NAB – Ready for Take-Off?

Back in Trading Tutors Issue #61 I wrote about the highly thought provoking position of NAB and the price pressure point cluster we identified at the Brisbane Interactive Trading Workshop. If you take the time to review that article, you will see the reasoning behind clusters. We identified that NAB was sitting very close to the 50% retracement level of a recent major range and near the 25% retracement level for the all-time historical low to high range.

The similarities between the potential set up forming on NAB bares a striking resemblance to a pattern earlier identified on BHP, discussed in Trading Tutors Issue #9. Chart 1 is a brief look at one part of the analysis on BHP using a weekly chart. Here you can see BHP had made a significant double bottom on the 50% retracement level for the major range that ran from December 1998 to February 2002. An interesting point to note is that BHP had one more dip toward the double bottoms before exploding to the upside. This ended up being the first higher bottom on the weekly swing chart.

A term that I have adopted from Tom Scollon is ‘stalking’ a market. NAB has been added to the list of stocks being ‘stalked’ at the moment. Chart 2 is the weekly bar chart for NAB showing part of the analysis outlined in Issue # 61. Upon closer inspection of the chart you can see that NAB recently also made a dip toward the double (triple) bottoms just as BHP did. This week NAB has gapped away to the upside, opening up and trading completely above the high of the previous week. Gaps away like this can be indication the market has reached a bottom or a top.

The ABC long trading in the first powerful run up on BHP was very profitable. The stock was in a strong trend and that’s all systems go for the ABC Trading Plan. NAB has a lot to prove before one can get too excited about it’s future prospects, however there are surely some interesting and potentially profitable times coming.

The first test for NAB will be to take out the $32.12 top made in March 2004. This week has confirmed the first higher bottom on the weekly swing chart. This doesn’t automatically confirm the weekly trend as up. NAB will need to break the previous weekly swing top, which is $30.50, before the weekly trend can be officially called up using our rules. You can also see on Chart 2 that I have drawn a trendline along the tops. Using basic trendline theory, the stock should be in a stronger position if this line is broken and the market can hold closes above the resistance. However if NAB fails to establish any strength to the upside and manages to hold 2 to 3 consecutive closes below these current triple bottoms, you may want to forget about any comparisons whatsoever to the BHP chart.

Until next week......

Noel Campbell