Aco, along with PD, CLF and PCU are all down sharply today.
Using Reuters free charting service to chart all four on the same screen, it is obvious that all four have moved sharply in the same direction at the same time for more than a year.
They are all identified by Reuters as being in the construction sector and also in the building materials industry of that sector.
They seem entrained together. Perhaps this is the sector that hedge funds are using to sell short while buying undervalued large caps. PCU is said to be 75% owned by Groupo Mexico. Perhaps it is easier to short stocks with a relatively small float.
ACO is presently close to and following a decling lower band on the Bollinger chart.
A 13G filed today reports that Lord Abbett increased their ownership of ACO from 7.3% to 10.3% during August.
Responding to those who have recently wondered on this board, I am not (and have never been) an employee of AMCOL. I have been a shareholder since @ 1994-5 and have received substantial (for me) wealth creation from the experience.
Wedbush Morgan posited the entire nine cents on footnote 11 to the 2nd quarter earnings report financials in the ACO 10Q. That note relates to a "subsequent event" After June 30 the IRS resolved their audit of the company's 2004 tax return. That resolution will require ACO to record certain entries in the third quarter for a benefit of $686,000 dollars from discontinued operations: a $3,181,000 for a reduction in tax expense: and a $661,000 for contingent professional fees.
These entries account for all of the 9 cents their analyst raised the estimate by.
They reiterate their buy and hold a price target of $32. They have enough of a following to cause a small retracement up in the long downturn.
But, IMHO, the stock continues in a downtrend with no sign yet of a turn around. Some resolutio should become apparent in September and October. I expect to wait it out.
The ACO short interest on August 8 was 3,026,000 shares (10.1% of outstanding shares and 11.3% of the float) compared to 2,308,000 shares on July 10, (then 7.7% of the out and 8.6% of the float.)
The short position has been climbing about one hundred thousand shares each month for quite some time but this jump of over 700,000 shares is a very large jump for this stock. Hedge fund trades?
Stock price keeps getting pushed down when it gets up to the volume weighted moving aberage.
A form 13 filed with the S.E.C. today discloses that Lord Abbet now (as of July 31) owns 2,190.971 shares of AMCOL. Their last report that I see on the Yahoo board was as of Feb 28th when they owned 450,500 shares or 1.52% This is a highly respected group to have support this stock.
But, the price fell below the lower Bollinger Band today and stayed there all day until a few minutes before the close. There is a lot of overhead resistance to get through from here.
The Amcol Bolinger Band chart has this morning compressed to within one dollar (currently 90 cents.) This normally means a sharp move in one direction. But the chart does not give a clue as to which direction - up or down.My guess is down because the volume weighted moving average is now below the upper Bolinger channel. This makes two strong resistance lines to clear in order to go up.
Amcol owns 22% of the equity in Ashapura, an Indian company that just announced that their first quarter profits were up 226%. Their bentonite, bauxite and bleaching clay businesses all participated. Among their comments was a statement that their geosynthetic clay liner business was up also. I assume this part of their business is conducted in their Ashapura Volclay subsidiary, which is a 50/50 joint venture with Amcol.
Today's price action (currently $23.43) closes the strong gap down of one week ago. A week long time frame is not the sort of snap back that would make it a Bear Trap but it is also not a strong Breakaway Gap to the downside. The price is now rising sharply accross its 90 day moving average into a sharply droping volume weighted moving average (now at $23.96.)
We will see how those two collide.
...reverse the trend of the SMA to up, and then break through the down sloped volume weighted moving average, currently at $25.88.
This is the tough one. A lot of volume moved over that price and I think will provide substantial resistance. Pound through several layers of significant resistance and by then you may see an uptrend. I am waiting for Cramer to yell "sell" sometime @ $12 and then jump back in confident that the downtrend is over. Without that, I will probably wait until the Volume weighted moving average is broken going up.
After being ranked an "A" in the 95 to 98 range, IBD on Friday ranked ACO at "65=C" Overall Rating. The business seems to be progressing nicely. The price in the stock market moves on investor perceptions. Missing the street"s guesses by a penny has no significance unless you think it portends a recession and is the first of many "misses."
Many investors seem to think a recession may have already started! We will only know "in the fullness of time."
You may have a good price below $20. I think you may see $30 by the end of '06.
But I sold 2/3rds of my holdings on May 10 and do not desire to get fully invested again until I am sure it is the low or the trend has definately turned up. Presently the trend is down, with no sign that it has bottomed and definately no sign it has started an up trend. I do not want to lose back the money I gained from Cramer's timely tout at the high.
The gap up out of the '04 - '05 base-building was on 1/20/'06. That was from a low $21 number to a high $22 number. That just got filled in on Friday. All week the ACO price was stabilised @ the moving average and gapped down below the lower Bolinger Ban, stayed below all day and closed up to just over the lower band. Today (it could be different if it closes above the gap on Monday) the gap may be a breakaway gap on the downside. That could mean much lower prices. I prefer to wait and see. If it closes the gap (over $24) on Monday or Tuesday at the latest (it needs to be speedy) you could interpret Froday's activity as a "bear trap." Normally these only move one box on the point and figure chart into the sell signal and promptly reverse. Here the tripple bottom sell signal is already 5 full boxes long. Friday the price stopped going down exactly at a trend line drawn up from the $16.50 low made last Fall. That is a strong support, but the chart does look bleak. My guess is that it will break down through that uptrend line and continue further down over the next several months. To be in a sure uptrend, the price has to lift off the lower Bollinger Band (reverse the direction of that lower band) go up through the simple moving average (cont'd)
This week's issue ov Value Line, dated July 21, Lowers the "timliness" ranking for AMCOL from a 1 to a 2.
