Trade Lesson: Calculation Signals Valero Is A Short
Calculating key levels is something only the best, elite traders and investors do accurately. Now it is available to the public. I have been teaching my members how to calculate master levels for years and they have become some of the most elite investors and traders in the world.
In this lesson, I will briefly go over the calculation for the Valero Energy Corporation (NYSE: VLO) chart. Before we get into that, VLO reported solid earnings today. As refining margins have soared, so have their profits. The stock is trading at $41.98, +3.17 (8.17%). The high of the day was $42.95. The high of the day is important, I will explain why shortly.
The way we will calculate the max move, master level on VLO is actually quite simple. First, if you are in the markets you must realize the markets have a natural symmetry to them. While the average investor looks at a chart and cannot make sense of it, a pro will always see a pattern emerge. A great example of the symmetry in the markets would be Fibonacci. Let's analyze the past history on Valero to dictate the current move.
On June 4th, 2012 Valero was trading at $20.00 per share. It started to run higher, never having a significant pull back until reaching a high of $34.36 on September 14th, 2012. This run was a massive move of $14.36. Once it hit that high, a solid pull back took place, taking the stock back down to $28.07.
On November 2nd, 2012 the next run started. As it blasted higher, many tried to short, all failed. How high would it go? When do you know the top is in? Here is the secret the retail investor wishes they knew. Remember, symmetry is key.
The Key: Take the same $14.36 from the first move and add it to the low starting point of the second move. This will map out where the stock will top out. If you add $14.36 to $28.07 you get $42.43. That level was hit today perfectly. The stock has already started to pull back. The top is in.
Please note the chart below. This lays it out perfectly.
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