QQQQ Is Due For A Sell-Off

QQQQ is overextended, the market sentiment is bullish therefore it is reasonable to expect a pullback short-term from the closing price of 49.66.  QQQQ may hit ~47.50 within 3 weeks.

Some Stock Picks will be found on Carnal Stock

Some of my Biotech Stock Picks can soon be found on Carnal Stock and Carnal Stock Blog . I have been busy working on my trading systems and I am pretty happy with the results I got so far. I hope you can find the info and the new site useful.

Forecasting Oil: $57 , $59, ..., $100 maybe?

Apparently the same analysts who forecasted $57 oil in 2006 and $43 in 2010 just two months ago are quick to raise their forecasts: "Oil prices are likely to average about $59 a barrel this year, up from $56.70 last year, according to a Reuters poll of 32 analysts this week..." I am wondering if the Peak Oil theory is actually correct and what we are seeing now is just the tip of the iceberg. Could problems in Nigeria and Iran be just convinient explanations for the oil price rise, but the real problems are much deeper and can't be solved by resolving Nigerian and Iranian troubles? oil peak+oil hubbert+theory oil+forecast oil+futures

Trading Summary

I have decided to organize the trades I talked about in the last few months. I report all my stock picks before the market opens on the corresponding yahoo message boards (TELK is mentioned on TELK message board and so on). My nick on MB is trading_signal. Usually I enter my positions at the market open. Position exits are also at the market open unless a pre-set stop-loss or stop-profit is hit during the day. To monitor performance of various trading systems I separate my positions based on the systems that have generated them. When I started posting I planned to create a model Biotech-Oncology portfolio based on several of my trading systems. Looking back I see that these systems could not generate enough signals to fill in a portfolio. The starting value of the portfolio was assumed to be $100K and each position is typically equivalent to $10K. In the future I will be adding several more systems that hopefully will allow me to generate enough biotech stock picks to keep a reasonable portfolio. In the table below each profit/loss is for a single position, equivalent ~1/10 of the total portfolio value. So, for example, 50% loss in ABGX translates to 5% portfolio loss. The second table monitors my picks based on Elliott analysis and the third keeps track of various other systems. Biotech-Oncology Stock Picks

Stock	Long/Short	Entry Date	Entry Price	Exit Date	Exit Price	# Shares	Profit/Loss
TELK	Long	11/1/2005	14.86	11/11/2005	16.51	250	11.1%
TELK	Long	11/1/2005	14.86	11/16/2005	16.98	250	14.3%
CEGE	Long	11/1/2005	5.33	11/16/2005	5.78	1500	8.4%
GTOP	Short	11/30/2005	8.1			1200
EXEL	Short	11/30/2005	7.87	12/6/2005	8.8	1200	-11.8%
ABGX	Short	12/7/2005	14.39	12/15/2005	21.8	700	-51.5%
CYTK	Short	12/7/2005	8.47	12/13/2005	7.62	1200	10%
MEDX	Short	12/16/2005	11.5	12/21/2005	12.65	800	-10%
IMCL	Short	12/29/2005	34.66

Stock Picks based on Elliott Wave

Stock	Long/Short	Entry Date	Entry Price	Exit Date	Exit Price	Profit/Loss
AMGN	Long	10/31/2005	75.96	11/28/2005	82.26	8.3%
C	Short	12/5/2005	48.76	12/12/2005	49	-0.89%
AA	Short	12/12/2005	28	12/21/2005	29	-3.6%
AMGN	Short	12/19/2005	78.05	12/22/2005	80.7	-3.4%
AMGN	Long	12/22/2005	81.05	1/12/2006	76.65	-5.4%

Other Stock Picks

Stock	Long/Short	Entry Date	Entry Price	Exit Date	Exit Price	Profit/Loss
GERN	Long	10/28/2005	8.74	11/4/2005	9.05	3.5%
MEDX	Long	10/28/2005	8.22	11/4/2005	9.3	13.1%

I am using an excel macro by Chris Mead to generate the tables. because of this html code is noticebly shorter than the one genereted by excel.

Tech Tags: Trading+System Technical+Analysis Trading Stock Stock+Picks Biotech Elliott Elliott+Wave Investment TELK CEGE GTOP IMCL CYTK MEDX ABGX EXEL AMGN AA C

Wondering about the market

Elliott Analysis posted on Forex Lab Notebook Blog suggests that S&P 500 could move to and above 1400 (~10% from the current level) in the next few months: “In short, the index will continue to rise in the next 1-6 month to 1400 or higher. Then it will drop to about 1000. Although it will have almost 20 years to complete the correction and it may stage a long recession, most likely the market decline will be relatively fast in the impulsive wave pattern”. I find this type of scenario somewhat disturbing since my systems have shown noticeable short bias in the last month or so. My model biotech portfolio only has two short positions at the moment (IMCL and GTOP). 10% move in S&P 500 would surely induce stop losses in both positions. I already had several short positions that were stopped out recently. And I am wondering if in this particular type of market that are having today my trading system simply generate sell signals prematurely. My plan right now is to keep the open positions and watch the market for a month or so. At that point I will re-analyze the system and will see if any tweaks are necessary. Meanwhile, if there are good long or short signals I will keep posting them. Categories: Technical+Analysis, Trading+System, Stock, Market, Biotech, Trading, Elliott+Wave, Elliott, S&P500, Trading+Signal, Market+Forecast

