Noel
Campbell 		Back in Trading Tutors Newsletter, Issue # 32, I wrote about a Head and Shoulders Pattern that has formed on Westpac (WBC). The diagnosis at the stage was that the stock was most likely going to bounce in the short term after retesting the support of the ‘neckline’. Two weeks have passed and with the market action of today it’s timely to review the prevailing market movements.

Below is the updated chart of Westpac, with the last data date being Thursday 20 November. The stock bounced over the last two weeks, from a low of $15.36, up to a high of $16.18 on Friday 14 November. This last week has seen renewed selling in the stock. I have added volume as a study to the chart and you will see how today’s market action has seen a considerable increase in volume. This indicates that the sellers are back in force.

Chart 1

click image for more detail

The market has retested a top made just prior to the formation of the Head and Shoulders, as indicated by the green dashed horizontal line. This is also very close to the triple bar chart lows of late October. This was an ideal resistance level for the top of the bounce. We could be about to see the start of a strong downward movement in the stock and that could be ideal conditions for successful short selling. If you haven’t taken the time to familiarise yourself with the benefits of trading Individual Share Futures (ISF’s), it is time to get busy.

It is a pleasure to see the market behaving according to the diagnosis, but one should always ensure they trade the market and not blindly follow a forecast. The market is always right. Right now I feel it is necessary to state clearly that our Newsletter is not an advisory service and every trader should take responsibility for their own decisions and hence the outcomes. I’ll revisit this ‘Short Story’ on WBC again in the near future to share the progress of the stock, but for now things are looking good.

Until next week......

Noel Campbell