Monday, May 30, 2011
Earnings Estimates Revisions Stock Picks
Good Memorial Day! We give thanks to all Veterans for their service.
First, after reviewing the indicies this Monday morning, I'm seeing a short-term uptrend in the Dow and SP500 for the time being. The Nasdaq looks to be heading lower short term.
I think the DOW may hit the 52 week high of 12,810.54 plus. After that, I'm thinking it may rollover to the downside. I see the same for the SP500 at 1,363.61 plus. I'm thinking these resistance levels the market will experience a false breakout. We shall see if and when it happens.
In the meantime, I'm recommending a momentum stock buy below from Zacks Investment Research. Zacks provides high quality stock picks based on earnings estimates provided by its own analysts, and other analysts. According to Zacks, earnings estimate revisions seem to provide better returns than just only earnings per share amounts. Its the anticipation of possible stronger EPS amounts that drive stock prices than the actual EPS earnings report.
Amerigroup Corp 63% Q1 earnings surprise sent shares of AGP to a new all-time high.
By Michael Vodicka of Zacks Investment Research
Amerigroup Corp NYSE: AGP continues to look strong on the chart, recently hitting a new all-time high after reporting an impressive 63% earnings surprise in late April. Estimates have since jumped higher, providing more support for this Zacks #1 rank stock.
Amerigroup Corp operates as a managed care service provider for Medicare and Medicaid beneficiaries. The company was founded in 1994 and has a market cap of $3.42 billion.
Amerigroup has been steadily grinding higher for most of the last year, but shares got an extra boost into an all-time high in late April after reporting strong Q1 results that came in ahead of expectations.
Revenue for the period was up 12% from last year to $1.54 billion. Earnings also looked great, coming in at $1.37, 63% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 81% over the last four quarters.
Amerigroup saw a respectable up tick in its membership base, increasing 1.9% from last year to approximately 2 million. It also saw its health benefits costs fall from 83.5% to 81.8% of revenue.
The company was also busy returning value to its shareholders, repurchasing 440,000 shares of common stock for $25 million.
Amerigroup has used its strong earnings momentum to strengthen its balance sheet, with cash and short-term investments up $272 million from last year to $909 million against just $313 in total debt.
We saw some pretty bullish revisions in estimates off the good quarter, with the current year jumping 10% to $4.42.
But in light of recent gains, AGP's forward P/E of 15.5X is a premium to its peer average of 12.5X.
On the chart, AGP continues to linger in elevated territory after recently hitting a new all-time high. Look for support from the trend line on any weakness. Take a look below.
Last Week's Momentum Zacks Rank Buy Stocks\
Krispy Kreme Doughnuts, Inc. NYSE: KKD just jumped into a new multi-year high after reporting an impressive 44% earnings surprise. Estimates have since moved higher as well, providing more momentum for this Zacks #1 rank stock.
Foot Locker, Inc. NYSE: FL is leaping higher like a pole vaulter donning Nike's latest shoe, recently hitting a new multi-year high after reporting blowout Q1 results that came in well ahead of expectations. With estimates on the rise and strong industry rank, this Zacks #1 rank stock is a momentum baller.
Liquidity Services, Inc. NasdaqGS: LQDT is fresh off the heels of an impressive Q1 earnings surprise of 80% that lifted shares to a new 52-week high. With a bullish growth projection and upward estimate revisions, this Zacks #1 rank stock is a solid pick for momentum.
Precision Drilling Corp. NYSE: PDS has been one of the stronger names in the energy space, trading near its recent 52-week high in spite of sector volatility. With a Q1 earnings surprise of 15% and bullish growth projection, this Zacks #1 rank stock is digging deep for momentum.
Click here to review more information on Zacks Investment Research winning stock portfolios.
Thursday, May 26, 2011
The Euro and the Greek Debt Crisis: Is THAT Really What's Driving the Trend?
“The euro…weakened against the dollar on Wednesday on uncertainty over Greece's debt crisis,” said a May 25 Reuters story.
The Greek debt crisis is an easy scapegoat for the euro’s recent troubles. But what about days like May 24, when the euro gained despite the Greek situation? Well, you could say it was due to an “improved overall risk appetite,” like a May 24 MarketWatch story did.
Yet here’s the problem: You may feel satisfied with these explanations, but they only tell you why the markets did what they did after the fact. They give you no real clue about where the euro will go: It may rise due to “improved risk appetite,” or it may fall due to “continued concerns over European debt crisis.”
This is where Elliott wave analysis can give you an edge. Rather than relying on “fundamental” explanations (“rationalizations” is a more accurate term), Elliott shows you market psychology, which manifests itself in Elliott wave patterns across forex charts.
Elliott wave analysis helped our intensive Currency Specialty Service (hurry, Forex FreeWeek ends May 26 -- Ed.) to make this bearish EUR/USD forecast on May 24 -- a day before the May 25 slide took the euro lower.
Update For: Wednesday
Posted On: Tue, 24 May 2011 20:47:43 GMT
Last Price: 1.4100
Support: 1.3969, 1.3863, 1.3655, 1.3428
Resistance: 1.4137, 1.4346, 1.4424, 1.4944
[Lower] The euro recovered Tuesday but the rise from 1.3969 looks corrective... leaving the euro vulnerable.
Find out what Elliott waves suggest for the EUR/USD and other major forex pairs now, free, by logging into EWI's ongoing Forex FreeWeek.
Hurry, FreeWeek ends May 26 >> Click Here
Wednesday, May 25, 2011
by Van K. Tharp, Ph.D. International Institute of Trading Mastery
Click here for Dr. Van Tharp's Trading Workshop Schedule
I'd like to take some time this week and review a few Tharp Think basics. If you're an experienced trader or long-time reader of this newsletter, you should view this material as an important reminder, even if you have seen it before.
From a big picture standpoint, I believe we entered a secular bear market back in 2000. Secular bear markets historically last on average about 15-20 years, so we still have quite a ways to go with this one. Being in a secular bear market doesn’t mean that prices decline for 15-20 years; however, it does mean that the price-to-earnings ratio for the stock market tends to decline into the single digits by the end of the cycle. In between, there are multiple down market phases and bear market rallies. Rallies in bear markets can be some of the most dramatic around—look at what the markets have returned on a percentage basis since March 2009. The current bull market rally, however, may be nearing an end soon so the simple steps below take on some importance.
