I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Sunday, January 17, 2010

Analysis Update: ATPG and AMX

Back in Mid December on my Caps blog, SolarisKing asked me to do a chart analysis on ATPG: (A Request to Blog Readers - Dec 12, 2009, comments 1 and 2):

Comment from SolarisKing:

Hey binve, are you in ATPG? I was wondering if you had done some EW on it. . . It's bouncing between the 180 and the 500, which it has already breached repeatedly, and the Bolinger is tight with a buy signal for the PSAR. Also, MACD, ROC, and WILLIAM, are all looking like possible consolidation.
Added to the probability of new production this year in the Gulf of Mexico, and next year in Poland (did i get that right?) Average Estimate next year $1.47 EPS.
Trailing PE 16 and PB 1.6. . . . well, you know. . .

binve replied:

I am not in ATPG, and had not seriously looked at it before (from a TA perspective) and had only cursorily looked at them 2 years ago from an FA perspective.

I went ahead and did a count. Caution: It is **very** speculative. There is not a lot of price history with it and so there is no long term trend defined. I urge a lot of caution with trying to read too much into it. But here is what I see (and it is pretty bearish).

My primary inclination is to call the rally done, but you can see my note in orange on the right, that this current pullback could be a bull flag forming. If that were the case and it did sucessfully break through the lower trendline, I would expect it to test the upper trendline.

And here is the chart that I put together at that time:


In this post I want to provide an update on the chart, see what took place during the intervening month and to provide some further analysis

From December 12, ATPG did turn back up. It looked like the bull flag option might be playing out. However it would have to negotiate the first downtrend line before it could make a play for the upper downtrend line.

It moved up and broke out over the trendline. However it failed to consolidate above the trendline, resulting in false breakout. The subsequent move back down was very sharp, losing >13% in a week.

This chart still looks very bearish to me. We have a complete corrective move up. Since the peak, we had a breakdown, move back up over the trendline in a false breakout, with no consolidation and failing to make a higher high. Followed by a sharp breakdown back below the trendline.

So the question is, how will ATPG react to Natural Gas prices? Old Natty looks like it is in a bottoming stance and ready to trade up for while. (Pink line at the bottom of the chart). But ATPG put in its rally well ahead of Natural Gas bottoming (if it is indeed bottoming, which is a big *if* at this point).

I am very bullish on commodities for the long term (I am somewhat agnostic on them for the short term). But I am far more bullish on the commodities themselves than I am on producers, especially at these price levels (resistance) and valuations (high).

I really like ATPG as a short here.

I had a similar (yet unrelated, different company in a completely different sector) conversation with Gumbo on my MTaA blog here: Updater - Updater

Gumbo was pointing out the very large wedge that formed an apex on AMX. In fact he called it the afternoon before a 7% down move over the next couple of days. Here is the conversation http://marketthoughtsandanalysis.blogspot.com/2010/01/updater-updater.html#comment-29673753

And here is the chart from Jan 13:

If you want to see the subsequent price action (down 7%) see this chart: http://www.google.com/finance?q=amx

I also like AMX as a short here.
blog comments powered by Disqus