Trading with swords

ASX trading

2006-10-11T22:09:00.000+08:00

I'd figure I would post some of my current positions in the Australian Sonray trading competition. One thing which is very interesting about Australian equities is there low pricing - resembling the otcbb warzone. However, they do act alot differently and many average one million trades per day creating very nice liquidity.

p.s I coulden't figure out how to resize charts, but you can click on them to get a clearer picture

My current portfolio(remember - simulated):

distribution day but nice charts

2006-09-20T11:03:00.000+08:00

We've logged a distribution day on the indicies, however it closed in the upper half of the candlestick - indication of support. The nasdaq held its 200dma. Moreover, I'm noticing some nice charts out there with good fundamentals like IFOX,JPM,FMD, FSH, GIGM, DTV etc

amazing

2006-09-13T15:33:00.000+08:00

Totally unexpected. The market made a huge gain, especially on the NASDAQ while commoditiy prices fell. Huge gain with huge volume. This was like a follow-through day and has reset the distribution day count. Trend is upwards but I'm apprehensive.

Market flush

2006-09-12T20:27:00.000+08:00

The market is correcting on heavier volume, today we saw some heavy volume across the indices and some divergence, which might be flagging instituional churning. In the context of this 2 day downtrend it makes sense.

I've taken on no new longs especially with these two consecutive distribution days, besides that nothing noteworthy is showing up on my scans and most breakouts are breaking down.

Taking into account the 21 day overdue follow-through, rally on light volume and then a heavy volume pullback with a lighter volume rally to me is foreshadowing the end of this rally... personally I'm not going shorts until we undercut the follow-through day. Even then positions will remain small.

Night.

humbled by the market

2006-09-08T14:14:00.000+08:00

I've been shaken out of two of my longs both costing me %8 of my portfolio. Another distribution day has been logged on the indices.

Market sustains heavy selling

2006-09-07T15:33:00.000+08:00

The Nasdaq, down -1.72%, has reversed on its light volume rally with volume coming in above average levels, indicating institutional involvement. The SP-500 followed suit with a -%1 drop.

I'm almost stopped out of my current longs, excluding ALSK, flagging the likely downtrend this will take us into.

2006-09-01T15:02:00.000+08:00

Went long MEH and VRGY last night. Market barely did anything today. 1 distribution day.

still trending upwards

Light rally, the question is sustainability

2006-08-30T18:30:00.000+08:00

We have picked up some volume, which is an improvement. However, volume is still below the 50 day moving average. If we get further upside with better volume action it is quite likely that nice charts will begin to form.

Currently long ALSK(since 08/17/06).
I'm alittle aprehensive to go long without further confirmation from other charts.

Watchlist:
GEX - be careful, these type of stocks come down fast and quick.

21st day follow through(a few days ago :P)

2006-08-18T16:41:00.000+08:00

we got a follow-through, albeit on light volume and very late. It's been backed up by some heavy up days the past few days and today little progress on some higher volume(which is negative). The path of least resistence is now up.

Lots of cool industries moving in reaction to the 'rally'. However, I'm still feeling abit unsure especially with a leader like HANS coming down.

Additionally, I recall reading that follow-through days after the 7th days usually mean weak rallies but again trend = up(for now).

Going long:
ALSK

WATCHLIST:
KNOL
TWTC(very nice base, however the breakout was not on heavy volume so i'd like to watch it -still possible to go long after breakout of the high of the base @ 18.83)

btw i'll be comitting alot more soon to this blog...

NASDAQ leading a nasty downtrend

2006-07-14T12:13:00.000+08:00

NASDAQ lead this distribution day. It has undercut the intraday of the first rally day confirming further downtrend.

Selling NGA tonight at a loss. It was a mistake buying both SIMC and NGA, ugly stocks in an ugly market.

2006-07-07T22:27:00.000+08:00

Just sold SIMC.

It was a mistake buying the stock, it is way overextended and has based for only one month with a symmetrical triangle. %383 above 200-dma.

I'm out at a small loss. I will have to see what happens if it goes back up b/c I just dont like these triangle patterns right now and am not so great at reading them.

tonights watchlist

2006-07-04T21:27:00.000+08:00

I'm likely to be buying SIMC, NGA tonight

WATCHLIST:
KNOL, SIMC, NGA

We are now in a confirmed rally

2006-06-30T10:34:00.000+08:00

We get the follow-through on the 12th day, albeit quiet a late one. I'm covering my shorts tommorow(BDY, EL). Metals and Oil are leading this rally.

I dont know if this is an 'oversold' bounce or whatever, all I know is the market is rallying therefore it would be wise to go with it.

However, this does not mean go long if there are no QUALITY longs - because frankly I dont see any.

WATCHLIST:
KNOL
GPIC
ECL

Short

2006-06-29T00:11:00.000+08:00

wForgot to add I shorted BDY 06/26/06 on break of 200dma with high volume showing up in the mourning @ intraday.

