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| Primalgreed.com – DHI my housing Dilemma – Final Stats |
| Monday, February 12, 2007 |
PLEASE REMEMBER THIS IS FOR EDUCATIONAL PURPOSES ONLY!
Continued from Part 3
The DHI opportunity door is finally closed. The stop of $2.00 or $200.00 per contract on the remaining half of the position was met on 02-07-07. It’s interesting to note that the Trailing stop function of Profitsource had my stop placed at about $29.18 (equity price) which is around the original $29.05 TAPP. If you remember, the $29.05 TAPP was given when we first started looking at the trade. Here is a snapshot I was seeing on 02-07-07.
Is everything crystal clear now? Obviously not, but it reminds me how easy it can be to over analyze something. There are numerous tools within Profitsource, but you may only need a few of them to accomplish your purpose for a given stock or option strategy. I typically stay with a handful of indicators that I use over and over again. Of course, indicators that I use can be completely different than the ones you become comfortable with.
Before I pull the chart up from 02-07-07, I want you to notice something else from 02-05-07. You can notice that the Elliott Wave 5 Peak has already been met on 02-02-07, and on 02-05-07 the price action has started to move away from the peak. This by itself cannot guarantee a future direction, but as time passes, the wave count will have to correct itself one way or another.
Moving forward to 02-06-07, we can see the Elliott Wave pattern has relabeled. The Elliott Wave 5 Peak has now changed to an Elliott Wave 3 Peak. The Pattern seems to leave me in a position where both the previous Wave 5 peak and the relabeled Wave 3 peak are indicating a downward directional movement.
The move downward continues on 02-07-07 where the stop was executed.
And finally, the most current chart as of 02-09-07 with the initial entry and exit points
Ok, here are the final stats for the DHI trade.
1. DHIEF MAY 30 CALL was bought at a debit of $0.95 or $95.00 per contract on 01-16-07
2. Half the position was sold at a credit of $2.40 or $240.00 per contract on 02-01-07
3. The remaining half was sold at a credit of $2.00 or $200.00 per contract on 02-07-07
4. Commission prices were $12.95 per transaction. Entry + Half exit + Other Half gives a commission total of $38.85.
5. Assuming a minimum contract amount of 2, the total debit would be $228.85 ($95.00 times 2 + $38.95 commission)
6. Assuming a minimum contract amount of 2, the total credit would be $440.00
7. Assuming a minimum contract amount of 2, your profit would be $212.00 or 92.6% ROI.
8. Assuming a minimum contract amount of 10, the total debit would be $988.85
9. Assuming a minimum contract amount of 10, the total credit would be $2200.00
10. Assuming a minimum contract amount of 10, your profit would be $1211.15 or 122.4% ROI
No matter how many contracts you traded, I can live with a double.
Later
Fibonacci
PLEASE REMEMBER THIS IS FOR EDUCATIONAL PURPOSES ONLY!
If you like the blog, visit the forum at www.Primalgreed.com Let's Network!Labels: Elliott Wave, Final Stats, Profitsource, Wave 4 Buy |
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| Primalgreed.com - DHI my housing Dilemma Part 3 |
| Friday, February 2, 2007 |
PLEASE REMEMBER THIS IS FOR EDUCATIONAL PURPOSES ONLY!
Continued from Part 2
From my last post, several other indicators were added to the mix. These included Bollinger Bands, DMI, RSI, and MACD. The risk to reward tool in Profitsource was also used to confirm a projected target, and establish a possible entry and exit plan based upon the stock price. Finally, an option strategy was chosen, and the risk to reward of the option contract was compared to the risk to reward of the underlying equity. The options risk to reward and volatility view were done using Optionetics Platinum service.
My original entry point was at $0.90 per contract or $90.00. The defined stop was at $0.45 or $45.00, and the point of a half position profit-taking was at $1.85 or $185.00 per contract. That being said, my order was filled at $0.95 per contract.
