price movements to 12 nov and future prospects

Hi all,

For those who attach some credence to the black arts of reading chicken entrails, charting and other forms of technical analysis, here's my take on DMA as at close of trading on Friday, 12 November.

INTRODUCTION

Since this is my first post on DMA after taking an initial position last Thursday, let me explain that I choose my stocks essentially on fundamentals and I use charting - primarily the Andrews Pitchfork method - to determine good entry and exit points for short term trading, as well as longer term holds.

Because all chartists use the same underlying market data, all charts should tell the same story for a given period, or at least provide very similar assessments. Given that charting is 80% science and 20% art, there will always be minor differences between chartists. I would recommend you visit the CHARTING site on HotCopper if you have not done so already, where a new thread titled '13-14 November Weekend Charting' will have started on Friday night, as it does for every weekend. You can post requests there for a chart on DMA or any other stock and almost certainly, other HC members will respond during the weekend with a chart for you. It's an excellent way to get a balanced view.

DMA AT CLOSE OF TRADE ON 12 NOVEMBER

This post contains three clickable charts. The first two provide an overview of DMA over the period Jan 08 - Nov 10 and set the context for the third chart which contains the current situation and future projections. It shows a short term pitchfork covering the period 22 Jul - 12 Nov 10.

All charts contain notes that explain my thinking. If subsequent events prove my assessments wrong at any stage, I will always blame the chickens rather than my own interpretive skills in reading chicken entrails. That way I avoid any damage to my pride or self-confidence. I trust you'll understand.

CHART 1



This merely sets the context for me and a provides me with a level of confidence that the pitchfork I have drawn is confirmed by the number of touches price has made on its significant lines as a valid descriptor of price movement. Note how many times price has reversed on touching one of these lines, after first doing a test/retest of the line as a level of either resistance or support.

CHART 2



This chart merely introduces the concept, for those who are new to pitchfork charting, that price movement can be described over any given period by more than one fork and can appear to conform with both, simultaneously, to different degrees. In such cases, you need to decide which is the better descriptor or which is the 'dominant pitchfork' at the time. Time will always resolve this.

CHART 3



This is the most significant chart in terms of interpreting what price has done recently and why, and what it is likely to do next (excluding the impacts of any unforseen, major announcements).

This chart effectively zooms in on part of the navy coloured pitchfork from Chart 1 and shows a new short term, dark green pitchfork with internal divisions in lighter green at the 03.82 Fibonacci levels. Note how effectively this fork describes or 'contains' current price movement. This chart contains notes that explain my thinking in some detail.

OVERALL ASSESSMENT OF DMA

My overall assessment of DMA is that price appears to have finally broken free of the downwards trend which started on 24 Sep 09 (as described by the red pitchfork in Chart 2) and should now continue the move upwards which it began on 22 Jul 10 while attempting to work its way back to the Median Line (ML) of the navy pitchfork (shown clearest in Chart 1).

In the shorter term, price has now completed a slightly greater than 0.618 Fibonacci retracement of the strong move from 15 to 34 cents and climbed to establish a level of solid support at 24 cents. Price should now attempt to climb along the axis of the green median line.

A Fibonacci projection of the price moves from 15, to 34, to 21.5 cents produces an intermediate price target of 40.5 cents as a result of the next surge up. I would expect that the upwards movement that achieves that will pass through the area marked on Chart 3 by the vertical, green ellipse which is the area where two significant lines cross and this area should act like a magnet to price. Similarly the blue horizontal ellipse marks a level of strong support for similar reasons.

SUMMARY

* Expect the upwards trend started on 22 Jul 10 to continue.

* Expect price to work its way back to the Median Line of the navy pitchfork (shown in Chart 1).

* Expect an intermediate price target during the next surge upwards, of 40.5 cents

* There is a slight possibility that price may drop to retest support of the green line immediately below the 12 Nov candle, or in the worst case to test the support of the navy line below that, before the upwards movement continues. If either of these occur, they may simply be achieved through intra-day downward spikes in price, not necessarily via closing prices.

COMMENT

That's all a bit long winded for a first set of charts to set the scene as I see it, but I hope it provides explanations that can be easily understood. Future posts will be much, much shorter.

The above is my opinion only and alternative views are welcomed. The more perspectives presented here, the more likely we are to come to a balanced, rational outlook. Now I'm off to get more chickens.

Regards,
Bones