Month: November 2013

By Mitchell Clark, B.Comm.

When we looked at Biogen Idec Inc. (BIIB) in late April, the biotechnology company was trading around $218.00 a share. Now, it’s trading between $230.00 and $240.00 or so and is still a big momentum bet.

The company recently raised its forecast as its multiple sclerosis (MS) drug, known as “TECFIDERA,” is now the leading MS therapy drug in the U.S. The drug is approved for use in the U.S., Canada, and Australia, and the company is working on approval from the European Medicines Agency (EMA).

The right drug company can defy prevailing stock market sentiment and make a lot of money for shareholders. While biotechnology stocks typically trade on their own material developments, they are often super high-risk and very volatile investments. They are perfect for risk-capital traders and momentum players.

Biogen Idec’s total revenues in its third quarter of 2013 grew 32% to $1.8 billion, with earnings growing 22% to $488 million. The company’s growth rate is slowing, but this could change significantly if more markets for its MS treatment open.

Another biotechnology stock that’s experienced major momentum in its operations and on the stock market is Alexion Pharmaceuticals, Inc. (ALXN). The stock has tripled over the last three years, and earnings estimates continue to rise for this year.

The company’s main drug offering is “Soliris,” which is a treatment for a debilitating blood disorder known as paroxysmal nocturnal hemoglobinuria.

Third-quarter net product sales grew 36% to $400 million. Non-GAAP earnings grew 39% to $168 million.

The company recently increased its 2013 revenue guidance, and the stock reaccelerated from a recent consolidation. (See “Why Momentum Traders Love These Stocks.”)

Speculating in biotechnology stocks is risky business, and the marketplace can cut positions in half in the blink of an eye. But it is a stock market sector ripe for momentum trading. Put together a list of biotechnology stocks hitting new highs, and you’ll find some attractive growth stories.

Of course, trading this sector is not for the faint of heart. It’s all about managing the trade and prevailing sentiment. Potential return is a lesser part of the equation if you’re a trader.

You can’t know if a drug will get approval or what the results of a clinical trial will be, but you can trade a stock’s momentum based on sentiment, the underlying story, and price corrections. A biotechnology company with one or two approved drugs that are in high demand is a powerful combination as the two above-mentioned stories illustrate.

Valuation is always relative in big growth stories. Institutional investors can be very generous in affording growing biotechnology companies high multiples that wouldn’t be effected in other sectors.

No position is ever worth chasing. Buying or selling a stock is a business decision and trading is obviously different than investing. But biotechnology growth stories with high participation from institutional investors can make for really good trades.

When positions correct among fast-growing, large-cap biotechnology stories, they are worth a second look for risk-capital traders.

This article What Traders Love So Much About This Sector is originally publish at Profitconfidential

by Sasha Cekerevac, BA

I think it’s interesting how people, including the mainstream media, discuss an issue without truly understanding what it really means. It seems that skimming the surface is good enough these days, as no one seems to want to dig a little deeper.

One example is the recent reports from Chinese Premier Li Keqiang, who stated that the Chinese economy must grow at least 7.2% per year in order to limit the unemployment rate at four percent. (Source: “China Premier warns against loose money policies,” Reuters, November 5, 2013.)

As we all know, the Chinese economy is extremely important. As the second-largest nation in the global economy, its ability to manage the Chinese economy and prevent it from weakening further is quite important.

China’s Premier warned against creating even easier monetary conditions within the Chinese economy, as additional money printing could lead to even higher levels of inflation. Currently, the total credit supply is now in excess of $16.4 trillion (or 100 trillion yuan), approximately twice the size of its entire Chinese economy.

With the global economy still quite weak, China has had trouble exporting. It is now trying to transition the Chinese economy from export-led to domestically oriented, reducing its reliance on the global economy.

At least, that’s the story on the surface…

Here’s what troubles me: the Chinese economy is slowing, we all know that, yet all of its money printing so far has led to a total amount of credit supply twice the size of its entire economy.

So, what has all of this money printing really done?

It’s caused people in the Chinese economy to react by essentially trading their paper currency for hard assets like real estate and gold bullion. They don’t know how long the paper money will hold its current worth as inflation continues rising; therefore, they are rushing to trade it in for something solid, like gold bullion. And we all know that China is one of the biggest buyers of gold bullion.

