| |
Bernie,
Explain your study of volatility as it pertains to waves.
<did you do any wave study on volatility? try it. it may be easier
than try the wave of price. It's very amazing.>
This is long so others might want to hit the next button.
The following is a simple explanation of wave structure. The typical UP wave structure is as follows. I will then relate it to AAPL.
1. First up wave is profit taking (by shorts) and a lack of selling by longs. (longs Sold out)
2. Second wave is down - this move is a slower move. (consolidation) Positioning by longs "in the know" & selling out of longs by public "not in the know". Fundamental analysis comes into play. What is the true worth of the Co.
3. Third wave up is strong wave up. Shorts covering & Longs coming in. You can identify this wave using RSI or Stoics. Here is were you find the highest readings of Volatility, RSI, Stoics. Shorts come in but they get blown out and add fuel to the fire. Third waves are never shorter than first waves. Usually a fibonacci ratio of the length of the first. RSI is a very good tool to find this wave.
4. Fourth wave down is usually another accumulation period associated with contractions in volatility. Pennant formations. Important to note that the high of the first wave is MAJOR support. Another phenomenon is that the fourth and second wave will never be of the same structure. If wave 2 was a three wave correction, wave 4 will usually be a contracting pennant. or vice versa.
5. Final move is longs getting out "in the know", public getting in. Because this two way action the wave is not as strong. An RSI will never exceed the extremes of wave three. The typical divergence in RSI occurs. New price highs but failure to carry momentum into new highs. Extensions very common.
€AAPL€For technicians Only - not fundamentalist. This is an art so interpretation can vary.€Down wave is an inverted Up wave€
There is an Order to all things if you look closely. I do not believe in chaos.
This is from my notes.
My wave analysis of AAPL, the numbers are ~.
Wave 1 = 50 down to 42. Longs profit taking, lack of new buying. *
Wave 2 = 42 up to 47 . Eight weeks of distribution. "in the know" selling **
Wave 3 = 46 - 33. Very fast move Down. Lowest readings on momentum occilators.
Longs selling, Shorts selling.***
Wave 4 = 33 up to 41. Distribution by Longs 3in the know2 notice no overlap of wave 1.****
Wave 5 = 41 to 23 The final move. An accumulation of stock to the ones 3in the know2. Public getting out.*****
* Wave 1 is $8
**The CFO sold his shares at 46.
*** Wave 3 is $13 (1.625X ) the golden ratio
**** Wave 4 does not overlap and has a A,B,C pattern. (Letters are labels of counter trend moves) Numbers are labels for waves with the Trend.
***** Wave 5. Final move. Since 5 is the direction you should be able to see five smaller waves with in this wave structure. (The theory of fractal analysis comes in to play)
This last wave also has five smaller waves.
1. ~42 -36
2. ~36 - 40 pennant
3 ~40 - 28 Fast
4 ~28 - 30 ABC
5 ~30 -23
Its neat to find all the correlations in wave lengths but for now, since we are at the end of something it is important to step back and look at the bigger picture.
Major Wave One ended at $70
1. 3 - 16 New Company
2. 16 - 8 Jobs ouster
3. 8 - 50 Macintosh
4. 50 - 23 PC with clones
5. 23 - 70 Mac is still King ..ends in April 1991
Major Wave Two (completed or very close to completing)
Summary
70 to 23 -now a double abc flat correction.
So that leaves us ending wave Two with us entering Three. (an accumulation at value price)
The timing of this can take many months but it is important to know were we are. It still looks like a flat correction for Two. This tells me the Low of 1993 should not be taken out.
Wave Two is the selling of the short term Players to Long Term Players. The fundamentalist. Is here were we are? Short term buyers that Bot the take over 3play2 have sold out. All need to sell before any real move up can occur. Time will make them look for greener pastures.
Gann always said to look for a major Trend change every 19.9 years. When did AAPL incorporate? It has been exactly five years since AAPL made its 70 high.
Good Luck
Jaime
I am glad Apple did not sell out. I think I see what he saw. This will give the opportunity for true AAPL shareholders to harvest the gains from 20 years of sowing
Remember that wave Three is not shorter than wave One. Wave One was $67. 67+~23=$100.
Caveat, wave One took 15 years. Will wave Three take 8 years?
Wave Three will be longer in length but shorter in time. |
|
