GLO (Globe Telecoms)
Monday, March 23, 2009 19:19
It’s been since I looked at our local market’s chart. Nothing much is going on, just floating sideways. But that’s better than the market going down some more.
From this moment on, let us talk about stocks that we could buy for the long term. Stocks that we could accumulate at “cheap” prices and then sell once another bull market comes along.
The trading system that I’m going to be using is the Harmonic Trading System. I suggest you look up the book “The Harmonic Trader.” It was introduced to me by the Forex Master, Mr. Warren Mira. I’ve been doing my own back and forward testing on the system and I’m doing pretty well with it in my forex trading.
Let’s move on to our stock pick: GLO.
Let’s look at the weekly chart. As we can see, from the start of the bull market in 2003 to the end in early 2008, it has already completed the AB=CD pattern (details in the book mentioned above). AB doesn’t have to exactly equal to CD, “almost” is good enough. Another thing to consider is the length of time it took to complete the waves. AB took 2 years to complete, CD took also took 2 years. Is it just coincidence? I think not, these patterns happen all the time. I’ll give you more samples later on.
Buying Low, Selling High
So how do we proceed? We buy at 61.8% or 78.6% Fibonacci retracement. The latter is the last support that the bulls have to defend. Now at what price do sell? If it bounced off 61.8% we sell at 161.8%, if from 78.6% we sell at 127%.
Now let’s check GLO’s chart to verify these numbers. Let’s measure the retracement of AB. It bounced off exactly at 61.8%, now let’s check the target. Where did I say that we should sell it? That’s right at 161.8%! Look at the chart, where did it reversed? Nice right?
GLO revisited the 61.8% retracement and is now trading between 61.8% and 78.6% which is our potential reversal zone. I’m now looking at buying this stock at these level and take profits at 61.8% (1,350) of the 2008 wave. That’s our possible AB.
- Due to the current market condition, there is a possibility that the price may consolidate between 650 and 900 for, say 2-3 years?
- This is a long term buy.
- Buy at your own risk.
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