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.

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.

Wrong

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.

Laid low

ht

Laid low by a cold for the past couple of days.  Since Monday was a holiday in the US the interesting action happened yesterday.

The DJI remained above the resistance level that was established by a price peak back in May last year.  But the movement in the market remains steady and subdued on a day to day basis. It is amazing how hard I find it to pick up on a change in the mood of the market and respond appropriately. I have completely failed to respond to the smooth upward trend which emerged in December, hugely to my cost in missed opportunity. I now am fearful that my response is too late. This feeling is not helped by the fact that my share picks have been poor. So, even now that the market is still bowling along my returns are dismal.

No point in bleating about this. I am making some money and these periods when nothing you do goes right happen from time to time. It's just a case of being strong and holding on for the moment when luck returns. In the mean time you just keep going and checking to see whether perhaps there is something you have missed and could be doing better.

In the mean time I have taken profits on PG and VZ in the US, both meagre. In the UK on WEIR, decent.
I have filled my boots with HK shares 3360 410 1128 1068 and 2342 - so far so good. These were purchased on the basis of decent quality shares that had been beaten down.

I am also in the process of buying battered shares in the US that I plan to hold for a week. More news about these in my next post.

I have had two comments and have been delighted to reply to each one. Ian recommended MA crossovers as a method for getting in and out of shares. I tested Unilever and found that they were too slow as signals for getting in and out.

Dave wants an understanding of this trading business and I have recommended two books:
Jim Slater's The Zulu Principle and Richard Koch's Selecting shares that perform.

The silver and the gold

Lots of resistance to a further upward move in gold

Well I did it. I sold up all those shares I bought leaving a tiny rump of Hong Kong shares. So far it is uncertain whether I was premature or not. The Dow is hovering uncertainly at its high. But I have put a substantial chunk of money into my pocket and have the emotional energy to look dispassionately at gold and silver.

Before I do that, let me examine my emotional state. I climbed into the market a little early on the 18th when I still thought that the 11700 support line was important. VectorVest was showing that a bullish strategy had yielded positive results over the previous week when the market was falling, so I thought I would give it a go. Bad move! I sat watching money drain away and I had to take losses on the worst performers. None of that cohort of shares did much good except CISQ. A lesson learned.

My next two moves were well timed UK purchase on the 22nd and US shares on the 25th. And I used share picking strategies that I know, as a result of lengthy back testing, work in these circumstances. More purchases on the 28th and 29th yielded more profits. In the US I went for systems that picked large cap shares which disappointed - I was going for safety - not always so smart.

And then belatedly I went for Hong Kong which yielded meteoric returns in a day. I have problems with Hong Kong because I only start to think about it in the evening. I buy my Hong Kong shares in a SIPP and not all the shares have been vetted to show they qualify for a SIPP. I have to get the TD Direct Investing to check, and the department that checks has gone home. They do not return before the market closes in the morning so I am stuffed until the next day. I could have upped my stake in the shares that are pre approved but then I am increasing my risk. This time it would have paid off handsomely another time it might  have been a disaster.

So how did I feel while all this was going on. Frankly it was grim. I was not too worried about the risk to my capital. I am used to that. I am still sitting on an unpleasant loss for the financial year and can take that in my stride. It is the short term unpleasant feeling that here I am sitting on a hefty profit after just a few day. Am I going to lose it? A decision is needed and it is hard to make. Next thing to work on.

Now those pesky precious metals. Gold is coming up to a horrid looking diagonal resistance line, it is sitting at an intermediate resistance level and yesterday's price movement indicated uncertainty about a continuing upward move. I shall have to consider selling some of my gold to reduce risk. However, I am constrained by all those warning sirens that are being sounded by ministers and bank chiefs. What is the best place to be when the S hits the F?

Silver presents a confusing picture

Silver presents an altogether more untidy picture. It has broken down through several support levels but in a rather unconvincing way. The chart provides no decent guidance and I suppose sitting on the sidelines is the best strategy. Lightening exposure is second best. My instinct, however is to hold onto both gold and silver. The battle rages in my heart.

The anguish of profit taking

For most of my twelve years trading on the markets I have enjoyed long trending moves with sharp market collapses to provide a bit of relief. I have not witnessed these broad channel movements. I am having to learn the art of profit taking. In Hong Kong I took profits after just two days and cashed in a useful chunk of money.

It was harder to cash in my UK shares but cash them in I did. That also yielded a very useful profit after just a few days. Here it was the odds that made me decide. The chances that they would fall after such a sharp rise was the clinching argument. Look at the chart and the signs that the odds are lengthening and we are now unlikely to get more upside movement.

I don't know if I will be quick enough selling my US shares this afternoon when the market opens. My performance in the US market has been marred by buying a group of shares using one of VectorVest's search systems which was inappropriate for market conditions. I was lured into believing that a system which had done well over 5 days and then the latest day would yield well performing shares. I was wrong and had to cut some horrible losses. Nevertheless going back to picks based on criteria which I had selected as ones which work well in a recovering market I managed to squeeze out an overall profit - albeit one that remains to be cashed in. Here are the UK and Hong Kong shares that I picked and the profits they generated in a very few days. I will post the US share list once I have booked the profits/losses. (HK shares have numerical codes.)

