Aaron Lynch
Aaron Lynch		 WMR has been a good news story with solid moves from September this year. You may recall in the Trading Tutors edition #74 that I noted strong support at $4.80 and the potential for a price breakout on the upside. The close price at this time is $5.49 and showing some good signs of continuing the move.

Being a predominately technical analyst it is rare that a fundamental thought dictates a trade for me. However, in saying this I will never ignore information in the market especially if it is supporting my technical view. Looking at WMR there is little wonder that it is in a strong moving sector and just glancing at WMR’s website their core business revolves around “the discovery, development, production, processing and marketing of minerals, metals and chemicals.”

Most traders would be aware of the bullish move in the material sector and in particular the movement of base metals pricing. The fundamentals have been very strong in this area. If following all the available fundamental information is a little tiresome, a quick glance at the materials sector chart should convince you of the move at hand. The index since May this year has been extremely bullish and is sitting just under 6300 points, compared to the low in March 2003 of just under 4000 points, the growth has been over 50% in the space of 18 months.

For your reference there is some Contract for Difference providers that allow you to trade Stock Indices for the different sectors. The Materials Sector, XMJ, is one of those.


Chart 1

click chart for more detail

Taking a closer look at WMR, all looks favourable for a continued bullish movement in price. The price action is currently above the 25% Gann retracement level and there has been a strong ABC long entry signalled in recent times.

Chart 2

click chart for more detail

When looking at the current ABC trade, price is the main function for deciding where to exit the trade. Adding a basic time filter as well can help provide proportion to the trade and assist in rating the strength of the trade.

The chart below is WMR with a 1 day swing overlay over the top. The first legitimate ABC entry was in mid September, however, there is an advanced price technique that we could have used to enter the trade on the confirmation of the first higher swing bottom. Using the multiple contract system would have yielded a fantastic return already with further potential as a number of contracts would still be in the market.


Chart 3

click chart for more detail

Adding the time filter is simple for the current ABC trade, measure the A to B range in time and you can see that this was 13 days, projecting this forward that gives us the 6th Oct as a date to watch for the time frame to repeat. The price action is currently around the 75% price milestone. If the market can move to the 100% price target of $5.61 on or around the 6th Oct we could say that price and time have balanced.

Chart 4

click chart for more detail

If the price action reaches our 100% target and the time frames balance out we may see a short term retracement. In the context of a major move, there is still some potential for solid gains, with a move to around $5.80 not out of the question.

Good Trading

Aaron Lynch