And as much as they would like to see lower levels of inflation, the main goal for the leaders in the Chinese economy is to prevent unemployment. Even if that means printing money, they will continue to do so. That means continued buying in hard assets.

What happens when it all ends?

It’s difficult to say, and timing is always tough to call. Can the total credit supply increase to three times or four times the size of the Chinese economy? Perhaps, but I foresee those business people involved in profiting from the excess money supply will continue to trade their paper yuan into gold bullion and other hard assets.

Because the situation in the global economy is weak and the Chinese economy continues to undergo change, the one constant is that gold bullion will remain valuable.

The Chinese government has also been using the wealth created from selling goods to the global economy to buy gold bullion.

With our debt levels continuing to grow, I think many nations are going to become concerned with our ability to actually pay them back. China already owns trillions of dollars of our debt; I doubt it wants another trillion. So from a diversification viewpoint, it makes sense for the Chinese to look at alternatives to U.S. Treasuries, and gold bullion certainly fits the bill.

While the price of gold bullion has dropped, one has to view price action over a long-period of time. Day-to-day and quarter-to-quarter price movements can be volatile; look at the actual demand for physical gold bullion instead.

Will China (and other nations) continue to buy or sell gold bullion? They’re buying, and they’re using this pullback in gold bullion prices to continue accumulating. For the long-term investor, I would follow China’s lead and use this pullback to buy gold bullion, as I believe the demand from China for gold bullion will continue to grow over the next decade.

This article How Growing Chinese Credit Signals Long-Term Opportunity in Gold was originally published at Investment Contrarians

By The Sizemore Letter

Microsoft ($MSFT) founder Bill Gates made news last month when it was announced that he had made a $155 million investment in Spanish construction company Fomento de Construcciones y Contratas SA (Spain:FCC), taking a 6% stake.

Now, $155 million is a relatively modest sum of money for Bill Gates.  Forbes calculates his net worth at $72 billion.  Still, a move like this gets your attention.  If the world’s wealthiest man (Gates recently re-took that title from Mexico’s Carlos Slim) sees value in a beaten-down market, it’s probably worth exploring.

And Gates isn’t alone.  American private equity firm Apollo Global Management ($APO) recently made a large purchase in the Spanish banking sector.

I’ve been bullish on Spain for a long time now (see “When Spanish Stocks Rally, They Rally Hard,” which I published in February).  I saw a market full of world-class companies with excellent exposure to emerging markets that happened to be deeply depressed due to Spain’s deep recession.

And my position here hasn’t changed; even after the recent rally of nearly 40%, the iShares MSCI Spain ETF ($EWP) sits at barely half its 2007 high.  And Spain’s market has one of the lowest earnings multiples, at 14, and highest dividend yields, at 3.9%, of any developed market.

Spanish stocks have been drifting downward for the past three weeks.  This is normal, healthy correction, and should be expected.  But it’s also a great opportunity to accumulate new shares of your favorite Spanish stocks.

My recommendation?  Buy the entire index.  I recommend buying shares of EWP.  Plan to hold for 6-12 months or for gains of 20-30%.  Use a 15% trailing stop.

Spanish stocks are cheap, and investors are only now starting to warm up to them again.  I believe the bull market is just getting started.  But we should remember, this is Europe, a continent in crisis, and risk management is important.

And on a final note, we just got a major shot in the arm from ECB President “Super Mario” Draghi.  Draghi cut the benchmark rate to just 0.25% and made it clear that “Our monetary-policy stance will remain accommodative for as long as necessary.”  Tapering may be the word de jour on this side of the Atlantic.  But it looks like European stocks will get to enjoy monetary stimulus for the foreseeable future.

This piece first appeared on TraderPlanet.

Charles Lewis Sizemore, CFA, is the chief investment officer of the investment firm Sizemore Capital Management. At time of writing he was long MSFT and EWP.  Click here to receive his FREE 8-part investing series that will not only show you which sectors will soar, but also which stocks will deliver the highest returns. This series starts Nov. 5 and includes a FREE copy of his 2014 Macro Trend Profit Report.

This article first appeared on Sizemore Insights as EWP: Buy Spanish Stocks on Dips

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London Gold Market Report
from Adrian Ash
BullionVault
Mon 11 Nov 08:20 EST

WHOLESALE DEALING in gold was muted Monday morning in London, with prices bouncing off their lowest level in almost 4 weeks at $1280 per ounce as European stock markets rose.