So if all goes well at the US open I will have cleared another third of my peak loss and with luck and a following wind I will have cleared up the mess I made earlier in the financial year.

The next task is to read the next phase of the market correctly and to trade it well. Will we continue up to the top of the channel and then break out, or do we have a period in the doldrums inside the channel to live through?

There was some damage done to the US profits on the open but I did close my positions and cashed a reasonable profit. I now wait to see what happens next. Gold and silver are contributing well. I wonder if that will go on? Here are my US picks including those ghastly ones from the VV Derby winners selections.

Hold onto your hats

Hold onto your hats.

Amazingly the Lloyd's purchase is paying off - so far. I am sitting on a net profit of 1.7% after four days despite yesterday's pull back.  I guess it will all vanish tomorrow. I need to monitor carefully because it is a share with no fundamental virtue. Its price is subject to political interference - this does not make for a happy holding. It will be a case of take the money and run. I might have done that yesterday but was out all day with our Australian guests. For the time being the price is being pushed and pulled by the market and that is why I think the paper profits will disappear today. We are still in that ghastly channel

Hong Kong is much the same. Price fell to the level where I had made the judgement that it would bounce back and in a valiant effort to put my money where my mouth is I put in an order to buy a batch of shares on Thursday night. Since I expected a strong rebound I put the buy limit at 1% above the closing price of the previous day. All my orders, with one exception were filled. The exception was a share that sprinted upwards and made a 4% rise on the day. That share (330) has continued to rise The shares I did buy made no money the first night but with the big rise on the Dow the next day they made money on Monday. The money was lost on Tuesday overnight after the Dow had lost ground.

It is beginning to look as though the new resistance line that I had failed to spot previously (I have marked it on the chart above) is the important one. With that new line in place I'm beginning to wonder if we are going to have a repetition of the last pattern of consolidation. If this happens the next move is a sharp fall to the bottom of the channel and support at around 11500 with the risk of a breakdown. This is guesswork but I still think it's time to hold on to your hats.

I was not at my desk yesterday because I took my guests to Swindon. Swindon? you may well ask. But Swindon has used part of its old railway workshops to create a massive cut price retail outlet - boring but big and lots of ladies like it - and another part to create an amazing museum dedicated to display the story of the building of steam locomotives from the nineteenth century up to the 1960s. Over 20,000 people lived and worked there for several generations. The museum is called Steam and whoever designed it did a fantastic job. There are short film clips that show interviews with men and women who worked there as well as pictures of the frightening machines they operated. Those machines are there and there are massive examples of the locomotives they built. I have taken two lots of visitors there and in both cases they were enthralled.

Patchy service this week

Missed opportunity on the Hang Seng

This week and into next we have house guests so the service is likely to be patchy. I will endeavour to ensure that any crucial developments will be covered promptly but there may be gaps.

I am writing this post on Tuesday morning, a day after the markets did very little. The Dow was modestly up. These days 83 points counts as a modest move! And the FTSE was modestly down. So the FTSE may play catch up when it opens, though its move may be subdued because the futures market is currently pointing to a 60 odd point fall in the Dow at the open. We continue to sit on the 200 day moving average. See Friday's chart.

Gold and silver look more interesting and, from a trading point of view, worrying. Gold had a good run yesterday and overnight has risen sharply to touch its next resistance level at 1793. So big decision: do I take profits or will it power through. My inclination is to take part profits as soon as London opens and then repurchase if the price moves on upward. On the other hand there are no volume signals to suggest that a reversal is about to take place, so I may just hold on. There is no good news on the Euro Zone crisis and gold is the only protection against an ugly end to that political saga. Silver has cleared the downward diagonal that I pointed out on Thursday's chart, and so it looks set to move on to the next resistance at 3570 2.5% up from here.

Today's chart is the Hong Kong index - the Hang Seng. I put it up to show how I missed an opportunity by watching the world with blinkers on. I was sitting fiddling about with gold and silver and fretting about movements on the Dow and the FTSE while the Hong Kong market moved up 25% in a month. I am set up to pick shares in Hong Kong and to buy and sell them easily. I have a stock of HK$ sitting idle in my brokerage account and I take my eye off the ball. This blog is doing its job in reminding me how stupid I can be. My guess is that the opportunity has passed since we have hit resistance. But I will keep my eye on this from now on. There remains a gap to be filled so another run up is possible. And there is a potential support line around 19050 which could provide a sensible entry point.

Silver stairs

And now the silver stairway?

Another early post because of a busy evening. I managed to sell my Hong Kong shares, without technical problems, as prospects for the market deteriorated. There was one glitch of my own making - one of my holdings I sold 4000 shares instead of 40000. D'oh!

