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Have you found a stock or commodity that you just love? I’ve had a few love affairs on my trading journey and the latest is with QBE. It has provided terrific examples of so many of our lessons, some of which I began highlighting in Trading Tutors in early February. We are now seeing some important time and price lessons that will be interesting to those working their way through their Platinum studies.
The first lesson is using time trend analysis to reveal a time and price balance in QBE. Chart 1 illustrates where it has pulled up at 100% in price and 200% in time of the run down from October to December, 2012. Note the 47- and 90-day periods also provide excellent Time by Degrees harmony. Chart 1: QBE Daily Bar Chart with Time and Price Balance
click chart to enlarge
Put up a chart of QBE and take a look at the run up from December. If you have been practising recognising sections of the market, you will notice there have been three equal sections in price in that run up. Chart 2 also shows how the retracement against the main trend each time has been just short of 50%. Chart 2: QBE with Sections and Retracements
click chart to enlarge
Now let’s look back to January, where my last article left off. An island reversal was formed on 29 January, around a 42.5% retracement. The gap up on the 30th gave a long the opener’s entry, with another possible long entry on the breaking of the highs of 21 January and 1 February. Once 100% of the first range out was reached (note the cluster with the ABC on Chart 3), this was the signal to tighten stops or to take profits. Chart 3: QBE with Price Cluster Giving Price Target
click chart to enlarge
It was also possible to stop and reverse at this point and watch for a similar retracement to 42.5% of the bigger range. If you did, the strong open close reversal on 26 February was clear evidence that QBE was starting the next section. It has now repeated 100% of the first range out again - in one swing - and this top clusters with the October, 2012 top, as well as hitting the 1x1 calendar day angle from the January, 2012 low. Check out the key reversal signal day that formed on 5 March and note that QBE couldn’t close above that angle. Note how this angle has worked previously. Chart 4: QBE with 1x1 Angle
click chart to enlarge
A first lower swing top has formed today (Wednesday, 13 March), which just happens to be the same date as the SPI low in 2003. As an aside, I suggest you check out the market action on the SPI from that period.
Perhaps we could expect another 42.5% retracement before either a fourth section forms or maybe the start of a bigger picture section to equal the whole of December to 5 March. In fact, if you look at Chart 5, there are a few places we might watch for QBE to retrace, including the cluster of the 50% level with the low of 26 February and the gap that formed back in November. All of these are illustrated in Chart 5, along with the 1x2 angle. Chart 5: QBE with Price Cluster
click chart to enlarge
What terrific examples of time and price harmony combined with simple trading entries and exits QBE has provided! I suggested in January this might be a great stock to do some more work on. If you haven’t yet chosen a market to specialise in, this could be a great learning experience. You might not fall in love as I have done but I doubt it will break your heart!
It’s the Journey
Lauren Jones
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