1. Invest with the current trend of the market.
Before you enter the market in any way, you need to know what the market is doing. Is it going up or down? You should avoid having a major long position in the stock market unless you can safely say that the market is going up. But how do you determine that?
First, look at what the S&P500 index is doing. This index is a composite of the 500 largest companies in America. To determine how well it is doing, compare the close of the market today, with the average price of the market over the last 200 days. The latter is called a 200-day moving average. You can easily create a free chart of the S&P with a 200-day moving average on any number of web sites with charts.
When the stock price is above the 200-day moving average, the market generally goes up about 12.6% each year. When the stock price is below the 200-day moving average, the market generally goes down by 1.6% each year. Isn't it better to have that moving average on your side? At the moment, we have the average on our side—but maybe not for long.
If you were hurt in the 2008-2009 bear market, go back and look at that S&P 200-day moving average. It helps to be out of the market when prices go beneath it.
If you want to know what I think the markets are doing, read my Market Update in this newsletter at the beginning of every month.
2. Never enter a position in the market without knowing where you will get out.
Most people enter a position with the idea of holding onto it for a long time. The investment industry heavily promotes "buy and hold" as the best strategy for investors to follow. I believe buy and hold is a strategy for disaster in a secular bear market.
If you do want to enter long-term positions right now and don’t know where to get out, I recommend using a 25% trailing stop as a bare minimum. A 25% trailing stop is big enough to allow you to catch a good trend move up, but most importantly, it gets you out before a major drop hurts your account.
3. Never expose more than 1% of your portfolio in any given position.
Suppose you start out with $25,000. Based on this rule, we would not risk more than 1% of that or $250 on each position. If we like MSFT right now at $25, but want to get out if it drops $2, we would be able to buy 125 shares. Our total risk for the position is $250 and our risk per share is $2, so we divide $250 by $2 to get 125 shares.
Let's look at a second example. Suppose you want to buy XOM at $80 per share, and you use the 25% trailing stop rule I mentioned above. 25% of $80 is $20, so you are willing to risk $20 per share—this means you will set your stop order at $60. Your portfolio, again, is worth $25,000 and you will risk only 1% on this position. If you divide 1% of equity ($250) by your risk per unit ($20), you can buy 12 shares. The actual number is 12.5; however, you must round down to the nearest whole number as buying half a share is not an option.
In our first example, our risk per share was $2 and we could purchase 125 shares. In our second example, our risk per share was $20, so we could purchase only 12 shares. In each case, however, we limited our exposure to the market by the same small amount. If we are wrong about the stock price moving up, we only lose 1% of our portfolio or $250 per position.
If you risk more than 1% of your equity per position, you take on a higher risk of burning through your equity. Stay safe to live long enough in the markets so you can learn and improve.
4. Continually observe yourself and notice your patterns, habits and emotions. Self-awareness is the key to improvement.
I once asked one of the world's greatest traders, "What's your secret to handling your emotions and psychological problems?" His response surprised me at the time. He said, "I just notice that I'm emotional and then I continue to trade the system."
Most people allow their emotions to control them. They get caught up in those emotions and don't even realize what is happening. The great trader, in contrast, stays aware of those emotions as they occur. Awareness is the key to any personal change process and is essential if you want to improve. People who are unaware of their emotions and thoughts are victims of their own repetitive patterns. They are psychological robots.
Become aware of what goes on inside of your head. Keep a diary of your trades and record what you are feeling and thinking as you enter, manage and exit your trades. Look for habitual thoughts, emotions or actions in your diary that might indicate self-destructive patterns.
5. Take responsibility for everything that happens to you.
One of the problems in down markets is that people found lots of other people or things to blame. For example, in 2009, people blamed the market fall on, among others sub-prime mortgage lenders, derivatives dealers, Lehman Brothers or Bear Stearns or Goldman, the Fed, TARP and on and on. People blamed their broker or mutual fund manager or analysts. People who blame someone else or anything external always repeat their mistakes and avoid personal responsibility.
Some years back, an investor sued a large mutual fund because his account went down 90%. This person received an account statement every month and watched his account drop bit by bit. Only when his account was down 90%, though, did he decide to finally take action—by initiating a lawsuit. But who was really to blame for his losses? The investor! He risked too much of his portfolio on one investment and he didn't have a predetermined exit point. He probably never had any idea that he made those mistakes, so he has likely made them again and will likely do so in the future.
No matter what happens to you, you must be completely accountable for your results. That’s the only way you can learn from the markets.
Trading coach, and author, Dr. Van K. Tharp is widely recognized for his best-selling books and his outstanding Peak Performance Home Study Program, a highly regarded classic that is suitable for all levels of traders and investors.
Click here to learn more about Van Tharp at the International Institute of Trading Mastery.
Tuesday, May 24, 2011
Hanging By A Thread: Data Storm Just Ahead
By John Nyaradi ETF Wall Street Sector Selector
After yesterday's sell off, major global stock markets hang by a thread with an economic data storm just ahead.
Stocks, exchange traded funds, bonds and the U.S. dollar reacted strongly to European debt problems today and suffered a major sell off that took major indexes down to significant support levels, where they now hang by a thread.
In the chart of the S&P 500 above you can see how the index has dropped below both the 20 and 50 Day Moving Averages, widely followed technical indicators, and is now deep into strong support levels in the 1300-1310 range. Hanging by a thread.
The Point and Figure chart points an even more graphic picture, with prices now resting at a critical juncture.
A further drop would trigger a double bottom breakdown and a "sell" signal for the S&P 500. Hanging by a thread.
And tomorrow starts the data storm that could well "tell the tale" for the market going forward into this notorious "sell in May and go away" period.
Economic reports to watch this week:
Tuesday: April New Home Sales
Wednesday: April Durable Goods
Thursday: 1st Quarter GDP; Second Estimate, Initial and Continuing Unemployment Claims
Friday: April Personal Income, April Personal Spending, Final May Michigan Sentiment Indicator
Pay special attention to GDP on Thursday.
It's going to be an exciting week.
Click the link below to review more information and resources on Exchange Traded Funds
Friday, May 20, 2011
Click Here for Free Intraday Forex Forecasts Until May 26
EUR/USD: Falling on "Risk Aversion"? Let's Look at the Timeline First
It's not the "bad news" from Europe that has been pushing the euro lower.
From the May 4 top near $1.4950, the EUR/USD (the euro-dollar exchange rate and the most actively-traded forex pair) has fallen as low as $1.4050 on May 16.
