Rough week for me and Vegetarian cottage pie with chestnuts and mushrooms

It was all pointing the right way on Monday when I got my buy signal. Tuesday and Wednesday were good strong up days and yesterday saw just a little pull back. I duly picked my shares in three batches, on Tuesday, Wednesday and Thursday but up to now my picking  systems have let me down badly.

In the US I bought DRYS,SIGA,GNK,CTHR,ZHNE,SID,KTOS,GGB. Only CTHR is showing a profit and DRYS and GNK look horrible. Re-examining the charts for those two, retrospect suggests I should have been more careful. They were already extended having enjoyed a huge run up.

They are both in the same sector. Dry bulk shipping which is benefiting from a massive rise in freight rates. In theory this should translate directly into profits. So they could still come good.

The FTSE also saw a nice run up but my picks of UTV, BOY, LLOY, INCH, KLR have yet to offer any decent returns. Yesterday I bought FSJ and CKN. They are in the marine freight servicing industry, they have shown steady price growth and should benefit from the market movements that saw DRYS and GNK skyrocketing. They are the best performers in my UK picks even though I only bought them a day ago.

It is early days but the losses hurt.

I pulled out of my small gold holding which looks to be going nowhere.

The big lesson from all this is that the world economy must be on the mend. Such a sharp rise in dry shipping rates suggests that world trade is on the move. Watch out for that tapering and higher interest rates. US retail sales figures are out later today which should give more guidance.

Vegetarian cottage pie with chestnuts and mushrooms

A vegetarian friend came to supper. It is always a challenge finding something unusual to cook. This one did the trick, though my wife had some reservations. Luckily guests seemed satisfied or they were ultra polite.

For the topping I boiled vegetables all chopped small: 2 large potatoes, 3 parsnips, 3 carrots, half a celeriac. When they were soft I mashed them with plenty of butter, about 75ml of milk and a desert spoonful of french mustard.

In the mean time I made the filling by frying 2 chopped carrots, 12 whole peeled shallots, 5 cloves of garlic (chopped). I then added , fresh rosemary,  a desert spoonful of tomato paste, a couple of tsp of Marmite, a tin of chopped tomatoes, a generous splash of white wine, and quarter of a pint of vegetable stock. I added a pound of mixed mushrooms of all shapes and sizes (you can get so many types in supermarkets these days) and 200gms of cooked chestnuts, I used the vacuum packed sort and halved them. 

I put the filling into an oven proof dish and spread the topping over. I added some grated cheese (my favourite is cheddar). I then baked at 180 degrees for half an hour and finished under the grill to brown the cheese.

My wife's complaint was about the amount of tomato paste which she thought dulled the flavour. Try reducing or excluding the tomato paste if you would like to cut back on that rich tomato taste. I think you would have to add some flour for thickening to replace the paste.

Hard work making money in the UK. Recipe: Insulin and Colcannon

Suddenly I remember how much easier it is to trade in the US than in the UK! My UK portfolio plods on sedately making me no money despite my best efforts.  That's not quite true. I have now completed the laborious backtesting exercise and have found  one, possibly two better unisearches.

But it's a week since I bought my shares and I'm still down 1.6% after costs. If I strip out costs and the ghastly THT I would be up 1.1% but those are unavoidable costs. I do not know whether, with a good stop loss strategy, I would have dumped THT before now. No Simulator, no proper backtestng, no decent strategy.

In the mean time in the US I got my buy signal on Thursday, I bought six shares that day and six more on Friday. (SOL, HSOL, III, UVE, GTN, EVC). Overall I have 7 winners and 5 losers after just 2 days. Profit after costs is 0.7%. There is no guarantee that this will continue but you must agree that it is a much better start.

I do have an idea for how to plug the gap left by the lack of the Simulator in the UK by concerted action by members of the user group. It would not solve the lack of a stop loss strategy but it would guide us to the best unisearches. Unfortunately I am not a natural organizer so someone else would have to drive the idea forward. Anyone interested in leading the exercise or participating should contact me.

