ANZ - No Bank is an Island

The market action here in Australia continued to dazzle, record closes after record closes. It certainly has been a very healthy reporting period for many companies and the market has responded. We have traded up very strongly into the mid November pressure dates, written about a couple of weeks back. We won't go getting too excited just yet. This bull has more resurrections than a villain from a horror movie.

ANZ is a stock we once were devoting a fair share of time to in past editions of the Trading Tutors Newsletter. I keep a regular eye on the stock because of its' volatility and relatively high price. The other reason I like following this stock is it's a fantastic Gann market and regularly proves his rules.

Chart 1 shows the weekly bar chart for ANZ over the past 18 months. The stock made a low of $15.94 in November of 2003 and rallied strong, without much of a retracement until reaching a high of $19.44 in early April 2004. This gave us a range to work with of exactly $3.50. The pullback from this high lasted about 6 weeks and the ANZ made a low, at $17.45 in mid May 2004.

Taking the previous range of $3.50 and adding that to the May low, gave me a price target of $20.95 ($17.45 + $3.50). The recent high for ANZ, just after their dividend payment and reporting was exactly $20.95. One thing to remember with these articles Aaron Lynch and I write, highlighting Gann's techniques in the markets, we often have much more backing up a set-up, than we have space to mention. This repeating range is just one part of the equation. Chart 2 shows a closer view of the recent action on the weekly bar chart, and I have noticed an unusual pattern, that's powerful and rarely seen on weekly charts.

You can see on the week of the top, how ANZ gapped up on the open and traded up virtually all week. Then the week after the top, the market gapped down dramatically. Leaving the weekly bar for the top of the market, virtually sitting out there all on its own, like an ‘Island'. Island Reversal Patterns are strong patterns at times, potentially even stronger when seen on a weekly chart like here.

Until next week......

Noel Campbell