 Major government bonds ticked higher after Friday’s sharp sell-off on strong US jobs data.

 Silver prices also fell to their lowest level since Oct. 17th, turning higher from $21.26.

 The Sterling price of gold dipped below £800 per ounce – a level first reached in May 2010 – for the third time since April.

 Wholesale trading in India and Dubai was also “subdued” overnight according to gold dealers, after world prices ended last week 2.5% down.

 Volumes on the Shanghai Gold Exchange in China, in contrast, were the strongest in 3 weeks.

 The Shanghai price, which slipped at the start of this month below the world’s benchmark of London settlement for the first time in 2013, rose to a premium today of nearly $5 per ounce.

 Secure logistics firm Malca Amit meantime said Monday that it’s opened a 2,000-tonne storage facility inside Shanghai‘s freeport zone.

 “Such a facility is a massive vote of confidence for the Chinese gold market,” says Philip Klapwijk, formerly of Thomson Reuters GFMS and now CEO of Precious Metals Insights in Hong Kong.

 “The trend for demand has been very strongly positive,” Bloomberg quotes Klapwijk, who said last week that alongside a surge in consumer gold purchases,China’s central bank gold buying likely totaled 300 tonnes in the first 6 months of 2013 alone.

 “It is very likely,” agrees the weekly report from refining giant Heraeus, “that China will overtake India as the largest [private] gold consumer for the first time.

 “[But] demand has eased off a bit and a sustainable trend is not expected at these levels.”

 Back in the traditional dealing centres of India and the Middle East short term, “Physical markets might come better into play should gold prices soften any further,” reckons Gerhard Schubert, head of commodities at Emirates NBD in Dubai.

 “But it would be doubtful if the physical markets could stem the flow of derivative sales, should this pattern occur.”

 Latest data from US regulator the CFTC show speculative traders, as a group, raising their bearish bets and cutting their bullish positions in gold futures and options in the week-ending last Tuesday.

 Overall, the so-called “net spec long” position – which measures the balance of bullish over bearish bets held by non-industry players – shrank 12% to the equivalent of 372 tonnes.

 That compares to a 5-year average of 675 tonnes.

 “These numbers are a little stale,” says ANZ Bank in a note, “given this snapshot was taken prior to [Thursday’s] stronger-than-expected US GDP and [Friday’s] non-farm payrolls figures.

 “But they indicate that levels above $1340/oz were seen as good levels [by speculators] to lighten longs and initiate further shorts.”

 “Money managers,” agrees the commodities team at Commerzbank, “made something of a retreat from the gold market again, having noticeably expanded their net long positions in the two preceding weeks.

 “In other words, the fall in price [ahead of the US data] was largely speculatively-driven, just as the price increase was beforehand.”

 India’s trade deficit – widely blamed on the country’s historic and cultural gold demand – meantime rose last month from September, but was almost half the level of October 2012 as gold and silver imports fell by four-fifths year-on-year to the equivalent of $1.3 billion.

 Despite the looming Hindu wedding season, “Supplies are limited” by the government’s anti-import rules, says Daman Prakash Rathod at wholesalers MNC Bullion in Chennai.

 “Only a few jewellers are buying at the current price.”

 India’s leading body for the gold industry, the Bombay Bullion Association, said at the weekend that it plans to enter the market as a participant, launching an exchange-traded product and minting small investment units.

Adrian Ash

BullionVault

Gold price chart, no delay | Buy gold online

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can fully allocated bullion already vaulted in your choice of London, New York, Singapore, Toronto or Zurich for just 0.5% commission.

(c) BullionVault 2013

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

by George Leong, B.Comm.

The market was impressed with the advance reading for the third-quarter gross domestic product (GDP) growth last Thursday. The fact is that with the Q3 GDP growth at 2.8%, the news was a relief, as it was much better than the consensus estimates of 1.9% and the 2.5% final reading for the second-quarter GDP growth.

The U.S. Department of Commerce said it was the fastest rate of growth since the third quarter in 2012. But while the market appears to be applauding the result, I’m not.

Yes, the GDP growth was better than if we had a soft reading, which many were expecting.

The Federal Reserve, at first glance, may look at the number and decide it’s time to rein in its quantitative easing at its December meeting.

But hold on… A closer look at the components of the GDP growth report would show some fragility that makes me concerned about the country’s economic renewal.

