AKS Update #2

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6 trading days ago I calculated the mean of AKS as $9.13. This price was derived from the closing price taken over 38 (n) days. The decision of using 38 as a base period was determined through the development of the wave structure. Since we are attempting to trade a wave 3, the time period of wave 1 development is used due to the natural link of impulsive waves.

The price consolidation within the box occurs over 6 days and is expressed in 60 minute bars. The price resistance occurs at $10 and the support level is $9.35. 0.82 is the 50% midpoint between these two levels.

10 or 9.35 +/- 0.82 = 9.175

Our calculated mean was inaccurate by 0.045 over the past 6 trading days. This serves as evidence that when a mean is derived from a non random time period, it can have an implicit role with price development.

Apple Inc 2- Pre-market Trading

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The original 15 minute time frame has been extended to 60 minutes due to the additional data from after-hours trading. Here we can see a better measurement of the AAPL rally with the new after hours low included into the calculation.
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Apple Inc

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Apple Inc (AAPL-NYSE) . The upward 5 wave sequence which all of these stocks share, occurs on a daily time frame, AAPL on the other hand occurs on a 15 min time frame. From the price action occurring 1/15/09 we are able to project a minimum rally up to 86.74. This remains as a sufficient target unless price goes below 80.06.

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UPDATE

AAPL Sell stop low should have been adjusted to $76.11 Rather than $80.06. Not visible on the chart above is the pre-open trading in AAPL. Using the pre-open low would avoid being stopped out unnecessarily.

AK Steel

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AK Steel Holding Corp (AKS-NYSE) - AKS is currently supported by a 50% retracement value located at $9.13. A standard deviation of 1.618 is applied to a look back period of 38 days and we find that AKS is also supported by its mean of $9.13. This stock is down 87% from its 52 week high of $73.07. The first upside target is $14.68 and the second target is $18.53. Notable is the volume in wave “v” of 1. The last time this stock went from $10-$13 the volume was enormous; it was 55% higher than its 10 week average. This indicates that there were a vast number of longs waiting to sell into the rally, and then new buyers gladly took the shares off their hands. Most of the frustrated longs who want to sell between the $10-$13 region have already done so. As such, there should be very little resistance until AKS reaches the first target of $14.68 or the secondary target of $18.53

Currency Shares Canadian Dollar TR

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Currency Shares CDN Dollar Trust (FXC-NYSE) - The FXC is being used as a tool of confirmation. Any divergences between the USD/CAD and the S&P 500 should be considered as a major warning. It is unknown for how much longer this relationship will give reliable signals. It appears as though the CAD will benefit considerably from rising U.S. markets. The FXC is currently supported by a 61.8% retracement value located at 79.88. All daily closing prices have respected this level thus far. Notably is the development of a 2 day Japanese Candlestick pattern known as a “hammer”. The confirmation day following the hammer is sufficient to label this pattern as such. When we apply a standard deviation of 1.618 to a look back period of 28 days we see the FXC supported by its lower deviation of $79.45. The upside target for the FXC is 90.08.

Alexandria Real Estate

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Alexandria Real Estate Equities, Inc (ARE-NYSE) - ARE is currently supported by a 38.2% retracement value located at $53.79. A standard deviation of 1.618 is applied to a look back period of 32 days and we find that ARE is the most expensive stock that is included in this edition of TTS. This equity is currently $4.42 above its mean. The first upside target is $83.85 and the second target is $91.66. The volume development in ARE is almost identical to that which we see in AYE

Allegheny Energy Inc

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As with the previous mentioned equities, Allegheny Energy (AYE-NYSE) also shows significant signs of upward potential. Most notably is the price action which occurred between 12/05/08 and 12/29/08. Here we witnessed the development of a 4th wave triangle which broke out up. This triangles breakout then subsequent price action returned AYE comfortably back to a 38% retracement value of $31.71. A negative factor affecting the AYE rally scenario is that we see a decline in volume throughout its initial 5 wave sequence. While this volume development is not as bullish as it could be, it does at the same time however confirm the 5 wave sequence of having the most volume during W3 and less throughout W5. The first upside target is $39.69 and the second target is $44.77.