In other words, the dollar has gained 9 full cents on the euro in less than two weeks. That's a huge move, and people want explanations. And what the media offers boils down to "risk aversion," in light of "the bad news from Greece." And that sounds good -- until you check the timeline.
The latest wave of trouble in Europe started on May 3, when Portugal asked for a bailout. If you think that event is what pushed forex traders towards "risk aversion" -- think again. The euro happily gained against the U.S. dollar the following day, May 4, pushing the exchange rate to that high near $1.50.
And if you think the trouble in Greece pushed the EUR/USD lower -- again, please reconsider. Greece made a splash in the news on May 9, when its credit rating was downgraded. But by then the EUR/USD had already fallen some 700 pips, to the mid $1.42 range.
So, as good and logical as all the mainstream stories sound about "risk aversion" and "bad news from Europe," the timing of events doesn't fit. What then gave the dollar the strength -- and at a time when almost everyone expected it to only fall further?
Believe it or not (and it's easy to believe it, because, as this example shows, there's no better explanation) the news doesn't set broad trends in forex. Collective emotions of forex traders do. In early May, the majority was betting against the dollar. When everyone places their bets and there is no new money left to push the price further, it has no choice but to reverse.
That's why it pays to be extra cautious in the financial markets when everyone takes the same side of a trade. True, markets can stay overbought or oversold for a while, but the reversal inevitably comes -- and the stronger the one-sided conviction, the bigger the reversal.
The advantage Elliott wave analysis gives you is this: Wave patterns in forex charts track the collective mindset of the market players. By anticipating the price points where the Elliott wave pattern should end, you get a pretty good idea of where the trend should stop and reverse.
Now through Thursday, May 26 you'll have full and free access to our Intraday Currency Specialty Service. Dig deeper into the forex action with 24-hour-a-day forecasts, charts and analysis for dollar, euro, yen and more.
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Thursday, May 19, 2011
Click Here for How to Trade in a Fast-Moving Bear Market Atlanta Seminar GA May 20-21, 2011
How Does a Bear Market Differ from a Bull Market?
What makes studying financial markets so interesting is the psychology that drives them. After all, every buy order and sell order is based on where investors and traders think (or hope) the market will go. This behavior is not scientific – it's emotional. That's why markets are near-perfect barometers of overall social mood. Elliott wave analysis takes that psychology into account. Its most basic wave pattern (three waves up, two waves down) shows this psychology at work in the markets. Learning how to interpret those patterns takes time, but it pays off in knowing what is likely to happen as a bull market or a bear market take shape. In this Q and A, Bob Prechter talks about how to tell the difference between a bull and a bear market – and how to know when they are topping or bottoming.
Excerpted from Prechter's Perspective, re-issued 2004
Q: Advances and declines, bull and bear markets take different shapes. Is this also true of the psychology in bull and bear markets?
Bob Prechter: The problem with declines is that they can follow a lot more paths, because there are numerous corrective patterns [in Elliott wave analysis]. At the start of a bear market, all you have are hints. You have little certainty about which one of the shapes is going to take place. All you can say is it is going to be rough for a while. Bob Farrell says that a bear market goes from caution to concern to capitulation.
Bear markets tend to bring bad news in one form or another, regardless of their shape. Triangles, for instance, are seemingly moderate sideways patterns. Yet there is almost always a scary event or point of focus in wave e, the last wave, that keeps you out of the next advance. In a large bear market, wave e of an upward triangle correction usually features a bullish event that gets people to buy just before the rug is pulled. However, the worst news – the news that turns out making the history books – usually awaits the end of a large bear market. Bull markets do it again, only the other way around: they save the best news for last.
Q: Do the different psychologies of bull and bear markets show up in other non-Elliott areas, like momentum indicators?
Bob Prechter: Oh, yes, for instance, extreme overbought conditions generally indicate further advance until the overboughts become milder. By contrast, extreme oversold conditions often accompany the price low of a decline. Fear does not need a period of dissipation as does hope.
Q: So a technically strengthening upward thrust in stock prices is usually closer to a bottom than a top?
Bob Prechter: Acceleration into a top is typical of commodities but not of stocks. The stock market has always given plenty of warning from a momentum standpoint that a top was in the making. From December 1985 to March 1986, when the bull market of the 1980s was at its epicenter, all the talk of a "blowoff" was coming from the commodity futures traders who have less experience with the stock market than with commodities.
Stocks just don't blow off. If you throw a ball into the air, it has to slow down before it comes down. The market doesn't exactly follow the laws of physics, but its action does seem to reflect this one.
Even the 1929 high was accompanied by "top building," i.e., a glaring divergence in the 6-month percentage rate of change. As the great Dow Theorist Richard Russell says, "A blowoff is when the market goes up big, and you were bearish the whole rise." In other words, in the stock market, the idea is a psychological feeling more than a true description of a stock market chart formation.
Q: Does this slow topping process serve any function?
Bob Prechter: Many manias in history have outlasted the Cassandras to the end of devastating the finances of the largest possible number of people. The crowd is buying fantasies. That is why the professional who can measure the amount of emotional activity in a market and relate it to the degree of the wave in progress is going to make money. When fantasies get far out of line with reality, you've been presented with the opportunity to make money, whether it's on the downside or the upside.
Now That the Market Has Shifted, What Do I Do? Take time to subscribe to the Elliott Wave Financial Forecast. It will keep you ahead of the curve, so that you will feel more in control in the face of a bear market and a declining economy. The latest issue helps you to understand exactly what drives the changes and trends in financial markets, and how you can anticipate those changes. Read more here.
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Wednesday, May 18, 2011
Click Here for Your Complimentary 100+ Pages of Elliott Wave Global Analysis
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Over the past month, you have witnessed extreme volatility in the metals, crude oil, currencies and global stock markets. Will this volatility continue or is it time for “sell in May and go away”? No matter what happens, it will affect your portfolio and your finances.
Answers to these questions and more can be found in Robert Prechter's current issue of Global Market Perspective, a 100+ page book full of investment analysis and forecasts for every major world market. And for a limited time, you can download this important resource FREE!
Global Market Perspective includes Elliott Wave International’s analysis of stock and interest rate markets in three regions, U.S., Europe and Asia, plus analysis from EWI’s market specialists who cover gold & silver, crude oil and currencies.
which world stock markets are ready to continue their rally
the outlook for crude oil prices
if the metals will continue their dramatic fall
the outlook for the dollar -- has it finally bottomed?
about investment manias that are occurring right before your eyes
We invite you to benefit from the current issue – a $49 value – with no obligation.