Spending by the businesses stalled in the third quarter, based on early indications. This is a red flag, as companies will generally spend more if they are growing and the economy is healthy and in an upturn. This lack of spending by businesses may indicate continued weak revenue growth.

Another warning in the report is that real personal consumption, which accounts for about two-thirds of America’s GDP growth, rose 1.5% in the third quarter—that’s not that good. Actually, it’s a decline from the 1.8% GDP growth in the second quarter. Given this, the retail sector could continue to struggle, so I would be careful when buying. I would continue to stick with the discounters, such as Family Dollar Stores, Inc. (NYSE/FDO), Dollar General Corporation (NYSE/DG), and Wal-Mart Stores, Inc. (NYSE/WMT), which is tops in this area.

Then there’s the value of U.S. goods and services sold to foreigners. This increased at 4.5% in the third quarter, well below the eight-percent pace in the second quarter. Moreover, the real imports of goods and services came in at 1.9%, versus the 6.9% jump in the second quarter.

Not so surprisingly, government spending is down due to the sequestration and budgetary cuts. Real federal government consumption spending and gross investment fell 1.7% in the third quarter, following a 1.6% decline in the second quarter. I don’t expect this to improve.

So while the GDP growth on the surface looks fine, the breakdown of numbers tells another story, suggesting there could be some issues down the road.

The Fed will likely be looking hard at the second estimate to be released on December 5, just prior to the Federal Open Market Committee (FOMC) meeting. If the underlying numbers continue to be soft, I doubt the Fed will begin tapering its bond buying until perhaps the January meeting, which will also be Ben Bernanke’s last.

With retail sales and the economy expected to stall in the fourth quarter, you need to be careful, especially when considering buying retail stocks as I discussed above. You should also take some profits off the table and/or buy some put options on the indices to hedge against potential downside weakness.

This article Advance 3Q GDP Growth Reading Doesn’t Tell the Whole Story was originally published at Investment Contrarians

By George Leong, B.Comm.

In China, 2013 is the “Year of the Snake.” In the United States, this year will long be remembered as the “Year of the IPO.”

IPOs have been sizzling-hot this year. And while not all IPOs have made investors rich, many have recorded astounding gains for shareholders.

Twitter, Inc. (NYSE/TWTR) was only one of many IPOs that returned riches to its investors. Priced at $26.00 (already well above its initial $17.00–$20.00 range), the stock surged to open at $45.00 last Thursday and traded at $50.00 by mid-morning. (Read my take on Twitter in “How Small Investors Can Still Get a Piece of Twitter.”) It’s amazing the riches that can be made from 140 characters of text. With the surge, Twitter was valued at over $26.0 billion, which is astounding for a company that has yet to figure out how it’s going to monetize its user base.

Two other recent IPOs that also showed crazy moves include box and packaging company The Container Store Group, Inc. (NYSE/TCS), doubling from its $18.00 IPO price, and Chinese e-commerce classifieds web site Beijing 58 Information and Technology Co., Ltd. (NASDAQ/WUBA), or 58.com, Inc., up over 40% on its first day.

Some of the quick and somewhat obscene gains recorded by some of the IPOs remind me of the situation in 1999 and early 2000, when companies with very little in terms of fundamentals or history staged stellar IPO gains after being welcomed by anxious investors.

We are not at the same degree of obscenity now as back then, but the gains I’m seeing today are ridiculous. (Maybe it’s because I’m envious about not getting any pre-IPO shares.)

Now, the rapid ascension of IPOs and the broader stock market, especially in the Internet services area, is sounding off some warning bells in my head.

It’s too much, too soon. I was convinced the stock market was set for a bigger correction than we saw recently when the S&P 500 corrected about six percent.

The major correction in the S&P 500 has yet to materialize, but I still believe it’s coming; I’m just not so clear on when. Maybe it will happen when traders realize the economy and corporate revenue growth aren’t growing at a pace that the rise in the stock market this year would suggest.

The bottom line is to enjoy the grandeur of the IPOs market, but be aware that the frenzy we are seeing is an indication of some of the froth that is surfacing in the stock market. It may be time to take a step back, take some profits, and enjoy your gains.

This article is 2013 IPO Frenzy an Omen for the Stock Market? originally publish at Profitconfidential

By Michael Lombardi, MBA

This morning, we heard from the Bureau of Labor Statistics (BLS) about the jobs market situation in the U.S. economy. It said the unemployment rate in the U.S. was 7.3% in October, compared to 7.2% in September. In October, 204,000 jobs were added to the U.S. economy. (Source: Bureau of Labor Statistics, November 8, 2013.)

