Value of Perfect Information

I always watch the daily TRIN and it really give me an edge on trading when you learn to utilize it properly. I also have watch list of over 100 stocks that I try to find value with a discounted cash flow model.

For me in order of importance while trading:

1. Volume
2. Discounted cash flow analysis on individual stocks
3. Earnings growth potential on individual stocks
4. Market direction based on SP500 earnings and knowing the right PE multiple to apply
5. 50 dma and 200 dma
6. Fibo retracements
7. Moving average crossovers.
8. WSJ data on buying on weakness and selling on strength
9. Gaps
10. My bevy of paid investment websites
11. TRIN
12. Maximum or current pain for options

To that end, I hope you enjoy this video I put together on finding value in stocks.
 

…and equally important I am learning how to temper my trading style with MortiES Premium Elliott Wave excellent daily analysis and intra-day updates… even after 28 years I learn something new every day!

When I posted the first chart below on the night of 29Apr2010, many were calling for new highs the next day. ES was pushing the limits for my reversal scenario to get us to new lows and the end of a proper W4. I’ve seen ES push the limits for retracements so many times in the past, that although I was getting less sure of my opinion, I was going to stick with it up to the 78.6% retracement level.

Posted EOD 29April 2010:

This is the market action for the next day. I used the same regular hours trading chart as above, but indicated where Globex went during the night. Interestingly, both of my projected paths were followed – one by Globex and one by trading during regular hours.

I especially like to post these spectacular moves, but every week we have equally good projections on the smaller action. Major reversals are always the calls we want to brag about. Ben has to harass me to get these track record posts done.

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Ok Investors!.. let’s see what the billions of blue blistering barnacles is going on with Greece and how they are going to get out of the mess and drive our markets to a continuation of the bull market… some might remember my article on Dubai alerting investors that it was a non-event.

http://www.bostonwealth.net/2009/12/14/dubai-mu…

..so wtf do I know that perhaps the average investor does not know about Greece and their plans?.. well if it helps, I am half Greek.. ok but the meat of the matter is as follows..

Greece, followed by France  and the United Kingdom has been on the forefront of supporting the Arab countries in helping seek independence and a resolution of the Israeli-Palestinian conflict….so yes in return for Greece’s support, they are going to get one hell of a bailout from yours truly the Saudis, Qataris, and others….

2nd unbeknownst to many is that in the next few month there is going to be a huge conference in Athens; the 3rd Arab-Greek Economic Forum.. now how the heck is that going to take place if Greece is broke…the motto of the conference is “Fostering business alliances to tap emerging opportunities”

3rd further news that never grapped any world headlines is the fact that the Kuwaiti Emir Sheikh Sabah Al-Ahmad Al-Sabah met with Chancellor Angela Merkel and German businessmen on April 28.  He is on a whirlwind  European tour that ostensibly will  concentrate on developing closer relations with Germany and the Vatican.  The Vatican.. wow!  .. that’s really news for me.. Kuwait is still probably one of the most intolerant countries when it comes to respecting other religions…to wit.. growing up in Kuwait in the 80s.. yes a policeman yanked a cross off my neck in public and sternly warned me that such display is “haram” or  forbiden;  the real truth of his visit is anything other than Merkel getting on her knees and pleading with Sabah to dole out billions to Greece.   The official word is “During his meeting with Chancellor Merkel he is reported to have discussed “a host of bilateral relations that would cement partnership between Kuwait and Berlin”  Bullshit!  The whole purpose of the meeting is nothing more than a cry for help from the Germans to the uber rich Kuwaitis to bail out Greece!

An astute reader commented that:  “Kuwaitis are already bailing out Greece by ‘accepting’ to sell a very necessary commodity (oil) against debt, with the obvious prospect of never been able to recover what they are selling right now.”

And just how rich are the Kuwaitis and the rest of Gulf Cooperation Council countries and Libya.  They make up almost 50%  of the top 11 Sovereign Wealth Funds in the world! 

Amazing…just amazing.. and this is after they took a beating in the market crash of 2009.

Well what the hell is going to be achieved in the conference if Greece is broke and dysfunctional.

