22/07/15 – Waste Management Inc – The Wave 4 found resistance at the Fib 0.5 Retracement level taken between Wave 2 and Wave 3 extremes of this overall Bearish movement for this stock. The TJ’s Ellipse was also taken out at the same level, indicating a strong resistance level. The last three trading days have seen the price move down from the Wave 4 high, confirming the high potential of this 5th Wave bearish move. There are 8/9 of my trade setup indicators in the green with the 9th (6/4 MA low) going green upon entry. MACD histogram is tending to zero with the signal lines looking to cross in the next couple of days. Stop Sell Order @ 47.69 with the Stop Loss @ 49.26 and the initial Take Profit Limit Order @ 44.50, giving a Risk to Reward profile of 1:2. Earnings announcement is due before the open on Thursday 23 July (tomorrow) so if the trade does not trigger in today’s session there is a big possibility of a gap down at the open tomorrow as earnings are expected to be flat or poor. This is a dilemma as a large gap will make the potential short trade useless as my Risk to Reward will be taken up. So if the price action is still bearish and strong today but fails to open, I may consider entering the trade short before the close so as to reduce that risk. Obviously I will have to change the amount of CFDs I trade and there is also a risk that the earnings forecast are totally wrong and the price gaps up and rises. I will make the decision much closer to the close if indeed the trade does not trigger during the today’s session. Charts as below for the setup of the potential short on Waste Management Inc.
23/07/15 – Waste Management Inc – My Stop Sell order triggered during yesterday’s session and although closed back above my entry, it did close just below the 6/4 MA Low. The Company will announce its quarterly earnings before the market opens today and if the results are bad could produce a gap down on open. I expect they will be pretty neutral and allow the price action to complete its overall bearish trend over the coming weeks. There is always the possibility of a spike up but my stop loss is in a sensible place and should not be challenged, unless there is unexpected earnings results. Chart as Below
24/07/15 – Waste Management Inc – Well that was short and not so sweet! Even with a poor Earnings Announcement the price did a U Turn yesterday and made a large volume Bullish move to take out my stop loss, giving a 1% loss on my trading account balance (2nd chart below). This didn’t hurt as much as my trade on UA closed out with big profits, dampening the blow of this Ugly trade. I am still going to be looking for this stock to turn bearish over the next week and look to enter on a shorter intra day time frame. As an idea the 60 minute chart below is showing signs of exhaustion and a move below 48.69 would indicate yesterday’s price action was purely reactionary and the overall bearish trend could continue.