Yep...might take an announcement...But you would be surprised...

Yep...might take an announcement...

But you would be surprised just how many times I have bought shares purely on technical grounds, which on the face of it appeared to be facing severe overhead, yet amazingly, out comes an announcement that changes everything.

In case you haven't worked it out...I have become very bullish on AEX.

I don't usually do this...but I am going to give away one of my charting "specials"...observed from many years of trading. To date, it has been one of my most successful signal patterns and importantly, appears to be unfolding with AEX as I type.

It goes like this...

Week 1:
Significant increase in usual volumes, usually resulting in an up week, but nothing particularly huge.

Week 2:
Major rally, with volumes substantially higher than normal. The price needs to finish at or near the weeks high.

Week 3:
Distribution or flat trading, with the main body of trading occuring no more than a few points either side of the previous weeks high...it also needs to finish at or very close to the close of week 2. The key here is that the volumes here need to be more than the first week, but less than the second...this is very important.

The volumes for all tree days need to be significantly above average!

The above pattern has an uncanny ability to predict significantly higher prices going forward...if not the very next week, then pretty soon afterwards.

I challenge people to apply this pattern to their favourite uptick of late...remember, it has to be a weekly chart!

Here are a couple of examples...

RIM: (week ending)
20th Jan 2006: 2.7 - 3.3c (volume = 4.9m)
27th Jan 2006: 3.2 - 4.4 (volume = 15m)
3rd Feb 2006: 4.8-4.4 (volume = 6.5)

It subsequently hit 6.8 following week (this week) and will most likely track higher in time.

NDO: (week ending)
1st July 2005: 8.3 - 8.5 (volume = 24m)
8th July 2005: 8.5 - 11 (volume = 66m)
15th July 2005: 11.10.5 (volume = 35m)

NDO subsequently went on to hit 20c

Pick a stock which has rallied recently...then see if the pattern fits near the critical stages of the move...you might be surprised.

Anyway, perhaps enough said for now.

Cheers!