How to Succeed at Trading? One Small (Elliott Wave) Step at a Time!
Real-world example: Alcoa Corp. (AA)'s march to 14-year highs didn't happen overnight. It did happen in line with Elliott wave analysis
by Nico Isaac
Updated: January 19, 2022
We're just a few weeks into 2022, and I've already broken half my New Year's resolutions. The one about not watching TV after dark... that went out the window when I tuned into my alma mater University of Georgia winning their first national football championship game in 41 years!
As it is, I'm far from alone. "Studies show that approximately 80% of New Year's resolutions fail" (Dec. 21, 2019, Forbes). One reason being, we set the bar too dang high, expecting sweeping changes overnight, only to be disappointed and give up when those changes fail to occur fast enough.
- Signing up to run a marathon... when you use a golfcart to pick up the mail at the end of your driveway.
- Promising to give up carbs... three days before your Sicilian mother-in-law moves in
- Just saying no to caffeine... when the local Starbucks has a drink named after you.
What's interesting is the same percentage -- 80% or more -- of traders lose money over time, according to brokers' own statistics. And one reason they fail is the same reason we fail at our New Year's reso-lose-tions; i.e. traders expect to catch and ride huge price trends fast! Instant gratification, please -- when, in reality, trends form happen one small step at a time.
Take, for instance, the performance of Pittsburg-based aluminum giant, Alcoa Corporation (Ticker symbol: AA).
From late January 2021 to January 7of this year, AA quadrupled in value to its highest level in 14 years. A December 31, 2021 Kiplinger showed this graph of the top 25 performing stocks of 2021, with Alcoa taking the #5 position:
In turn, Alcoa is now on every Wall Street wish list, with the accolades pouring forth like raw ore beneath a hot smelting iron. Cue these 2022 headlines:
- "Alcoa skyrockets... as global aluminum market poised to tighten further" (Jan. 7 Seeking Alpha)
- "Alcoa (AA) Outpaces Stock Market Gains: What You Should Know... A massive push to rebuild the crumbling U.S. infrastructure will soon be underway...Trillions will be spent. Fortunes will be made." (Jan. 22 Nasdaq.com)
- "Alcoa: Future Is Looking Brighter for Free Cash Flow and Shareholder Returns (Jan. 17 Seeking Alpha)
But don't let these headlines fool you into thinking Alcoa became a star-performer overnight when in fact, the stock's bright future began in its past... over one year ago.
That's when our Trader's Classroom first recognized the seeds of bullish change in Alcoa, and prepared subscribers for the first step of a long growing season ahead.
On February 9, 2021, Trader's Classroom editor Jeffrey Kennedy showed this Elliott wave-labeled price chart of Alcoa. AA had just hit $20 a share and Jeffrey identified a fifth wave rally in progress, saying:
"I'm okay in identifying this fourth wave move complete and our fifth wave move to the upside is pretty much already underway.
"So, moving forward, I will be looking for this issue to go up to at minimum 29.6."
From there, AA took the upside with gusto. On March 4, Trader's Classroom extended its up arrow on AA's chart and said:
"Momentum is still strong. Subdivisions of the current run up are incomplete. Now the way is cleared for higher prices."
By early May, AA had moved above $40, and a near-term top was possibly in place. On May 18, Trader's Classroom provided critical price levels to manage risk and said:
"Let's see if Alcoa can continue to climb a bit higher to our secondary target. Of course, always ask where am I wrong? This area on the chart between 38.19 and 36.05 is a good support area and should be respected.
"If we start falling below this area, that would argue that wave 3 is indeed complete... and the next move would be a wave 4 correction."
Indeed, prices fell below critical support and a sell-off followed into mid-July. On July 8, Trader's Classroom updated its AA price chart suggested the uptrend was about to restart:
"If everything goes according to plan, moving forward, we will indeed see this issue continue to climb higher. We'll see a five-wave move develop from the June low up to 49.20.
"We're good to go to the upside."
Once again, AA soared, reaching as high as $57 in October before tapering off.
Then, on December 1 Trader's Classroom warned that the stock's uptrend may be complete, and the next move would be down. However, Jeffrey's forecast hinged on prices staying above the $46 level.
Bearish confirming price action did not transpire, and AA maintained its uptrend. On December 29, Trader's Classroom Jeffrey showed a higher move ahead before reaching the fifth wave peak.
And, as the next chart shows, AA's march to a 14-year high on January 7 did not happen in one fell swoop; but rather, one small step up, down, up, down, and up again over the course of a year.
And for many of those small steps along the way, our Trader's Classroom was there to keep subscribers' right side up with detailed analysis, labeled price charts, and risk-managing price levels.
Trader's Classroom gives subscribers a new video lesson three times a week, many with an ongoing opportunity -- here's how to find out which stocks have landed on Trader's Classroom watchlist today.
Sometimes, One Small Step Leads to Huge Opportunities
Alcoa, Nike, Dollar General, and Disney -- what do they all have in common?
Answer: They're all featured in the current, January Trader's Classroom videos. In each one of these carefully crafted lessons, editor Jeffrey Kennedy walks you through every step of a high-confident setup, from wave count to confirming price action and the critical levels necessary to stay on the right side of risk.
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