The Journey to High-Confidence Trading Starts Now! Next Stop: Corrective Wave Patterns
Soybeans and Apple stock (AAPL): Corrective patterns signaled opportunities in these disparate markets. Your market could be next!
by Nico Isaac
Updated: February 18, 2022
The last 2 years have been a time of immense global adversity with the most challenging human health crisis in over a century.
But it has also been a time of immense personal growth. The uncomfortable realization of our dependence on others for everything from entertainment, education, nourishment, and income came into stark, swift focus. And with it, how quickly those things can be taken away without warning because of that dependence.
In turn, the pandemic saw an insatiable industry of online self-improvement crash courses emerge on home garden horticulture, podcast making, home building, home schooling, and -- learning to trade financial markets to "ensure a steady livelihood despite economic setbacks."
The problem is, learning to trade isn't like learning to plant tubers in your backyard. It's much more complicated and can't be fully conveyed with mock "trials" or simulated positions. At best, these courses get people in the door, but not seated at the table of real-world practice and risk-management.
That's where our Chief Market Analyst Jeffrey Kennedy comes in.
This year, Jeffrey committed himself to designing the most comprehensive educational track of his 25-year long teaching experience: Trader's Classroom Learning Journey for developing and deepening your opportunity-spotting skills.
For every month of 2022, Jeffrey chooses a critical topic to discuss with his subscribers. Then, as a group, they dive deeper into the components of each lesson, covering it front to back before taking the guided step of applying the lesson to real-world price charts.
February's topic is the 3 "core" corrective Elliott wave patterns: zigzag, flat and triangle. If you know a little about Elliott already, you know corrective patterns are the meandering, choppy, sloppy lulls. But there's a reason Jeffrey loves corrective waves; namely, they give traders time to establish a solid footing before the resumption of the larger trend.
On February 24, Jeffrey hosts a live webinar on corrective waves for his Trader's Classroom subscribers. So, we wanted to till the soil with real-world examples of how Jeffrey used corrective waves to alert traders to recent opportunities in two disparate markets.
-- The Surge in Soybeans --
In the June 2021 Monthly Commodity Junctures "Wave Watch," Jeffrey Kenney (who also edits our Commodities Junctures Service) showed the following chart of soybeans. Prices appeared to be falling in a fourth (corrective) wave off the June 2021 high. If correct, Jeffrey could use one simple guideline of corrective waves to determine not only where the decline might end, but also what type of move would follow. Here, in the June Monthly Commodity Junctures, Jeffrey said:
"I like the idea of higher prices. I believe recent selling will prove to be a corrective move. I like this movement to the downside as an expanded flat fourth wave move. As we get into the next week, I will be looking for the culmination of this fourth move right in this area here between 1230-1210 and then, following that, another advance to the upside to five us a new higher for the year."
This next chart shows how soybean prices followed Jeffrey's analysis to the letter: The fourth wave decline ended in Jeffrey's target area and reversed up in a powerful rally to new highs.
You can learn all about the guideline that enabled Jeffrey to identify where the fourth wave in soybean would end in the February Trader's Classroom Learning Journey.
-- Apple Inc. Thrusts to New Highs --
In mid-2021, Apple stock was about as exciting as watching an apple ripen on its branch. Prices hadn't budged from a rangebound trend in the 10 months between September 2020 and June 2021. Said one May 4, 2021, Yahoo Finance:
"The tech wreck could continue as the reflationary environment will likely, drive up bets on cyclicals.
"Tech has had its day in the sun."
But on June 7, 2021, Trader's Classroom had something different to say about Apple's future; namely, the sun was about to start shining on this tech giant once again. There, Jeffrey showed this chart of the Nasdaq listee AAPL which labeled the months-long sideways price action as an Elliott wave triangle, the most patience-trying of all the corrective structures.
But, as Jeffrey's analysis of Apple made clear, those who wait triangles out are generously rewarded. Here is an excerpt from Jeffrey's Trader's Classroom analysis of AAPL on June 7, 2021:
"We've basically gone sideways pretty much. We're trading 127 now. That's what we were doing a few months ago and that's what we were doing a few months prior to that, and a few months prior to that.
"My best wave count for Apple is that this is a contracting triangle fourth wave and we've still got one more wave coming, a pop higher in wave five for the post-triangle thrust."
The chart below follows the stock's performance from there, where Apple soared 40% to reclaim record highs.
Seeing a triangle on a market's price chart gives you an invaluable advantage -- one that starts with the lessons, videos, and webinars in the February Trader's Classroom Learning Journey.
When it comes to the old fish-learning metaphor, Jeffrey Kennedy has always believed in the power of teaching versus doing for. But he goes beyond that. Trader's Classroom, combined with the year-long learning journey, teaches newbie and veteran traders alike how to catch a fish under any conditions, whether it be with their bare hands or fly reel, in gentle streams or choppy seas.
Join Jeffrey on his year-long learning journey by subscribing to Trader's Classroom now (you get a 20% discount), watch the January and February journey lessons -- and on February 24, join Jeffrey for a free live webinar to review the material and make sure you are prepared to move on to the March study topic.
Lockheed's (LMT) "Waterfall Decline" from Record Highs Fits Elliott Wave "Form" to a T
On April 18, aerospace/military defense giant and Big Board listee Lockheed Martin (LMT) soared to its highest level in its 28-year history. Where "fundamental" analysis was shapeless, Elliott wave analysis saw the stock's current form, and its price future.
Forget the Fed -- Watch the Waves
The Federal Reserve, and to a lesser degree the European Central Bank, have dominated the conversation about interest rates lately. But watch our Interest Rates Pro Service analyst Ivo Zhelev apply textbook Elliott waves to forecast the price of the UK's Long Gilt -- and, by extension, UK interest rates -- without a single glance at central bank statements.
Why a U.S. Recession May Foil Economists’ Expectations
A recent survey reveals positive expectations for the economy by a group of "professional forecasters." Learn why you may not want to bet the farm on that expectation. This chart compares leading economic indicators around the time of past recessions with what's going on now.