The Kirk Report Interview Part 7

The Kirk Report

Q&A With Sylvain Vervoort

Thursday, December 17, 2009 at 8:16 AM

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Interviewed by Charles E. Kirk from "The Kirk Report"

Did we reach the closing target? Or did we have to get out with the trailing stop? You can see here what happened next:

It looks like we are having an extension in the C-wave with another lower degree zigzag. I am also moving the pitchfork reference origin to a previous top, to make it less steep and moving in line with price. Now it is also in line with the downtrend line and the inverse trend line. The short term ARSI indicator is already turning down and the RSI swing is making a top, ready to turn down. The price is close to the trailing stop, but it finds resistance from the upper side of the pitchfork and from the downtrend line. So, I expect further downward movement.

Did we finally reach the target? Let’s see:

On November 27 the first hour after the opening there was a low price of $12.46 and my position was closed at $12.55. That made a profit of more than 8% in just 7 days.
Regrettably, sometimes I am too eager to take a trade.

On June 23, 2009 I bought Usg (USG) at $9.95 as you can see the daily chart on that date:

I have the initial closing stop at $13.8. Since price is probably finishing an upward move, I am expecting an Elliot correction wave. In most cases an ABC zigzag pattern. I have no future turning point yet to make a Fibonacci projection, but what I do then is use what I call a historical projection, using a previous turning point. That will most likely show support for future prices and probably be usable as a reference point for my projection. That gives a target price around $12.55.

All indicators are in the buying area and most of them are turning up already, while a previous support is confirmed with a bullish harami candlestick pattern. The first resistance of the averages is 20% away and buying at $9.55. I could use a close initial stop setting at $9.30.
Let’s now follow up with this chart:

Actually, already the next day there was a bad sign. The bullish harami pattern was not confirmed and finally on July 7, the initial stop was broken and the position was closed with a loss of about 2.5%. Lesson? Do not trade on a pattern that needs confirmation if you do not have that confirmation yet.

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