Wednesday, 14 March 2012

Where are we now?

Service will be patchy for a while. But I will be back.
What a jump! More than 200 points and it took out the 13000 level (purple line), burst above the diagonal trend line and broke through an important peak that occurred just before the 2008 market collapse (top blue line).

So where to next. As ever I am not foolish enough to predict these things. But I have a well invested portfolio so that tells you where I'm putting my money. The futures market for tomorrow looks promising. I bought a whole bunch of "surfing" shares on Monday. By this I mean ones that:

  • have an upward trend
  • have displayed a wave motion in price 
  • are near the bottom of the wave
  • the value of the move from the buy price to the mid point of the wave movement is worthwhile.
In the UK I have bought TT. KIE PMO STAN KAZ RIO. All are in profit since Monday and STAN is showing a 3.5% profit and is close to the point where profits are taken.

In the US I have bought ZSTN USHS ALNY WNC and LCAV. These are doing reasonably well and have very high profit targets but are being dragged down by poor performance by LCAV.

My US picks of 8 March are showing excellent returns. Hong Kong shares bought the next day are, rather disappointingly, neutral.

Report comment overall: could do better, but is improving.

This information is provided so you can watch. I do not recommend shares.

Monday, 12 March 2012

Back in the doldrums

After last week's scare we are back in the doldrums. The market has recovered - a bit. It has bounced through our two resistance levels. (You will remember that these are highs established in May and July last year. The next resistance level which I have just added was established in May of 2008, before the 2008 market crash.)
Currently the market is struggling with the 13000 level which it has breached briefly before falling back. It is also below the diagonal trend line support level.

At present I working on the assumption that we are poised on the brink of a renewed bull market which may be short lived. I am therefore picking shares that should generate short term gains using two strategies:

  • I am currently experimenting with a month by month share picking pattern. I buy shares and hold them for a month and then replace them with a new batch. The reason for this rapid rate of turnover is because the shares I pick are in reasonable companies that have been severely beaten down in price. These shares can show spectacular returns but carry a high level of risk and meteoric percentage rises can quickly evaporate. These are shares that I seek out in the US, Hong Kong and the UK
  • I am also buying shares using my tried and tested UK system that looks for shares which have out performed the market and have exceptionally attractive fundamental characteristics. PE ratio, predicted growth rates etc.
So last week I was frightened out of my positions based on the first strategy, with a moderately better than neutral outcome; and held onto the shares bought using the second strategy.

As things settled down and the market recovered I bought back into strategy A, a little more cautiously than before. The US shares I bought were PCX DMND STRI AMRS PMFG. They are already showing a nice chunk of profit. In HK I bought 886 267 2328 2342 and 1828. They have yet to show a profit. In the UK I strengthened my portfolio of strategy B shares with VP. BMY RNO and SPD. I'm still waiting for an uptick in those.

Remember that nothing here is a recommendation. I mention what I have bought so you can all watch and then have a good laugh if I fall flat on my face OR think how right he was if I don't. 

Pip pip and good luck with your endeavours.

Wednesday, 7 March 2012


So I was wrong. Hasty reappraisal of tactics. Swift implementation of stop losses. Winding down of positions and then sitting back to tend to my bruises with an enhanced war chest. Wondering whether I should hedge with some short positions. Too early to tell.

And then this morning. One of the pleasures of holding some Hong Kong shares is that I can get up in the morning and see what has happened overnight. I could have gone to bed leaving sell orders but I decided not to. I don't have an automatic feed for Hong Kong so its a question of manually looking up each share.

First though I looked at the futures market which was expecting a 30 point rise on the Dow. Then the HSI - the Hong Kong index was only down 150 points. Not bad for an index that can easily fall several hundred points when its feeling peaky.And then I went to look at the individual shares I own. 6 out of 9 were up.

Futures are indicating a 17 point fall in the FTSE. Not massive. So here I am sitting on the fence. I think I'm going to do this: Wait for the open and see how black the clouds are looking. If they are dark I shall do a bit more pruning of the portfolio and throw in some small shorts (how do these puns find their way into my head?) and I shall do the same with the US market. The HK market has about an hour to go. If my position starts to deteriorate between now and then I'll take some profits.

Nil desperandum.

Monday, 5 March 2012

Will it hold?

Hello David. Thanks for your comment. I agree that caution is needed here. (see comment on last post - no pun intended, but there could be a hidden message.)

The fact that you look at the evidence and find it points to a a top and I look at it and think a breakout is more likely is why the market plods along unwilling to do anything much. Buyers and sellers are matched and each side is trying to wear down the other. I see that two resistance levels have been broken on the Dow. Others see the failure to breach the 13000 level. Either side could be right. My modest optimism is just that: modest. Tomorrow I will go through my holdings and stop some losses and possibly take some profits. I have yet to decide whether going back into silver is a good idea now. Not only is it outperforming gold but it is much more volatile so there is much more danger.

A big part of tomorrow's work will be reviewing stock picking strategies. So my bullish mood continues unabated. Only a big drop in the Dow will shake that.

Just to keep my feet on the ground and to keep me worrying (worrying is best) I show two shots of the S&P 500 today. It shows a failure to break the highest resistance level and a break down through the next lower resistance level which should now be offering support. It has also broken down through a diagonal trend line support level that has held since the end of December. If those portents are to be believed it is a case of hold on to your hats. "It's a game, i'nit."

Sunday, 4 March 2012

What's new?

That massive dive in the gold price (5.5% in a day) has had no kind of follow through. The price drifts about at the same spot it ended the day on Wednesday. The volume spike on Wednesday was big but not as great as the last real biggie that occurred on 26 November last. And the volume follow through on Thursday was very limited compared with other such events. And then on Friday trade was pathetic. Sliver showed a similar pattern.

What is extraordinary is that none of the other main markets were affected. It was as though someone dropped a huge rock into a pool and it sank without ripples.

By now you will know I take little notice of the news and allow the market to tell me what is happening. But with something as strange as this I was curious to see what others made of it so I took a little peek. It was much as I should have expected. It's amazing how many ways grown men (and women) have to wrap up the words "I have not the faintest idea." while still pretending to be on top of what is happening. Better still the fall came as no surprise to them.

My next trick is to decide whether I should go back into those very profitable gold and silver positions or is this the beginning of the end for the precious metals bull market. I can divide that question into two parts:

  • do I still feel confident about the equity market? (My basic idea here is that equities seem poised to make a big breakout on the upside and I am perhaps 80% convinced that this will happen.)
  • could the precious metal markets yield a better return than the equities? (I am fairly clear about the answer to this question - if I am right about equities I am convinced that I can make more money by share picking in a rising market. I can cash in my profits and if If feel the need to buy precious metals I will be in a position to buy more gold, silver or whatever.)
The risk I am running by doing this is that I could get caught out by a catastrophe which would catapult precious metals into the stratosphere and leave me struggling to dispose of my shares. Something to mull over in the next few days.

In the mean time the Dow plods on finding it hard to smash that  13000 barrier leaving my portfolio languishing with it.

One little idea did come out of listening to all those explanations of why gold was dumped as Bernanke spoke. It would appear that platinum has been outperforming gold since the beginning of the year and did not take the big hit that damaged gold. And then I looked at the charts and found that platinum and silver followed the same trajectory. I think I feel safer with silver. But a lot more thought needed here.