I tell you what is going to happen.. either Kuwait, Saudi Arabia, Qatar (who is so flush with money they do not know what to do with it.. and their sovereign fund is busy buying up first class hotels.. to wit…

“Raffles Hotel sold to Qatari Diar for $275 Million”

According to The Times, “The historic Raffles Hotel in Singapore, famed for its colonial grandeur and the Singapore Sling cocktail, is to change hands in a deal worth $275 million (£180 million). The luxury 103-room hotel, a favourite watering hole of literary figures including Somerset Maugham and Rudyard Kipling, looks set to be acquired from Fairmont Raffles Hotels International by Qatari Diar, part of the state-controlled sovereign wealth fund, the Qatar Investment Authority”

..anyway continuing….either Saudi Arabia, Qatar, or Abu Dhabi or perhaps in unity as part of the GCC (Gulf Cooperation Council) is going to steal the world stage limelight by offering one heck of a massive loan guarantee to Greece… just in time for the 3rd annual Arab-Greek economic forum to flow smoothly..

..also let’s not forget that today, May 1, is May Day or International Workers’ Day, commemorates the historic struggle of working people throughout the world, and is recognized in every country except the United States, Canada, and South Africa

My 2cents!

This is the post and chart my premium subscribers received this evening:  If you like what you see here, wait to see how MortiES’s analysis can assist you in your everyday investing or trading strategy! Go ahead., Click on “Subscribe to MortiES Premium” and give it a try! I am offering a 30 day free trial period.

I always get myself in trouble when I start finding triangles forming. This is not the first time a triangle failed and the bottom fell out of the market. Seeing it twice will make me more alert to this possibility in the future. I remember a failed triangle a few months back that resulted in a similar severe correction. The fact is, you can’t predict a severe correction like this. When they happen, you just have to react. I did well with the market closing the gap this morning. I then was looking for a long, but the market never gave me a good setup at the usual buy-the-dip level, and I then watched the market plummet. I didn’t chase the trend, so I had to be satisfied with my morning green.

I have to call the end of W3 again. That means we are in W4 of the move up from early February. Corrections are the most difficult patterns to trade. When they become complex, it is impossible (for me) to project future action on a short term basis. I’ll be expecting a rally once Wave A is complete – and it looks almost complete at the EOD. The typical Wave B rally is 50-62% of the entire impulsive move (W1-5).

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Back in January 2010, I did an article based on fundamental analysis of why I saw 1250 as the top on S&P 500

http://www.bostonwealth.net/2010/01/27/sp-500-here-we-come-1250/

Well I just went back and looked at the estimated bottom up approach operating earnings for 2010 and it has gone up from $76.47 in January to $79.83 today.

Applying the 16.37 multiple (read the article to see how it is derived) and wow, I get 1306 for the S&P 500. See how this compares to other analysts and the consensus estimate show on the attached chart. Interesting that the consensus average is at 1229!

I just heard some great news tonight! Frederick Forsyth’s latest novel, “The Cobra” will be out in August this year!

Finally my EW count is getting clear (at least for me). We have Leading Diagonal Triangle of next Leading Diagonal Triangle, which is not obvious from begin of the waves.

The last (LDT) has still 3 not finished lines, with the following plan:
- (3 LDT) 1202 should take 1-2 days
- (4 LDT) 1191 should take 2-3 days
- (5 LDT) 1209/15 should take 1-2 days
—————————————
Sum: 1209+ by the end of next week.

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I have recounted all waves again, and we are probably NOT in the wave V. I see the END of wave b”’/x”’. Monday probably a little bit higher, don’t know how much, the range is from 1179.54-1193. But because the indicators are very up and divergent, I expect only 1185.  For more details see the chart.

I hang out at MortiES Premium during the trading day where I provide charts and analysis during the trading day.    Mortie has a free thirty day trial going on.  Give it a try by signing up below:

Click to see MortiES' Track Record ~ Week of March 22, 2010

Ok, I am back on EWwaving and EWtrading, Hey!  I am 30 years old and was born in Kiev, Ukraine and now live in Germany. Trading and Elliot Waves are my passion. I work as a consultant in the securities industry.