This offer will expire May 31, so be sure to download your FREE issue of Global Market Perspective now.
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Tuesday, May 17, 2011
5 Ways the Wave Principle Can Improve Your Trading
Jeffrey Kennedy brings more than 15 years of experience to his position as Elliott Wave International’s Senior Analyst and trading instructor. He knows firsthand how hard it can be to get simple explanations of a trading method that works -- so he shares his knowledge with his subscribers each month in the Trader's Classroom lessons.
Here's an excerpt from The Best of Trader's Classroom, a free 45-page eBook that gives you the 14 most critical lessons every trader should know.
Click here to download the full eBook free.
Every trader, every analyst and every technician has favorite techniques to use when trading. But where traditional technical studies fall short, the Wave Principle kicks in to show high-probability price targets. Just as important, it can distinguish high-probability trade setups from the ones that traders should ignore.
Where Technical Studies Fall Short
There are three categories of technical studies: trend-following indicators, oscillators and sentiment indicators. Trend-following indicators include moving averages, Moving Average Convergence-Divergence (MACD) and Directional Movement Index (ADX). A few of the more popular oscillators many traders use today are Stochastics, Rate-of-Change and the Commodity Channel Index (CCI). Sentiment indicators include Put-Call ratios and Commitment of Traders report data.
Technical studies like these do a good job of illuminating the way for traders, yet they each fall short for one major reason: they limit the scope of a trader's understanding of current price action and how it relates to the overall picture of a market. For example, let's say the MACD reading in XYZ stock is positive, indicating the trend is up. That's useful information, but wouldn't it be more useful if it could also help to answer these questions: Is this a new trend or an old trend? If the trend is up, how far will it go? Most technical studies simply don't reveal pertinent information such as the maturity of a trend and a definable price target -- but the Wave Principle does.
How Does the Wave Principle Improve Trading?
Here are five ways the Wave Principle improves trading:
1. Identifies Trend
The Wave Principle identifies the direction of the dominant trend. A five-wave advance identifies the overall trend as up. Conversely, a five-wave decline determines that the larger trend is down. Why is this information important? Because it is easier to trade in the direction of the dominant trend, since it is the path of least resistance and undoubtedly explains the saying, "the trend is your friend."
2. Identifies Countertrend
The Wave Principle also identifies countertrend moves. The three-wave pattern is a corrective response to the preceding impulse wave. Knowing that a recent move in price is merely a correction within a larger trending market is especially important for traders because corrections are opportunities for traders to position themselves in the direction of the larger trend of a market.
3. Determines Maturity of a Trend
As Elliott observed, wave patterns form larger and smaller versions of themselves. This repetition in form means that price activity is fractal, as illustrated in Figure 2-1. Wave (1) subdivides into five small waves, yet is part of a larger five-wave pattern. How is this information useful? It helps traders recognize the maturity of a trend. If prices are advancing in wave 5 of a five-wave advance for example, and wave 5 has already completed three or four smaller waves, a trader knows this is not the time to add long positions. Instead, it may be time to take profits or at least to raise protective stops.
4. Provides Price Targets
What traditional technical studies simply don't offer -- high-probability price targets -- the Wave Principle again provides. When R.N. Elliott wrote about the Wave Principle in Nature's Law, he stated that the Fibonacci sequence was the mathematical basis for the Wave Principle. Elliott waves, both impulsive and corrective, adhere to specific Fibonacci proportions, as illustrated in Figure 2-2. For example, common objectives for wave 3 are 1.618 and 2.618 multiples of wave 1. In corrections, wave 2 typically ends near the .618 retracement of wave 1, and wave 4 often tests the .382 retracement of wave 3. These high-probability price targets allow traders to set profit-taking objectives or identify regions where the next turn in prices will occur.
5. Provides Specific Points of Ruin
At what point does a trade fail? Many traders use money management rules to determine the answer to this question, because technical studies simply don't offer one. Yet the Wave Principle does -- in the form of Elliott wave rules.
Rule 1: Wave 2 can never retrace more than 100% of wave 1.
Rule 2: Wave 4 may never end in the price territory of wave 1.
Rule 3: Out of the three impulse waves -- 1, 3 and 5 -- wave 3 can never be the shortest.
A violation of one or more of these rules implies that the operative wave count is incorrect. How can traders use this information? If a technical study warns of an upturn in prices, and the wave pattern is a second wave pullback, the trader knows specifically at what point the trade will fail -- a move beyond the origin of wave 1. That kind of guidance is difficult to come by without a framework like the Wave Principle.
Technical studies can pick out many trading opportunities, but the Wave Principle helps traders discern which ones have the highest probability of being successful. This is because the Wave Principle is the framework that provides history, current information and a peek at the future. When traders place their technical studies within this strong framework, they have a better basis for understanding current price action.
Don't miss the rest of the 14 most critical lessons that every trader should know.
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Monday, May 16, 2011
Click Here for High Ranked Buy and Sell Stocks
This week I’ve got a sell short on one of the world’s largest office products and furniture retailers . . . Office Depot. With the US markets last week grinding sideways to ending lower on Friday, I’m seeing a lot of weakness in the markets currently that are looking out like their running out of steam to move higher into even more resistance.
In case you’re still a bull right now and want to buy some stock, click here to review the latest Zacks #1 Rank List of aggressive growth, momentum, value, and growth income buy stock picks for this week.
Increasing volatility in stocks and commodities could continue to be the main theme in the week ahead as investors watch the latest U.S. economic reports for signs the recovery is moving forward or not. The European debt crisis is still a big focus also with the ECB heads of state meeting this week to discuss the debt problems of Greece, Portugal, and Ireland. The European finance ministers meet Tuesday, and the IMF, European Central Bank team spend the week in Athens. Greece is expected to present a new fiscal strategy that will include new austerity measures and privatizations, and the IMF staff may make a statement by the end of the week.
According to Zacks Investment Research, Office Depot has been persistently losing market share to industry stalwarts, recently posted lower-than-expected first-quarter 2011 results. The under performance can be traced back to sluggish sales across each business segment that suffered due to lower customer transaction counts and the divestiture of businesses in Japan and Israel.