 Looking back at the chart on 01-23-07 you can see that DHI made a considerable move to the upside. DHI had reached a intraday high of $29.38 and the option intraday was as high as $2.60 or $260.00 per contract. Two other things worth noting is the Elliott Wave 5 formation from the high, and the breakthrough of the $29.05 TAPP. Normally, this would be a point at which I exit the trade, but a couple of things prevented this. First, I had set my initial exit for profit-taking higher than the $2.60 of the intraday. Secondly, greed had set-in by the time I saw the contract price reach $2.60, because I still believed DHI had a considerable move to come, so I moved the stop-loss point up to the trailing stop point of around $27.41, and left the profit-taking exit the same. If you haven’t used the trailing stop function in Profitsource, I would suggest you give it a try and see if it works for you. The only gripe I have is that you can’t pick a entry date from a mouse click. This forces you to enter the date in manually.
Just a side note: After realizing my undisciplined habit of greed, I immediately started watching one of my favorite recorded episodes of Deal or No Deal. I keep this around for just such an occasion. It reminds me of how easy it is to make a winning, sure-thing trade, into a big loser. Fortunately, this time, I was saved from my own stupidity even though the markets are not generous to the hard-headed.
On 02-01-07, I exited half the position for a credit of $2.40 or $240.00 per contract, and will the let the rest of it ride as long as it doesn’t go much below the $2.00 or $200.00 range or becomes to close to expiration. At this point, the initial investment has doubled, and the open-half is essentially a free trade. As you can see, the Wave 5 formation has moved up as well.
Continued in Final Stats
I will give the final stats later.
Later, Fibonacci
If you like the blog, visit the forum at www.Primalgreed.com Let's Network!
PLEASE REMEMBER THIS IS FOR EDUCATIONAL PURPOSES ONLY!Labels: Elliott Wave, Part 3, Profitsource, Wave 4 Buy |
| posted by Fibonacci_Trader @ 8:44 AM Add to: DiggIt! | Del.icio.us | blink it | |
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| Primalgreed.com - DHI my housing Dilemma Part 2 |
| Monday, January 29, 2007 |
PLEASE REMEMBER THIS IS FOR EDUCATIONAL PURPOSES ONLY!
Continued from Part 1
Greetings all,
From the previous post, using ProfitSource, I first came across DHI on 1/12/07. The company’s profile is listed here: http://finance.yahoo.com/q/pr?s=DHI
When we last left, I was confirming the retracement levels using both the retracement tool and the wave extension tool. I hope you have tried out both, they have different advantages and disadvantages. I also like to look at several other indicators to get a better feel of “The Picture” we talked about before. From the screen shot, you can see I have included Bollinger Bands, DMI, RSI, and MACD.
First, the lower Bollinger Band was broken a day or so before the EBOT trigger, which may signal an upward directional movement. Second, will also note that the DI+ has crossed the ADX. Third, the DI+ has also crossed the DI-. Fourthly, the RSI has crossed the RSI MA. Fifth, the short MACD has crossed over the long. After saying all that, did you look back on the circled part of the chart? It seems like these same patterns were repeated before, and followed with an upward movement. With all these considerations at hand, I decided to figure my risk to reward.
If there’s one thing that I like about the Profitsource software…it’s the risk to reward tool. It tends to save me a lot of time scanning through potential trades. Saying that, after looking at tons of charts, I already new that this chart would fall into the range of my risk to reward profile before applying the tool.
After applying the Range Projector, my initial target is 31.65. The TAPP projection is at 29.05. I also applied the wave extension tool for my 38.2% and 61.8% projections. This left me with a zone around the TAPP. The zone is marked off with the yellow square being sliced in half at 29.05, the lower part of the square at 28.04 (38.2%), and the upper limit of the square at 29.92 (61.8%). The reason why I do this, is not to ignore the Range Projectors Target, but to give me a preliminary target of possible strategy change. My risk to reward tool gave me my stop price of 25.05, an entry point of 26.34, and a timestop of Feb 12, 2007.