Sell Signal for IMCL

I am initiating IMCL Short position in my model biotech-oncology portfolio. Sell Short 300 shares of IMCL 29-Dec-05 at the market open. Stop loss will be set 7% higher than the entry price. Tags:IMCL Imclone Sell+Signal Trading+System

AMGN Elliott Wave Update 12-26-2005

Trading strategy Keep long position. The invalidation point for this scenario is at 77.21 slightly above our stop loss. ...Read more AMGN Elliott We had quite a tough week with respect to our Elliott wave forecasts for AMGN and AA. AMGN limit order at 78.05 was filled but then the stock changed its direction and hit stop loss at 80.70 which transformed to 3.4% loss. After that we entered long position at 81.05 with the stop loss at 76.65. The recent activity let us think that we are still within our preferred scenario and zig-zag pattern was not completed. However we can be sure about it only when the price will make a new high above 84.5. Within this scenario our target zone is at about 90. We keep current long position. There is one observation from the last week – we were trading outside our time frame. In the future we should ignore Elliott Waves of such order and use them only to define probable entry and exit points in our longer term positions. amgen amgn stock elliott+wave technical+analysis trading

Alcoa Elliott Update 12-26-2005

The stop loss has been activated and we ended up with 3.5% loss. Apparently we took a trade from the time frame where we can not make adequate analysis using End-of-Day data. Also it seems now that the wise decision last week would have been to exit short position once we started to suspect that the price only touched the target zone and completed the correction wave. Although it seems that the price will continue to increase, it is in the overbought territory and there is a chance that we are still within a correction sideways pattern. During the next week we will continue to watch price movement and avoid taking positions. alcoa aa stock elliott+wave technical+analysis trading

Oil $57 in 2006, $43 in 2010?

Reuters has conducted a poll of 30 oil analysts asking them to forecast the price of benchmark U.S. light crude oil futures in 2006. The price will average $57.34 a barrel. In 2005 the forecast was $57.03. Actual average prices were: for 2005 - $56.63, for 2004 - $41.47. The analysts were remarkably accurate in 2005. I will try to locate the predictions for 2004 just to see how often these analysts are correct. oil peak+oil hubbert+theory oil+forecast oil+futures ...Read more Ok, the prediction for 2006 looks reasonable to me. But what struck me is the consensus that longer term the prices are expected to go down:”U.S. oil prices were expected to average $42.53 in 2010, with Brent crude seen at $38.45 a barrel. Analysts' forecasts showed divergence of $25 for 2010. Goldman Sachs was the highest, forecasting U.S. crude prices would be at $60 a barrel. The lowest forecast from NAB put prices at $35 in 2010” Basically, none of the analysts believes in the Hubbert Oil Peak Theory. This is totally amazing to me. I expected at least some analysts to be super-bullish on oil. As for myself, I am certainly in the Hubbert Peak camp.

Messing around with my Blogroll

For some reason Technorati does not see new links that I have added to my blogroll. you may see some weird posts appear/disapper in my blog in the next few hours as I am testing various things.

RNAi is One of the Areas to Watch in 2006 according to Science Magazine

Today Science magazine highlights major scientific breakthroughs for 2005. It also talks about eight major areas selected as potential breakthroughs for 2006. RNAi is one of the hot areas for the coming year. This is what Science says about RNAi-based therapies: "They're moving into human patients with startling speed, and 2006 should offer the first hints of how well the highly touted technique works. Company-funded trials in macular degeneration and the pediatric illness respiratory syncytial virus are under way; another targeting hepatitis C is supposed to launch soon, with some therapies for neurological diseases to follow. Oh, and another treatment that's coming down the pike: RNAi for permanent hair removal." Alnylam (ALNY) is one of the companies seeking to capitalize on RNAi-based drugs. Since I highlighted recent research at ALNY in Nov-05 the stock is up ~40%. But I would not be adding ALNY shares here. I think the market is ripe for some correction and will present plenty of better buying opportunities for ALNY and other Biotechs in the coming months.