Office Depot Balance Sheet Grade D
The company reported a 3.2% drop in the top-line and a break-even bottom-line, with both falling short of the Zacks Consensus Estimates. A sales decline of 3% at the contract channel of the company's North American Business Solutions division following failure to retain customers during the shift to the new purchasing consortium was also a first-quarter event.
Further, we remain cautious about the macroeconomic environment and sluggish job market with small businesses and consumers still remaining watchful on their spending.
On a reported basis, including one-time items, Office Depot delivered a loss of 5 cents per share, compared with 7 cents in the year-ago quarter.
Office Depot’s total revenue of $2,973.0 million fell short of the Zacks Consensus Estimate of $2,979.0 million and dropped 3.2% from the prior-year quarter, registering sales declines in each business segment.
Cost of goods sold and occupancy fell 2.9%, while general and administrative expenses inched down 1.4%. Meanwhile, store and warehouse operating and selling expenses inched up 0.6%.
During the quarter, revenue for the North American Retail division slid 2.0% to $1,320.6 million. Same-store sales fell 1% versus the prior-year quarter. Office Depot hinted that customer transaction counts declined compared with the year-ago quarter but the average order value rose slightly during the reported quarter.
The division reported an operating profit of $58.0 million compared with $73.0 million in the prior-year quarter. Lower sales and increased marketing costs weighed upon the operating profit of the company.
Total store count at the North America Retail division stood at 1,141 at the end of the quarter. During the quarter, the company opened 1 store, closed 7 stores and relocated 2 stores.
Revenue for North American Business Solutions also dipped 3.0% to $806.2 million, due to a decline in customer transaction counts. The average order value remained flat compared with the year-ago quarter. Operating profit went down 19.8% to $16.2 million, reflecting lower sales and rising costs.
The International division’s revenue plummeted 5.0% to $846.1 million (in U.S. dollar terms). The division posted an operating profit of $27.3 million, down 34.4% from the prior-year quarter, reflecting a lower gross margin.
Other Financial Details
Office Depot, the operator of office supply stores under brand names such as Office Depot, Foray, Ativa, Break Escapes, Worklife and Christopher Lowell, generated negative free cash flows of $123.2 million during the quarter, compared with a positive free cash flow of $11.2 million in the prior-year period.
The company ended the quarter with cash and cash equivalents of $494.2 million, long-term debt of $657.0 million (reflecting debt-to-capitalization ratio of 47.5%), and shareholders’ equity of $725.8 million, excluding non-controlling interest of $0.5 million. Capital expenditures for the quarter came in at $28.6 million.
Zacks Investment Research View
Office Depot recently announced that it will be closing its nine existing stores in Canada on June 11. Furthermore, the company claimed that the move was part of its initiative to enhance its growth prospects by cutting down on investments in sections that no longer contribute significantly to its long-term growth.
Office Depot has repositioned itself to remain afloat in a difficult consumer environment. The company is containing costs, closing underperforming stores, reducing exposure to higher dollar-value inventory items, shuttering non-critical distribution facilities and focusing on providing innovative products and services, which are expected to contribute to margin improvement.
Office Depot completed the acquisition of Swedish office supply company, Svanstroms Gruppen, in February 2011. The acquisition will facilitate Office Depot to expand its European market presence, placing it among the leading office supply companies in Sweden.
However, we remain cautious about the sluggish recovery in the economy. As a result, consumers and small businesses remain watchful about their spending on big-ticket items such as business machines and other durable products. We observe that the demand for office products is closely tied to the health of the economy.
Given the pros and cons, we prefer to maintain a long-term ‘Neutral’ rating on the stock. Office Depot, which competes with Staples Inc. (NasdaqGS: SPLS - News) and OfficeMax Inc. (NYSE: OMX - News), holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ recommendation.
Sell Short Office Depot – Ticker ODP
Sell Entry: 4.93 to 4.59
Take Profit Areas: 3.73 to 3.66, 3.43 to 3.47, 2.25 to 2.21
Office Depot Company Profile
Office Depot, Inc., together with its subsidiaries, supplies office products and services. Its North American Retail division sells an assortment of merchandise, such as general office supplies, computer supplies, business machines and related supplies, and office furniture under various labels, including Office Depot, Viking Office Products, Foray, Ativa, Break Escapes, Niceday, and Worklife through its chain of office supply stores. It also provides printing, reproduction, mailing, shipping, and other services, as well as personal computer support and network installation service. As of December 25, 2010, this division operated 1,147 office supply stores in the United States and Canada. The company’s North American Business Solutions division sells nationally branded and private brand office supplies, technology products, furniture, and services to small- to medium-sized customers through a dedicated sales force, catalogs, and Internet. Its International division sells office products and services through direct mail catalogs, contract sales forces, Internet sites, and retail stores using a mix of company-owned operations, joint ventures, licensing and franchise agreements, alliances, and other arrangements. As of December 25, 2010, it sold its office products to customers in 53 countries in North America, Europe, Asia, and Latin America. This division operated, through wholly-owned or majority-owned entities, 97 retail stores in France, Hungary, South Korea, and Sweden; and participates under licensing and merchandise arrangements in South Korea, Thailand, India, Israel, Japan, and the Middle East. The company was founded in 1986 and is headquartered in Boca Raton, Florida.
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Thursday, May 12, 2011
Click Here for Some Trading Reality
by Van K. Tharp, Ph.D. International Institute of Trading Mastery
Click here for Dr. Van Tharp's Trading Workshop Schedule
Having modeled success in numerous areas of trading—the trading process, designing systems, and position sizing™ strategies—it still totally amazes me to see how we are almost "hard-wired" to do all the wrong things. It’s almost as if we were put on this planet to determine how many ways we can mess up our trading and even our lives.
How do you respond to a loss? Have you done any simulations of your trading? Have you really worked on yourself and determined that it’s all you? What decisions have you made about your trading and yourself?
If you’ve been working through the Peak Performance Home Study Course or reading my latest book, Super Trader, you probably have learned many ideas to improve your trading. Let’s look at one simple example: a business plan for your trading. There is probably no good reason not to spend one month (or six months) developing a good business plan and incorporating many of the ideas covered in the book or in the course. So what is stopping you?
If you don’t immediately feel the urge to carry out such a task, it’s time to do a little homework to recognize your self-defeating patterns and excuses.
We All Have a Story
I’d like you to sit down and write several paragraphs on, "The Story I’d Tell Myself If I Have Not Produced Meaningful Change in My Trading and Myself." Be honest with yourself. What are your typical excuses?
