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The strength of the recent recovery seen in both Australian and US markets has not only highlighted the resilience of the DOW and the All Ordinaries, but also served to highlight the importance of being able to capitalise on trading opportunities. As the Trading Tutors Newsletter goes to print, the Australian market is enjoying its seventh straight day of positive gains. – A welcome contrast from the uncertainty experienced throughout much of March. At these levels, markets are poised for a slight pullback. Of course, its never a straight run to the top! As traders, we want to be able to take advantage of opportunities as they unfold and a simple way to do this is to use sector analysis to confirm Elliott Wave trades.
In last week’s FREE Elliott Wave webinar we observed that Elliott Wave counts in ProfitSource were pointing toward a well supported move in the Materials sector (XMJ). We were able to conduct a top-down approach and attendees were able to witness first-hand how filtering to a number of individual stocks within any one sector can lead a number of consistent and profitable trades.
XMJ - the ASX 200 Materials Sector:
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For those of you who own Profitsource, you will see instantly that this is a classic Wave 4 buy setup. The EBOT (Elliott Wave Break-Out Trigger) corresponds with a pullback of the Oscillator and we can see that the wave has retraced almost 50%. With the materials sector showing promise, it was a matter of creating a shortlist of corresponding trades. Let’s take a look at some of the heavyweights in that sector:
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At first glance, one could easily mistake this for the previous chart of the Materials sector. The set-up for BHP is nearly identical to the sector in which it dominates. BHP wasn’t the only promising trade. A number of stocks selected during our live Elliott Wave Webinar returned spectacular results, all on the grounds of basic technical and Elliott Wave analysis. Anyone who traded BHP over this time would be sitting on a tidy 8% profit.
Below is another example of the power of sector analysis and Elliott Wave:
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The chart of RIO Tinto not surprisingly, shows a similar picture. Again the EBOT trigger has indicated a Wave 4 buy and delivered a tidy 6.6% profit.
The markets may once again be setting up for a little short term weakness. Now, these trades will not pay for that next round the world trip, however regular, consistent analysis and a dedication to Elliott Wave, will certainly act to bolster your trading account.
For those who haven’t yet enrolled in the FREE Elliott Wave Webinar, do your trading account a favour and register today.
Stay ahead of the game,
Lachlan McPherson
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