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When it comes to trading and following Australian Stocks I tend to prefer sticking with the top 20 stocks. Tim Walker and I have an Interactive Trading Workshop starting this week in Brisbane and will be getting together with a group of 20 something (size of room, not age!) traders. These big household name stocks are often the ones on most students’ lips. They also show very good advanced Gann tendencies and have the most diverse public interest – the top 20 stocks are a safe bet to follow for good opportunities.
Late last year I wrote an article about several Aussie stocks that were at very interesting levels according to their High’s Resistance Cards. Well some have held in there and some have broken lower. In all cases they had shown some recognition of support around key percentages based on the recent major all-time highs and that knowledge may pay-off more handsomely in the future. Hindsight might just become foresight.
I’m on record as putting some faith in the value of the low the ASX200 made on 21 November 2008. Since that date, the index has remained essentially in a holding pattern. The November 2008 low is hanging on (at times by a thread), but the market is failing to move away to the upside with any energy. Partly this is due to the fact that while some resource stocks (BHP being one) have managed to move up, financials have continued to drag the overall index down. We need some action to the upside from the financials to get the overall market moving, without resources falling heavily again.
One stock that I reviewed late last year was ANZ and it has been in the news again recently taking a battering. When the negative news on something as solid as ANZ is headline news, the contrarian in me pricks up the ears and asks; where are prices on the chart? Chart 1 continues on the theme of the High’s Resistance Card for ANZ.
Chart 1 – ANZ Weekly Bar Chart - $31.74 High Resistance Card Levels
click chart to enlarge
I have circled 3 areas of interest around the percentages of 37.5%, 50% and 62.5%. Last time I spoke about ANZ was when it was near the 50% level. History went on to show it was not ready to rally as prices have fallen through the 50%.
For now though, we can see clearly the support found around the 62.5% region ($19.98) and the 50% region ($15.87) start to build a case that percentages of the $31.74 high are important to watch for a strong low. We are now sitting this month with a low on 12 February 2009 at $11.83, very close to the 37.5% resistance level. We may just perhaps being using hindsight as foresight, but this is only one thing.
We talk about harmony with our numbers and a number of things coming out around the one level. An old chestnut that I speak about with enthusiasm at our Trading Tactics Workshops is the saying; Old Tops can become New Bottoms. Chart 2 is a monthly bar chart of ANZ taking us back over one decade.
Chart 2 – ANZ Monthly Bar Chart
click chart to enlarge
As you can see we have two major highs (a double top) being April 1997 ($12.04) and April 1998 ($12.11) that cluster very nicely with our 37.5% resistance level ($11.90) of the $31.74 high. I like this simple harmony and along with our hindsight from the previous support found around our highs’ resistance card percentages, it may just be enough to look for a rally from around this $12.00 level.
There is also some solid back-up from Time by Degrees for those who have studied the Ultimate Gann Course or attended Gann Jump Start to apply back from the 12 February low. This is one stock I’m going to watch and utilise the leverage of CFD’s. It only takes a couple months or even weeks for that matter (sometimes days) to be in the right way and you have earned very nice dollars. I’m not suggesting that $31.74 is going to be taken out anytime soon by a long shot, but there is good potential for profit to be made as a trader.
Until next time...
Noel Campbell
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