Total rubbish. Here is my analysis of WOR from last night. Read it carefully cartman, then tell me why it lags, why its any different to a momentum strategy and why it will not work in this environment.
BOTTOM LINE
5/3:
EW Trend: Down
Price Trend: Down
Trend Strength: Weak
Broker Consensus: Intermediate BUY
TECHNICAL DISCUSSION
5/3:
VIDEO ANALYSIS (3 mins 12 secs)
LAYMANS: WOR has to date been rather resilient about moving lower as patterns dictate, but I feel its just a matter of time before the last push does eventuate. If so we'd anticipate a peek back below the November lows before the start of a large counter trend move, however there could be scope for trading this next move down because it is aligning us with the major market trend, but we'll discuss that below. Again we have a stock that is in some type of holding pattern, which to date could be deemed a symmetrical triangle. An Elliott Wave triangle will contain one more swing back and forth yet from a time symmetry perspective I'm not sure we'll see that unless its a short, sharp move (refer video). Today was not a positive outcome on a number of fronts. Firstly prices tried to break above the highs set last week, yet closed back down on their lows. This was accompanied by moderate volume that in turn points to possible selling interest. Lastly our divergence indicator doesn't offer any divergences but it does show that prices are at a very over bought level meaning a reversion is nearby. We shouldn't look at overbought/oversold indicators in isolation, but coupled with old resistance and volume attributes it does become a valuable confirmation tool.
TECHNICAL: Activity since November has been a swag of 3-wave patterns all suggesting we're seeing a pause in the much larger degree trend and not a new advance higher. As such any immediate downside shift in momentum should be deemed the potential start of wave-5 and therefore new lows being seen. There does remain scope for this triangle to expand with a wave-d and -e yet to come, but even so the recent highs set last week should not be overcome. This becomes an important observation for our trading strategy that we'll discuss in a minute. As we're nearing the end of the immediate bear cycle we would anticipate that wave-5 lower here would just penetrate the November lows circa $10.60 by a small margin rather than driving aggressively lower. Of course anything in this climate can happen, but with all current information we'd expect the $9.00 to $10.00 zone just about terminating the pattern. That said we do not step up to the plate and start buying just because it hit the zone. We will need to see price and hopefully volume confirmation before contemplating bucking this trend.
TRADING STRATEGY
5/3:
The lowest risk strategy for a short term trader is capturing the expected swing lower by selling on a break of yesterdays low at $14.59. Place a protective stop above Fridays high of $15.95. even if we do see an Elliott Wave triangle form, that is one where some more sideways action will occur, we should still not expect to see Fridays highs penetrated. A triangle must always continue to coil with each successive wave inside the one prior. As such we can anchor the protective stop at a place that is deemed the safest under the circumstances. That risk also offers a reward of 3:1 should prices tag the major lows again. Yes we are looking for a push through those lows but we need to ensure the risk reward at major levels of support are favorable.
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ok --- (cooled down a little now) ---- ive actually looked at WOR --
i dont totally disagree with the possible short on this stock -- just curious though Nick --- r u using E/W exclusively to analyze it, cause simple trend lines will tell the average punter a quicker story ---
i still dont think its an immediate short even if yr price point is broken---
Why? --- In laymans terms ---- it needs to break down thru the initial TL (A)
it needs to prove that break by failing the retest of (A) to the upside AND respecting the TL (C) to the downside ---- taking the trade at the top of a momentum cycle would make it very low risk ---
your stop of $15.95 is a bit wide for my liking ----- if the above pans out the (C) TL + a few cents would become the stop line --- similar to your trade but the retest is important i think.
