The purpose of this Market Call section is to
educate readers in technical analysis patterns and indicators. As with all investment
information, you need to research information and consult your financial advisor before
initiating any strategies that are contained in Market Call.
Also, you must realize that as with all trading strategies,
opinions can change quickly depending on market conditions and developments.
This column tries to present historical examples, potential set
ups, and examples of entry and exit strategies.
Technical Indicators or Fundamentals?
I often debate technical trading vs.. fundamental analysis with
my peers. I am always told that a stock price rises because of fundamental factors such as
good earnings. I do not disagree. Good earnings or better yet great earning will move a
stock higher.
My response to technical skeptics is that the technical
indicators will tell you that something positive is about to effect stock prices. Good
earnings, a takeover, new contracts, and other factors are not always easy to keep secret.
The work of technical analysis can help anticipate future moves.
The review of chart patterns can sow the "foot prints in the sand" bring us to
where we are today. It is said that the stock market has excellent predictive powers.
Let's look at some excellent predictive powers and "foot
prints in the sand" with Amgen, AMGN.
I would like to ask the CEO or CFO of AMGN if he has something to
tell the public, that someone or some group of people might know.
>From June 29 through July 6, AMGN traded with hourly volume
of around 400,000 shares. Prices fluctuated in a 2-3 point range. Well folks, guess what?
AMGN is coming out with earnings soon.
On July 7, volume increased and stock prices have closed higher
in 18 out 22 hourly bars. >From a low of 59 on July 7 to a close Friday of over 69? Is
this a normal breakout of the 61 high? Is this a new development that has not been
announced? Is this inside information about upcoming earnings?
I do not have the answer to why AMGN increased like this in a few
days. The pattern of breaking out to new highs that I discuss so often in this column was
evident here.
When the news about AMGN is announced, you will be able to look
back and see the "foot prints in the sand". Patterns, price, and volume are key
indicators that you can use with many stocks. As we come into earning season, you may want
to look for this pattern with other stocks that have earnings reports due soon.
