BAC, C, SBUX, TWTR updates 01/24

BAC: Here’s THE example of extended waves.  (C’s next). Let me explain, in a “normal” market (define normal…) a 5th wave equals the length of the 1st wave; in this case the “v=i” arrow. Early December price had reached that target in a clear 5-waves fashion, and where the 5th wave reached also the ideal (green) 200% extension of those 5 smaller waves. Normally that is enough for this larger 5th wave. But no, not in this market. What happened was a subdividing larger intermediate-v wave. Even (green) minor-2 was extremely shallow barely reaching 23.6% of all of (green) minor-1. All this is to show that markets can extend and which simple cannot be forecasted before hand. We only KNOW they can happen. Hence, why prudent stops should be used that allow you to continue to move along with price. Bottomline: price is now ideally in minute-v of minor-3. Due to the extension it is hard to forecast where minor-3 will end: is it the 2.382x, 2.618, 3.382x, etc extension or? Thus we simple have to let the market sort it out. But we know it’s close based on the waves. Stops can now be set at $30.

BAC.png

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C: Same story as BAC. Also here we see price first reach the ideal 5=1 extension for minor-5, in a 5-waves fashion. Textbook to suggest wave-5 topped; especially since the internal smaller waves adhered nicely to Fib-extensions and retraces. But, what we got next is a sloppy retrace and now already firmly at new ATHs. These are price movements that cannot be predicted before hand. But, here we are and what we have to content us with what we have, which is either an EDT is forming, or a standard impulse. A break over the green upper trendline will tell us the latter, while a bump and fall back to the lower trendline (See FB for example) the former. Regardless, higher prices are still to be expected over the next few weeks. Stops can now be raised to $74.

C daily

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SBUX: The whole advance off the late-August low has been sloppy and overlapping. Doesn’t mean one can’t make money with it, just means that whipsaws have been prominent. If you’d simple bought late-November when it closed above its 200d SMA, you’d be up 7%. Not much, but still: only buying when price moves above the 200d SMA is more often than not profitable. Though is it time to start to exit the position? From a good source we know big money is buying puts (see here) as SBUX is to report earnings tomorrow 1/25 AMC. Now it can simple be a hedge to larger long positions, but because the advance has been so sloppy (unless it’s a serious set of nested 1st and 2nd waves) it certainly looks better as a larger b-wave that is close to a 76.4% retrace of the prior a-wave. Hence, if long and with possible only being up a few percent points it would be IMHO prudent to scale back at a minimum as earnings reactions can be quite harsh (see $UAL today for example which is down 11%). It’s better to wish you are in, then to wish you are out. If there’s a nice positive reaction to earnings you can always re-enter: rather safe then sorry.

SBUX daily

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TWTR: Counts best as being in minor-4 of intermediate-iii. Now price did drop below the 50d SMA, which is a warning sign and although the internal waves do count impulsive (none-overlapping), I still find the whole advance off the April-low a bit sloppy. Just doesn’t really have that nice clean look of an impulse. But, lets just say that’s just me and we’ll keep that nagging feeling on the back burner for now. It does mean that price will need to start turning back up soon again. Support is in the $22-$21 zone and that should hold. If not, my nagging feeling will become much more prominent. A good up day tomorrow will likely usher in an A.I. buy signal. If it does I will TWEET it. How to trade this? If long from lower levels, stops can be raised to $20. Aggressive traders should have exited longs already on the recent drop, and should wait to re-enter on a buy signal.

TWTR daily