I'll fix that tonight and then I'll be out of equities with the exception of AFC on the London market. I'm holding for the long term on the recommendation of a very good friend. I sit and wait with no strong feelings about it except for trust of the source and a consequent willingness to hold with a 20-25% stop loss.

The weakness in the futures market overnight has been transformed into a continuing rally, up to the 200 day moving average so far. We're still mid range and we still haven't fallen to touch the 11520 support level. Everything remains up for grabs.

Gold and silver, on the other hand are on the move in a gentle sort of way. Gold seems to be climbing up to the next step on its stairway. (see yesterday's graph.)

Silver, (today's graph) has touched the bottom of its current step so I upped my stake as I said I would yesterday. I can always take some profit when it reaches the top of this run. However, there is a triangle, which brought today's rise to an end. Let's worry about that tomorrow.

My portfolio breakdown is now: gold and silver 21%, commodity 5%, equity 3%, cash 71%.


I did a quick and easy duck a l'orange for my wife and I last night. Sainsbury's was selling duck breasts at half price.

I fried the duck breast in lard at high heat on the skin side (skin salted) for about 8 minutes then turned it over and fried for 3 minutes the other side. I then finished it off in the oven at 195 deg. for 6 minutes.

The sauce consisted of 3 oz sugar dissolved in 1.5 fl oz of vinegar. To this I added the zest grated off one orange. I find the best way is to use the coarse side of the grater (though I did grate my thumb). I then peeled the orange and sliced it. I added this to the liquid together with about 5 fl oz of Cointreau. I simmered all this for about 5 mins and then a bit while I served up the rest.

The sauce was quite liquid so I served it with brown rice which I always cook with frozen peas (added at the last minute so they only just cook). I sliced the duck breasts before serving and they were a lovely pink. Leave them longer in the oven if you are queasy about under done meat.

Golden prospect

Golden stairway to heaven? 

The Hong Kong saga continues. I attempted to sell my remaining shares at about 2am and again the system failed. But system failure does not always work against you. The market had fallen at the open and with it my shares so I wanted to cut my losses. By the morning there had been a big recovery and prices were back up to the levels where I would have sold them on the night before. TDW offered to put the trades through manually but I decided to hold on. The futures situation looked good. They would not have owed me money anyway. They say they have fixed the problem and we may see tonight. But with the recovery in the markets I could hold on. (They're fading a bit as I write.)

Apart from this I am doing nothing. The 11720 support level is holding so far and the Dow has had a good day despite the best efforts of the Greeks. By now you will know that I give little credence to the notion that such announcements have much long term effect on the market. It was due for a correction and that's what it got.  We are in for a period of uncertainty until the market decides to continue its rise above 12284 or to dive below 11520. Best to sit on the sidelines until it is clear what the next move will be. During the last run inside the channel, I thought that down was the most likely outcome and I lost a lot of money betting that hunch. In this phase I am agnostic about the direction of the breakout so the temptation to fiddle is not strong.

On the other hand I am glad that I stuck with gold and silver They have recovered and are showing promise. Both are climbing up stepwise from their sharp fall. A courageous strategy would be to build my stake each time the price reaches the bottom of its channel and taking profits each time it gets to the top. I wonder if I can manage that?

Trials and tribulations

DJI 1st November

At 2:15 I was woken by the dog slurping up his water so I went to look at the Hong Kong market. It was displaying weakness but nothing terrible. I placed my orders to sell my Hong Kong stocks and went back to bed. In the morning they were still showing as pending and the market had dived. You have to put in limit orders on the HK market so I thought that I had screwed up on the limits in a falling market. A bit of investigation revealed that this was not so. I waited till 7:30 when the TD Waterhouse staff started answering their phones. It was then that I discovered they had a problem with their systems - because of the change of clocks of all things. Computers take time too seriously and screw up.

Anyway it seems that TDW were inclined to do the right thing and roll back to check whether the trades would have gone through. And if they found that the trades should have gone through they would honour them. Big sigh of relief. Until in the afternoon I discovered they had accepted three trades but had cancelled three others. Luckily for me the HK Exchange has a reasonably nifty web site that tracks prices and trades. I had a look and accepted that one of the trades would not have gone through, a second was debatable, the third was clearly in my favour. The Exchange data is not crystal clear so I am now waiting to see what TDW make of it all. It did not help that the people who were making the corrections thought that 2:56am GMT was 13:56 HK time (It's actually 10:56). I have sent in my complaint and await the result with interest.

All this stopped me fretting about what was happening on the market. I had been right to pull out it seems. Most of that euphoria that had pushed the DOW up to 12284 has smashed into the shards like a broken Hellenic urn (I turn my hand to the purple prose when I feel like it. And I have been stressed all day.). But I am keeping my anxiety in check. Remember all those support lines that I pointed out yesterday. They are still there and the 11720 seems to be doing its stuff as I write. It was the thought of those support lines that stopped me from buying shorts - that and the speed of the fall. But it's a long time till 8pm when the US market shuts and things may change. The important support line is still 200 points lower.

In the mean time gold and silver have been thrown out with the bath water once more. And that hurts because I still have big holdings.