Tech Tags: RNAi ALNY Alnylam antagomir Stock Investment

Position Update

MEDX short position was closed today after the stop loss @12.65 was triggered (10% loss). AMGN short position was initiated on Dec-16 @78.05 as suggested by our Elliott analysis (stop loss @80.70) I have noticed that Matthew Frailey is Long GTOP in his public charts on stockcharts.com. I want to remind everyone that I happen to have been short GTOP since Nov-30. GTOP is still hanging around the break-even since I entered my short. Will it go up or down? Who is right: Matthew Frailey or Me? The suspense is killing me :). Tags: Trading+System Trading Elliott+Wave MEDX GTOP AMGN Amgen

Amgen Elliott Update (enter Long @81.05, enter Short @78.05)

Trading Strategy 1. Enter long at 81.05, stop loss 76.65. 2. Enter short at 78.05, stop loss 80.70, take profit at 72.0. 3. Should the price fall below 75.50, set the trailing stop at Low+1.50 4. Update scenario when the price makes a new high above 80.52 or a new low below 76.70 or if there is more certainty about price motion in the shorter term. Our buy limit order at 81.05 entered last Monday has not been hit and the price went down almost immediately after market opening on Monday. During the last two trading sessions the price went higher but has not reached our limit order....Read more The situation has not changed much compared to our previous outlook. Since the price made a new low we should update the target zones for the current wave. Wave 3 of the Impulse is expected to complete in the price range 86.52 to 146.12, but more probably between 88.01 and 101.92. This wave is most likely to complete sometime between 22-Dec-2005 and 20-Jan-2006 Note that it cannot complete until 19-Dec-2005 but must complete by 17-Mar-2006. * Note this analysis has two important drawbacks: i) it is based on the End-of-Day price data while some patterns could be hidden in the intraday patterns; ii) in the long and medium term high rating counts can be found only for the “Hidden waves ON” option which means that the software can assume some patterns are hidden within the daily bars. There is a chance that the valid scenario is the alternative outlook mentioned last week “The alternative scenario assumes that the current zigzag pattern was completed on 22-Nov-2005 although the price did not reach high probability price zone for the higher degree double zigzag wave. In such a case the market should continue down in the impulsive wave as it was described in the Scenario 2 on October 30.” We can not distinguish between the alternatives because in the short time frame there is no Elliott pattern with a rating high enough to make trading decisions. Both factors reduce reliability of the outlook and some precautions should be taken into account in the trading plan.

Tech Tags: AMGN Amgen Technical+Analysis Elliott Elliott+Wave Stock Investment

Citigroup Trading Plan based on Elliott

Citigroup (C) Trading strategy 1. Buy at 50.00, trailing stop loss at high “–“1.30 (approximately 2 ATR) We will update Elliott analysis later in the week.

Alcoa Elliott Update

Trading strategy 1. Keep the current short position with the stop loss at 29.00, take profit at 26.50. 2. If the stop is hit, update outlook and be ready to enter long. Elliott Details It is likely that on the same day we entered our short position the wave 4 was completed and now the price is in the fifth bullish wave that should complete in the price range 28.66 to 34.39, but more probably between 29.90 and 32.58. This wave is due to complete anytime from now until 09-Jan-2006, but is most likely to complete before 21-Dec-2005. ...Read more The alternative count assumes that the first wave of higher degree is completed and we observe a correction wave that should complete in the price range 22.28 to 28.08, but more probably between 25.21 and 27.48. This wave is due to complete anytime from now until 11-Apr-2006, but is most likely to complete before 21-Dec-2005. We can not distinguish between these two scenarios based on the end of day data right now. The price level of 29 is the invalidation point for the second scenario therefore we will stick to the initial trading plan but if the stop loss is hit, we will revise outlook before taking long position.

Playing around with my Blogroll

I have started experimenting with Blogrolling. Looks like a very usefull tool for a blogger. One can easily add/edit links to other blogs and keep an eye on recently updated blogs. I will be playing around with my blogroll in the next few weeks so don't be surprised if there is massive disappearance/appearance of links in my blogroll. So far I have found about 60 blogs related to the Stock Market and/or the Biotech that I like. I will surely find more interesting blogs. One thing I am not sure is how many blogs are too many for a blogroll. Feel Free to Blogroll Me!

Sell Signal for MEDX

My trading system has flagged MEDX as a short candidate. Sell Short 800 shares of MEDX at the open on Dec-16 with stop-loss set 10% higher than the entry price. Let's see if I have better luck with MEDX than with ABGX. Yesterday with Abgenix it did feel like a kick in the nuts but, psychologically, I seem to be over my loss today. My ABGX position got closed at the open because it blew through my stop loss. Medarex and Abgenix are both developing antibodies to treat cancer but I just can't see myself so unlucky as to witness BMY or some other company buying MEDX while I am shorting it. Of course, MEDX could be bought but not at this juncture. MEDX is technically weak and this is what counts for the short-term trade. I limit my exposure to ~10% of my account in case the stock does move against me. Biotech-Oncology Portfolio Open: GTOP: entered 1200 shares short @8.10 on Nov-30, stop loss @8.91 Closed: ABGX: 700 shares short opened @14.39 entered Dec-07, closed @21.80 on Dec-15 for 51.5% loss. CYTK: 1200 shares short opened @8.47 on Dec-07, closed @7.62 on Dec-13 for 10% profit. EXEL: entered 1200 shares short @7.87 on Nov-30, position closed @8.80 on Dec-06 for 11.8% loss. Elliott System Open: AA short @28.00 entered Dec-12, stop loss 29.00, take profit at 26.00 Closed: C short @48.57 entered Dec-05, covered short @49.00 on Dec-12 for 0.89% loss

Slaughtered by ABGX

AMGN is buying ABGX for 22.5/share and I am SHORT ABGX @14.39. The stock is halted so my stop-loss can't be activated. ABGX will probably open around 22$ tomorrow, ~50% cut for my position. The only good thing here is that only ~10% of my money is allocated to ABGX. On a day like today, I can't stress the importance of not putting all the eggs in one busket.