They confirm their belief that earnings will remain strong through 2006 and 2007 and think the current price (24.70) "already appears to discount a good portion of the earnings growth we project out to 2009-2011"
They also comment that earnings from nanotechnology ",if any, appears to be years away."
Their eps projection is $1.45 for '06 and $1.70 for '07.
Believing that the DJIA will have a substantial (and perhaps sharp) drop at some point before Holloween, since AMCOL seems to follow the DJIA I believe ACO may see lower prices in that time frame also.
A $22 trade will fill in that box on the P&F chart creating a triple bottom sell signal, an omen of significantly lower prices from there.
The price keeps meandering between the moving average and the lower Bollinger Band. Above this is the volume weighted moving average which I anticipate will be significant resistance. The value weighted moving average is now at $26.12 and descending.
The news stories on my tv indicate the fault is defective rebar. I believe AMCOL's products are to seal water out for the tunnel after drilling the hole. I have heard of no stories that water gushed in after the concrete fell. Possibly a good selling point - positive rather than a negative.
Wedbush Morgan lowered their earnings estimates for 2006 and 2007 by two cents, keeping their target price at $32 and holding their "buy" rating.
As I write this the aco price is below the Bollinger lower band and when there it can follow the lower band down for a while. IF it hits $22 it will be a point and figure chart "tripple bottom" sell signal that is a much stronger sell signal than the "double bottom" sell that it has been trading on since last May. It will lower the target price into the lower teens.
Thank you for this post.
An illustration of your #s 7, 8 and 9 is the machinery that they have developed (and patented) for quickly and easily laying down the lining "carpet" rolls and for extracting the oil from water for on site water disposal from the sludge. Two slides in the presentation show this machinery. Surprising to me is how mobile it is for them to locate at the construction site or the on land pipeline locations. When I saw the patents I wondered how they would exploit them. They had the machines made for themselves and rent them out for specific jobs. Certainly a large plus for the engineering firms deciding who to do business with.
The ACO Bollinger Bands are now compressed to within 75 cents. This compares with over $2.50 in May and earlier June. This indicates a sharp move in one direction. But, it does not predict which direction. We will only know in the fullness of time.
Except for the muscle that DD can put behind its sales to the auto industry, this does not seem especially exciting. To the extent that they still require glass fill to get their results, the cost savings are less. Without the platelet structure their UV protection is probably less, if any.
I liked the concurrent article, also by Andy Beevers, that Maserati is now using a nanoclay thermoplastic for an engine cover part made from MXD 6. (Only UBE is the supplier of the nanoclay.)
Wedbush Morgan's latest update (last Monday) is modeling a $250,000 revenue for Nanocor in each of the 3rd and 4th quarters of 2006 and $500,000 in Nanocor revenue for each of the 4 quarters in 2007. It would be nice to learn if those numbers are pulled from thin air or the result of conversations with Nanocor' distributors like Colormatrix.
Do not fail to listen to this one all the way through.It is on www.amcol.com Gives a great grasp of the products and the growth prospects.
They look for 30% sales growth and 40% earnings growth for a long while to come!
$21 would be a milestone where some support should come in. You are then hitting the top of the 2004-2005 base that was then built.
It could happen this week! Friday is the "tripple witching" day.Wierd things happen. This Friday through the 21st of July could continue to be very volatile too. The three weeks before the earnings announcement have typically been VERY volatile. But, it can latile up or down.
The price has been sliding down the lower Bollinger band for so long it is unlikly to rebound sharply. The point and figure chart now has a price objective of $12 and will go lower when the #22 box is filled in.
My belief is that the hedge funds have found a VERY profitable arbitrage trade by buying the DJIA index or the S&P 100 index and selling the S&P 600 small cap index (or ther metals and mining index.) There is a lot of money in the hedge funds now and most of it is in Europe and Asia. When that trade turns unprofitable the up trend may be equally steep.
I am waiting for a gap down on a million share day to buy back the stock I sold after Cramer's hast hype at $33.
The point anf figure chart now has a price objective of $18. I am looking to get back in at half the $33 I sold for last month. Then I can buy twice the shares that I sold. At the speed of this correction, it could occur before the next earnings announcement in July.
After watching Cramer for a few shows after he split from Kudlow, I stopped watching have had no use for his hype. But after the extrordinary gain in ACO so far this year, the large gap up and extrordinary volume after his show provided me with an opportunity to partially withdraw from the market that would have been much more difficult on a "normal" volume day. It is also what persuaded me that the gap was an "exhaustion" gap to help trigger my sell attitude. So, I personally appreciate Cramer's attention.
BUT, Cramer had absolutely nothing to do with the sharp drop in the Dow since his ACO comment. And, AMCOL has been very sensitive to the DJIA's movements.
Technical charting is an "all in" (everything considered") method of analysis. Point & Figure charting never considers time and the probability of success in its use ranges only from 50 to 80 % . I do believe that Aco will be much closer to $20 before it reaches $33 again.
Breaking below $27 yesterday caused a point and figure chart sell signal for ACO. The current price objective is $20. The current price is also substantially below the volume weighted moving average of $29.96 and the unweighted moving average of $29.45 and much closer to the Bolinger lower channel band.
Thinking of the million share days above $30 and I believe there is still a lot of volume interested in getting out.