After failed hunting the wave IV, P2 or whatever, losing money and mind, I took a personal break, and during this time I was able to  re-analyze the global picture, which I would like to discuss in this post. In the last few month I also have realized, that there are two big groups of traders who emotionally BELIEF in BULL or BEAR markets. If an investor is talking about a BEAR market, everyone is adjusting their EW count to a P2 scenario, with a utopian target of around 1,000 in DOW in several years (e.g. EWI). The other group, BULLS, are seeing the beginning of  aBULL market with a DOW target about 20,000 in the same time. The discrepancy is about 19,000 dow points. But the are a lot of reasons, why  both these cases do not make any sense.

The BULL case: everyone knows, that government world-wide is printing money (FED, EZB), less tax-incomes are increasing public/national debt DRAMATICALLY (German’s debt in 2009 increased by 7.1% or 112 Bil. EUR, US budget deficit hit a record $1.4 trillion in 2009, etc.). Unemployment hit over 10% in the USA and is probably bad on average in Europe. Even if the stocks are rising, it means for me nothing than the notional VALUE of money is just GETTING DESTrOYED. Or in other words – hidden increase of INFLATION. Inflation will be a very good way to pay back the dept in the coming decade(s). But in reality, we just know only 10% of the big story, without mentioning any impacts of  CDS’s, defaulted Corporate Loans, CDOs and other financial issues, we will be faced with its impact on us and the economy in the next 5-10 years. For me there is no one single reason from an economical perspective, which gives me at least one single argument to say that we are done with the  recession. If you do not believe me, there are 4 economic cycles in every economics school book you can learn in your second semester. When we will see the Bull market we are still missing one cycle in between.

The P2 BEAR case: I just want to point, that this case is coming from EWI, which will be destroyed, after we reach a new high.  Dow at 1,000 and S&P500 at 150 is not realistic, at least only because of  the huge amount of virtual money, printed by the FED. Such case means unemployment of more than 50% – possible, but until the FED has a right to issue money, bonds, which will be accepted by all WMF members (hope you understand what I mean) –  I see this case as UTOPIA. Even if everything gets worthless, Apple/Amazon/Google will have enough cash to hold Nasdaq100 over 900 – joke. Mr. Preacher- please adjust your count!!!

The OTHER case: I was looking for some other case, which adjusts to the economical and political issues, we have seen from year 2000 till this time, when the economy can REALLY solve the old and new issues, to give people and government new BREATH for the BULL run.  Two weeks ago I  read an article in a German newspaper, which described the situation, when all EU countries will reduce its debt deficit by only 0.5%/year, only in 2018/20 we can reach the same economical state of 2007.  Historically we had similar economical disasters, which took on average 17/18 years to solve, and produced finally a new BULL run. This happened in 1906-1923, and in 1966-83. The similarity is obvious to the time from the year 2000. If in 2000 we completed only the cycle III, we should be in the cycle IV. Based on new count I see a Double Flat formation, which will last until 2017/2018.  Between 2000 and 2009 we only finished the (W) wave, which has an irregular flat pattern. Now we should be in the (X) wave into the 1500th area. Please see the daily chart below.

Daily Wave count: We are in the wave (X) which is moving from 666, and has a target between 95%-110% of Wave (W). The minor (A)/(W) is already finished. Now we are in the (B)/(X)-wave. The first A/W-wave of (B)/(X) is finished, and I am counting the B/X wave. Right now we should be in the (a)/(w) of B/X.

Short term count: the blue (a)/(w) shows a w-x-y pattern right now, it is still not clear, how the y-wave will extend. I see a sub-wave structure of a-b-c waves, where the first part of a of y is complete and we are now in the a-b-c of b of y. Tomorrow we should also finish the b of y probably as irregular or running flat and start the c of y, with a minimum target of 0.618 of a, which is 1204.5 in S&P500. 

For any questions or comments, fill free to write me: yury.menchinskiy@gmail.com.  I hang out at MortiES Premium during the trading day.