Open/closed positions quick update

Biotech-Oncology Portfolio Open: ABGX 700 shares short @14.39 entered Dec-07. Take profit @12.95. Stop loss @15.83 GTOP: entered 1200 shares short @8.10 on Nov-30, stop loss @8.91 Closed: CYTK: 1200 shares short opened @8.47 on Dec-07, closed @7.62 on Dec-13 for 10% profit. EXEL: entered 1200 shares short @7.87 on Nov-30, position closed @8.80 on Dec-06 for 11.8% loss. Elliott System Open: AA short @28.00 entered Dec-12 Closed: C short @48.57 entered Dec-05, covered short @49.00 on Dec-12 for 0.89% loss Sorry, yesterday I forgot to mention that I am still short GTOP

CYTK position is closed

CYTK dropped today triggering my profit target that I updated yesterday. CYTK 1200 shares short position is closed now: opened @8.47 on Dec-07, closed @7.62 on Dec-13 for 10% profit.

Quick position update

Biotech-Oncology Portfolio Open positions: ABGX 700 shares short @14.39 entered Dec-07. Take profit @12.95. Stop loss @15.83 CYTK 1200 shares short @8.47 entered Dec-07. Take profit @7.62. Stop loss @9.32 Elliott System Open positions: AA short @28.00 entered Dec-12 Closed positions: C short @48.57 entered Dec-05, covered short @49.00 on Dec-12 for 0.89% loss

AMGN Elliott Update (Buy at 81.05, stop loss 78.15)

Again we are at an ambiguous point with two reasonable wave counts. This situation is very similar to our forecast on October 30. 1) This scenario is a continuation of our preferred count last week. We observe the end of the correction wave (or part of the correction wave) and in the next few days the price will go upwards. Now we possibly see Wave 3 of the impulse within zigzag pattern and it is expected to complete in the price range 86.14 to 134.42, but more probably between 88.08 and 100.57. This wave is most likely to complete sometime between 14-Dec-2005 and 06-Jan-2006 Note that it cannot complete until 12-Dec-2005 but must complete by 10-Mar-2006. ...Read more When completed, expect the stock to pull back into wave 4, which will be corrective in nature and has a probability of 83% of being a Flat or other sideways pattern. After wave 4, expect wave 5 to move beyond the end of wave 3 to complete this Impulse, which will also complete zigzag pattern. 2) The alternative scenario assumes that the current zigzag pattern was completed on 22-Nov-2005 although the price did not reach high probability price zone for the higher degree double zigzag wave. In such a case the stock should continue down in the impulsive wave as it was described in the Scenario 2 on October 30. Trading strategy Currently the price is in the oversold territory and in principle we have been waiting for such an opportunity to enter long, however we would not like to be in a situation when we could buy the stock in the middle of a strong bearish move. It is also true that we would not like to miss potential strong bullish move to above 90. 1. Buy at 81.05, stop loss 78.15, profit target 95.0 2. Update short term scenario daily to figure out changes in the preferred scenario and either find better entry price for a long position or change our outlook for the bearish scenario.

AA Elliott Update

There was no a comfortable entry point for long position this week. However it seems that current bullish wave is about to complete and a new bullish move should start at about 26 or below. Therefore we have a good risk/reward ratio for entering short term position. There are several alternative scenarios for the price movements in the nearest few days. The main reason for this uncertainty is due to the fact that we can not distinguish interchangeable waves (flat and d3) before they are completed. This uncertainty should not bother us as long as we accommodate it in our trading plan either by staying aside or by taking trades and knowing our possible losses and rewards. ...Read more 1) The price is in the Wave 4 which is expected to complete in the price range 26.97 to 28.94, but more probably between 27.39 and 28.71. This wave is due to complete anytime from now until 29-Dec-2005, but is most likely to complete before 12-Dec-2005. Once this wave 4 is completed, expect the market to continue up to the end of wave 5, which will most probably be an Impulse but could be an Ending Diagonal. Wave 5 will complete the Impulse. 2) The price is in the Wave B of an inverted Flat that will complete in the price range 13.94 to 24.48, but more probably between 21.54 and 24.34. This wave could complete anytime between now and 18-Aug-2006, but is most likely to complete sometime between 12-Dec-2005 and 13-Jan-2006. 3) This is a low probability scenario since it does not synchronize well with the higher degree waves. Price is in the Wave X of an inverted Double Zigzag which is expected to complete in the price range 22.28 to 27.74, but more probably between 24.54 and 27.01. This wave is most likely to complete sometime between 12-Dec-2005 and 13-Jan-2006 Note that it cannot complete until 09-Dec-2005 but it must complete by 29-May-2006. Trading strategy 1. Enter short at 28.00, stop loss 29.00, take profit at 26.00. 2. If stop is hit, enter long at 29.00, stop loss 28.05. 3. Update outlook daily.