From here I decided to go with a straight call option. The risk to reward is 4.14 for the stock, and the May 30 Strike gives a risk to reward of 4.50. I should have compared other strikes for a greater risk to reward…but I didn’t! (Note to self: You’re an idiot). Looking at the options graph you can see the potential profit of $250.00 and the potential loss of $50.00. 250 divided by 50 gives my risk to reward of 4.50. The model price was at 0.88 with a bid/ask of 0.85/0.90 (remember you have to multiple that stuff by 100). I went with the 0.90, defined a stop at 0.45 and an exit of half the position at 1.85.
What about the Volatility? Here that view as well.
I'll wrap it up in the next post, It's almost trading time
Continued in Part 3
Fibonacci
If you like the blog, visit the forum at www.Primalgreed.com Let's Network!
PLEASE REMEMBER THIS IS FOR EDUCATIONAL PURPOSES ONLY!Labels: Elliott Wave, Part 2, Profitsource, Wave 4 Buy |
| posted by Fibonacci_Trader @ 5:57 AM Add to: DiggIt! | Del.icio.us | blink it | |
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| Primalgreed.com - DHI my housing Dilemma |
| Sunday, January 28, 2007 |
PLEASE REMEMBER THIS IS FOR EDUCATIONAL PURPOSES ONLY!
Greetings all,
Using ProfitSource, I first came across DHI on 1/12/07. For those of your unfamiliar with the company, DR Horton is a homebuilding/financing company listed on the NYSE. For a company profile you can look here:
http://finance.yahoo.com/q/pr?s=DHI
What is interesting to me, is that the media has been bombarding our senses with the doom and gloom of the real estate market for quite awhile. I've always been a "against the masses" type of guy, but I've also made the mistake of being "against the general market". Here lies the dilemma. Do I really think the housing market is all doom and gloom, or do I think the big boys are looking at opportunity. For now, here's the chart I saw on 01/12/07:
 For me, I don't feel frisky about pulling up a precomputed scan, selecting a risk to reward ratio that's acceptable and then placing the trade. I think their are several questions that need to be asked before moving forward.
1. I know that Profitsouce will pull up these scans by criteria already set, but I still like to confirm these criteria by hand. At the very least, it allows you to become more familiar with the software tools.
2. Before I go through all that business, "THE PICTURE" still has to be right (i would say feel right, but that has got me in trouble before). In my experience, the closer the chart looks like a true Elliott wave pattern, the closer it seems to be in reality. All those charts with huge swings, gaps up and down, etc have their place, but that volatility thing can make or break ya. There's nothing worse than seeing a trade that goes in the intended direction, but the option's price is stagnant or decreases. Being primarily an option trader Volatility has become my best friend and my worst enemy. And since I'm looking at this from the biased eyes of an option's trader, I still have to pull up a risk graph from another source to see if it's Picture is inline with my overall strategy.
3. What is the long term picture looking like. It's great to take a snapshot of few weeks of data, but where has the price been before. This is always important to analyze points of support and resistance. It also lets you get an idea of how big a swing will effect the price based on past events, earnings, news, upgrades, downgrades, etc. The first chart was a daily graph from a small time frame and the next chart is the weekly view over several years.
Notice how the wave patterns for the long-term and short term are strikingly different.
4. Wow, did you notice the TAPP's. The first screen shot cut it off, but its 29.05 by March 14,2007. The weekly chart has a TAPP of 16.03 by August 10,2007. Well which way is it going to go, thats a range of 13.02. Maybe none, maybe both. I do know that once you start applying the range projector tool, the tool itself will have no directional bias in its forecasting. Don't take my word for it, check out the Profitsouce tutorials and they will say the same thing. So if we go back to the original daily chart we can have two possible targets to view. Look to the left:
5. Overlaying the 21, 50, and 200 SMA, you can see several different results. I would classify myself as a short to mid-term trader so the 21 day SMA works fine for me. This allows me to get a feel of the short term movement over the last 3 weeks. The 50/200 SMA is one I almost always use primarily because everyone else does. Sometimes, it feels as though the 50/200 SMA becomes a self-fulfilling prophecy... at least in the short-term. Whether it truly predicts the price movement in the long-term is less important to me than whether the majority of investors BELIEVE it predicts the price movement. If the antelope herd is being chased up hill by a lion, so be it...even if the lion turns out to be a....monkey..no...a giraffe...no...probably another ANTELOPE. You can also see that the EBOT has been satisfied. Here's the view:
6. I had mentioned earlier about confirmation of the EW pattern early. Next we will confirm that the that the ratios look right. Just a side note: I always like to perform a custom Data on Demand of a least 5 years to make sure my data doesn't have any holes in it. Well, how much should Wave 4 Pull back, and what tool can I use. For the EW4B Pattern, the range is usually between 24-62%. I use two different tools to perform the confirmation and you can use either one. The first one is the Fibonacci Retracement tool and the second is the Wave extension tool. The first screen shot includes the tools, the other two represent the final display of the two tools, and how they look a little different.
