| Technical Analaysis OIL OIH HANS OMG JOYG HMY |
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| Tuesday, December 26, 2006 |
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Weekend Update - $WTIC VS. OIH, HANS, HMY, JOYG & OMG Charts
Performance Comparison Between the OIL ($WTIC) and The OIH
I have discussed this chart many so many times, but at the risk of sounding like a bore, I just want to reiterate that there is bullish divergence in the performance of Oil the commodity versus the OIH / energy stocks. Please review previous video updates of this chart. Every single time this divergence appears in the Commodity versus the OIH, the stocks themselves outperform the commodity (see the green OIH is outperforming the Blue OIL - it is bullish). The OIH bottomed in October of last 2005. Now if you look at the chart this year you can see that the OIH retested the OCT '05 lows in a wave 3 to wave 4 counter trend pullback. The correction this year in the OIH also ended in October. The OIH then reversed course and has rallied all the way into mid December . Now however, now the OIH and energy stocks are experiencing a short term counter trend pullback, which is typical action for the end of December. You can see that the OIH is forming a bull flag with this pullback. When $WTIC starts moving up again, the OIH will also reverse upwards, and both the commodity and the OIH will continue their primary trends. When OIL starts to outperform the OIH it will be time to exit the energy stocks. Until then the sector is bullish.
Hansen Natural Corporation - (HANS) - Daily and Monthly Charts - Optionable
Now let's take a look at the Daily chart of HANS. As you can see HANS is in a bullish continuation wedge pattern. Hans has broken out above the wedge and is in a 123 bullish trend reversal. If you look at the moving averages you can see that they had a bullish triple moving average crossover at the beginning of December which occurred on heavy volume after the breakout. All of the indicators and oscillators are confirming the early December breakout with bullish divergence. Entry for HANS was on October 27th at $33.22 with a price target of $40.00 where it will fill the gap. Furthermore,on December 6th, the stock pattern scan flagged HANS with a price target around $58.00 within the next 107 trading days. Entry was triggered by the stock scanner on the 4th of December. If you look at the monthly chart you can see that HANS is up 21.58% this month. On the monthly chart, HANS has maintained it's bullish uptrend channel, and is now in a wave 5 up move.
Harmony Gold Mining Company - (HMY)- Weekly Chart - Optionable
HMY is in an ascending triangle pattern. As you can see by looking at the chart HMY has successfully completed it's wave 3 to 4 pullback to the long term uptrend line. It is now in it's wave 4 to wave 5 move. HMY has just had a bullish Aroon cross on the weekly. This cross has caused a pullback on light volume to the 13 EMA, which it held. In addition, the indicators and oscillators are bullish and moving up along with price. If you have extra money and do not own HMY, I am reiterating a buy here.
JOY GLOBAL INC- (JOYG)- Daily Chart - Optionable
As you can see JOYG is in a bullish continuation wedge pattern. Hans has broken out above the wedge and is in a 123 bullish trend reversal. If you look at the moving averages, you can see that they have crossed over and are trading in a bullish fan. All of the indicators and oscillators are confirming the early November breakout with bullish divergence. It is currently in a 3 day cycle pullback to the 13 EMA and forming a bull flag. Entry for JOYG was on December 19th at $49.00 with a price target of $76.00.
OMGroup, Inc. - (OMG)- Daily Chart - Optionable
OMG is a medium risk ethanol swing trade. The daily chart of OMG illustrates that it is in an ascending triangle pattern. As you can see, it has completed a wave 3 to 4 pullback. It has held it's long term uptrend line with this recent pullback to form a possible irregular flat at $44.18. The ascending triangle pattern suggests a minimum price target of $65.00- $75.00 from an entry around $50.50. Furthermore, you will notice that the indicators are not quite, but very close to a 1-2-3 bullish trend reversal. This is a rocking' chart and that is why I suggested it, albeit a little early, and it is poised to go higher in the long term.
Edited by Daisy
Andrea Victoria Friend aka Daisy
Editorial Assistant for Trending123.com
daisy@trending123.com
Stock Charts are nothing more than a collection of sticks on a grid that allow our brains to see what group think perceives an equity, index, currency, or commodity is currently worth on a minute to minute basis.
That “group think” shows up in the form of geometrical shapes and trends. Those geometrical shapes we call patterns. Those trends we call bullish and bearish. Because people are human and humans experience the same types of feelings, they are expressed throughout the day in the form of buying and selling stocks, currencies, or commodities over and over for a variety of reasons.
Those patterns measure the distance as to how far the collective masses feel something is worth. The reasons are typically emotionally related and often you will hear the words fear and greed as the two main culprits. The words “bullish and bearish” are not feelings but definitions of the collective “group think” for example……..
Bullish is “a positive interpretation of the behavior of an equity or the market as a whole based on an extended rise in price.” Bearish would be the opposite but both are “adjectives” describing the opinion that a stock, or a market in general, will decline and/or rise in price. They are not “feelings” but “adjectives”.
Bullish and Bearish as mentioned above are also trends. And the reason why they are trends is because price action is not static, it is constantly moving, the movement has a definite direction and the direction is what tells us which way “patterns” (geometrical shapes) will break. In simple terms “up or down”.