C (Citigroup) short position to be closed

Trading strategy We sold C on open on 5-Dec-2005 at 48.57. The stock closed at 48.50 last Friday. Perhaps this position is an uncomfortable one and I am not sure that one should stick to it. If our preferred count is correct, then the price is already in the high probability zone for the wave 4 and it is even possible that the low on Dec 8 was the end of the wave 4 since then the price should rise in the impulsive wave. On the other hand if our outlook is not correct, it is still very likely that the price will rise in the next few days, will test the resistance at 50 and swing low to 45 or below. In either case closing this position will be a wise option. Of course there is a chance that the price will continue to decrease according to a completely different scenario, however there is no rationale to build a trading plan based on a lucky chance since it will be gambling rather than trading. 1. Close the short position at the market open on Dec-12.

Sell Signals for ABGX and CYTK

Sell Short 700 shares of ABGX and 1200 shares of CYTK at the market open on 07-Dec-05. Stop losses are set 10% higher than the respective purchase price for each position.

EXEL Short Position Closed

EXEL: entered 1200 shares short @7.87 on Nov-30, position closed @.8.80 on Dec-06 for 11.8% loss. GTOP: entered 1200 shares short @8.10 on Nov-30, stop loss @8.91 C: entered short @48.76 on Dec-05, stop loss @50.05 I am not very happy with my EXEL play. First, because the position got closed somewhat higher than my stop-loss @10% when the stock opened sharply higher today. Secondly, because the stock immediately started to trade lower and is trading @8.26 as I am typing this. Had it opened a little lower I would not have had my position closed for 12% loss. But such is the nature of the fundamental news – they can move a stock noticeably and there is nothing that can be done about it. I am going to see if my system still indicates Sell Signal for EXEL over the next few days/weeks. I would not be surprised if re-enter the short position again later this week.

AMGN (Amgen) Elliott Update

Trading strategy 1. Look for an opportunity to open long position when the price drops below 80 (preferably at 79) when it is supported by an oscillator signal in the oversold territory. 2. Stop loss 73.15. ...Read more The price pattern is unfolding within our preferred scenario. Long and medium term outlook did not change. It seems that we closed long position right after the end of the fifth wave and now we are to search for an opportunity to enter long again once the correction pattern is completed. Current very short term outlook assumes a Wave (C) of the Intermediate degree Zigzag that is expected to complete in the price range 75.02 to 80.81, but more probably between 77.86 and 80.35. This wave is most likely to complete sometime between 02-Dec-2005 and 06-Dec-2005. Note that it cannot complete until 02-Dec-2005 but must complete by 09-Dec-2005. This might be the final wave in the pattern. When completed it will also finish wave 2 of the higher degree Impulse. Although there is a possibility that the correction wave 2 will be a sideways pattern, we can not identify this now because even the starting phase is not finished. Nevertheless, the latter option can also provide a chance to pull out some profit from the potential move upwards.

AA Elliott Update

Trading strategy 1. We continue to seek an opportunity to enter long position when an oscillator will be in the oversold territory. 2. On Wednesday we will check which pattern will have higher rating as the price action continues to unfold. ...Read more Again we could not find a comfortable entry point for taking long position with a good risk/reward ratio. The price stays in the overbought territory and is still increasing. Possibly now we observe the second scenario assumed last week: “We had already observed completion of Wave 2, which was rather short and now the stock price is in the Wave 3 of an Impulse and it should complete in the price range 28.48 to 32.12, but more probably between 29.13 and 30.39. This wave is due to complete anytime from now until 09-Jan-2006, but is most likely to complete before 06-Dec-2005.” However right now impulsive pattern has a rating “just on the edge” and one more possibility is that in the short term we have a correction pattern. It means that in the medium term we can expect D3 instead of Flat (they are interchangeable) and consequently slightly different price and time limits for the medium term.

Apparently C (Citigroup) is not an easy example for the Elliott Wave analysis

Trading strategy 1. Enter short position at the market open on 05-Dec-2005. 2. Place stop loss at 50.05 3. Update short term analysis daily and close the position after the end of the possible wave 4. ...Read more The price has not taken the resistance line at 50. The stochastic points to a good opportunity to enter a short position as we were expecting during the previous two weeks. However, according to our preferred scenario, only wave 3 of an impulse was completed and we must expect one more impulsive wave upwards after the end of current correction stage. The price is in the high probability zone of the wave 4, but it has about one more week to complete. At the same time the current short term rally started on Aug 29 can be considered as a corrective wave having higher rating. Although it is not in harmony with our preferred medium term outlook, it gives a hint about one thing (thought) that have bothered me in this outlook – the wave II in the medium term outlook seems to be too extended and the current pattern does not look like as a nice impulsive wave down. Now, if the current wave is a corrective pattern, it means that in the medium term we have a contracting triangle or another flat and the price will move further down to approximately 45 or even below. This is the ambiguity we have to face in the current situation.

