timwest

ABX at a WARNING LEVEL on 63 day RATE OF CHANGE

Short
BATS:ABX   None
Here is an ODD observation -

Notice how each time ABX has been up around 17% over the previous QUARTER (approx 63 days).... it has been a reasonable trading top for the past couple of years.

I'm often looking at 63 days for the simple reason is that it compares the same time window to the previous quarter's time window. This presumes that most companies report earnings around the same date, about 63 days apart. This way you compare the price action leading up into earnings from both quarters at the same time. Another way to accomplish this is to use a 1 day moving average, lagged by 63 days so you can see exactly where the stock was 63 days ago relative to the current price. It is a simple buy-sell indicator as well, which is equivalent to buying when the rate-of-change over 63 days turns positive and selling short when the rate-of-change ( ROC ) turns negative over 63 days.

I'll go ahead and label several of the 17% rallies over 63 days leading to tradable tops in ABX ... what is strange is that we aren't rallying into this 17% gain over 63 days.

Note: I have a short recommendation out on GG (similar stock to ABX ) and a long against that in BHI as a pair. I also have a short in XLE against a long in BZF (Brazilian Real Currency)... so effectively I have a long BZF, and a Long BHI /Short XLE ... and this ABX looks like a short after a lift up to $41. More to follow when it gets there.

I'm just sharing an interesting chart this time and NOT a specific trading strategy.

I am considering a short up around $41 to maybe as high as $42 on a small lift from here at $40.19, but for now, I am weighing out this trade. I will post an update when it looks set up. Risk is always defined as 3 average true ranges at a maximum.

Cheers.

Tim 3:30PM EST, Wed, Oct 10, 2012

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