Google Inc

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Google is currently supported by a 50% retracement value located at 294.05. It is required that all daily closing prices close above this level, respectively. The same input as before for applying standard deviation indicates that Google is currently between the +/- 1.618 deviations, almost directly at the *mean. The current mean is $301.29 and the last daily close was $299.67. The ability for Google to currently remain at its mean while a stock like NYX resides at its lower deviation is likely the result of Google having a higher beta. The initial upside target for GOOG is $362.33 and the second target is $409.01. These remain sufficient targets unless GOOG breaks below its low of $247.3 set on 11/21/08

NYSE Euronext

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The NYSE Euronext equity issue is currently supported by a 78.6% retracement value located at $20.14. The 5 sequence wave pattern can be identified on a daily timeframe consisting of 37 days. When we apply a standard deviation of +/-1.618 to the closing price of these 37 days, it can be identified that the negative deviation results in a price support level of $20.31. Since NYX is residing at its lower deviation, call options with relatively high deltas are priced very cheap. The 2 main targets for upside potential consist of $34.32 or $40.01. The minimum target should be met with considerable ease if NYX can remain above its last major inflection point of $16.33. This does not imply that a sell stop should be placed below that low, but consider that the support level I mentioned earlier has been successfully tested twice already. There is a possibility that this level may not hold again if tested so adjust your stop loss to the 78.6% support rather than the ultimate low.

Volume Characteristics Very Bullish

An Elliott Wave Principle buy signal has been generated for these companies-

1) NYX
2) GOOG
3) AYE
4) ARE
5) FXC
6) AKS
7) AAPL

While their pattern is much different from that of the S&P or DJIA, this differentiation in pattern leads me to conclude that the prospective rally may not be broad based.

The volume going into declining equities in the U.S spiked to a 38 day high Wed Jan 14th, 09. Not since Nov 20th, 2008 have we seen this much volume flow into negative issues. The Nov 20th volume which was 17% higher, pushed the Dow Jones Industrial Average to a low of 7,506. This last week, the volume spike placed the Dow at a low of 8,140, an amazing 634 points higher than the comparative low. This type of market action is indicative of very large buyers stepping in right now to absorb the selling pressure.

Kondratieff Cycle

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This is the S&P 500 chart which demonstrates the Kondratieff cycle from posting below. Each bar on the chart above represents one quarter (three months). If this cycle is proven to be true then for trading purposes, you should be able to buy equities hand over fist and put a stop loss below the low of 2008 and not get stopped out with a loss. This remains the situation until the S&P fails to break above 1330.

Kondratieff Cycle

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The Kondratieff wave cycle goes through four distinct phases of beneficial inflation (spring), stagflation (summer), beneficial deflation (autumn), and deflation (winter). I have included seasons attached with each economic cycle because of the apparent link between weather and economic fluctuations. The "K" cycle is a 54 year cycle which Nikolai Dmyitriyevich Kondratieff (1892 - 1938) found within capitalist societies. Each 54 year cycle is broken down into three 18 year cycles. Then every 18 year cycle is characterized by three 6 year cycles. Each cycle is uniquely defined by its own set of economic and weather patterns.

The chart above illustrates that we have entered the third & *final* 6 year cycle of an 18 year cycle. Personally believing that these cycle structures are fractal in nature, this signals that significant geo-political events will occur within the next 6 years. The fractal importance of our current cycle can be easily understood by approaching these cycles as though you would a set of Lego Blocks. Since a 54 year cycle has more relevance than an 18 year cycle, the third and final 18 years which complete a full 54 years is extremely significant. Necessary to the "K" cycle, we must have a final 6 year cycle which completes a final 18 year cycle which then completes a full 54 year cycle. It is through the completion of the next 6 year cycle that we complete a full 18 year cycle.

Breadth Analysis Result

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Bullish Breadth Analysis

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