Your story might sound a little like this:
“I was desperate. I was running out of money, and I needed to do something. I really didn’t want to go back to work, so I had to make money. As a result, I really didn’t have time to do a proper business plan. Instead, I just made trades.”
“After going through the Peak Performance Home Study Course and Dr. Tharp’s books, I didn’t do any of the things recommended because…”
Or your story might be worse:
"After buying the Peak Performance Home Study Course and the Super Trader book over a year ago, I have not looked at either of them because…"
For the 30 minutes that it takes to do "The Story I’d Tell Myself...” exercise, give yourself a break and be brutally honest. You know that you’ll con yourself in order to not make any progress. Treat this exercise as a test to determine just how you con yourself. Can you be honest and tell it like it is, or is it more important to justify the excuses and be a failure?
So go ahead. Take 30-60 minutes right now and start writing down your excuses about your trading.
Do the exercise even before continuing reading this article! It's that important.
So What Did You Write?
If you were honest with yourself, you justified your limitations. You’ve probably created a record that includes many of the major thoughts and beliefs that you use to undermine virtually every endeavor that you create. Furthermore, the more honest you’ve been with yourself, the more valuable this exercise will be for you.
What might some of those excuses and justifications look like?
Here’s a list of possible excuses:
I just haven’t had the time that I need to trade better.
My spouse doesn’t understand my trading and how important it is.
I have had too many distractions, and I cannot focus.
The market has not been acting like I expected.
Here are some of the kinds of excuses people have stated who have my materials but haven’t made progress with them:
I had Dr. Tharp’s material but it wasn’t for me. I thought it was something simple that I could use to transform myself. I didn’t think it would be so much work to complete it.
Dr. Tharp doesn’t know me. He doesn’t really understand the kind of person I am. If he did, his material would be easier.
My life is going fine. I don’t have any problems, and I just don’t need to deal with all of this stuff.
I’m right and Dr. Tharp just doesn’t get it.
I know I need to study this stuff, but I just can’t seem to find the time.
You make excuses simply so that you can be right. You are basically saying that you like your excuse beliefs because they are right. I have mentioned over and over again that wanting to be right is a pervasive problem for most people. Excuses don’t make you happy. Excuses don’t make you successful. Excuses, however, do allow you to be right and if that’s so important to you, so be it.
If you want to evaluate your excuses or any of your beliefs for that matter, there is a great strategy you can use. It's called the Belief Examination Paradigm and you can learn more about it here.
If your trading isn’t going the way you want it to, change what you are doing. One of the basic presuppositions of NLP (Neuro-Linguistic Programming) is that if something doesn’t work, do something else. Almost anything else will get you different results.
Maybe you need to change something about your trading system (your exits or your position sizing strategy). Or maybe you need to change how you approach your life in general.
Life is a process. There is no success or failure—only feedback. You’ve been getting feedback about what you’ve been doing for a long time. How have you been responding to it so far? Have you been making up a lot of excuses? Are you more interested in being right than making progress toward your goals? Are you willing to change now? It’s never too late. You’re never too old.
Just imagine that you are responsible for everything that has happened to you up to now in your life. That’s part of "respondability" that I’ve talked and written about so many times. And when you finally decide that you are responsible for your own life—for what has happened in the past—you will find that you get an immense rush of freedom.
You can decide right now what you want, and you are in charge of making it happen. Today is always the first day of the rest of your life, so begin now.
About the Author: Trading coach, and author, Dr. Van K. Tharp is widely recognized for his best-selling books and his outstanding Peak Performance Home Study Program, a highly regarded classic that is suitable for all levels of traders and investors.
Click here to learn more about Van Tharp at the International Institute of Trading Mastery
Wednesday, May 11, 2011
Technical Fundamental Scanner with MetaStock Pro 11
MetaStock 11 is here. Twenty-seven years in the making, it includes more power, more features, and more tools for traders of all levels. It's time to take back the market. It's time for MetaStock 11.
My Favorite MetaStock Fundamental Analyzer is the Estimates Tab
You can scan stocks based on increasing or decreasing earnings estimates just like Zacks Investment Research does for their winning stock picks and portfolios. Increasing or decreasing earnings estimates from the analysts are a proven forecaster of higher or lower stock prices in the near term. Long-term, buying and selling stocks based on increasing or decreasing earnings estimates is a proven way to provide low-risk high-reward return.
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New MetaStock Fundamental Analyzer Exclusively Available in MetaStock Pro with QuoteCenter
Technical analysis charting is a powerful tool, period. However in today's market, the more information you have about the companies you trade, the better. Armed with clean, reliable, and organized fundamental data, your trades are more informed and you are more confident.
With a few clicks of your mouse, the MetaStock Fundamental Analyzer lives up to its name by providing just about anything you could possibly need to know about US and select global markets. From PE Ratios and Earnings per share to Dividend Yield and Shares Outstanding, the list of fundamental data is comprehensive and categorized so you can go way beyond scratching the surface on a firm and determine if its stock is over or under valued.
MetaStock Fundamental Analyzer includes 5 powerful sections:
Fundamental Tab – View at a glance the exchange, Industry Sector, Market Cap, Avg. 21-Day Volume, 52-Week High and Low and much, much more.
Revenue Tab – Divided into two sections, this tab shows Quarterly and Annual Net Income Compared to Revenue including: Revenue, Net Income, and Percent fields for both the last 8 quarters and 4 years.
Performance Tab – Displays Annual earnings per share, Annual Dividends, Annual Growth Rate, and Percent Changes to S&P 500 over a variety of periods.
Estimates Tab – Displays EPS Quarterly Estimates and Total Revenue Quarterly Estimates going out 4 quarters, as well as EPS Annual Estimates and Total Revenue Annual Estimates going out 4 years.
Scanner Tab – perhaps the most unique feature of the MetaStock Fundamental Analyzer, this powerful tool allows you to search for companies based on a variety of fundamental criteria including: Minimum Price, Maximum Price, Minimum Average Volume, Minimum EPS, Minimum PE Ratio, Minimum Dividend Yield, and Minimum Beta. The results can then be sorted by Closing Price, Average Volume, EPS, Annual Dividend, PE Ratio, Beta, Company Name, Group, and Sector. You can even scan a list you created from the MetaStock Explorer and vice versa – it’s a great way to create a technical analysis/fundamental analysis workflow.
