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Welcome from me to all our Safety in the Market traders to this month’s dedicated newsletter. I’m in the midst of final preparation for my first online one-day workshop on SPI Forecasting. The question on a lot of traders’ minds would be: when is this market going to stop significantly? It has been a phenomenal run on the equities markets and if you had blinked you may have missed any pullbacks. This month I’m going to continue to share my work on AMP with you. We have been looking at this stock since March of this year when I first called it higher.
Chart 1 is from last month’s article when we looked at the success of the work done when ‘combining perspectives’ with the market heading out of an 8 July low. The speculation was that the 1 September high ($6.67) was the end of the second leg up out of the March low and we were set for a pullback.
To quote from last month I said, ‘The recent high on 1 September has come in at $6.67 and since that time we have observed an ‘Overbalance in Price’ off that top perhaps indicating at least a short term change in trend. For my mind it will only be a pull-back for now and a chance to watch for another low to buy in again in the coming few weeks.’
Take a quick look at Chart 1 below to refresh your memory on where we were at this time.
Chart 1 – AMP Daily Chart – Safety in the Market Monthly Newsletter September 2009
click chart to enlarge
Well since that time AMP has not exactly set things on fire until just the last few days. It was a 4 week drawn-out sideways to down period. A false start was given for a rally at the end of September, but ultimately prices came back down to a low of $6.07 on 5 October, which is a fall of around 10% in 4 weeks. Chart 2 is the updated chart of AMP as of Friday, 9 October.
Chart 2 - AMP Daily Chart – Second Big Picture ABC Set-up?
click chart to enlarge
If you study Chart 2 closely you will see where I have noted the 5 October low is in fact a double bottom with another low at $6.07 on 9 September. Prices have then since taken out the $6.67 high with this last daily up swing. This last daily upswing could certainly be a potential A to B range forming on the daily swing chart. We now need a Point C and then you have a potential trade. I’d certainly suggest that a study of volume in this A to B swing compared to any potential future B to C swing would be very wise.
Also as you can see on Chart 2 the time and price of the last up move (8 July to 1 September) was very close to the previous move (10 March to 7 May). I have projected that range again using an angle from the 5 October low. It will be interesting to watch how the market movement progressive relative to this repeating angle.
We have a market we are stalking here, watching the daily swings in combination with the bigger picture sections of the market. AMP has almost given me some textbook stuff to share with you since the March low – about as good as it can get. We should all feel a far greater affinity to AMP now, I know it has been kind to me financially and that’s not through financial advice!
Until next time...
Noel Campbell
Professional Derivatives Trader
P.S. You can now look at the articles from the March low as educational series and I urge you to print them all out and review as an unfolding story.
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