So positions:
ELY - Gain %14.43
BDY - Gain %3.85

laterall movement

2006-06-25T23:10:00.000+08:00

Lateral movement here. Nothing much to talk about. Still same position as previous post.

Leaving with a good quote from an article by alan farley "Bear markets shake out the infrastructure and realign prevailing psychology".

I'm not long anything. Wont be taking new longs.
I have covered TTM, IPS a few days ago. Still holding ELY.

Currently developing a short scan for tcnet, will post it soon and want any addition or tweaks to be added in comments.

This is dodgy

2006-06-22T08:56:00.000+08:00

Nasdaq up +1.62%, the dow up +0.95% and the S&P500 up +0.97%.

All moved up on a low-medium level accumulation day. However, no strong breakouts have manifested as a result.

I point to my previous post where I claimed that I was a little confused because we saw some growth industries moving up. But now I realise that they must be too tired and still correcting b/c otherwise we would be seeing these breakouts.

I dont see how a market could move up without any breakouts in strong charts, which symbolise leadership.

Tonight I have my debuton ball - and will be away two nights sleeping.

Lafayette - out

Rally outlook

2006-06-20T17:41:00.000+08:00

Yesterday rally made a move down on heavy volume, keep in mind it was quadruple witching. Still I'll count it as a distribution day for the rally. Today it moved down on lighter volume,

I'm alittle stumped about this rally because i'm seeing more reactions by more growth industries to it.
Internet service providers, Diversified Computer systems, Semi's... Although there respictive industry charts dont look good -if they can be judged in a manner similar to big indexes?

Chart breakouts are shit right now. That does explain alot.

OK. All of this was just my 'outlook' on the rally - testing my skills. thinking blah blah but lets get to the point...

I'm bearish until a follow-through and good looking breakouts coming from strong industries.

Thingi mebob of the random interval:
Quadruple witching:
A day on which contracts for stock index futures, stock index options, stock options and single stock futures (SSF) all expire.

http://www.investopedia.com/terms/q/quadruplewitching.asp

4th*corrected rally attempt

2006-06-16T06:10:00.000+08:00

Ok. This 4th rally attempt is looking good(I said 3 before, but counting the climactic looking day I commented on it's 4). I'll be back later with market commentry as I have to rush to school now...

Ok back from school and now in a rush to go meet some friends... anyhoo It was an interesting day in the markets.. Firstly some of my classmates have called a crash right here --- these guys dont trade.

You have lots of leaders reacting best to this rally. Tech is up there too along with metals again. I dont know what to say about gold and haven't had time to check its breakouts but i'll be back with some more data.

Some people are saying the volume is way weak on this thing. True it is realtively smaller then the downtrend volume, but volume can pickup later. Keep an eye on volume price action next two days. We are looking for a follow through on the 4th day now. Oh yeah --> My shorts have reacted the 'best' to this rally too, they all jumped %5 plus where as in the previous rally it was much lower. Cheerio

Support

2006-06-09T19:11:00.000+08:00

Support and climactic selling. Nothing else to add...

Dow rally failure. NASDAQ hitting 7-month low.

2006-06-08T15:32:00.000+08:00

The attempted Dow rally is dead. SP-500 & NASDAQ still alive and nearing the end - once they breach first the first rally days absolute intraday low. Both have suffered one or two distribution days while attempting to rally and are into their 10th rally day.

The fact that the DJ-30 is a defensive index and has failed it's rally suggests to me that the other indexes will soon follow suit.

Below is an image of industry groups and their action since the market top(click to enlarge) - Notice the amount of defensive industries holding themselves through the decline and even advancing... Also what are closed end fund- debt/ debt securities in relation to a declining economy?

Thingi Mebob of the Random Interval(Cant do this everyday!):
When nearing a market top it can be observed that laggards begin moving up. Quote from IBD "When the old dogs start barking it's time to get out" - or somthing like that :P

Why? Investors late to a bull market are looking for cheap stocks. This lifts up laggards and the otcbb warzone stocks.

During the 2000 internet bubble the following was observed.

"Excessive OTC: BB Volume

There are times when it seems like the herd is buying anything that's not nailed down -- regardless of price or quality. By the time the frenzy works its way down to the least-warranted, lowest-value, nonreporting companies -- the bulletin board stocks -- it's all over but the crying.

In an ordinary market, most of us never go anywhere near this junk. So it's worth noting when these micro-minis are jumping up on huge volume. It means that money has run out of credible places to go."

Taken from http://www.thestreet.com/comment/cfeatures/1242603.html

Want to see this in a recent example? Look at ERS climax run, and look at all the low-priced GOLD stocks during this time period.

I felt bearish didn't I

2006-06-06T20:54:00.000+08:00

Got no time to write alot about today - very busy. btw I dont analyse economics - fed rate and all that shiz yet. I've started learning about it so commentry coming in the near future!! For now I can only analyse some market action ----

Okay! All indices plunged today with moves down of more then -1.5%. Notabely NASDAQ moved down 2.24% but on lower volume, this at first confusing me... but look carefully

Rememmber how I said I was bearish on the NASDAQ rally(explained earlier)? SP-500 rally was looking better.. infact it still looked like it could bring in a rally-day but today higher volume on the SP-500 set in a 2nd distribution day. Even though the NAS +dow moved down on lower volume the rallies on both these indices were not very good price/volume wise .This does not bode well for any rally.

