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Noel Campbell Over the past couple of years NAB has for some, been the good and others the ugly! A number of readers emailed the suggestion that I do a follow up on NAB, considering the review I did on the stock in early June of this year.
Chart 1 shows over 12 months of the most recent market action for NAB on the daily bar chart. You can see where I have circled the position of the market at the time of first article back in June. The outlook was for the stock price to dip off this resistance. The market just worked its way down from this resistance in a controlled manner, rather than the stock being completely savaged. This tempered sell-off was a sure sign to be on the lookout for underlying support and a likely re-test of the resistance level.
Chart 1
click chart for more detail
Also in Chart 1 you can see the strange boxes or rectangles in the background of the chart. The border of the blue boxes represents the outside of each ‘permanent square' of 245. The red diagonal lines are the main 1x1 angles within each of the squares. When the first article was put together the stock had just entered into the weakest part of the ‘next' square and this was perfect for watching out for a top. Since then, the market action within the square has continued to be amazing, with the stock virtually forming a rising wedge pattern along the main diagonal in the square below. I have circled the spot on the chart where the price sat right on the intersection of the two main diagonals.
Where to now for NAB? The stock is showing great strength by having entered back into the square above, after having knocked on the door 3 times while forming the rising wedge. However, these rising wedge patterns are not as reliable as the books say and nothing can be taken for granted. I have indicated on the chart with a pinkish circle the area above the next diagonal. If NAB can break above that diagonal and hold for 3 or more consecutive closes in that area then that goes a long way towards proof of genuine strength. If the stock retreats out of this weak part of the square again without getting into the area above the next diagonal, then all the recovery in price on NAB over the past months may be short lived! For now the strength appears to be with the bulls, but our tests of strength and commitment have been put in place.
Until next week......
Noel Campbell
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