This stock seems to be in a big hurry to reach "some" higher level. Contrary to what many express as Ampex's share price being unable to follow through, the facts are that it had about a seven fold increase in the run from last December thru January, corrected for only about nine weeks and now seems to be on the run once again.
In the last base, roughly Spring 93 thru Spring 95, about two years of base building activity occurred above and below $2.00/sh. Then there occurred the run from roughly 3 to 16 from Spring 95 thru Spring 96. Two years base build is generally considered about just enough to support a decent movement.
Our immediately prior base, at first glance appears to have begun around Oct. 97 and was completed in Dec. 98- about 14 months.
Is this base area sufficient to support a decent run as we had in Spring of 96? Probably not, or to say the same thing, the currently rally would be short lived and profits taken relatively soon.
However, this observation does not seem to square with the current fundamental facts and with the expectations of the moment.
Therefore, I am going to view the real base build of the recent past as occurring between 2 and 3 as in most of 98 and as confirmed by the most recent correction. The movement below 2 in late 98 was at best a very mean shakeout and it did it's job very well. Similarly, the movement above 7 in 96 was a distribution that also did it's job very well.
One conclusion then, is that the current price launch is just now coming off a long confirmed base of about 1 ½ years. This means that the last move from .69 to 5.63, while certainly real, was a rally correction to a grossly oversold condition which began in mid 98. In sum, the current AXC move is just beginning.
Based on prior support resistance levels, another conclusion is that a trading range of roughly 3 to 8 should prevail during the upcoming several quarters. In sum, do not take profits in the near term. Not only will you miss out on a reasonable 8 but you will also find it difficult to re-establish a new position. This stock is in a hurry and the "outs" psychology will be all wrong for one trying to establish a new position. .
Now to return to my original point, the impatience which many attribute to AXC price is justified, primarily because it is now only coming out of it's base. The markup with momentum characteristics has not yet begun. Similarly, the puzzling absence of promotion by the media and the Street, is entirely correlated because the base build is just completing.
Ed Perry |