Note about the system based on the Elliott Wave Analysis

Currently I am watching closely three stocks (AMGN, AA and C). Also I have applied Elliott Wave approach to AAPL because I became curious about its behavior. So far I have quite ambiguous feeling about Elliott Analysis approach – I am happy with clear outlook and understanding of what is going on with stocks as long as they follow one of the preferred scenarios, but at the same time I am not satisfied with an important issue of limited number of trade signals, an issue that can make real life trading uncomfortable. Consequently, it is somewhat difficult to stick to a trading plan based on the Elliott Wave analysis methodology. ...Read more Let me explain it. Elliott analysis does not generate many entry points. If I consider my typical investment style, then the entry price, suggested stop loss and exit price would transform to the following numbers: Risk – 2% of main capital, Return – 8.3% on the invested capital and 3.5% on the main capital, invested capital 40% without margin. With the stocks I have looked so far I have had only clear trading signal for AMGN. And now after closing AMGN position, I ended up with 100% cash position in USD and it happens that USD is becoming weaker right starting from this week. Basically, I need to expand my stock selection process to cover more stocks. The first thing I would like to do in the future is to create a broad portfolio of stocks for trading based on the Elliott wave analysis. I would like to have plenty of trading signals and to be able to select among those opportunities the trades with better risk/reward ratios and to screen out stocks based on the correlation of their price action to minimize overall risk. In the nearest one or two months I will focus on the creation of such a portfolio by analyzing different stocks and watching them to figure out the most likely Elliott counts. If you believe that a stock follows well Elliott wave behavior, please let me know either by e-mail or in the comments to this post.

Sells Signals for GTOP and EXEL

I am adding GTOP and EXEL to my Biotech-Oncology portfolio as short positions. Sell short 1200 shares of GTOP and 1200 shares of EXEL at the market open on 30-Nov-05. Stop losses set at 10% higher than the respective entry price for each stock.

AMGN (Amgen) long position closed

AMGN entered long on 31-Oct-05 @75.96, closed position 28-Nov-05 at the market open @82.26 for 8.3% profit.

Amgen Elliott Wave Update (closing long position)

Trading strategy Probably the trading strategy in this case strongly depends on the psychology of the investor. It may be a good idea to keep the stock and wait for the wave 3. However wave 2 has very good chances to complete below out current stop loss locking smaller profit. I would fill more comfortable by closing this position at the market open on Monday. 1. Close position at open. 2. Look for an opportunity to open long position when the price drops to about 80. ...Read more Elliott Analysis for AMGN Long and medium term outlook did not change. In the short term we have probably observed the end of the fifth wave of the impulsive structure and the beginning of the correction pattern. It is not very likely that this fifth wave completed zigzag in the longer time frame because price did not touch high probability zone of the zigzag and high probability price zone of the double zigzag in even longer time frame is still to be touched. Therefore in the short time frame we are probably observing Wave 2 of the Impulse which should complete in the price range 73.13 to 83.0219, but more probably between 78.1328 and 81.9986. This wave is due to complete anytime from now until 03-Feb-2006, but is most likely to complete before 30-Nov-2005. After this wave 2 is complete, expect the stock to continue up into wave 3. Wave 3 should always be an Impulse and should retrace wave 2 completely. Expect wave 3 to retrace wave 2 by 164% - 383%. Wave 3 can also be expected to be 83% - 383% of the price length of wave 1.

Alcoa (AA) Elliott Update

Trading strategy The ambiguity of the forecast in the very short time frame should not affect our trading strategy since the overall forecast is bullish and now the price is in the overbought territory, which means that even it could be the third wave of an impulse, it might be wise to stay aside and wait for another trading opportunity with better risk/reward ratio. 1. We will seek to open long position when an oscillator will be in the oversold territory. 2. Price move to about 25 will support our primary scenario....Read more Elliott Analysis for Alcoa There is no change of the outlook for this stock. However, we could not find a comfortable entry point for taking long position with good risk/reward ratio. Previous week did not provide such an opportunity and even created some ambiguity for analysis in the very short time frame. We have two alternative scenarios that could be unfolding. 1. According to the first possible scenario in the very short time frame – we observe Wave (B) of the Flat and it is expected to complete in the price range 26.58 to 29.39, but more probably between 26.6 and 27.11. This wave is due to complete anytime from now until 19-Dec-2005, but is most likely to complete before 28-Nov-2005. After wave (B) is complete, expect the stock to continue down into wave (C). It will complete corrective Wave 2 which is expected to complete in the price range 22.28 to 26.23, but more probably between 24.28 and 25.82. This wave was expected to complete before 22-Nov-2005, and must complete by 20-Jan-2006. After this wave 2 is complete, expect the stock to continue up into wave 3. 2. We had already observed completion of Wave 2, which was rather short and now the stock price is in the Wave 3 of an Impulse and it should complete in the price range 28.48 to 32.12, but more probably between 29.13 and 30.39. This wave is due to complete anytime from now until 09-Jan-2006, but is most likely to complete before 06-Dec-2005.

