The first round of hearings of The Banking Royal Commission commenced on the13th March 2018 and in the 6 weeks since then it is finance management company AMP that has been more severely impacted by adverse revelations, than the big four banks themselves.
Unfortunate shareholders have been shocked to see the share-price of AMP slide from a near year high of $5.47 to a low of $3.98 before rebounding somewhat in the last 2-3 days.
The Metastock chart below employing ASX data supplied by Paritech depicts the dramatic turn-around in market trust. Although Technical analysis cannot even accurately predict whether tomorrow will see the share-price rise or fall, let alone exactly where it will move to in the near future, charts can give some guidance as to present market sentiment, and suggest an approximate price range in which it might trade for the present.
Many shareholders have already dumped their stock, especially since support at $4.75 was broken, as shown by the high turnover volume, and in the process the RSI Indicator has sunk below 30 well into the over-sold zone.
To AMP’s credit, management is taking prompt remedial action with both CEO and Chairman stepping down, and perhaps this is why the trading candlestick for today was so strong, forming a bullish engulfing pattern. This has arrested the downward trajectory of the parabolic trace, and could indicate the emergence of a corrective move higher.
The most important observation to be made in the next few days is how long it takes before such a rebound peters out, and whether if there is another downward thrust soon, support holds at $4.
My expectation is that the share-price will probably trade in the trading zone A, most likely in the lower half, before market participants make up their minds as to the likelihood of further bad news. Retail investors who feel tempted to buy the weakness, should remember that it would be a counter-trend trade, not likely to last. They should also consider if they still own AMP shares, whether they would be better off deploying their capital elsewhere.
Readers are reminded not to rely on technical analysis alone, but to seek qualified advice from their share-broker, or financial adviser, as needed.