Follow the Weight of Money to get the Truth on Amcor

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WD Gann Rule of Three - Stock Market Investing
Coronavirus and the US Stock Market - Using WD Gann's Rule of Three

It can be hard to know what the truth is at times.

Are the financial figures companies publish always accurate? Do CEOs sometimes gild the lily?

I’ve found the weight of money is usually a reliable guide to really find the truth of anything.

Here’s a quick example; just before it went into liquidation, Enron, one of the largest traders of electric power and natural gas in the US, was making billion-dollar profits, but here’s what the chart was doing…

Source: Hedgeye.com

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It’s not that the market is smarter than you. It’s just that it usually has more information than you.

And if there’s money blowing in the breeze, people will act on that information.

We can bring all this closer to home and to the current day.

US based short-seller, Spruce Point Capital Management has told its clients it has little confidence in its financial reporting of Amcor Plc [ASX:AMC].

Amcor is a packaging company. Most of its sales come from grocery, beverage, healthcare and medical supplies packaging.

Following on the theme from yesterday, even in a lockdown world, people still need to eat and need essential day-to-day goods.

And most of that comes in packaging.

Anyway, the US short-seller has alleged this month that Amcor was providing an inaccurate view of its financial position and that Amcor’s true market value was up to 60% less.

In response, Amcor CEO Ron Delia dismissed the accusations as rubbish research.

Where’s the truth?

You could follow all this from here. Often the chart will get to the truth of things, so let’s bring it up:

Source: Optuma

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The Amcor share price is trading around, what I call, a key level. It may well just find support around this level.

So, what now for Amcor?

This stock is facing multiple headwinds. A panic sell-off and accusations the books are not showing all that they should.

If it can hold that level around $10 or so, despite the short sellers accusations, despite the pandemic panic sell-off, that might tell you a thing or two.

Anyway, if you want to keep up to date on what’s happening in the markets and a whole lot more, you can subscribe to the Profit Watch newsletter here.