The Home Trading Blog

In a week where US politicians “hijacked” the financial markets, we have seen strong falls in all major international markets. And it looks like this is going to continue into the new week as well. Let’s hope we get a resolution soon and then get on with it. In any case it will be an interesting week where we could see either strong falls or a strong move up. Obviously there is also the chance we finish the week there where we finished this week. Don’t you love trading!?

Going through the stocks this evening I didn’t think I would find any that meet all the buy criteria according to the Home Study Course. I was quiet surprised to see a number of stocks ticking all the boxes. They are IPL (Incitec Pivot Ltd), BEN (Bendigo and Adelaide Bank Limited), OZL (OZ Minerals Limited) and SEK (Seek Limited). There are also two stocks that are already in the portfolio that still tick all the boxes. They are DOW (Downer EDI) and CGF (Challenger Limited). I will add the new ones to the portfolio next week.

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Welcome again to my weekly update. The Australian market made a new low on Tuesday, but has since recovered most of the losses the week before. Looking at the XJO daily bar chart, there is a nice reversal bar for Tuesday (it actually recovered al l of the losses of the day), which could indicate we indeed have found the end (and bottom) for the current cycle. Still if the US fails to come to an agreement on lifting the debt ceiling we could be in for a nasty surprise. Whilst it is looking up, it is too early to celebrate.

Our open positions are gaining momentum as well, with the unrealized profit up from 15.12% to 19.38% without adding or selling any stocks. It has been a quiet week and I couldn’t identify any additional stocks meeting the buy criteria for next week. However I have a number of stocks which I will watch closely next week as they might meet all the rules next week.

I have also noticed IOF (Investa Office Fund) having two closes below the uptrend band, hence meeting the sell rules if you have bought the stock following the HSC rules. I’ll be also watching for a possible add position of one of our latest additions TEL (Telecom Corporation of New Zealand Limited). TEL had a big rise last week and is up to almost 24%.

With no buy or sell transactions for last week, here is the portfolio as of Friday 22nd July 2011:

First my sincere apologies for missing a week of updates. I just got caught up with a few things over the weekend. Many people thought, we will see a rise in the Australian share market following the low in June. After a week dominated by losses the Australian 200 index is just 4 points away from the June low and looks like it will march straight past it. Once again, the Australian market seems to be weaker than its US and European counterparts. However there is still a lot of underlying strength in the markets considering the global news.

The Euro zone is still under a lot of pressure, with Italy being the latest country in difficulties and the situation in the US does not look very promising either. There are doomsayers  who reckon that what we saw during the financial crisis is nothing compared to what we can expect if the USA defaults on their bills. S&P already indicated there is a good chance they will downgrade the credit rating of the USA.

It just does not look like the market itself beliefs this and they are expecting another last minute parachute. The markets are moving cautiously lower and once we see a positive resolution should start a nice rally up.

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The Australian share index finished the week stronger following the major  European markets and US market, but still lagging behind their strong performance for the week. The rise in the markets follows the avoidance of Greek’s bankruptcy (at least for now). Interesting though the world focuses entirely on Greece and you hardly hear a word of the debt crisis the USA faces. If the US fails to raise the debt ceiling by August 2nd, it will have to inform creditors that it cannot pay its bills. I reckon the closer we get to the date the more nervous the markets will become.

Back to our share portfolio and the HSC. As mentioned last week WPL (Woodside Petroleum) had two closes below the uptrend band and hence triggered a sell on Monday. What I forgot to mention was that it showed already weakness early May triggering selling half of the position with a small profit. Overall though WPL resulted in a 3.6% loss. For this week I also have OSH (Oil Search Limited) with two closes below the trend band. For anyone that didn’t agree with my take on TCL (Transurban Group) it has now very clearly two closes under the uptrend band.

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What a week, not because of trading, but I am juggling a few things. I have embarked on a 10 day Bikram (hot yoga) challenge, which is doing one Bikram yoga class every day for 10 days. I am 4 days into it and I am feeling fantastic, apart from sore legs and feeling a bit tired at the end of the day. This combined with normal work load and family make things quite busy.

So I keep it short today, the Australian market made a new low during the week, but finished the week slightly higher than the week before. As I was still waiting for TAH’s (Tabcorp Holding) adjusted data, I noticed this week, that TAH was a sell on Monday, and the week before a sell half of the holding. Overall TAH was sold with a .46% loss and adds to the recent string of losses. Apart from this I have a number of stocks that have given the sell signal with two closes below the uptrend band. They are APA (APA Group), BLY (Boart Longyear Limited), TCL (Transurban group) and WPL (Woodside Petroleum). TCL is marginal and it really depends on the position of your trendband.

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Looks like the bears are still in control of the market at the moment. The situation with Greece and the possibility of bankruptcy of a Euro country seems to play on investors’ minds and many are trying to exit the market until the situation becomes clearer. The Australian market made a new 9 month low and it appears that what I previously thought was the end of a 53 week cycle was not correct.

The good news is that once we see the end of the cycle we should see some good strength return to the market and lots of opportunities to enter the market. Obviously there is also the possibility that we are currently in a bearish 53 week cycle, meaning that we can see the market continue to fall of the next 10 – 12 months.

Don’t you love trading, when you look at a chart with lots of history, all the moves in the past are very obvious, but when it comes to predicting the future there is always some uncertainty in it. All we can do is going by what has worked in the past and continually apply our edges, that have proven profitable in the past. If we stick to our trading plan and in the case of the Home Study Course to the set of rules by applying them consistently – eventually we will succeed and make a healthy profit.

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