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Tuesday, May 10, 2011
What’s Next for the S&P 500, Gold, & Oil
The price action in precious metals and oil this past week has been breathtaking. The last time we have seen this much volatility in commodity prices was amidst the financial crisis in 2008 and the early part of 2009. Does this mean we are at the brink and risk assets are going to decline precipitously? Obviously that question cannot be answered with any certainty, but the underlying price action in the S&P 500 has been relatively strong compared to gold, silver, and oil.
Talking heads everywhere are predicting the commodity bubble has burst and pointing fingers at excessive speculation in silver and oil. Margin requirement changes in silver futures have been fingered as the primary catalyst for the nasty sell off. Silver had gotten way ahead of itself in terms of price and parabolic moves higher are usually followed by parabolic moves lower. For silver buyers on Friday, April 29 a painful lesson has been learned as their investment has declined more than 30% in 5 days.
It doesn’t take a genius to realize that we are going to bounce higher at some point. With a sell off of this magnitude it would not be shocking to see at least a 50% retracement of the entire move in coming weeks. It is also possible that this is a buying opportunity for precious metals and oil. It is too early to be certain, but a bounce next week is likely as silver went from being severely overbought to severely oversold on the daily chart in one week. The chart below illustrates the 50% retracement and the RSI reading for silver futures:
In the month of April OptionsTradingSignals members were able to capitalize on rising silver prices to close a trade that produced an 18% return in less than 5 days using a double calendar spread in order to produce outsized profits based on maximum risk. Members regularly receive trade alerts focusing on gold and silver using ETF’s GLD & SLV which have extremely liquid options.
While silver prices have been absolutely crushed, gold prices have held up a bit better. In fact, in this selloff gold has been less volatile in terms of intraday percentage price movement and has not suffered from near the losses that we have witnessed in silver. The gold futures chart below illustrates key price levels:
Members of the OTS service received a trade alert on April 6th for a calendar spread that was converted to a vertical spread. When the vertical spread was closed on April 26th the members realized a gain close to 56% based on the maximum risk of the trade.
Recently we have received some poor economic data which has put a drag on equities the past few weeks. This morning we are seeing a strong bounce in the S&P 500 futures and if we have another light volume Friday prices tend to drift higher throughout the trading day. The S&P 500 futures spiked to around 1,370 on the news of Osama Bin Laden’s death and then sold off from that point. The chart below illustrates the S&P 500 futures rally and subsequent sell off highlighting current key price levels:
Members of OptionsTradingSignals received a trade alert on April 12th to put on a call vertical spread to capitalize on rising prices. On April 21st partial profits were taken and eventually stop orders closed out the position on May 4th locking in a total gain of around 32% for the trade based on maximum risk.
Oil prices have sold off sharply, albeit not as sharp as the downside move in silver recently from a percentage standpoint, but a significant amount of the risk premium has come out of oil prices. I continue to believe that oil prices over the long term have only one direction to go based on tightening supply / demand going forward and lower production levels in the future. Similar to silver, a .500 retracement of the entire recent move is rather likely in coming weeks. The daily chart below illustrates key price levels in oil futures:
I continue to believe that oil prices are going to work higher over the longer term for a variety of reasons, but a drop in gasoline prices would not hurt U.S. Consumers and the domestic economy. Higher oil and gasoline prices weigh on the U.S. Economy heavily so this sudden decline in price is beneficial to most Americans which could juice consumption if prices stay lower for a longer period of time.
Overall, price action in the commodity space has been extremely volatile the past week with silver and oil really getting hammered lower. Gold and the S&P 500 held up a bit better and it would not be shocking to see the S&P 500 put on a rally from here if oil prices stabilize. However, if the U.S. Dollar continues its recent rally it will force the commodity space as well as equities lower. The daily chart of the U.S. Dollar Index futures is shown below:
In closing, I am expecting a bounce in coming days and a .382 or .500 retracement of the entire move in gold, silver, and oil would make sense so I would not be too aggressive shorting. However, I would not necessarily be an aggressive buyer either. It is going to take time for market participants to digest the recent moves. In weeks ahead it will be more apparent what price action is likely to do and I would be shocked if we did not see a few low risk, high probability trades setting up.
Speaking of low risk, high probability trades, the month of April was the best performance for the OptionsTradingSignals service so far year to date. Seven total trades were opened and six trades have been closed with sizable profits. Recent returns included an 18% return in SLV, a 56% return on a GLD trade, 32% return on an SPY call vertical spread, a 12% return on a RUT Calendar spread, and a 37% return on an AMZN calendar spread. The total cumulative return in April was 155%.
Assuming a trader had a $10,000 account and risked a maximum of $1,000 per trade, the gross gains would have been well over $1,400 in April alone. The overall service is up over 15% year to date handily beating the S&P 500 return while assuming less risk. Take advantage of the special offer going on now where new members get 3 months for the price of one!
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Monday, May 09, 2011
By Zacks Investment Research
Transcend Services Ticker TRCR just topped analyst expectations yesterday and shares are on the rise. Even though estimates haven't started coming in yet, the stocks still has great growth rates and valuations. And, it should only get better for this Zacks #1 Rank (Strong Buy).
Transcend Services, Inc. provides medical transcription services to the healthcare industry in the United States. It converts physicians voice recordings into electronic medical record documents using its proprietary BeyondTXT workflow platform that provides workflow management and production control. The company utilizes a combination of its proprietary Internet-based voice and data distribution technology, customer based technology, and home-based medical language specialists to convert physicians voice recordings into electronic documents. It also offers its medical transcription services directly on the customers platforms. The company serves hospitals and clinics. Transcend Services was founded in 1976 and is based in Atlanta, Georgia.
Transcend just beat earnings expectations on May 5 when they reported earning per share of $0.34 compared to the Zacks Consensus Estimates of $0.28. This gives the company back to back earnings surprises. Revenue was up 32% to $29.3 million, on a year over year basis, driven by surging volumes. Transcend said it 'dramatically exceeded' its own outlook.
Because the surprise was just yesterday, we do not have any new estimates just yet, but forecasts were rising into the number. When you see projections rising into the number, that number topped and then shares move higher; it is extremely likely that analysts will raise their outlooks.
Right now, the Zacks Consensus Estimate is at $1.21 and next year's is at $1.39. Given the $0.87 Transcend earned in 2010, expected growth rates are currently 39% and 16%, respectively, and that should be on the rise very soon.
The forward P/E is nearing 20 times but, again, that is ahead of upward estimate revisions. Also, even with that P/E we are stil getting a PEG ratio of 1.0, which is a bargain.
