February Commentary

This month I would like to discuss a new security, Worldgate Communications or WGAT. This security is highly volatile and while many would pass such an opportunity, I prefer trading such security. This company was under a dollar for a while and I would not venture trading it while it is at such level. However it has moved above one dollar and it shows remarkable volume. I checked the news and all was positive. From that point on, it became a prime target for me. What I needed was a price target that would generate enough profit potential and an entry price that would not expose too much my position. I got in at $1.65 in February and waited to see if my expectations would be fulfilled rapidly. It hesitated for a couple of days and then it exploded upwards. At that very moment, the temptation to reap some of the profit is very strong. Resist it because it takes a lot of footwork to spot good candidates and then additional effort to enter at the right price. Are we going to walk away with a fair profit but leaving in the middle of an impulse? If we are conservative, the answer might be yes; while prudent, we should not exit a winning position unless we have better prospect elsewhere. The target for this wave is almost $2.40 and today's close was $2.05, I have put a sell order at $2.30 because of the recent volatility and because I fear greed more than exiting too early.

Click on the image to enlarge.

I usually do not discuss ongoing trades to avoid people jumping in at the wrong time and without the information I have. I do it this time because it is unlikely that anyone would jump in at this late stage. My second reason is to walk the rope by disclosing my trading style and goals before the game is over. What makes me so comfortable with my target is not my wisdom or even competence, it is my experience with Fibonacci ratios and Elliott waves. I can be wrong and I will know at a precise point when and if I am wrong. This impulse breaks into smaller waves and the price should not retrace below the peak of wave (1); if it does I will exit the position. Even before it retraces to that point, my SAR stop loss will be triggered and I will have to decide how much of the position should be sold. That is the kind of control we get by trading Elliott waves with mathematical milestones.