Finally, a month in which more than 200,000 jobs were created! But not so fast…

The underemployment rate (which includes people who have given up looking for work and people who have part-time jobs but want full-time jobs) actually jumped in October to 13.8%—it stood at 13.6% in September!

And, as we have become accustomed to, in the jobs market report, we see low-wage-paying jobs accounted for most of the new jobs in the U.S. economy in October: 44,000 jobs were created in the retail trade, 53,000 jobs in the leisure and hospitality sector, and 15,000 jobs in health care. Combined, these low-paying jobs made up 55% of all the jobs created in October!

Jobs which provide a decent salary didn’t see much growth from what we can see in the October jobs market report. Jobs in the traditional high-paying construction, mining/logging, wholesale trade, transportation/warehousing, information, and financial sectors lagged and showed next to no change in growth in October.

The table below, which I have created for my readers, shows the change in manufacturing employment in the U.S. economy since February 2013. So far, until this past September, 2,000 manufacturing jobs were wiped out this year.

 Growth in U.S. Manufacturing Jobs,
Feb. to Sept. 2013

Data source: Federal Reserve Bank of St. Louis web site,
last accessed November 8, 2013.

The final troubling fact about the U.S. jobs market that no one wants to talk about is that in October, the civilian labor force (all workers in the U.S. economy) declined by 720,000! The labor force participation rate declined by 0.4% and stood at 62.8%. This is troublesome at the very core; it shows less and less Americans are working.

Dear reader, the jobs market report for October has strengthened my argument that the U.S. economy is far from seeing any economic growth. Looking at this jobs market report, which I’m sure the Federal Reserve is analyzing very closely, it only makes the Fed’s decision not to start tapering (not to pull back on monthly paper money printing) even stronger.

This article The Worst Jobs Report of the Year Just Announced?  is originally publish at Profitconfidential

by John Paul Whitefoot, BA

Whether you’re in Pamplona, Spain or on Wall Street, when it comes to running with the bulls, the object is to stay ahead of the pack. This means not getting gouged physically or financially. However, there are an increasingly large number of investors out there right now who think they’ve got a handle on the bull market.

Why? The Federal Reserve says it won’t taper its generous $85.0-billion-per-month quantitative easing policy until the U.S. economy improves. And by that, it means—for now at least—an unemployment rate of 6.5% and an inflation rate of 2.5%.

As a result, the Federal Reserve’s easy money and artificially deflated near-record low interest rates have put the stock market front and center for income-starved investors looking for capital appreciation. As long as the Fed keeps its printing presses in overdrive, there’s no reason to think that the bull market will take a breather.

Case in point: in spite of a year marred with revised lower earnings in the first, second, and third quarters and a record 83.5% of companies issuing negative guidance for the fourth quarter, investors have been flocking with reckless abandon to the S&P 500, which continues to trade near record levels. (Source: “Earnings Insight,” FactSet web site, October 6, 2013.)

For the last week of October, 45% of investors were bullish on the market, down from 49.2% for the week ended October 24—the highest level since February 2011. Month-over-month, the number of market bulls climbed 25%. Over the same period of time, the S&P 500 climbed 4.8%. In the last week of June, just 30.28% of Americans were bullish, representing a four-month increase of 50%; the S&P 500, on the other hand, increased 9.7%. (Source: “Sentiment Survey,” American Association of Individual Investors web site, last accessed November 7, 2013.)

What about the bears? At the end of October, 24.5% of Americans were bears versus 30.6% at the end of September and 35.2% at the end of June.

The increasing spread between the number of investors who are bulls and bears is significant because, according to the late Sir John Templeton, bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.

But few seem to agree. The CEO and president of one investment firm said the bull market will rage on for another five years because he can feel the exuberance and strong positives in the U.S economy—meaning the stock market will continue to be the best game in town. (Source: Navarro, B.J., “Bull market has 5 years ahead: Pro,” CNBC web site, November 6, 2013.)

It could be argued that as long as the Federal Reserve’s money tree keeps blooming, the bull market will continue to rage on. But history shows that too much optimism is actually a bearish signal rooted in unrealistic expectations.