The rate of speed in which price action moves depends on what we call the “wave structure”. Wave structure can come in two forms “impulsive or corrective”. Those two forms can be found in rising and declining markets. You might have heard the word “parabolic’ that is what traders often call something that rises so fast that it’s actually “curved in a way that is not symmetrical”. (that is the very definition of parabolic by the way). I often have said “parabolic’ is not a pattern but something we can label as impulsive. Stalling or consolidating are words we use to describe corrections on a “micro scale”. A waterfall (a steep descent) or downdrafts (unstable, or distribution) are other (adjectives or verbs) we use to describe something in a correction but maybe on a more “macro level”.
When analyzing Direction (the trend) Speed (impulsive or corrective) and Distance (geometrical shapes) what we really are saying is
- Which way
- How fast
- How far
- Corrections are always against the trend
- Impulse or Motive waves are always what define the trend
- According to wave structure we are always moving in 3's and 5's with variations (keeping in mind that every wave has siblings) same directional waves of the same degree within a larger wave)
A summary of Rules and Guidelines for Waves
Impulse Rules (Examples)
1. An impulse always subdivides into 5 waves
2. Wave 1 always subdivides into an impulse or rarely a diagonal
3. Wave 3 always subdivides into an impulse
4. Wave 5 always subdivides into an impulse or a diagonal
5. Wave 2 always subdivides into a zigzag, flat, or combination
6. Wave 4 always subdivides into a zigzag, flat, triangle or combination
7. Wave 2 never overlaps wave 1
8. Wave 3 always moves beyond the end of wave 1
9. Wave 3 is never the shortest wave
10. Wave 4 never moves beyond the end of wave 1
11. Never are waves 1,3 and 5 all extended
Guidelines
1. Wave 4 will almost always be a different corrective pattern than wave 2
2. Wave 2 is usually a zigzag or a zigzag combination
3. Wave 4 is usually a flat, triangle or a flat combination
4. Sometimes wave 5 does not move beyond the end of wave 3 (in which case it is called a truncation)
There are many more guidelines but this is a small step on the road to knowledge
There are rules and guidelines for everything
Examples
1. Diagonals have rules and guidelines which also fall in the motive wave category
2. Corrective Waves fall into 3 types of triangle formations
A. Contracting Triangles
B. Expanding Triangles
C. Barrier Triangles
3. Within corrective waves we have
A. Zigzags
B. Flats
C. Combinations (Combinations comprise two or three corrective patterns separated by one (or two) corrective pattern(s) in the opposite direction labeled X (The first corrective pattern is labeled W, the second Y, the third if there is one, Z.)
Learning the basics of Corrective and Impulse Wave Structure is essential into understanding "speed" and plays a small role in distance when it comes to corrective patterns.
No market approach other than the Wave Principle gives as satisfactory an answer to the question, "How far down can a bear market be expected to go?" The primary guideline is that corrections, especially when they themselves are fourth waves, tend to register their maximum retracement within the span of travel of the previous fourth wave of one lesser degree, most commonly near the level of its terminus. Note in Figure 23, for instance, how wave 2 is drawn ending at the level of wave four of 1.
Elliott noted that parallel trend channels typically mark the upper and lower boundaries of impulse waves, often with dramatic precision. Analysts should draw them in advance to assist in determining wave targets and to provide clues to the future development of trends.
To draw a proper channel, first connect the ends of waves two and four. If waves one and three are normal, the upper parallel most accurately forecasts the end of wave 5 when drawn touching the peak of wave three, as in Figure 23. If wave three is abnormally strong, almost vertical, then a parallel drawn from its top may be too high. Experience has shown that a parallel to the baseline that touches the top of wave one is then more useful.
The question of whether to expect a parallel channel on arithmetic or semilog (percentage) scale is still unresolved as far as developing a definite tenet on the subject. If the price development at any point does not fall neatly within two parallel lines on the scale (either arithmetic or semilog) you are using, switch to the other scale in order to observe the channel in correct perspective. To stay on top of all developments, the analyst should always use both.
Within parallel channels and the converging lines of diagonal triangles, if a fifth wave approaches its upper trendline on declining volume, it is an indication that the end of the wave will meet or fall short of it. If volume is heavy as the fifth wave approaches its upper trendline, it indicates a possible penetration of the upper line, which Elliott called “throw-over." Throw-overs also occur, with the same characteristics, in declining markets.
VOLUME
In normal fifth waves below Primary degree, volume tends to be less than in third waves. If volume in an advancing fifth wave of less than Primary degree is equal to or greater than that in the third wave, an extension of the fifth is in force. While this outcome is often to be expected anyway if the first and third waves are about equal in length, it is an excellent warning of those rare times when both a third and a fifth wave are extended.
At Primary degree and greater, volume tends to be higher in an advancing fifth wave merely because of the natural long term growth in the number of participants in bull markets.
The reasons “why” and the question "what time” are something we can’t tell you in advance but we can shed some light on both as to the reasons behind what we don’t know.
As to why people buy and sell it’s because they do it to make and lose money (this is the “why” portion of the question that we don’t have the answer to). From the average Joe to the most brilliant of people they make good and bad choices every day in the stock market. It’s identifying through trends, patterns, and waves what choices they will make before they make them and then profiting from it.
OIL/OIH
HANS DAILY
HANS MONTHLY CHART
HMY WEEKLY CHART
JOYG DAILY CHART
OMG
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