The Home Trading Blog

I am up to the portfolio update 100 and it is good to see your comments indicating that you appreciated what I am doing. I am hopeful the markets do their bit to celebrate this post and continue their way up. After having a really good week the week before last, the Australian share market continued to advance, although by a much smaller level. This led to many more buying opportunities for next week and could mean some healthy profits in the near future. If the indicators are wrong however it will mean that the portfolio goes into negative territory for the first time.

Before I went away I mentioned that I would like to change the way I present the portfolio. Rather than always buying 10k worth of shares, I will use a percentage of the capital I have available for any purchases. This will give a better picture about performance as any profits are re-invested. Unfortunately having just returned from holidays I have been a bit busy this week and will set this up in the next two weeks. So for now any news buys will still be added to the existing portfolio. I will however transfer them to the new one once everything is set up.

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We are back from our extended holiday to Europe and had a fantastic time. The way it looks I didn’t miss much in the market and we picked the perfect time coming back. Looking ahead I can see many buying opportunities. Let’s just hope the market has found its bottom. Whilst overseas I occasional looked at the different indexes, one day 2-3% up and a few days later 2-4% down. Crazy market conditions. The German and the Australian index haven’t made a new low for some weeks now making me hopeful that we have seen the bottom.

Looking through the charts this weekend I could see many bullish bars indicating the same. And for the first time in months there are a number of stocks ticking all the boxes (according to the HSC) for a buy. If the upcoming week remains positive there will be plenty more joining in. Whilst the market is volatile though, it might be worth to look at a slightly different strategy to determine the stop loss. David teaches to never risk more than 15% on any given (HSC) trade and if the turning point is closer, use the turning point +1% as the stop loss. There is nothing wrong with this approach, especially if you are just starting out.

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The blog portfolio is edging higher and following the trend of the Australian 200 share index. The index is almost back at its last major high from February. This is in line with some of the major indexes worldwide, however the Aussie is still lagging behind unlike the Aussie dollar which is recording one major high after another. Whilst the strong Aussie dollar is fantastic when you are travelling abroad it is not good news for many of your corporations and this is holding up the market.

Looking at the top 100 stocks in Australia, I have identified a number of buys for the week and also saw many stocks that may fulfil the buy criteria (according to the HSC) in the next couple of weeks. There were no sell signals that I noticed. The new buys are QBE (QBE Insurance Group Ltd) and AMP (AMP Ltd), which I mentioned on my watch list last week. HVN (Harvey Norman), BOQ (Bank of Queensland) and TSE (Transfield Services) are stocks on my watch list for this week. They have the potential of becoming a buy during the week if the monthly swing turns up. Read more…

For a second week in a row the blog portfolio outperformed the Aussie 200 index (XJO). Whilst the index closed nearly the same than the previous week, the blog portfolio advanced with the profit of our open positions up to 7.12%. This was thanks to the takeover bid for the Australian Stock Exchange (ASX), which sent the stock soaring up to 43.89. Unfortunately objections to the takeover caused much of the gain being wiped out again with ASX closing at 37.10.

In hindsight it would have been a good idea to sell half of the holding near the top. However it is always difficult to pick where the top would be when you get a spike like this. And there is nothing preventing the stock going up further. It all depends on your personal investment strategy and your mindset. Personally I like to take some profits when a stock comes down again like this. In a big move like this you could take the half way point of the move as a profit target. In any case it is important you don’t let a trade like this turn into a losing trade (even if the technical indicators don’t give you the sell signal) as this really hurts.

Apart from this we sold HVN (Harvey Norman) as it gave us two closes below the uptrend band. I forgot to mention before that we sold GPT (GPT Group) on the 8^th October for the same reason. Last week we also added DOW (Downer EDI Ltd) to the portfolio and we have still two spots remaining. I will fill them with new buys and not with buys that carry over from the previous week or have been a buy before (since their turning point). This brings me to next week, WBC (Westpac Banking) is fulfilling all the buy criteria according to my analysis and will be added to the portfolio.

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We had a great week in the blog portfolio, at least that what it looks like looking at the figures. Whilst the XJO lost a little bit of ground compared to the week before, the profit of the portfolio rose from 4.87% to 6.48%. Most positions went hand in hand with the XJO but thanks to PPT (Perpetual Limited), up from 4.95% to 27.65%, we were able to increase the portfolio. The second factor was being stopped out of OST (OneSteel Ltd). Cutting the losses on a stock can also help to lift the overall performance of the current positions.

Looking to next week, I will sell HVN (Harvey Norman) as it has two closed below the trend band. This leaves two positions that need to be filled. DOW (Downer Edi) is fulfilling all the buy criteria according to my analysis and will be added to the portfolio on Monday. The monthly swing for DOW turned up during the week. However if you like a conservative entry on DOW you would wait until the high from 30^th of July has been taken out (see chart). I also have NUF (Nufarm Ltd) as a buy, which I missed last week. The carry over buys from last week are SUN and WOR. I would like to apologise for wrongly stating AMP being a buy last week. One of my readers pointed this out (thanks Brad). You cannot draw a valid down trend band (connecting two peaks). This is an important reminder to always do your down analysis before buying or selling a stock. Read more…

Volatility goes up and the market drops. This seems to be the story for 2010 thus far. After what looked like a positive lead at the beginning of the week, turned negative towards the end resulting in a more than 3% loss of the Australian share index. It was a similar picture in the other markets around the globe.

We had some movement in our portfolio adding 4 new positions. They are NCM (Newcrest Mining Ltd), MTS (Metcash Limited), HVN (Harvey Norman Holdings Ltd) and JBH (JB Hi-Fi). Two of them (NCM and MTS) went against the trend and actually posted a small gain for the week, whereas the other two ended the week in negative territory. Fingers cross we can hold on to them until the market moves up with a stronger direction than in the past weeks.

Personally I am very cautious in adding any positions to my personal portfolio. I like to wait until it becomes clear which way we are going. I am seeing many HSC students (especially those who recently finished the course) become impatient and wanting to jump on every buying opportunity. Whilst this can be a good move if we have really seen the bottom of the market, for me personally there is too much uncertainty. Yes I might miss some profitable trades but I keep my bank balance (including the emotional balance) intact, by not having too many false signals like we had with Boral two weeks ago. Patience is a virtue for every successful trader!

Now back to the buys for the blog portfolio: Read more…