Citigroup Elliott Wave Update

Trading strategy 1. We will continue to look for an opportunity to open short poison. 2. If the stock is still within wave 3 that will be followed by well defined correction pattern, we may be willing to open long position with the target below 52.80....Read more Elliott Analysis for C We were watching the behavior of this stock with great curiosity during last week. The development of the pattern is still within our preferred scenario, and the price high was 49.76 – slightly below the resistance line and a price range for potential entry short position and slightly below invalidation point of our current outlook which is at 52.88. According to the preferred count in the short time frame we observe Wave 5 of the Primary degree Impulse that is expected to complete in the price range 48.06 to 58.64, but more probably between 49.28 and 52.86. This wave is due to complete anytime from now until 07-Dec-2005, but is most likely to complete before 02-Dec-2005. Or the price action is in the Wave (5) of the Intermediate degree Impulse which should complete in the price range 47.81 to 57.07, but more probably between 48.59 and 51.02. This wave was expected to complete before 23-Nov-2005, and must complete by 07-Dec-2005. This is the final wave in the pattern. When completed, it will also complete wave 3 of the Primary degree Impulse. These two waves have the same target ranges. After that the price will still have potential to rise, but it should remain below invalidation point of the longer term scenario.

Apple (AAPL) Elliott Wave Analysis

Analysis of Apple stock price is not very congruent within the methodology I am using, however I am intrigued by the stock behavior. It does not look hopeless either and therefore I decided to watch it for a while more closely. NOTE: the main inconsistency is related to the starting point of the impulsive structure which does not fit well with the general pattern for US stocks. The impulse starts in 1997 rather than in 1987. This may imply some limitations for the projected time and price zones in the long time frame. Trading Strategy No trading yet. Just get some feel on how the stock behaves in the context of Elliott Analysis. ...Read more Elliott Analysis Long term: The corrective pattern for the price action has finished and now the price is in the Wave (III) of the Supercycle degree Impulse that is expected to complete in the price range 45.72 to 225.55, but more probably between 51.65 and 97.32. This wave is due to complete anytime from now until 30-Dec-2011, but is most likely to complete before 12-Nov-2008. Then expect the stock to pull back into wave (IV), which will be corrective in nature and has a probability of 84% of being a Flat or other sideways pattern. Wave (IV) should not retrace back into the price range of wave (I) or (II). After wave (IV), expect wave (V) to move beyond the end of wave (III) to complete this Impulse. Medium term: The price is in the Wave III of the Cycle degree Impulse which should complete in the price range 53.82 to 142.84, but more probably between 59.68 and 92.08. This wave is due to complete anytime from now until 31-Jan-2007, but is most likely to complete before 05-Jun-2006. Then expect the stock to pull back into wave IV, which will be corrective in nature After wave IV, expect wave V to move beyond the end of wave III to complete this Impulse which will also complete Wave (III) of the Supercycle degree Impulse (long term). Short term: Wave 3 of the Primary degree Impulse is expected to complete in the price range 57.96 to 107.41, but more probably between 61.25 and 77.91. This wave is due to complete anytime from now until 22-Feb-2006, but is most likely to complete before 21-Dec-2005. Shorter time frame forecast is rather uncertain. Probably the price is in the Wave 5 and it will complete in the price range 60.36 to 89.56, but more probably between 63.81 and 72.92. This wave was expected to complete before 17-Nov-2005 and must complete by 2-Dec-2005. When completed, it will also complete wave 3 of the higher degree pattern. Taking into account that previous correction waves were relatively short both in time and price ranges, we should expect extended correction patterns for waves 4. They may provide low risk opportunities for trading within the price channels.

Amgen Elliott Wave Update

Trading strategy 1. Move stop loss to 80.3 If the stop loss is hit we will update the outlook. There is no change in the outlook compared to the previous week. The price is moving to the target area. Probably now we observe the final fifth wave in the impulsive structure of a zigzag which should complete at around 90. Our trading strategy would be to lock in potential profit by setting stop loss approximately one average true range below the close price. It roughly corresponds to the end of the potential corrective wave 4 in the current pattern.

Citigroup Elliott Wave Update

Trading strategy Look for an opportunity to enter short once the price fail to break the resistance at 50. Watch stock behavior and confirm the completion of the pattern before final decision. The price movement so far confirms our outlook. The stock entered high probability price and time target zone during the past week and very likely it is in the final wave 5 of the impulsive pattern that should complete the corrective wave in the longer time frame. After that we expect a decline of the price. There is a possibility however that the stock is still in the corrective wave 4 and after the second intermediate correction it may rise and then we again expect a strong move down. Therefore, we will watch closely the stock behavior near the resistance line at 50 and try to enter short if updated scenario supports the completion of the current pattern.

Alcoa Elliott Wave Update

Trading strategy 1. Use an oscillator signal to enter long when the price drops below 25.7 (preferably 25). 2. Before entering long, update the forecast to check if the outlook has not changed. The pattern of AA stock price unfolds within our previous scenario and there are no strong reasons so far to change the scenario. We will continue to seek an opportunity to enter long at approximately 25 when the current corrective move will be accomplished. However we may update trading strategy should the price close above 27 during the next week.

