A Change In Trend For GENZ

For the moment GENZ is displaying an excellent 5 wave pattern that indicates that the trend has changed from down to up. There is a slight chance that the recent triangle could be a b wave, but the overall form is more consistent with an impulse wave. Wave 5 may have a little more to go and then a correction should ensue. Once the correction is complete another impulsive move should follow.

The big picture for GENZ is rather muddled and difficult to decipher, so it is hard to project whether the current trend change will lead to new highs. Sentiment on GENZ has been rather negative which should support a rally.

My general strategy for this type of setup is to decide up front whether or not I am going to take a full position or partial position based on my confidence in the analysis and the broader market conditions. If I take a partial position, I will wait to see how the stock behaves to decide whether or not to add to the position. If it moves in my direction, I will take half profits at the end of wave (3) or (C), and move my stop to just above break even near the top of wave (1) or (A). At that point, I wait to see how the next correction unfolds. If it is a triangle, then I take profits as close to the end of wave (5) as possible. If is another type of correction, I wait to see how the next impulse wave unfolds. If it is a 3rd of a 3rd wave, it will usually break out above the upper trend channel on increasing volume. In that case, I will hold on for bigger gains.

A recent example is SOHU. I went long around 51 as SOHU broke out above its wave (1) high and a rectangle formation in April. I took half profits in June around 67 for a gain of around 30% and raised my stop to 51. A triangle has since developed and SOHU broke out of the triangle on 9/11. The ideal target is 82 to 85, but the breakout volume was weak so I'll be looking for signs that wave (5) is completing before hitting the target. Having completed 5 intermediate waves up from its low, I now have a ready made trade to take sometime later this year after SOHU corrects to the 50 to 55 area.