Aaron
Lynch
 		 Recent weeks in the market have seen some very interesting local movements. A confession I have to make is that I have not been keeping a very close eye on the Australian equities market. Recently the US equities have really caught my eye. It is hard to argue with the liquidity and overall scale of movement across the major stock exchanges. The ABC trading system has been highlighting many profitable trades using the basic rules of the Starter Pack.
Combing more advanced concepts and big picture analysis, can support our views on current ABC trades and give us a view as to potential turning points in the market. MER (Merrill Lynch) trading on the NYSE has been in a solid downtrend since early March 2003. There has been a number of short ABC trades that have returned good profit and there has also been some short ABC trades in the last few days that were not able to filled, as they were outside the 33% limit of the previous A to B range.


click chart for more detail

If the trend continued and another short ABC trade was signalled, then in my mind I want to get a sense of where we may find some resistance in the current move. This is where the understanding of time and price forecasting tools provides a good guide.

In the chart below the first thing I have identified is the next significant low that MER may find price support on. This would form a double bottom at $54.47, to see a continued bearish movement this level will need to be taken out. Numerous other tools like your ranges and highs and lows resistance cards can give a good idea of price support. The Tubbs swing tools in the software give an excellent roadmap as to future support and resistance. In the past I have highlighted the benefit of the Tubbs 2 point swing rule. In this case I have used the 3 point swing rule, the major differences I will look to cover another time.

Also to note on the chart below, is that the double bottom at $54.47 and Tubbs 75% level at $54.44 are close to overlapping. This is referred to as a cluster.



click chart for more detail

Price based tools add one dimension to your view and combining this with the time based tools we can get a sense of proportion and momentum in the market. Measuring the recent bullish run from early February this year to the March top, the time frame was 28 days. Running the 28 day time frame out gave us April 2nd the first lower swing top of the yearly high. Using this same time frame again 28 days later we see April 30 as the next time pressure point.


click chart for more detail

Combine this with the price pressure points that we are seeing in the approximate area and we can look for time and price to come together. I would not expect this area to be a strong level of support more likely a pullback followed by the continued bearish movement. For those who have access to the data you can research some other significant price pressure points that support the cluster that we see here. We are working hard to bring the next versions of the software to you as soon as possible.

Good Trading

Aaron Lynch