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ASX:AWC Alumina Limited Ordinary closed yesterday in Australia on Friday 14th November 2008 at $1.36
Not that long ago - on 13th July 2007 - AWC hit a high of $8.35. If the investor or trader who paid that price still holds those shares today he or she must surely be feeling severely disappointed. Perhaps angry is a better word; after all, that’s a loss of $6.99 per share, or a loss of slightly more than 83%.
For believers in the idea of “buy and hold, no matter what” (and there are many) these must be trying times indeed. Even those who invest according to the tenets of Dow Theory would have had to exit this stock long ago.
AWC’s fall is just one example of the staggering depreciation in value that has flattened countless issues listed on stock exchanges throughout the Global Village.
Would that the pain for holders of AWC were over!
Sadly, the technical analysis pattern that has recently been completed on AWC’s chart – the Flag – generally indicates more bad news ahead. As one might expect, the Flag pattern appears on a mast.
In a Bear Market one must imagine the mast with the flag at its peak as an upside down image. The mast is the downward moving price plot, and I’m sure you can see why this recent area of price fluctuations or congestion – or price consolidation – is referred to as a Flag. Let us take the August 12th 2008 closing price of $4.66 as the beginning of the flag pole or mast. So its peak (upside down, of course) would be the October 17th 2008 close of $1.86. That’s a drop of $2.80.
Sadly for holders of AWC, Flags are not Reversal Patterns. So it would be futile to expect the price to suddenly start climbing, though miracles do happen. Flags are pauses in the prevailing trend, and the prevailing trend here is downwards. Flags generally require from about one to three weeks to develop.
A look at the Volume tells a story of many holders bailing out of this issue, more easily seen on the weekly chart (not shown).
When the price breaks out of the Flag formation it will often travel the same distance that it has already travelled. Obviously, since it closed at $1.36 on Friday it cannot possibly go down another $6.99 or even the $2.80 discussed above.
But I fear this price is going to drop further. Its drop just may be halted at the lower trend line shown, though I will be surprised if this happens.
Alumina Limited (AWC) is involved in the mining, refining and smelting of aluminium. The Price chart of Aluminium displayed above shows graphically what has been happening to the price of this commodity. Like most commodities – tin, zinc, silver, etc. - it has not been doing well at all.
Good luck to one and all.
James Leo Donoghue
If you wish to use any of this material in your publication please contact the writer:
Phone: Sydney (02) 9453 9174
Mobile: 0410 570 394
Permission will be granted by e-mail
Order a forecast for any ASX Australian stock or any World Stock Market Index for only Aus$35.00 (incl GST).
Or get a monthly update for 1 year for only Aus$150.00 (incl GST).Contact us at
DonoghueTechnicalAnalysis.gmail.com
ASX:AWC Alumina Limited Ordinary closed yesterday in Australia on Friday 14th November 2008 at $1.36
Not that long ago - on 13th July 2007 - AWC hit a high of $8.35. If the investor or trader who paid that price still holds those shares today he or she must surely be feeling severely disappointed. Perhaps angry is a better word; after all, that’s a loss of $6.99 per share, or a loss of slightly more than 83%.
For believers in the idea of “buy and hold, no matter what” (and there are many) these must be trying times indeed. Even those who invest according to the tenets of Dow Theory would have had to exit this stock long ago.
AWC’s fall is just one example of the staggering depreciation in value that has flattened countless issues listed on stock exchanges throughout the Global Village.
Would that the pain for holders of AWC were over!
Sadly, the technical analysis pattern that has recently been completed on AWC’s chart – the Flag – generally indicates more bad news ahead. As one might expect, the Flag pattern appears on a mast.
In a Bear Market one must imagine the mast with the flag at its peak as an upside down image. The mast is the downward moving price plot, and I’m sure you can see why this recent area of price fluctuations or congestion – or price consolidation – is referred to as a Flag. Let us take the August 12th 2008 closing price of $4.66 as the beginning of the flag pole or mast. So its peak (upside down, of course) would be the October 17th 2008 close of $1.86. That’s a drop of $2.80.
Sadly for holders of AWC, Flags are not Reversal Patterns. So it would be futile to expect the price to suddenly start climbing, though miracles do happen. Flags are pauses in the prevailing trend, and the prevailing trend here is downwards. Flags generally require from about one to three weeks to develop.
A look at the Volume tells a story of many holders bailing out of this issue, more easily seen on the weekly chart (not shown).
When the price breaks out of the Flag formation it will often travel the same distance that it has already travelled. Obviously, since it closed at $1.36 on Friday it cannot possibly go down another $6.99 or even the $2.80 discussed above.
But I fear this price is going to drop further. Its drop just may be halted at the lower trend line shown, though I will be surprised if this happens.
Alumina Limited (AWC) is involved in the mining, refining and smelting of aluminium. The Price chart of Aluminium displayed above shows graphically what has been happening to the price of this commodity. Like most commodities – tin, zinc, silver, etc. - it has not been doing well at all.
Good luck to one and all.
James Leo Donoghue
If you wish to use any of this material in your publication please contact the writer:
Phone: Sydney (02) 9453 9174
Mobile: 0410 570 394
Permission will be granted by e-mail
Order a forecast for any ASX Australian stock or any World Stock Market Index for only Aus$35.00 (incl GST).
Or get a monthly update for 1 year for only Aus$150.00 (incl GST).Contact us at
DonoghueTechnicalAnalysis.gmail.com
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