<<< as the stock re-enters its old trading range, long time holders can be expected to exit, and it will take a very sizeable new group of stockholders to replace those leaving >>>
And I might add, that the longer the time spent below the major resistance point, the more eager the sellers become at first opportunities once prices begin to approach their old levels.
The principle is one of a play on both fear and greed. First there is the greed to become "whole" again, to compensate for the experienced paper loss, and second the fear that price may decline once again. Together, and as time evolves - the longer the time spent below the major resistance, the more wearing, these emotions will bear on one until the opportunity for relief is presented and the position exited at any cost. Again, another reason that TA types prefer a substantial base building period preliminary to a markup move.
The Rx antidote to these afflictions in another post.
As applied to AXC, the sizeable volume concentrated in the period Dec 11 to Dec 29, both tax loss sellers (IMO a foolish strategy) and the frightened sellers feeding on the tax loss sellers, may have been enough to remove sufficient sellers to begin this move. A stock will move up when there are no longer any sellers. It will then move in the direction in which there are buyers.
All this works in reverse of course. That is, for those who were fortunate to buy below 1.75 (in the last eight months) if the assault on 1.75 appears to repeatedly fail, then there will be incentive for these late buyers to sell at somewhat modest profits. Another manifestation of fear and greed.
However, there is one scenario that is possible. If prices move up quickly and quietly to 1.75 (that is without much expanded volume along the way) then the battle and the volume will begin well into 1.75. In this scenario, these prior and early buyers have become primarily long term and have no intention of selling at modest profits.
Ed Perry
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