>>I'm saying that volume will give the clue to the movement in price<<
My but how this one little stock provides so much to learn from. AXC has everything poured into it - you name it and this stock offers it up. I hope everyone follows this one through all it's upcoming drama. I think the Ampex story is much more interesting than the Zippergate. If nothing else, the quality level of the postings from the varying points of view will create a following for it's own sake.
Now to the point. I am not suggesting that the chart pattern will determine the price movement. However, I am saying that the price and volume activity as evidenced in their unfolding on the chart pattern will provide the best early warning early signal to the announcements of upcoming Ampex business events. This forewarning will provide one with superior timing opportunities for trade entry and closure decisions.
To put it at the other extreme, if one waits for announcements and then place trades, from these price levels, one would very likely be caught "chasing the price". Then in the customary reaction, the position goes "underwater" and the investor is made to "sweat out" the position while "growth in earnings" bails him out. If one does a trade purchase on positive announcements at higher price levels, especially after a good run up in prices, then almost certainly he will be left "holding the bag" for those on the inside having "distributed their holdings".
The explanation of the significance of a drop off in volume after a long decline in price or after a long plateau at a low price level is bound up in the price movements of accumulation and distribution. During accumulation, in this case during the long decline since Oct 97 (the last good rally), the metaphor goes that shares are transferred from "weak - nervous - impatient" hands to "strong - confident - patient" hands. This process occurs at any still lower price where more shares can be coaxed out of sellers and into the inventory of accumulators. It may take the form of a long withering decline or possibly a sudden down thrust, as in the movement ending with the August 31 extreme day.
In any event, at some price there will be simply very very few shares offered up for sale and therefore just as few transferred into accumulation. By the same token, the accumulators have no market or business reason to bid up prices in buying still more. So, the price activity quiets down and the volume measure diminishes. There is now a plateau or perhaps one could call it a springboard or even a pivot point.
To a casual observer, this plateau, here at a low level looks like complete "dullsville" or as one poster put it, all "ZZZZ's".
OK, now where is the connection between this AXC stock pattern and the announcements events of Ampex Inc. in the business sphere? This is the tricky part. It requires one to use a judgemental blend of traditional business analysis and profile valuation measures along with a close appreciation of price and volume patterns which are unfolding.
However, it is not all that difficult. If one has exercised his due diligence, then he has done a fair amount of background analysis, study and comparison. In Ampex's case, there is in place the characteristics of a turnaround, a new venture, a high-tech in an emerging market all of it headed up by a strong financial management.
In the market sector there are the influences of tech stock and small cap out of favor hammerings. All of this together with a significant accumulation chart pattern will give that pattern forecasting significance in this context.
It is for these reasons that a strictly technical approach (the study of price and volume activity) will not work, it has no business context and exercises no due diligence. Also, a strictly fundamental (without the benefit of accumulation and distribution analysis) approach will not work, it has no timing context or price level reference - therefore capital management is likely poor.
So in sum, there is no free lunch. This kind of close analysis dictates a strict screening approach (no small matter in itself) to narrow down candidates to a select few. Then the real work starts. For an individual, on an avocational basis, I doubt that he could follow more than about seven selections and should actively trade about three.
Ed Perry
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