I wish I could have daytraded this thing today.
On a 5-minute chart, at the 9:20 and 9:25 sticks (central time) the stock got supported at a low of 13.93 with volume. At 10:55 that low got tested and rejected with only 1/3 the volume. That would have been the buy, at say an average of $14.00 with a stop at say $13.85; a 15 cent risk.
The sell would have been just after the shooting star doji at 2:05 at say $14.70; a reward of 70 cents (5%) on a 15 cent risk; a ratio of 4.67 to 1.
Risking 1% of a 100K trading account or $1000 you could therefore commit $1000/0.15 = 6,667 shares. 6,667 shares x $0.70 = $4,667 reward; a good day's work.
I have to correct something I said above:
<<<The highs ACM put in last week, believe it or not, were a retest of the high of a high-volume stick printed March 2nd, 2009. There were over 9 million shares traded that day. What's the average, about one million or so?>>>
Actually that high being tested was the high of the high-volume stick on a weekly chart, $24.14, the week of March 2, 2009 with 21.5M shares. The test last week was only 3M shares for the week. 3M versus 21.5M, not enough. If they can't take it up, then it has to consolidate, build cause, go down and test the lows.
The high of the day of March 3, 2009 on 9M shares was 21.46. Which provides confirmings support of the fib confluence, 21.05 to 21.27.
Great. Thanks. Interesting day for them today huh. Huge volume off the top! Seem to be seeing this more and more lately which bodes bearish for the market in general I think. Gold and Silver got clobbered today. But then, check the Dollar Index, up big. And the Euro down big. The currencies are still driving the commodities and the stock market.
The highs ACM put in last week, believe it or not, were a retest of the high of a high-volume stick printed March 2nd, 2009. There were over 9 million shares traded that day. What's the average, about one million or so?
Also, the highs of last week were a near perfect 61.8% retracement of the drop from the June high to the October low. In case you are not aware of the significance of Fibonacci numbers I'll give you a quick tutorial. There is nothing magical about them; they are simply harmonics and naturally occuring.
If you take a line (draw this) one unit long from point A to point C. Where would you put point B on that line such that the ratio of BC to AB is equal to the ratio of AB to AC?
The answer is at 0.618 units or 61.8% of the length AC. Then AB = 0.618; BC = 1-0.618 = 0.382.
The ratio BC to AB = 0.382/0.618 = 0.618
The ratio AB to AC = 0.618/1.000 = 0.618
This is the Golden Ratio, 0.618. The Egyptians used it to build pyramids; the ratio of the base to height. It is also found in nature and it is found in price fluctations of traded markets. It is not mystical and I don't have time to explain why but take my word for it; the more you study charts the more you would understand the why; it is simply naturally occuring harmonics.
A mathematician named Fibbonacci discovered the series: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, ......
Do you see the pattern? Any number in the series is the sum of the previous two numbers, ie., 5+8=13, etc.
Note that the ratio of n/n+1 approaches 0.618, ie., 610/987 = 0.618034447. Also note that n+1/n = 0.382. Also note that 0.618 x 0.618 = 0.382. Also note that the square root of 0.618 = 0.786, another fib important fib ratio. Also note 1/0.786 = 1.272 another important fib ratio (and my yahoo handle).
Anyway, ACM retraced 0.618, a place to expect a pause and/or a turn. Today it turned down, with volume. Can we use fib ratios to predict where it might pause and/or turn next? Yes. Look at a daily chart and note the October 4th low (A), the Oct 27th high (B), the Dec 15th low (C), and the Feb 21st high (D). It's a stairstep, or what is commonly called an ABC-UP or an ABCD, or an AB-equals-CD. You'll note that AB is nearly equal to CD (in price).
If you draw a fib grid or from A to D or hand calculate, you'll find that a 38.2% retracement of AD is equal to $21.27. And a 61.8% retracement of CD is $21.05. So we have fib confluence between 21.05 and 21.27. There's a high probability the price is going there and will pause there or turn there. What else is going on at that price? Well, it was a resistance line back in Oct, Nov, and Dec.
So I'm convinced that the $21 area is where ACM is going and if it comes into that with shrinking volume it would be a buy. If it comes in with accellerating volume then I would expect a bounce and further decline; an ABC-Down.
BMR Take: AECOM turned in a mixed quarter that appears to have been hindered by some one-off events in the MSS sector that caught it a bit by surprise. If not for these unexpected, unrecoverable costs, EPS would have been in line with estimates. Europe, not surprisingly, was also weak, but the $300 million in new wins last month that wasn't reflected in the quarterly backlog results following its restructuring is a good sign. The overall backlog growth was also a positive, as was its strong cash flow, an area which had drawn past criticism from analysts.