A few years ago the outlook for Transcend's earnings were rocky, to say the least. But look just how much they have righted the ship in the last year or 2. Big year over year growth and sizable revisions throughout the years.
This Week's Aggressive Growth Zacks Rank Buy Stocks
W. R. Grace & Co. NYSE: GRA. Analysts are pleased with the recent earnings surprise. Estimates are moving much higher giving shares excellent growth rates, as well a attractive valuations. This Zacks #1 Rank (Strong Buy) is also set to emerge from Chapter 11 later this year.
Federal-Mogul Corp. NasdaqGS: FDML. Federal-Mogul has pushed through a point of resistance thanks to a recent earnings report. The company, once again, topped expectations and analysts are raising estimates. Shares are up to Zacks #1 Rank (Strong Buy) and also trade with solid valuations.
CAI International, Inc. NYSE: CAP. Analysts raised their expectations once the company reported an 82% jump in revenues last week. Shares of this Zacks #1 Rank (Strong Buy) are trading with solid valuations to go along with the impressive growth rates.
Buffalo Wild Wings, Inc. NasdaqGS: BWLD. Buffalo Wild Wings is coming off of a surprisingly strong quarter. Earnings beat expectations and the company will continue is aggressive expansion. This Zacks #1 Rank (Strong Buy) has analysts raising their outlooks on positive guidance from the company.
Click here for a Free Trial of Zacks Investment Research and Their Earnings Estimates Stock Picks
Friday, May 06, 2011
The Greenback Recovery Hopes Hinge on Coming Economic Data David Frank, Chief Analyst , Ava FX
A dovish Federal Reserve and fresh multi year highs in the DJIA Average have sunk the US Dollar to new lows against the Euro and other key counterparts. This is leaving few hopes of any kind of sustained greenback recovery.
Traders show little interest with the current low yielding US Dollar positions, and indeed Commitment of Traders data showed non commercial traders at their most short greenback since the Euro traded towards 1.60 in 2007. Last week's rise with the Euro towards 1.500 helped confirm this. For more on the Euro, click here.
Currently, the greenback remains a speculator's favorite. Why? Record low interest rates and little risk of US Fed rate hikes through the foreseeable future. The next couple of weeks will be busy for US economic events and international central bank rate decisions which could shape market forecasts for future yield spreads and force major moves across key currency pairs.
US Dollar Index
Markets expect that this coming Friday's US Nonfarm Payrolls data will show the US added 200k jobs in April. This will be roughly in line with March figures and reflective of modest growth in employment. Still, a wide range of economist forecasts emphasizes that anything could happen. Further, any significant upward surprises could have similar effects on US FOMC rate expectations.
US Dollar risks arguably remain to the upside ahead of the release. It is difficult to envision a significant deterioration in Fed rate expectations on a disappointment, while above forecast results could boost lackluster monetary policy expectations. Earlier ISM Manufacturing, ISM Services, and ADP Employment data should shape sentiment heading into the potentially critical Nonfarm payrolls report.
We will likewise look to European Central Bank, Bank of England, and Reserve Bank of Australia interest rate decisions to potentially shift rate expectations and spark larger moves across global financial markets.
Overnight Index Swaps predict that the US Fed will raise interest rates by a meager 31 basis points in the coming 12 months. ECB predictions stand at a relatively robust 75bps, and the prospect of widening rate differentials has without a doubt boosted the Euro through recent trade. All three banks are expected to leave rates unchanged, but markets will monitor post announcement rhetoric from each the ECB, BoE, and RBA for clues on future decisions.
Sharp downward momentum and bearish market sentiment leave dollar risks to the downside through the coming week of price action. Yet steadily rising volatility expectations warn of tensions below the surface.
As the third lowest yielding world currency, the US Dollar has become a favorite funding currency for the Global FX Carry Trade. If the Dow Jones and other key 'risk' barometers continue their seemingly unstoppable rallies, we might expect the greenback to move lower.
Going forward, traders should keep a close eye on 'risk' in a potentially pivotal week of price action. Heavily one sided USD short positions suggest that the greenback could gain substantially on a deleveraging across the global financial markets.
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Thursday, May 05, 2011
Elliott Wave Basic Tenet by Elliott Wave International
The Wave Principle is governed by man's social nature, and since he has such a nature, its expression generates forms. As the forms are repetitive, they have predictive value.
Ride The Trading Waves - Especially The Longest 3rd Wave
The 3rd wave of the Elliott Waves is normally the strongest and longest. Identifying 3rd waves, taking positions, and riding 3rd wave trends can be very profitable in trading and investing. Low-risk high-reward trading to keep losses low and letting your winners run.
AlphOmega Elliott Waves 2.1 for MetaStock®
If you want to explore the world of stock markets, the workings of AlphOmega Elliott Waves 2.1 for MetaStock® and their use; this affordable collection of Experts, Indicators, Systems, Templates and Explorations will take you there. The Experts will outline waves of different magnitude (size) while the indicators will help you evaluate the various scenarios and the likely projections Fibonacci or Gann derived from each one. The Explorations will warn you about the securities entering typical wave patterns, the possible length the pattern detected and the price differential since the start. You will also monitor progress over selected time periods for those securities.
Using the AlphOmega Elliott Waves 2.1 for MetaStock®
In addition to having auto Trend line features, there is an indicator that probes the previous patterns to test the strength of the wave. The set includes all the Fibonacci tools as well as indicators and adapted to Elliott Wave's application. These systems demonstrate the power and the flexibility of Elliott Waves based systems within MetaStock®.
Profiting from Repeating Chart Patterns
What AlphOmega Elliott Waves 2.1 for MetaStock® attempts is to measure or quantify the movement of price for a security when the price is following a recognized pattern (i.e. Peak to Trough, Trough to Peak and their combinations). The trading decision is resting on the interpretation of what is happening now and the expected outcome.
AlphOmega Elliott Waves System Testing
The system testing will enable you to find out if there has been in the past a profitable pattern and how similar is the one forming. The ExplorerTM will enable you to monitor the securities over timeframes and measure the performance since the pattern has been recognized by the proposed methodology. This set has been designed with the rule of conservatism, meaning that prudence has priority over profit. Conventional protection such as Stop Loss technique should be used at all times regardless of the system you are using. Better paying commissions in and out than loosing your capital. Shielding your capital from uncontrolled losses should always be your first goal.
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