds we would end at 2.05 pounds.
However A=C would put us at 4.54 pounds – 2.04 pounds and therefore 2.50 pounds or around 2.45 pounds as you said – as my data on the start and finish of A isn’t paticularly clear.
Am I right to assume that A=C takes precedence as predicter over 5th wave end of C?
Many thanks for your excellent and clear insights on this site (I find Avi Gilbert a little confusing as he has so many different possible counts), and any feedback you may be able to provide.
James
Hello James, Thank you for your comments. I am hoping that by the time you finish reading the book a second time (and reading the various posts on this blog) you would have come to appreciate my approach to using EWP. Put simply, we start off with a hypothesis. Then we have a wave count. The next step is to have a trade plan, followed by its execution. Along the way, we keep monitoring the martkets for any clue it may give about where we have gone wrong in step 2. Until proved wrong, we continue to be faithful to our count. In the meantime, we ignore the counts of everyone else, including Ramki’s (!) THis last step is probably as important as the first step. Let the markets tell you where you are wrong, not any guru. Now that you have learned how to use EWP, you should proceed boldly to engage with the market. But always control your risk, and your emotions. Then you are assured of success. (in other words, the answer to your question is ‘it doesn’t matter whether A=C or wave 5 is going to be 61.8% or 100% of 0 to 3. What matters is you remain faithful to your own count till proved wrong. And EVRYONE will be proved wrong sooner or later! But in between, we can make money.Good luck.)
Hi Ramki, very wise words indeed. I believe a solid plan backed up by confidence in ones actions the key- Most appreciated for the rapid responses. I´m using yours and other peoples counts to further my understanding of the process and hone my skills, as well as dipping the toe to examine results when it actually really matters. My money!! Am spreading the words to mathematically minded friends, as am so impressed with the clarity of the book for easily gaining a basic understanding and your posts for providing practical lessons and food for thought. A joy to read an objective opinion that is malleable, as opposed to a dead cert conviction of what will happen only for it to be followed with a completely different dead cert. I know which one is more likely to fail. Enjoy your holiday and keep up the excellent work. Thanks again.
James
James, Thank you and best wishes
Hi Ramki,
I know you posted on this a long time ago, but it was a chart on a very big picture so development would be slow. Always good to give you feedback as I’m sure it would be impossible to keep check on all your posts. Appears to have maintained your count and kept below the 350ish . I believe us to have finished 4th of C and be back in impulsive wave down towards 245 target. Whatever the minor counts the main count has still respected EWP rules. 🙂
I have learned, and continue to learn, a huge amount from all your postings.I started looking at EWP around the time of this posting and continue to practice as time allows. The opportunity to hone skills and build confidence using EWP from your live postings is invaluable. I have found nothing like it. Much appreciation to your time and efforts both to the site and to responding to comments. Eargerly awaiting the next book as another part of the EWP education.
Kind regards,
James
HI James, Thank you very much for your kind words. You are right that I seldom remember what I posted some time back, what with being busy with the current markets in an active dealing room of a bank! But I do appreciate feedback from readers such as yourself, traders who are serious about the market and who aspire to become better at what they do. Good luck.