Fibonacci Retracement Tool and Wave Extension Tool in the Drawing tools Menu
Application of Fibonacci Retracement Tool on Price Chart
Application of Wave Extension Tool on Price Chart
Check back with me later....I'm not finished yet
Continued in Part 2
By the way, the STZ trade posted earlier was a losing trade and I'll finish it up too
Later, Fibonacci
If you like the blog, visit the forum at www.primalgreed.com Let's Network!
PLEASE REMEMBER THIS IS FOR EDUCATIONAL PURPOSES ONLY!Labels: Elliott Wave, Part 1, Profitsource, Wave 4 Buy |
| posted by Fibonacci_Trader @ 1:53 PM Add to: DiggIt! | Del.icio.us | blink it | |
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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 Add to: DiggIt! | Del.icio.us | blink it | |
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| Elliott gave me the go, STZ gave me some Sidestepping Part 1 |
| Friday, December 29, 2006 |
PLEASE REMEMBER THIS IS FOR EDUCATIONAL PURPOSES ONLY!
STZ (Constellation Brands)
I thought it might be interesting to look back at a position that has been one of patience. Usually, this type of patience is more than I'm willing to wait. I don't usually see myself as a long-term investor, more like a short to mid-term trader.
When I first looked at this position, I have to admit, I really didn't know who they where, what they did, etc. Of course, why does "knowing what they do and who they are" mean anything to the technical trader? To some it does, to others it doesn't. For me, I like to know a little something about the company (at least it doesn't make you look like a fool if someone asks you about it).
I did read up a little on the company. Went to their website, looked at the SEC reports, scanned for insider transactions, then it was on to the charts and indicators.
Lets go into my ProfitSource now. Although I have a chart saved with all the relevant info from back then, I thought it might help myself and maybe others to show some progressive steps. Here we go.
Here is a current shot of the software, but I want to look back to the date I first started looking at the position. In order to do that, I need to change the date in the software from the current date.
For those of you still moving around in ProfitSource, the field is highlighted in the screen shot. All you need to do is Uncheck the "Use current data" checkbox, click on the drop down arrow after the date, and select which date you want to go back to. I first started looking at this position on 10-16-06, so we will change it to that.
 Now that the date has been changed, we can see that STZ is listed under a Wave 4 Buy signal. This is the first day that STZ appeared on the the precomputed list of ProfitSource. Pre-computed you say, yes precomputed. HUBB, the providers of ProfitSource, provide scans of the entire market for Elliott wave set-ups. When I say provide, I mean that all the data can be downloaded without you having to do the scans yourself. This does not always give the best results, but it doesn't always give the worst either. Like I send in a previous post, "Elliott Wave is not the only thing" so don't think its your pathway to riches. It is just another indicator that has helped me understand the market. More times than not, I am overlaying Elliott wave with other indicators. Note: Watch out for overlaying...it can drive your eyes buggy.
Continued in Part 2
Fibonacci
PLEASE REMEMBER THIS IS FOR EDUCATIONAL PURPOSES ONLY!Labels: Elliott Wave, Part 1, Profitsource, Wave 4 Buy |
| posted by Fibonacci_Trader @ 11:47 AM Add to: DiggIt! | Del.icio.us | blink it | |
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