amcor oversold.the charts

here are a couple of mine showing the current price and fibs...





This is from Jodi Halls Chart Chatter as published at Sandfords on 10/05
He was obviously early on his call.....

Amcor Ltd (AMC) is one of the world's top global packaging companies with operations in 36 countries, deriving about 75% of its earnings from outside Australasia. The company has substantial packaging businesses in five geographic areas - Australasia, North America, Latin America, Europe and Asia. The company is focused in four key market segments: PET plastic bottles and jars, closures and specialty packaging, flexible plastic packaging (including medical packaging) and specialty printed cartons. The PET packaging based in Canada has been performing poorly in North America and will be rationalized over the next 12 months. AMC went ex-dividend on 4th March with a $0.16 dividend which was below expectations.

Interim earnings were effected by the high $AUD. However, gold has now crossed below $380 US Oz and the $AUD has dropped below $0.72 USD as forecast in Chart Chatter article 301. This should ease off some selling pressure on AMC but US interest rate jitters will continue to have some adverse effect.

The chart shows a daily continuation chart of AMC. We can see the long-term downtrend from the September 03 high of $9.20 and the short-term uptrend that created a bearish compression triangle as AMC approached its ex-dividend date. Shortly after that we had the massive sell off on the 22nd April which caused the stock to plummet down from the bearish triangle to below the $7.00 level.

This massive price sell-off has created a GAP at $7.80 and $7.20 in the chart. AMC has gapped significantly 4 times in the last four years and each time it has retrace the gap within 40 days before continuing on its original trend. In this instance we can reasonably expect AMC to retrace to 50% ($7.30) at least before continuing down towards $6.50.

The "Phased Regression indicator" is also displayed on the chart which has historically been very accurate on both the daily and weekly charts of AMC. Whilst it has not turned on the weekly chart yet, it turned on the daily chart yesterday, indicating a short-term retracement possibility was high. Couple this with a "Continuation Probability" of 65% that AMC will lift in the short term on the weekly chart and the fact that it has reached a 50% retracement of March 2000 Low and the October 2003 high at $6.75, gives a good advanced warning of a retracement.

Whilst this in no way signals the end of AMC's downtrend which is more likely to end at around $6.50, it does indicate that the rapid sell-off has taken AMC to a fiercely oversold position and it will swing back up in the short-term (20-40 days).

For options traders, the best option seems to be the AMCI9 May $7.00 CALL option at around $0.05. A retracement back to $7.30 should yield handsomely. The risk here is that this move may not complete by the end of May rendering the option worthless. The more conservative trader may look to the AMC34 June $7.00 CALL option at around $0.15 and close out the position when AMC reaches $7.30.

I find it difficult to be optimistic that AMC will retrace back to the higher gap in 40 days before continuing down. As stated above, this retracement in no way indicates a reversal of the overall medium-term downtrend for AMC.

Good Trading

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I am accumulating these
john