Back on to the market rollercoaster ride. At the start of the week the markets continued to move lower with momentum, but in the end recovered much of the earlier losses. In don’t think I have ever seen that many big bullish pin bars (open and close at top of the bar) when going through the stocks of the week. Still too early to say if we have found the bottom yet (that’s my point of view).
In times like this it is easy to get emotional about the market and to feel like the market has turned against you. Let me tell you this is the natural cycle of the market and even moves like this present lots of opportunity to make money for people that keep their cool. I know this is easier said than done. The actual opportunity to use this period to make nice profits may not come immediately and it might take weeks, months or even years for you to benefit from this move.
What I mean is not part of the Home Study Course and I won’t elaborate too much at the moment, but if you understand what price action is, it is definitely worthwhile to watch your bars when price returns back to any major low or in the current case to big moves up or down.
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Oh No! the blog portfolio’s profit of current positions is down to 10% again. When you first look at this it does not read very well. Whilst the Australian share index finished the week marginally lower, the portfolios profit is down from 14%. Nothing to worry about though as we were adding 3 more positions and you expect the profit to fall then, as it is unlikely their profit is up to 14% in the first week.
As mentioned last week DOW (Downer EDI Ltd), TEL (Telecom Corporation of New Zealand) and WOW (Woolworths Ltd) all three met the buy criteria according to the Home Study Course. Their buy price this week stayed under 33%. I am already looking forward for them to return some healthy profits to the portfolio.
Apart from the new additions I still have CPA, SKI (below 1.234), TLS and TSE meeting the buy criteria based on my interpretation of the HSC. I didn’t identify any new sells this week. There is a good chance I missed something, because I was redoing my workbook after attending David’s refresher webinar on the HSC. I liked his tips how to setup Market Analyst. But this means I lost some of my old trendbands on the charts and I need to go through them again in greater detail.
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The Australian share market finished the week slightly higher than the week before, whilst the blog portfolio moved marginally lower. This is to be expected when adding new stocks to the portfolio. Last week we added TLS (Telstra Corp Ltd), which finished the week 2% up compared to the opening price on Monday. Apart from this there wasn’t much movement in the portfolio.
Looking forward to Monday, I have a number of stocks fulfilling all the buy criteria according to the Home Study Course. They are DOW (Downer EDI Ltd) (under 3.92), TEL (Telecom Corporation of New Zealand) (under 1.74) and WOW (Woolworths Ltd) (under 27.33). This is interesting that all three are close to the 33% price extension and are only a buy if they open or move below the 33%. I also still have CPA, GPT, SKI, TLS and TSE meeting the rules. I didn’t identify any stocks meeting the sell rules. Read more…
It’s been a difficult year thus for to make profits following the Home Study Course (HSC). This goes hand in hand with the Australian share market as it is just not getting any real momentum and while the index is moving slowly higher it is more in a sideways movement. Most trades that we exited this year, were losers. For anyone just starting off with the HSC I would recommend to look for trades that carry less than 15% risk and possibly enter trades with less money than you would otherwise. Don’t get discouraged though. The market will pick up and you want to be ready for this.
It is important to cut the losers and on the other hand let the winners run. Take a look at ILU, which is up by almost 300% since we bought it. Whilst the Australian share market finished the week lower the profit of the open positions are up to over 14% again. This is mainly due to the fact that we got stopped out of two positions during the week with one of them (JHX) incurring the maximum 15% loss. This brings down the profit of our closed positions to 8.5%. Again this is not the true return on investment if you would reinvest your earnings, this figure would be much higher.
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The market feels like a roller coaster ride at the moment. After continuing the slide at the beginning of the week, the Australian market posted some strong gains at the end of the week and finished the week close to where it started. Looking at the low from May last year, the market has retraced by over 50% of its last rise. This increases the probability that we are close to the end (or at the end) of the 53 week cycle. Nothing is for certain though and anything can happen at any time.
There is still a lot of uncertainty in the market and an escalation of the war in Libya or the situation with the nuclear reactor in Fukushima can cause the market to drop more even more sharply. This makes it very difficult for investors and it can be a frustrating time. However it is also a time where there will be plenty of opportunities to enter the market at a bargain price and we should see many more buy signals triggered over the coming months.
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Categories: Portfolio, Trading Updates Tags: all, aqp, awc, fmg, ipl, map, rio, SHL, ski, wes
What a week, which ended with a big bang. I am lost for words to see the devastation caused by the earthquake and the following tsunami in Japan. My thoughts are with the people in Japan as mother nature has shown her destructive power once again. I just hope that the horror stories are stopping and we hear more about miraculous survival stories.
Before the earthquake we have seen five days in the red for the Australian share market causing the Aussie 200 index to drop by around 5%. I have mentioned this before we are getting closer towards the end of 53 week cycle in the index and you usually expect a big drop like this and I expect the market to drop below 4600 points (the close of Friday was 4644). However there is also the chance that this decline simply marks the end of the current 19 week cycle and the market will recover before a steep decline towards the middle of the year. Whilst this doesn’t help us much I suggest you stick by your rules and buy and sell accordingly. You will always find opportunities coming your way.
Having said this, I recommend that you take a break of 1 or 2 months if you encounter a string of losses in your trades. This can hurt not only your physical bank balance but also your emotional bank balance. In order to trade successfully you need to be in the right frame of mind. Take this time to backtest and polish up your skills. Then start trading again.
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