Prior to this initial price surge, the White house released comments about their intentions to deliver a solution to the GSE reform (Re-privatizing Freddie & Fannie). Both Mortgage giants have been forwarding their profits to the U.S. Treasury and delivering handsome returns since 2008, after they were bailed out by the U.S. Government during the crisis. Now, investors/traders are banking on Freddie Mac & Fannie Mae being released from conservatorship and once again delivering profits to shareholders. Could be an extremely lucrative opportunity if the White House follows through on behalf of shareholders!
Not 100% certain of my EW count, but clearly FMCC has established an uptrend with significant and sustaining volume as OBV has leveled off since the breakout.
Looks to me like a 5 wave impulse movement followed by something along the lines of a running triangle correction, ultimately taking the shape of a bull flag.
COINCIDENTALLY: The apex of this triangle just so happens to fall on Freddie Mac's earnings date.
End of day trading suggests buyers were looking to sneak in positions before earnings are announced, as the OBV broke out of its upper diagonal resistance, possibly alluding to expectations of a positive forecast.
(I am still delving into the fundamentals of EW theory, so I am not yet confident in my count. However, I figured I might as well play around with it now and tweak it as necessary moving forward.)
Not 100% certain of my EW count, but clearly FMCC has established an uptrend with significant and sustaining volume as OBV has leveled off since the breakout.
Looks to me like a 5 wave impulse movement followed by something along the lines of a running triangle correction, ultimately taking the shape of a bull flag.
COINCIDENTALLY: The apex of this triangle just so happens to fall on Freddie Mac's earnings date.
End of day trading suggests buyers were looking to sneak in positions before earnings are announced, as the OBV broke out of its upper diagonal resistance, possibly alluding to expectations of a positive forecast.
(I am still delving into the fundamentals of EW theory, so I am not yet confident in my count. However, I figured I might as well play around with it now and tweak it as necessary moving forward.)
Comment:
Looking at a weekly view:
This volume profile makes a strong argument for bullish continuation to the upside.
Comment:
After reporting earnings on Thursday morning, FMCC started the day down almost 10% with a red wick dropping down to the ~$2.30 area.
This looks like an example of traders 'Selling the News' more than anything as earnings were not substantially disappointing, nor were they unprecedentedly positive. Even more likely, given how price played out:
Earnings were already factored into the market, and investors / traders are still on standby & anticipating other news as a catalyst (*White House Intervention*).
Buyers clearly stepped in rather quickly, as shown by the body of the red daily candle with the bulk of selling having happened at the open. This buying pressure represents sentiment weighing strongly in favor of the bulls - at least for now.
Price action playing out nicely so far! Let's see what happens.
This looks like an example of traders 'Selling the News' more than anything as earnings were not substantially disappointing, nor were they unprecedentedly positive. Even more likely, given how price played out:
Earnings were already factored into the market, and investors / traders are still on standby & anticipating other news as a catalyst (*White House Intervention*).
Buyers clearly stepped in rather quickly, as shown by the body of the red daily candle with the bulk of selling having happened at the open. This buying pressure represents sentiment weighing strongly in favor of the bulls - at least for now.
Price action playing out nicely so far! Let's see what happens.
Trade active:
My first price target is $2.80-2.84.
Comment:
Comment:
This is the triangle I see forming:
If it does play out accordingly, and if the fundamentals agree (White House & legal system), this is one possibility that I could see manifesting in the next few weeks.
If it does play out accordingly, and if the fundamentals agree (White House & legal system), this is one possibility that I could see manifesting in the next few weeks.
Comment:
Here is a slightly better visual representation that price action could elect to take if it were to continue its upward trajectory within the bounds of a channel:
Comment:
I am looking for this horizontal blue line to hold as OBV support for the short term. If it breaks I will look to reassess my position. The price action is currently sitting on an important support as well. Looking to see how both react today at these levels.
Comment:
OBV & Price support levels both held as seen by yesterday’s close. However, I’ve noticed that the a-b-c-d-e triangle that I outlined does not exactly appear to be holding a bullish structure, which, in many cases would entail a rising support and a falling resistance line. Instead, it almost appears to be taking the shape of a bearish Barrier triangle, with a horizontal support line underneath it (orange dotted line).
Bear case:
According to Frost & Prechter’s ‘Elliot Wave Principle’, with barrier triangles, the horizontal line “always occurs on the side that the next wave will exceed.”
If this holds true and does turn out to be the case, that would imply the next major move will be downwards from the point labeled ‘e’.
Bear case:
According to Frost & Prechter’s ‘Elliot Wave Principle’, with barrier triangles, the horizontal line “always occurs on the side that the next wave will exceed.”
