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| Elliott gave me the go, STZ gave me some Sidestepping Part 2 |
| Saturday, December 30, 2006 |
PLEASE REMEMBER THIS IS FOR EDUCATIONAL PURPOSES ONLY!
Continued from Part 1
STZ (Constellation Brands)
We left off with the chart from 10-16-06, but I usually look for some form of directional move after the signal sign. ProfitSource divides its precomputed scans into two different types. The ones with the funky looking red and green triangles fall under the Trigger category and the ones with the eyeglasses fall under the Watch category.
 Trigger Indicators : These can be long or short Elliott indicators depending on your category of scan, but these are new opportunities that have recently been found.
Watch Indicators : If the "Trigger Indicated" opportunities stay in the defined Elliott Wave criteria for more than one consecutive trading session, they move on over into this category. According to the ProfitSource manual this indicator also applies to " all other results of other precomputed scan types". I'll try to get some more info on that...Note to self.
So which one do I go with? I think the consensus is still teetering back and forth, but on this particular trade I waited for STZ to show me those geeking looking glasses. Mostly, I think which one you choose will depend on the individual. Note to Self: What has been the historical performance of entering a position from the initial Trigger vs. Watch.
 Pulling the chart back up, I noticed a couple of things. First, since around the beginning of August 2006 until the beginning of October it was on a steady climb. Secondly, at the beginning of October it took a nose dive faster than a cocaine heartbeat. Thirdly, from the day after the nose dive, it has been holding its own. So what did I make of all this? To be honest, I didn't make anything out of this. Looking back at the start of the climb, I can see that there was some news generated about the Consolidating their operation, and making it streamline on August 2, 2006. There was some other news back in July 2006 about a joint venture with Grupo Modelo. Using some technicals, you could see that the 50/200 SMA was a bullish cross around August 8, 2006. What about the nose dive? The nose dive happened when STZ was in-line with expectations, but 2nd Qtr net income dropped on higher sales. What about the "holding its own" right now? Well, thats were we are.
My next step was figuring what my Maximum Risk, Maximum Reward would be on the trade. If there's one tool I like the best in ProfitSource, it has to be the Risk to Reward tool. Click on the tool, click on your entry price, click on your stop price, and drag and click for your target and time criteria. Ahhhh.....I'm in charting heaven! But before I can use that, I need a target..don't you think! Well maybe that's were the Range Projector tool might help out. The Range Projector gives me a probable price target and time frame that is statically likely based upon swing levels and turning points. Note to Self: That seems like a mouthful, why don't you explain the settings and how they work...maybe you need to learn a little more
 Here is the chart after the range projector and risk to reward tool has been applied. The one thing that I didn't notice for the longest time was the three vertical ticks on the Range Projector bar. The Range Projector bar on the screen capture is green. The first tick (to the left of the screen) indicates the shortest time frame that the price is expected to be achieved. The Second Tick is the average time frame, and the Third tick is the longest time frame. This can be very useful depending upon your trading style.
Now that we have determined my Risk to Reward and time frame, the question is still..should I take the trade? Even if I do take the trade, what strategy will I take in this trade. Will it be an option trade, a stock trade, some form of spread. One thing I do know, if you don't have your questions answered before getting into a position, your backwards looking 20/20 specs will answer it for you.
To be Continued in Part 3
Fibonacci
PLEASE REMEMBER THIS IS FOR EDUCATIONAL PURPOSES ONLY!Labels: Elliott Wave, Part 2, Profitsource, Wave 4 Buy |
posted by Fibonacci_Trader @ 8:47 AM   |
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