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Saturday, October 1, 2022


Now’s The Time To Buy Leading Stocks At Low Risk Entry Points

Now’s The Time To Buy Leading Stocks At Low Risk Entry Points

Courtesy of David at All About Trends 

Upon completion of the first leg down we would get some sort of rally that could last a month or even longer to correct back the excesses of this recent waterfall down (Wave 2).

There is a good possibility we are done with the first leg down. We see tagging some support levels on the charts. The reaction off of those support levels was exactly what we wanted to see. Powerful and with conviction.

Notice in the chart above the 50 day average is at 1100? That’s going to serve and a point of initial resistance.

The blue circle is actually about 5 days worth of market action in a range of 1070-1090 with a spike down to 1050 ish thrown in for good nellie action.

In the first chart we talked about 1100 being the 50 day average. It’s also a 38.2% Fibonacci level as shown in yellow. Note the confluence of the blue 38.2% Fibonacci retracement level and the 50% yellow Fibonacci level. See how close they are? That’s confluence and what is commonly called a Fibonacci cluster. Watch those levels next week or the week after for resistance and stalling.

This doesn’t mean we are out of the woods but we liked the action we saw Friday. So IF we now enter into a period of a Wave 2 (upward bias, or the alt count) then it ought to look like an ABC up. We may see some morning weakness on Monday. The chart below is the S&P 500 in a 1 minute time frequency.

As you can see, we stopped cold on a down trendline. We could stay around there for a few more hours but an upside break of the pink line ought to be powerful so watch for it.

By the way all the indexes out there show this pattern.

In summary:

Make no mistake the damage done to stocks will not repair itself overnight and a lot of names are going to take months if at all to build all new bases. There is also a real good possibilty that we will not see the April Highs again for a VERY VERY LONG TIME.



It’s no secret the market has been selling off aggressively all month. This has created fear in the average investor.  

But we don’t just guess or throw money into to stocks because the market is oversold.  Instead, we understand current market conditions and determine whether or not it’s better to be a buyer or a seller.  Once we know what zone we are in, we scan the market for quality stocks that have pulled back to areas of support. We do this because we want to buy stocks at alternative, low risk entry points.

As I’ve said many times, we don’t chase buses. Let’s wait for stocks to come to us and buy them at points where our risk is minimal.

Here’s some leading stocks at alternative, low-risk entry points:

You can see by the blue lines that there are multiple areas of potential support for AAPL.

A text book example of how to buy a leading stock. In this case you can see that it pulled back to multiple areas of chart support.

DNDN has also pulled back to an area of support which also coincides with the green uptrend line and 50-day moving average. Why chase it and buy it in the 50′s when everyone is talking about it and has to have it when we can let it come to us and buy it in the 40′s?

It’s really simple — we buy support and sell at resistance. Another example of a leading stock pulling back to support where we are buyers.

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For more on Elliott Wave-style technical analysis, click here for EWI’s free eBook on the subject.  


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