In fact, the divergence between the number of sky-high bull market investors and basement-dwelling bears, coupled with the stark economic disconnect between the bull market and the weak economic environment (high unemployment, stagnant wages), points to a correction.

What does this mean for investors? For starters, don’t get hypnotized by the bull market’s blind optimism; revisit your retirement portfolio and find out where your strengths and weaknesses lie and rebalance if needed. Eventually, the markets will catch up (or clue in) to what’s actually going on in the U.S.

On the other hand, if you don’t like sitting on the sidelines and want to take advantage of the bull market, you could always consider an exchange-traded fund that tracks the S&P 500 in step or inversely.

This article Stock Market Bulls Getting Too Bullish was originally published at Daily Gains Letter

by Mohammad Zulfiqar, BA

Is it time to rethink your gold investments? This question is being asked by those who have held on to their investments as the prices of the precious metal have come down significantly. It wasn’t too long ago when gold bullion prices soared beyond $1,900 an ounce; this year, they are facing scrutiny. Gold bullion prices witnessed plunges in April and June, and now sit close to $1,300—down more than 31% from their peak.

This decline in gold bullion prices has caused concern, and I completely understand why. For example, gold miners’ share prices have collapsed—both senior miners and exploration companies.

With this in mind; I certainly think it’s time to rethink the gold investments that investors hold in their portfolio.

Before going into any details, let me make this very clear: I continue to be bullish on gold bullion prices ahead. I see the most basic principles of economics, supply and demand, are at play; gold bullion is seeing increased buying worldwide, while supply becomes anemic every day that the prices remain stressed.

The reason for rethinking gold investments is due to the basic portfolio management principle that things can change very quickly and investors have to change with them. Investors have to keep in mind that the deeper the losses get, the harder it is to break even. For example, if an investment has come down 50%, it will have to go up 100% just to break even.

Let’s face it: some gold producers have come down significantly and exchange-traded funds (ETFs), which provide leverage to gold bullion prices, have tumbled downward, too.

If investors hold gold producers in their portfolio, they need to study their actions and make sure they are in “survival mode.” Investors have to dig deep and research if the gold producers they own are trying to cut their costs or are spending lavishly. At the same time, they have to see if the producers have made any changes to their production habits. Are they depleting their cheaper deposits to extract reserves? Are they looking to close their expensive operations? And most importantly, is their cash position increasing or decreasing?

Gold producers that are not taking these actions may face more scrutiny as gold bullion prices remain stressed.

Similarly, if investors hold ETFs that provide leverage to gold bullion’s performance, they need to look deep, assess their risk, and ask if it aligns with their long-term goals. These types of funds ultimately magnify the losses; for example, if investors own an ETF that provides twice the leverage on gold bullion prices, then losses in their portfolio can go very deep if the gold prices go down by 10% from their current level.

“When the going gets tough, the tough get going” is easier said that done. The gold bullion market is facing severe pressures and long-term investors have to act accordingly.

This article Time to Rethink Your Gold Investments? was originally published at Daily Gains Letter

The USD moved sharply to the upside on Friday after NFP report, but moves were not so significant against some majors. EUR/USD per example is still above 1.3290 low while AUDUSD and some other commodity currencies seems to be much weaker.

Today, we are looking at NZDUSD that seems to be bearish for wave E) to complete a weekly triangle. So if wave E) is going lower, then short term opportunities could be on lower time frames. On the 4h chart per example we see five waves down and three up to 0.9413 where rally looks completed after recent broken trend line that is now pointing for decline to a new low and possible even to 0.8100 in this week. Any taken shorts on this pair should have stops above 0.9400.

NZDUSD weekly

NZDUSD 4h

Elliott Wave Education: Triangle Pattern

A Triangle is a common 5 wave pattern labeled A-B-C-D-E that moves counter-trend and is corrective in nature. Triangles move within two channel lines drawn from waves A to C, and from waves B to D. A Triangle is either contracting or expanding depending on whether the channel lines are converging or expanding. Triangles are overlapping five wave affairs that subdivide 3-3-3-3-3.

Contracting triangle

• Structure is 3-3-3-3-3
• Each subwave of a triangle is ussaly a zig-zag
• Wave E must end in the price territory of wave A
• One subwave of a triangle usually has a much more complex structure than others subwaves
• Appears in wave four in an impulse, wave B in an A-B-C, wave X or wave Y in a double threes, wave X or wave Z in a triple threes

Written by www.ew-forecast.com

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