Dear WSE Member,

I couldn’t even begin to think about specific investment plays without mentioning the correction that is occurring in the market right now. I had many reasons to believe the party was well into after-hours and that the lights were about to be shut off. Ah, let the hangover begin.

Look at the chart below. We just finished up an Elliot five-wave pattern up and now the bears are in full control. Before I forget to mention this, you’ll also see horizontal “dashed” lines with varying degrees of vertical space between them.

These lines represent the Fibonacci ratios. Fibonacci analysis is a popular tool used by technical analysts to help spot key areas of support and resistance. You simply take two extreme points (as I have done above) and divide the vertical distance by the constant ratios of 23.6%, 38.2%, 50%, 61.8% and finally, 100%.

A few articles ago, we spoke about the patterns that exist in nature and how just about everything has some type of recurring mathematical structure and/or formula to it. We also said the same was true of markets and how investors behave within this realm.

In the chart above, you can see…

Dear WSE Member,

I hope you enjoyed the weekend. Your humble analyst kept his nose to the grind, filtering the market sands for more opportunities. Today we’ll be looking a bullish & bearish play to help round out any risk we are exposed to in the event that the market rolls over in the months ahead.

Keep in mind that you don’t have to invest in every single opportunity I throw your way. I may have said this in the past, but it’s always worthy of a reminder from time to time. There will be times when my analysis aligns with what you were originally thinking or agree with – and that’s great. There’s nothing like two great minds thinking alike, am I right!? However, once in a while you may scratch your head or lift an eyebrow.

And this is okay too.

Even the best dance partners miss a step or two from time to time — that’s why they practice. And before we get into this week’s recommendation, we’re going to do a little Q&A session:

A question comes in from Joe N. who writes, “Would you still be a buyer of SNDA with this week’s bearish engulfing…

Learning to Profit: K12 Inc. (NYSE:LRN) Flagged For Breakout

K12 Inc. (LRN) is one of those companies you salivate over. It’s a beaten down stock with fundamental attributes that just make sense. Even the technical crowd would like a piece of the action. But before we get into the nitty gritty details, it would probably serve you well to tell you a bit about the company itself in case you’ve never heard of it before.

Personally, I’d rather hear about a hidden gem than to latch on recommendations that have already been spotted by the fund manager and media types who are likely to leave you hanging onto an expensive stock near the peak. This is not the case with K12.

As it turns out, K12 has its fingers in the educational space. It sells on-line curriculum and educational books/materials targeted toward those in grades Kindergarten through 12th grade. As you can tell, the name is fairly straight-forward. In addition to this, the firm is also known for providing management and technology services to virtual public schools. This means that students can absorb information anywhere, whether it’s via online portal or from an offline learning kit — all…