If this holds true and does turn out to be the case, that would imply the next major move will be downwards from the point labeled ‘e’.
Comment:
Dissatisfied with my previous two outlined illustrations, I have further analyzed price structure from an EW perspective. I believe that my prior two counts are the result of premature labeling. Perhaps this is a result of my long-position bias, or simply trying to find a completed price structure before it has fully established itself.
Triangle corrections take time to play out. This is the count I will be using until proven otherwise.
An abcde triangle requires subwaves of 3's (A-B-C-D-E: 3-3-3-3-3).
From a trading standpoint, I will be reducing my position size and looking to place a long around the .382 fib level, which would be about $2.30. Manual Stop-loss just below that level by 2-3%.
Triangle corrections take time to play out. This is the count I will be using until proven otherwise.
An abcde triangle requires subwaves of 3's (A-B-C-D-E: 3-3-3-3-3).
From a trading standpoint, I will be reducing my position size and looking to place a long around the .382 fib level, which would be about $2.30. Manual Stop-loss just below that level by 2-3%.
Comment:
It seems the first scenario I outlined is the most likely situation playing out into fruition.
- Pardon my nomenclature (labeling with respect to time and cycles) as I aim to gradually improve the accuracy of my counts with time and practice. Regarding having outlined several outcomes, I have learned that it is likely best to account for multiple possible scenarios to limit subjective biases and mitigate errors from overconfidence. In this particular example, my initial observation seems to be closest to accurate in terms of playing/trading a breakout.
- I find it absolutely fascinating that the decision point - apex of the consolidation range - aligns perfectly with an important news headline. (www.housingwire.com/...-mac-conservatorship)
- Trading update: No sell was executed as my parameters were never met. 100% of my long position is still active. I will update targets accordingly, but do see this is a longer-term trade.
- Pardon my nomenclature (labeling with respect to time and cycles) as I aim to gradually improve the accuracy of my counts with time and practice. Regarding having outlined several outcomes, I have learned that it is likely best to account for multiple possible scenarios to limit subjective biases and mitigate errors from overconfidence. In this particular example, my initial observation seems to be closest to accurate in terms of playing/trading a breakout.
- I find it absolutely fascinating that the decision point - apex of the consolidation range - aligns perfectly with an important news headline. (www.housingwire.com/...-mac-conservatorship)
- Trading update: No sell was executed as my parameters were never met. 100% of my long position is still active. I will update targets accordingly, but do see this is a longer-term trade.
Comment:
-Standard Support Resistance flip
-Horizontal resistance still holding @ $2.84
-Horizontal resistance still holding @ $2.84
Comment:
Just an idea - zooming out slightly. Not necessarily drawn to scale.
Comment:
Looks like this abc correction has completed since the breakout and we're just about ready for out next wave up.
Looks like this abc correction has completed since the breakout and we're just about ready for out next wave up.
Comment:
It looks like this correction is far from over as my prior setup has been invalidated. We very well could see up to several months of sideways price action before a decisive move is made.
For now, $2.27 will be an important level to hold.
For now, $2.27 will be an important level to hold.
Comment:
It seems this corrective triangle is entirely much larger than I had originally anticipated:
The .382 Fibonacci level tends to mark the area where corrective triangles find support. So far, the reaction off of this zone is alluding to the larger than anticipated correction, with the formation still completely in tact.
The .382 Fibonacci level tends to mark the area where corrective triangles find support. So far, the reaction off of this zone is alluding to the larger than anticipated correction, with the formation still completely in tact.
Comment:
I find it quite fascinating seeing price react at certain important levels.
This area is now confirmed to be considerably important as price has now risen more than 10% since tapping the .382 level, which also corresponds to rising trendline support for the base of the triangle.
Also, no coincidence how this zone aligns perfectly with multiple bullish news headlines.
I find it quite fascinating seeing price react at certain important levels.
This area is now confirmed to be considerably important as price has now risen more than 10% since tapping the .382 level, which also corresponds to rising trendline support for the base of the triangle.
Also, no coincidence how this zone aligns perfectly with multiple bullish news headlines.
Comment:
Comment:
Here is an alternative count with an abc correction completed along with wave 2 of a larger structure. This would mean the correction is complete and we are heading higher into a 3rd wave of greater magnitude.
Here is an alternative count with an abc correction completed along with wave 2 of a larger structure. This would mean the correction is complete and we are heading higher into a 3rd wave of greater magnitude.
Comment:
Also important:
On-Balance-Volume break out
On-Balance-Volume break out