The Home Trading Blog

Let’s start with the good news first. I can see more and more stocks being in a confirmed downtrend according to the Home Study Course rules, which means once the market turns up again, there will be plenty of buying opportunities.

What a week, as I was reading in one article – it was a blood bath. I wrote last week that we will see either big falls or a big gains after the US debt ceiling vote. Although many private investors would have thought otherwise (after the vote), markets had their biggest one day fall since the beginning of the global financial crisis and there are doomsayers saying this one will be worse than the last time. Let’s wait and see and get everything into perspective. The overseas markets had a fantastic run since June last year (not necessarily the Australian market though). And so far we have seen just over 38% retracement of the rise for the Dow Jones index. This is a very normal retracement for a cycle and we need to wait and see how much further it will fall.

So much to the global markets, now we have a look how this affected our portfolio. As you can imagine with a number of positions already in the red, this week triggered a number of stops. We got stopped out of AGK (AGL Limited), OST (OneSteel Ltd), SGM (Sims Metal Management) and WOW (Woolworths Ltd). And if the bears continue to dominate over the next couple of weeks we will close further positions. I also mentioned last week, that we had 4 stocks fulfilling the buy criteria. I was looking at them again on Monday morning and was thinking that it is not worth the gamble with the uncertainty of the US debt crisis. For the record all buys would have resulted in a loss with the stop being hit this week.

Not surprisingly I didn’t identify any stocks meeting the buy criteria this week and I noticed ORI (Orica Ltd) having two closes below the uptrend band.

The transactions for last week were:

5th August: Sell 682 AGK @ 13.42 for a loss of 8.45%
5th August: Sell 4975 OST @1.71 for a loss of 15%
5th August: Sell 526 SGM @ 16.17 for a loss of 15%
5th August: Sell 368 WOW @ 25.41 for a loss of 6.37%

On a private note, we are going on a Europe trip for until beginning of October. I will do my best to continue regular updates to the blog but I might miss a week or have the update delayed.

The portfolio as of 5th August is:

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.

Read more…

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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Again the web portfolio goes hand in hand with the XJO (Aussie 200 index) and finished almost unchanged. The index finished the week just 7 points higher than the week before. Looking at the portfolio we were up by .01%. The big winners for the week were all the mining stocks with the  retailers being on the other end and finishing the week lower.

Looking ahead to next week I still have CWN, TOL and WOR fulfilling all the buy criteria according to the HSC. I also have AMP (AMP Ltd), MAP (MAP Group) and SUN (Suncorp Metway) joining the list of buys. Still no stocks that are giving me a new sell signal, although OST (OneSteel) is moving very close to my sell stop and I will be monitoring the stock very closely next week.

I had an interesting conversation with a colleague of mine last week. He gave me a list of 12 stock symbols, that he sees as an opportunity, and asked me about my opinion of them. Most of the symbols were from the Australian Stock Exchange but a few were from the New York Stock Exchange. I looked at them applying the HSC rules and none of the stocks that he mentioned were anywhere near of setting a buy signal (according to the rules that I follow).

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Apologies for missing last week’s update, I decided to spent some quality time with family on our holidays after we came back from my first skiing experience in Chile. We had great weather and best of all fantastic snow. I’ll definitely be back for more in years to come. Well as I skied downhill the markets went downhill as well. At least that was what I heard when I turned on the news. I expected the portfolio to be in negative territory again and was surprised to still see it clinging to a 1 percent gain.

There was quite a bit of activity while I was offline with TLS (Telstra Corporation) triggering the stop and three more additions to the portfolio. Telstra actually plunged to a new all time low at 2.82. OST (OneSteel) was a buy two weeks ago and last week we have added PPT (Perpetual Limited) and CWN (Crown Limited).

The transactions in detail:

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What looked like a recovery half way through the week ended up with the XJO taking out the low from November 2009. All in all the XJO lost another 1.2% compared to the previous week. Interestingly enough the blog portfolio profit rose slightly. I am getting asked a lot, what I think the market will be doing over the coming months.

I mentioned this before, we are currently at the end of a 53 week cycle and I expect the major low to be somewhere between now and the middle of May. There seems to be some major reversal days at the beginning of April and time will tell when the actual low will be.

We are certainly getting a lot of sell indicators at the moment and I am happy to take them to lock in the profit. Also many of the stocks I am watching are now in a confirmed downtrend. It is just a matter of waiting until they reach their bottom and then get ready to climb up again.

Last week we finally sold PDN (Paladin Energy Ltd) for a tiny profit of 1.3%. The transaction was:

1st February: Sold 2747 PDN at 3.69

Looking ahead to Monday, we will sell following: Read more…