Monday, February 23, 2009

The early bird? Mon Feb 23

The Aussie market has been outperforming most of the large markets lately but the party's over today. For some reason the overnight spi contract was up 3 points but an hour and a half into trading today the xjo (top 200 index) and the spi are down heavily.
There was a great opportunity to short rio on a ross hook entry just after 11am. Here's the chart; the start of the 3rd bar was a continuation after a bearish inside bar.





There was also an 11am opportunity to short wpl on a traders trick entry where there was a lot of room to justify pre-empting the trade.
A quick round up.

Bhp: trending down, new lows (in this time frame) but losing momentum. Down 127 but 65 cents was the stock going ex div. US closing price was 3040, so 2975 after the dividend compared to 2925 now. Does imply there's realistic room for a further fall.

Fmg is suspended as they've announced a capital raising and Wow is still in a trading range so I'll leave it alone.

Ncm: opened strongly thanks to more strength in gold but has slipped off with the rest of the market. Looks like I could find a trade there, possibly bullish if it can hold this level.

Rio: down 6%, making weekly and daily sell signals. It may have a quick bullish reversal which I doubt I'll trade unless there's a good foundation. I'm keen to find a continuation down later in the day.

Sto: Again looking weak on longer term charts although not breaking down yet. Looks like it is making a second inside bar but they're weak and not indicative of a bullish reversal. 1410 would be a new low and a sell signal.

Wpl: Made a new low in the last 15 minutes but I was reluctant to take it as a natural stop was too far away and the previous bar, while weak, had rallied off it's lows. Is ex dividend 55 cents today.

Every time I insert a chart this editing window goes to automatic double spacing. I haven't found the trick to fix it yet.

12.10 No trades yet as the market has traded in a range for the last 45 minutes after the gap down. Is a fall of 2.5% too much or are we catching up after having outperformed? My two most likely for a trade are ncm and sto.

12.16 I've got a potential buy signal now in ncm but I think I'd like to wait until closer to the end of the bar. There's 14 minutes to go and at the moment it's pushing up but on light volume. Also a break of 3385 would be a more secure entry. I guess there's never any definitive answer to these quandaries. Here's the chart - at roughly 12.19.

12.22 Bought a little at 3377, hopefully the strength will hold (spi is making a bullish reversal pattern) and I can pick up the rest. Stop is at 3353.

12.25 Spacing fixed! Inserted another chart, tho' I can't go back and fix up the earlier sections.
Bhp and wpl setting up for bullish reversals. Both worth taking with characteristic momentum leading into them and matching black and white candlesticks. May have a couple of trades after 12.30.

12.31 Bought bhp at 2945, buy was at 2941. Wpl went a bit too far at the end so I've left it alone. Rio also had a sharp little reversal but a bit hard to trade. It could set up for a second leg up later.

12.41 Decided to buy rio at 4736 as the futures continue to rally and the momentum down into the turning point was strong. Added to ncm at 3384 although given the turnaround elsewhere it's possible ncm will fail - gold is slipping as the broad market rallies.

1.04 Cut my ncm trade at 3360 as it slipped below the range of a very lacklustre rally. Setting up for a short now but would need more volume to get on board.

1.07 Just in time in ncm as it quickly slipped to 3336. Looking to short a little on a bounce. Just sold a small amount at 3352.

1.38 I'm finding it a bit hard to change my behaviour for the better. I leapt straight into a short in ncm 3 minutes after saying I'd need to see more negative momentum. However, I've been patient with my longs in bhp and rio. Sto is interesting. The first couple of corrective bars this morning were very non committal but then there was a third white candle and it started to shape up well. I thought about a buy on the break of that candle but didn't take the trade. It's continued to rall nicely.

1.52 Wpl did something similar to sto and now is shaping up as a short as the rally falters.

1.58 Stopped out of bhp at 2951 and thinking about a small short but will wait till things settle a bit.

2.01 Stopped out of rio at 4743 and short at 4737. Has made a little 1-2-3 sell signal but could still be a bit knee jerk.

2.07 Short wpl at 3256 on resumption of down trend. Similar set ups on the cards in bhp and sto.

2.20 Wpl rushed straight through my stop at 3275 as the spi keeps grinding up and then dropped back below so I haven't stopped out yet, I'm just waiting for more confirmation.

2.22 Out at 3280. Ncm is now confirming its weakness and is down through the previous low of 3336 at 3322. Tried to sell more but was hesitant after earlier loss and missed my chance. Wow would actually have been tradeable as it's moved up strongly to the top of the recent range. If it breaks through this week, perhaps when it reports, then it will be worth looking at seriously again.

2.28 Trying to build into a short in bhp as it has a second run at pulling back after a consolidation. Also re-entered the short in wpl at 3268 as I felt like I shouldn't have cut. 4 pos'ns now, all short, bhp, ncm, rio and wpl. The spi is finally pulling back a little.

2.33 Bhp short was at 2948 and added to rio short at 4735. Bought a quarter of my short pos'n back in ncm at 3278.

2.41 Punty trade in wpl now confirmed but the trick is probably to wait for the second time through. There's very often a second go and the move is usually better. Close to dealing in sto at 1435. I'm short quite a bit so I'm waiting for a bit of committed selling and a rally back. If I miss it, I miss it.

3.02 My positions have gone quite well in the last half hour. Bought back most of my second tranche of rio as it tests the earlier lows. Hoping for a failure to hold the lows for a better return on the first set. Bought back a little more ncm at 3281 and half wpl at 3256 and 3231. It's just jumped skittishly to 3260. Bhp is down but holding well. Sto cracked down but rallied back to still be in the range at 1440.

Here's a chart of QBE, an insurance company. I haven't been trading in this because I can't short it, even on an intraday basis, but I noticed the copybook reversal pattern this morning. Most of the banks had something similar. Might have been worthwhile taking a trade as the spi was rallying on positive news regarding the Obama administration putting some money into Citigroup and the financials were always likely to rally hardest.


3.19 Things have stalled here and I'm neither cutting nor adding. Sto is the only potential trade but is holding up well while wpl is sitting back up near where I shorted it. I haven't cut the last part of the trade but may have to soon.

3.32 Stopped out of last ncm at 3298. A bit unlucky as it's pretty thin and has slipped back again. Still short bhp, rio and wpl.

3.38 Stopped out of last wpl at 3271. As always, I'm looking for that one last trade and still holding out hopes in sto but time is running short.

3.58 Out of bhp at 2938 and rio at 4650 on the close. Sto did set up but with a buy signal and a bit too late to trade.

4.11 A better day today. It wasn't error free but I did most things right. There were 9 trades with 7 winners and 2 losers.

The one big error was in ncm where I couldn't wait until either a strong bar or a new high before getting into a long position early on. I cut reasonably well but jumped too fast into the opposite trade. After that I was patient enough in holding while it rallied back but missed the chance to add to my position on the second time through. Here's the chart at the end of the day.

However, I did manage to learn from my mistakes and not jump straight into a short in sto without waiting for a bit more confirmation. Here's a chart showing a small sell signal at 1434. The stock quickly rallied and I would have taken the second time through on the downside but it never came, instead the rally resumed.



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