I'm still in small short posititons but do not feel confident enough to assume more posititons...

Go long only after a follow-through, if it occurs(which I doubt). Go short after a rally failure(Another failure on heavy volume - anyone want to confirm wether this is ok? 3 distro days would usually kill a rally from what I read) or breaking fo the intraday low of 1st rally day.

IFO intraday

2006-06-03T19:36:00.000+08:00

look at this cup/h breakout on intraday 30min 10day chart.

Cheers and goodnight.

Support and movement

2006-06-03T14:51:00.000+08:00

06/02/06
2nd of June 2006

Mixed results for the indices today. Nasdaq fell intraday but later found support at it's 200dma.
A small gain made on the sp-500 and small loss on Dow, both of which are nearing the 50-dma.

I remain uninvolved. We are now in day-7 of an attempted rally.

I feel bearish on this rally - because of the progress it has made on light volume and the little progress on higher volume.

Day 4,5,6 I don't like.
day 4 = light distribution
day 5= Small spread, little progress on higher volume.
day 6 = big markup, but where is the volume

We'll see how the rally turns out.

Thingi Mebob of the day:
Narrow spread, High volume, on an Up-day/bar
"The public and others have rushed into the market, buying before they miss out on further up-moves. The professional money has taken the oportuinity to sell to them. This action will give you a narrow spread with high volume on an up-day or bar. If it closes on the high, this seems to add even more weakness. The reason for this is not quite clear to me. This type of action is seen after a rally of some sort. Buyers are sucked into the market usually on good news giving the professionals the opportunity to sell." - The underclear secrets that drive the stock market by Tom williams.

His work is largely based on wyckoff's, a trader from the 1920's, own research.

Moving up really?

2006-06-02T21:32:00.000+08:00

06/01/06
2^nd of June 2006

Nasdaq: + 1.88% / +40.98 to 2219.86

S&P 500: + 1.23% / +15.62 to 1285.71
Dow Jones: +0.82% / +91.97 to 11260.28

The indexes were marked up a lot today. However, volume was lower across the board and so I will not confirm this rally. Follow-throughs’ require volume higher then the previous day.

This means I will remain in cash and not assuming any more short positions (I will do this in the case of a rally failure + research more into shorting during an attempted rally). For me to turn Bullish I will need a follow-through day.

Some breakouts occurring in the following industries: scientific and technical instruments, communications – wireless and networking and healthcare. Anyone want to add to this?

Ooo almost forgot. Industries which reacted the most to this recent rally which began 05/24/06 are Steel & Iron(Previous leaders), Gas utilities, water utilities, Oil sector, Healthcare Information Service, Heavy construction and Metals & Mining. Most of these are not coming out of fresh bases as they were the previous leaders…

Healthcare Information could be a leader if this rally is confirmed but utilities? They don’t seem like high growth leaders…

New positions: none.

Currently short:

TTM, ELY, IPS.

Thingi Mebob of the day:

When should an attempted rally be confirmed?

A rally occurs after a declining phase and is a time to evaluate the strength and condition of the market at a lower level. In most cases the first 3 days of a rally should be ignored, unless all days making tremendous price progress on heavy volume.

A rally confirms its strength through a ‘follow-through’. This occurs on or after the fourth day of the rally when the index attempting the rally is marked up %1.7 or more on higher volume then the day before (indicates accumulation by institutions).

Statistics: 85% of upturns/bottoms contain a strong price and volume follow-through day. This indicator should be used in combination with other analysis to assist in your trading.

First Report

2006-06-01T22:23:00.000+08:00

05/31/06
May 31st 2006

Nasdaq: + %0.65

S&P 500: + %0.81

Dow Jones: %0.67

We are still rallying despite a down day (counted as a distribution day) recorded yesterday. The distribution day occurred on low volume. However, a distribution day recorded during an unconfirmed rally is not positive.

I’m interested to see how long an attempted rally can hold without a confirmed follow-through day (while containing one or two distribution days).

My scans are not showing any breakouts from sound early bases. Rather, occasional breakouts from old leaders.

New positions: none.

Short:

TTM, ELY, IPS.

(Credits to Maui trader, Please check my links).

Thingi Mebob of the day:

Rotation into new leading stocks from defensive industries at a market bottom occurs a lot quicker then it does at a top. This is usually due to a climactic sell off at the market bottom.

Welcome

2006-06-01T17:17:00.000+08:00

Firstly, Welcome.

If you've come here you'll be lucky to witness the thoughts of a great future trader.

This blog has been created to help me analyse my skills, but you may find that it will benefit you too.

Join me in discussing stock market action by posting comments.