Updated: Oncology-Biotech Portfolio

TELK and CEGE long positions closed

Sell to close 250 shares of TELK and 1500 shares of CEGE at the market open on Nov 16.

C (Citigroup) forecast using Elliott Waves

Trading Strategy According to the preferred scenario, the stock has further potential to rise and probably one could even pull some profit out of such a move, however, if the outlook is correct, this growth may suddenly change into the sharp decline of the price. 1. Unless the market will provide a good opportunity to enter long in the nearest one or two weeks, we will wait for the completion of the current wave and opening short position.2. Watch the stock behavior on daily basis. 3. Should the price reach 52.88 than it means that the current outlook is totally wrong....Read more C outlook Long term C is still in the correction Wave II of the Grand Supercycle degree Impulse which is expected to complete in the price range 1.54 to 48.18, but more probably between 25.12 and 43.35. This wave is expected to complete before 04-May-2005, and must complete by 14-Oct-2033. After this wave II is complete, expect the market to continue up into wave III. Wave III should always be an Impulse and should retrace wave II completely. Medium Term In the medium term the stock is most likely in the Wave (c) of the Supercycle degree Flat which should be the impulsive wave that is expected to complete at a price no higher than 41.24, but more probably no higher than 25.56. This wave is due to complete anytime from now until 04-Jul-2014, but is most likely to complete before 04-Apr-2006. In the shorter term we observe development of the Wave II of the inverted Impulse which is expectedto complete in the price range 43.39 to 52.88, but more probably between 44.47 and 48.13. This wave was expected to complete before 31-Dec-2004, and must complete by 02-Jun-2006. After this wave II is complete, expect the market to continue down into wave III, corrective wave IV and final wave V which will complete the Wave (c) and the Wave II of the Grand Supercycle. Note: that corrective flat pattern is interchangeable with double 3 and they are different only with respect to the final wave that should be corrective for double three and impulsive for the flat. The target price range is quite similar for both patterns, however considering double 3 as an alternative may give slightly different scenario in the short term. Short Term Currently the stock is in the Wave c of the inverted Flat. It is expected to complete in the price range 44.29 to 57.13, but more probably between 47.74 and 53.15. This wave is due to complete anytime from now until 19-Jul-2007, but is most likely to complete before 06-Feb-2006. This wave will also complete Wave II of the higher order (Medium term). Wave c ought to be an impulse and now C is in the Wave 3 of the Impulse and it is expected to complete in the price range 46.57 to 52.88, but more probably between 46.97 and 50.73. This wave is due to complete anytime from now until 07-Feb-2006, but is most likely to complete before 25-Nov-2005. Note: if the alternative scenario with double three is considered, the stock is in the high probability zone of the wave d of the contracting triangle and it means that it may change the direction into the wave e any time. This would be the final wave which will complete D3.

AMGN Elliott Wave Update

Trading Strategy 1. Move stop loss to 78.5 to lock in 50% of the profit. 2. Watch closely AMGN behavior during the week - although it has a potential for further growth, the stock is in the overbought territory and one can not exclude correction in the nearest future. 3. If the stop loss is hit we will update the outlook. AMGN outlook Apparently, we observe Scenario 2 in progress with the potential target area at least above 85.4 and likely above 92. At this moment there is no solid background for more accurate forecast of price target zones. In the very short term a mild correction is possible during the next week. Depending on the price action we will either keep our long position open or will exit by locking 50% of profits and will seek for an opportunity to re-enter long again at lower price.

AA (Alcoa) Elliott Wave Update

Trading strategy 1. Use an oscillator signal to enter long when the price drops below 25.7 (preferably 25). 2. Before entering long, update the forecast to check if the outlook will not have changed. AA Outlook There is no a significant change in the outlook for AA compared to the previous week. The stock is rising and has a potential for higher price. However, it is in the overbought territory and entering a trade in such situation would be uncomfortable. We will seek an opportunity to enter long during a short term correction preferably when the entry point is supported by RSI or stochastic. One would expect an approximate price range for the convenient entry point to be around 25, although it may change if the price continues to move upwards.

Oncology-Biotech Portfolio Update

Other recent trades (not part of the Oncology-Biotech Portfolio): MEDX open long Oct 28 @8.22, closed Nov 4 @9.30, profit 13.1% GERN open long Oct 28 @8.74, closed Nov 4 @9.05, profit 3.5% AMGN open long Oct 31 @75.96, position is still open (11-Nov closing price 81.10) I am very happy with the system so far. Of course, two weeks is too short period of time. But it is good to see that 3 out of 4 positions are very positive and only one is flat (CEGE). AMGN entry was predicted by a separate approach that relies on Elliott Waves.

TELK (Telik) taking profit

TELK long position 500 shrs opened Nov 1st @14.86 Sell to close 250 shrs at market open Nov 11 Move stop to 15.90 for the remaining 250 shrs