In trying to make some sense out of recent price activity, I have turned to the monthly chart to pick up on a theme which came to mind some time ago.
Current price movement is, without a doubt, decisive and forceful. However, absent any churning, even on an intra-day basis, there is no evidence of distribution. Also, while it is convenient to think in terms of momentum, there are insufficient waves (or zig-zags) at stepped higher levels to allow momentum plays. What we have are high volume spikes and then pennant swoons on low volume.
What I think we are getting is a rapid re-pricing - this is different than trading activity. It is also an explanation as to why TA is hard to apply to AXC short term price movements - TA is really borne of the trading mind set. What I mean by re-pricing is a primarily fundamental re-appraisal of the outlook of this company and then a follow through of, in this case, a overwhelming supply of buy orders.
Where the re-price will settle, or at least pause to consolidate, may be hinted at by the long term monthly chart. In the time frame of 92-93 and again 96-97, price levels of 6.00 to 8.00 seemed to predominate as support and resistance.
While I am not saying that the current price movement will stop dead at exactly 7, I am suggesting that there will be a pause and consolidation here, or even a pullback to these levels after touching the price of (12.00? or whatever).
This also means that the current price movement from 2 3/8 (and even .69) is not a momentum movement but only an adjustment (in this case to the upside) as a response to the long slide since mid 1997.
Finally, from this point of view, the measure of continued upside potential should be based on the projections from the swings above and below the 6 to 8 consolidation range and on the re-affirmation of the 6 to 8 range in a likely upcoming consolidation or support / resistance tracing.
What this means, is that the real price movement, with trading range characteristics, in AXC, will occur much above the price of 8, and this is yet to come. This is where seat belts will be, not advised, but required. Then, it will be too easy to fall out of your seat. IMO, to attempt a trade or a swing play prior to this time frame will be more a matter of luck than skill.
Ed Perry |
