Lehman Brothers Holdings Inc. (LEH)

Within a 15 month period, Lehman has declined 180% in a seemingly truncated 5-wave Elliot formation. A fifth-wave in an impulsive pattern that fails to exceed the price extreme of the third-wave implies a weakening trend signalling a reversal; comparable to a bullish double-bottom formation. Put activity is resembling the trading in Bear Stearns options on March 14, the last trading day before being acquired by JPMorgan: http://www.reuters.com/article/fundsFundsNews/idUSN0338720920080603

Nikkei Elliot Wave ?

In an 8-month period between July 2007 and March 2008, global stock markets saw steep declines in realisation of an unfolding subprime mortgage crisis leading to the dispersion of credit risk causing a credit crunch. The sell-off in the Nikkei has portrayed itself in a seemingly Elliot five-wave decline. Current price action is finding resistance at the 38.2% Fibonacci extension projected from the bottom of the five-wave decline where a b-wave of a a-b-c corrective three-wave bullish formation may be commencing.

Citigroup, Inc. (C)

Totalling a record net loss of US$10 billion in the fourth quarter owing to its subprime mortgage holdings, Citi’s stock price has declined over 200% within a 12-month period tracing out an Elliot 5-wave formation. Current price action is finding support at the 50-day moving average where a b-wave of a bullish a-b-c corrective three-wave cycle may be developing. With a crossover of oversold stochastics indicating a buy signal, a c-wave formation may see a price target of $31 which serves as the 38.2% Fibonacci extension projected from the bottom of the five-wave decline.

Eurasian Natural (UK:ENRC)

Having rallied over 175% since IPO in December 2007; natural resources miner based in Kazakhstan; Eurasian Natural, closed today with a gain of 7% after citing significantly increased revenues in the first quarter of 2008, largely due to higher commodity prices. However, with RSI signalling overbought conditions and with a crossover of overbought stochastics, price action in the interim period may be subject to correct. Immediate price target towards the 23.6% Fibonacci retracement level of the impulse wave rally beginning May 2nd.

Example trade: enter short position at current level (1481), close position at 23.6% Fibonacci retracement level (1424). At £10 per point, yields a profit of £570 (1481-1424 * 10, excluding broker fees). Stop-loss: close above 1500 yielding a loss of ~£190 (~1500-1481 * 10).

Long-term: bullish; enter long on weekly close above 1500.

FTSE Elliot Wave ?

The FTSE has ostensibly completed a bearish 5-wave Elliot cycle marking a low on 19 March. Current price action is nearing completion of an a-wave bullish a-b-c correction at the 50% Fibonacci retracement level of the 5-wave Elliot cycle. Presumably, bearish b-wave may instigate the creation of the right Shoulder of a bullish inverse Head & Shoulders formation. Finally, bullish c-wave ought to drive price action through the 50% Fibonacci retracement level which also serves as Neckline resistance of the inverse Head & Shoulders formation.

Bull or Bear ?

FTSE Fibonacci Fans & Retracements

The 23.6% Fibonacci retracement level projected from the beginning of the 2003 bull market is currently serving as resistance on the FTSE 100 index. Enter short postion with a stop-loss on a weekly close above the 23.6% Fibonacci level; next immediate resistance at 6000 and then the underside of median Fibonacci fan trendline.

Walt Disney Co. (DIS)

Price action of Dow component, The Walt Disney Company, is currently consolidating into a speculative bullish inverse Head & Shoulders pattern. A close above Neckline resistance at $33.25 may provide confirmation of a low-risk entry point into a long position with a price target towards approx $36.

Dow Jones 12,770 Level

The 12,770 level on the Dow has served as support and resistance over the last 14-month period. Current price action may see a retest of the 12,770 level, at which point, an entrance into a short postion may serve as a low-risk trade. Long on a weekly close above 12,770.

Johnson & Johnson (JNJ)

Johnson & Johnson engages in the research & development, manufacture and sale of healthcare products worldwide. Price action is currently forming a seemingly bull flag pattern which should see a price target of approx $68 towards prior 52-week highs. A price target is derived by projecting the height of the Flag Pole formation from the base of the Bull Flag formation. Stop-loss and failure of the formation upon breakdown of current OBV support.

Merck & Co. Inc. (MRK)

Manufacturer of pharmaceuticals, Merck, has completed the corrective part of an Elliot wave cycle which saw stock price decline 52% in a 3-month period with wave 5 marking a 52-week low. Coinciding with the 50-day moving average, impulse wave A has found resistance at the 23.6% Fibonacci extension level; a sell signal indicated by a crossover of overbought stochastics may see the beginning of a corrective wave B before price action resumes an uptrend as part of wave C. Earnings announcement expected 21 April 2008.

General Motors Corp. (GM)

Founded in 1908, based in Detroit, Michigan with 266,000 full-time employees; automotive manufacturer General Motors has seemgly formed Double-Bottom pattern over a 21-month period. Long position towards the 50-day moving average for an 18% gain; stop-loss on close below $18.

Altria Group Inc. (MO)

Founded in 1919, based in New York; Altria primarily enages in the manufacture and distribution of cigarettes and tobacco worldwide. During the 5 months ending 2008, stock price rallied 25% where price action is currently consolidating into a downtrend. An entrance into a short position with a stop on breakout of the RSI downtrend may serve as a low-risk trade. Tobacco producer Philip Morris is being spun off by Altria and is joining the S&P 100 index.

International Business Machines Corp. (IBM)

Update on previous IBM analysis:

http://stevepuri.blogspot.com/2008/03/international-business-machines-corp.html

S&P500 38.2% Fibonacci

The S&P500 weekly is approaching the 38.2% Fibonacci retracement level of the entire 2003-2008 bull market. Typically, this area may serve as support and commencement of a trend-reversal towards the 23.6% Fibonacci retracement level or the underside of the broken trendline.

International Business Machines Corp. (IBM)

Between July 2006 and October 2007, IBM's stock price gained 66% in value; a sell-off during November 2007 saw price action break the trendline of the rally. Since then, price action has remained beneath the underside of the broken trendline where support has become resistance. An entry into a short position with a stop-loss on close above previous highs at $117.50 may serve as a low-risk trade.

iShares MSCI Brazil Index (EWZ)

Between August 2007 and January 2008, the iShares MSCI Brazil Index rallied 80% within a 5-month period. Since the sell-off in early Janaury 2008, price action has rebounded but has remained beneath the underside of the broken trendline; forming a triple-top formation with resistance at $85. An entry into a short position with a stop-loss on close above $85 may serve as a low-risk trade.

Wal-Mart Stores Inc. (WMT)

Operater of retail stores in various formats worldwide, Wal-Mart has remained in a trading channel ranging from approx $42 to $51.50 over the last 28-month period. Price action is now approaching the upper band of this trading range providing an entry into a short position based on the assumption of the continued channel; stop-loss close above $51.50. Tuesday 19th; Wal-Mart is expected to report fourth-quarter earnings of $1.02 a share.

Cablevision Systems Corp. (CVC)

Founded in 1985, Cablevision Systems operates as a media, entertainment and telecommunications company in the United States. Having declined approx 90% over the last 7 month period, price action has now rallied towards the 38.2% Fibonacci extension level projected from the 7 month downtrend low. This level, at approx $28, has previously served as both support and resistance. With RSI and stochastics signalling overbought conditions, an entry into a short position with a stop-loss on close above $28 may serve as low-risk trade.

Dow 30 Short Ideas - AA, CAT, DIS, MCD