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Welcome from me to all our Safety in the Market traders to this month’s dedicated newsletter. It’s been a great couple of weeks trading for me. In particular a big drop on Soybeans a couple of nights back that I have to thank the guys at the Brisbane Gann Jump Start workshop for helping get me onto. Now I don’t like having to do it but I feel a need to be upfront about it. Last month I wrote about Seven (SEV) and the possibility for a rebound in its share price. Now that hasn’t happened, but it hasn’t fallen out of bed either, so to use one of David’s favourite sayings, ‘Let’s not throw the baby out with the bath water’.
Chart 1 is a daily bar chart up to date for yesterday (9 July 2009) and things still look interesting. When looking at a bigger perspective the low on 21 November 2008 ($5.01) is a big low and a great place to look for a double bottom. The low yesterday, 9 July 2009 was $5.03 that’s pretty close to a double bottom for me. Those that know a little about time, there is also good harmony between this potential July low and the 5 January top, I’ll leave you to figure that out.
Chart 1 – Seven (SEV) Daily Bar Chart – Potential Big Double Bottom
click chart to enlarge
I’ll review our work on SEV over coming months but for the remainder of this months article I’d like to share with you another set-up I’m watching on AMP. Chart 2 is the daily bar chart for AMP since the start of 2009 to present. Take some time to have a quick look at it first then I’ll flesh out some of the detail.
Chart 2 – AMP Daily Bar Chart – Potential ABC Wave Pattern
click chart to enlarge
If you study the turns that I have labelled the first thing that hopefully jumps out to a ‘budding’ Gann trader is that the pull-back to the low this week, 8 July 2009 ($4.55) is precisely 50% of the run-up from 10 March 2009 ($3.52) to 7 May 2009 ($5.57). Using the Gann Retracements tool in ProfitSource (a personal favourite) the exact 50% figure is $4.545, I’m happy to call that exact as AMP doesn’t trade to ½ cent movements.
Also you can see where our 50% Retracement pressure point also happens to sit very nicely in a significant gapped formed during the run from 10 March to 7 May. I have labelled the turns, 10 March, 7 May and 8 July as potential big picture A, B and C points (respectively). When I say potentially we have points A and B locked in, the big question mark is still over Point C. However here is a game plan. Let’s say that we are now stalking AMP very closely. Should the daily swing chart (or perhaps more advanced methods) give us a long signal now would we have extra motivation to take it and perhaps try and hold the trade for a little longer? The answer there is a clear yes to me.
This set-up reminds me perfectly of the something I share at the Interactive Trading Workshop and Gann Jump Start Workshop – the importance of being able to break a market down into sections. Then being able to apply our basic time and price rules and know how to trade combining perspectives. I’ve been watching AMP, WBC, ANZ etc for weeks now as they have been carefully pulling back. Time wise, now looks good also. Getting back to AMP exclusively for a second, if you take the time from the 10 March low to the 7 May top you get 58 calendar days. The time down from the 7 May top to the 8 July low is 62 calendar days or very close to 100%. We could say that this pull-back is currently poised at 50% price and 100% time of the last upward section. This is all very interesting and well worth stalking for a low anytime soon in my way of thinking. I’ll keep you posted.
Until next TIME...
Noel Campbell
Professional Derivatives Trader
P.S. Koshy probably isn’t going to tell you to buy Seven in the mornings only the chart!
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