AECOM continues to perform very well in emerging markets, and it is also gaining ground in the energy market, which now makes up about 10% of its business, up from only about 3% a few years ago. Given its backlog, the second half of the year looks like it should be solid, and we would anticipate a nice improvement in margins, as well. A new transportation bill in the U.S., meanwhile, could be a long overdue catalyst.
Trading at 8x the FY13 consensus, we still consider AECOM's stock to be undervalued, given its lower-risk business model that takes on no construction risk; strong international presence, especially in emerging market nations; and solid backlog. We rate the stock a "Buy" with a $32 target.
Onepoint-I need to say a couple of things. First, when I read this the old adage "if my aunt had balls she'd be my uncle" came to mind. But I then noticed you as the author. I must say that I have rarely, if ever, read on these boards someone as sophisticated as you. Sincerely, I feel like I am reading a wall street traders blog. Very impressive. Are you not a day trader? What do you do?
Thanks. I will daytrade only on a day off, if an opportunity presents itself. Have been trading since about 2002. I work fulltime as an engineer mostly on dams, flood control, flood forecasting, and the work surrounding those like risk analysis, cost-benefit analysis, regulations, etc. Have also done highway design, bridges, intersections, etc. So like most working people most of my investments are tied up in 401K accounts with limited options and limited trading opportunities. It is from millions of these retirement accounts where Wall Street harvests its oppulent living.
Did you see what SWN did after earnings? It hit a low of 32.69. The Jan 23rd high of a high-volume stick was 32.70; my buy target. But it came down on higher volume; can't bite. It is now likely a short at $34.
How would one determine the value of a private company using charts? If charts cannot predict the value of a private company then why would they work on one that happens to have some shares that are listed? Do insiders/management ever use charts to make business decisions?
When Buffett and other greats start charting I'll reconsider my stance.
Come on, a private company that is not traded publically can only be valued based on an accountant's audit or what a certain buyer is willing to pay a seller. But a pubically traded company has market value just like corn or soybeans or pork bellies.
Yes, of course insiders use charts, they and/or their traders watch them very closely and you better believe that Warren Buffet uses charts.
All markets in all time frames go thru basically 4 phases: accumulation, mark-up, distribution, and mark-down; rince repeat.
Guys like Buffet operate in the accumulation and the distribution phases. When they accumulate they are doing it in a trading range (TR). They are buying at support and selling just enough at resistance to keep the price from getting away from them, all the while net buying. They may do this over long periods of time, whatever it takes to get positioned without the price exploding on them. Are his traders using charts? Yes indeed; they're defining the chart. When they are fully positioned they use the news or create news; Warren may even leak that he's buying; they may juice the buying to create a feeding frenzy but then they are done. From there the funds jump in, then the great unwashed get in, together they mark it up until it all ends in one final buying climax. And Warren is selling to them.
After the buying climax there's simply no one left to sell to. Warren may still be holding some; so his traders go to work again in the distribution phase doing just the opposite, net selling, perhaps even shorting.
You cannot do what Warren and his ilk do; you cannot pick a stock and make it go up. But you can follow what they do. How? By watching the chart, looking for the clues at support and resistance. For example, in an accumation TR, if you see price come into resistance with a small squatty candle on high volume that is called a Short on Thrust, a SOT; Warren is defending resistance; he's not positioned yet, he's not ready for the price to advance, so he has to sell into the demand. But you know now that there is demand and the next time it approaches resistance it may break out. Then you watch what happens at support; you watch the reaction off of support, a long tailed candle would tell you it's going to go, etc, etc.
But Warren works mostly in the biggest time frame. There are other smaller big players working the smaller time frames who have to buy or sell many shares and can't do it all at once without affecting price. So, you will see TR's, markups and mark downs in all time frames. You can follow them too. The principal, the 4 phases are working in all time frames. As an individual you have the tremendous power of flexibility, the ability to get in and out quickly.
Check out Southwest Energy (SWN) another one I've been watching and waiting on. They reported earning after the close today. Similar to SKUL it's been trading in a range, $34.50 to $36 in anticipation of earnings. They missed by 4 cents but guided higher I think. Doesn't matter of course; my buy target is between 32.32 and 33.07, centered on 32.70; there is a multiplicity of confluences of support in there; high-volume historic stick, fib confluence, diagnol support. Right now, afterhours, its trading at 33.63. I guess I'll be buying that real soon if the volume drys up going into my target. It's funny though to read the message board with all the "explanations".