At last, market makes that move up

AT LONG last our market ran up strongly last week and closed above the narrow sideways trading range that had been in place since May this year.

This weekly close formed the weekly pivot point I have been waiting for. I mentioned last week that a break above this sideways move should lead to a quick move up to the 6000 resistance level on the All Ords.

As of Wednesday that level had almost been reached and I expect it will consolidate now, either as a slow pullback or a few days of narrow range trading before breaking above 6000 and moving to the 2007 all-time high of 6873.

When that level is reached I will watch closely as to how it behaves, as I expect we will see it move to new all-time highs and, when and if it does, there will be some interesting targets to discuss.

In recent weeks I have discussed the fact some of the stocks priced below 10 cents have been quietly forming patterns over many years on low volume, from which I would expect some strong moves to develop when volume starts to increase.

One stock I have been watching closely for some time is Australian Mines (AUZ). After several years trading on little to no volume, in mid-2015 some volume started to creep in.

In early 2016 there was a surge in volume and the price ran up from 0.5c to 3.4c and then fell away to below one cent on reducing volume.

It traded between 0.5c and 1.5c on very little volume until early this year when the volume again increased.

The price ran up to 2.5c, then pulled back to trade between 1c and 1.8c (again on low volume), until early this month when the volume increased and it moved above that sideways trading range and consolidated for two days.

The strong move up after this consolidation prompted me to buy 300,000 shares at 2.3c on October 13 for a total of $6920. The stop is 2c and there are some big targets starting at just below 6c.

As most of the stocks held are well in profit, I just could not resist this classic pattern. There are many other similar patterns that I will discuss in future columns.

Last week was one of the strongest weekly gains for the portfolio for some years. Big Un (BIG) now has a target around $4 and it will be interesting to see if it has a small pullback and another move up, providing me a higher trailing stop.

The strong move up in the case of BIG is another situation where there is a decision to be made – whether to take profit or risk giving back that profit while waiting for a small pullback forming another higher spike low, to be used as a higher trailing stop.

Lynas (LYC) has continued to consolidate around the 22c level and if and when it does resume the move up, it will next find resistance around 32c to 33c, before again moving higher.

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