Insulin and colcannon

I was first diagnosed with diabetes 15 years ago. That is what brought me into stock trading all that time ago. I retired with far too little money and had to make the most of what I had by driving my capital very hard. So far it has worked.

Since then I have collected a growing band of chronic autoimmune diseases. It seems that each time my blood is tested another one pops up. I am lucky in that, so far, none has significantly cramped my style, except in the range and number of pills that I pop every night and morning.

The progress of my diabetes is interesting. I started with dietary control which kept excessively high blood sugar at bay for  six or seven years. Then I started on pills. They worked for another eight or nine years. All of that time I had to be very careful about what I ate and, latterly, when I ate. The big risk then, as now, was falling blood sugar which carries the risk of a hypo which starts a little like drunkenness and can end in a coma. Being caught driving with a hypoglycemic attack loses you your licence so it's no joke. 

A few months ago my poor old pancreas, the organ that produces the insulin that manages blood glucose levels, finally gave up its efforts despite the help provided by pills. I was put onto an insulin injection regime. I tried two daily doses of mixed insulin which helps most people who can't be bothered with a more complicated system. With good advice I was steered onto an alternative system where I take one type of insulin at night and another with each meal. This keeps tighter control of blood glucose levels and gives me far more flexibility. But it is hard work. You have to calculate how much carbohydrate you are going to eat at each meal and adjust you insulin dose accordingly. On the plus side you can miss meals if you want to, and occasionally have big ones with lots of carbohydrates.

Which brings me to colcannon. I have always loved mashed potatoes, a big no, no when you are managing diabetes with diet. And colcannon is a fabulous Irish version of this dish. I was inspired by a visit to the Aveyron in France where we were given aligot, a local specialty where the mashed potato is mixed with cheese and garlic. It was a little bit bland for my taste but that might have been the versions we were served.

Net result I came home, took the appropriate dose of insulin  and made colcannon.

It's dead easy. You cook peeled potatoes so they are really soft. Don't ask me how many I used. I had a bag left over in the larder and I used what I had left. Cut up, I guess, there might have been a dozen small pieces. I also had some left over carrots which I steamed over the potatoes for about half of the cooking time. I had grown a cabbage, one of those pointy ones, and cut that up and steamed it along with some sliced industrial sized spring onions for the last couple of minutes. 

I then mashed the potato with lots of butter and salt (I confess to a liking for Aromat as a supplement to salt). It's a Knorr product favored on the Continent especially in Switzerland .)

I whizzed the cabbage and carrots in a blender for a few moments and then mixed them into the potatoes. I served it with sausages and gravy but it would go equally well with lots of other things, or by itself, or even cold. (I shall give you my gravy recipe one day.) Great plaudits.

What a difference a day makes?

The high DJI of May 22 has been broken. The move up is not super-convincing but it has happened. And for me the more important fact is that the market has given me my buy signal. My toes, or perhaps even my knees are in the water. I have bought 6 US shares They are KTOS LEE ARC ORBC SBCF and SNV. They come, three each, from my two top performing unisearches.

 My nerves are on edge because we are at a new all time high on both the DOW and the S&P.

It helps that my UK portfolio has improved. Five winners and five losers as of today. The ghastly THT gave me a bad scare and it has ended the day lower once more. It has broken through the 89 day moving average but it did recover some of its losses as the day went on. So I decided that fortune favours the brave and it got another day's grace. All this angst results from the fact that I do not have a UK stop loss plan. No Simulator, no backtests, no system.

So that's how things stand. I am 49% invested. 45% of the total is in equities and the remaining 3% is my short ETF in US treasury bonds. 61% of the invested amount is in UK stock and 39% is in US.

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.

Colywobbles

I've started to lose my nerve. Only a bit, and it was the result the sudden fall in the gold price. It should not have come as a surprise because it has had several failed attempts at the $1800 level. The silver price has followed. I snatched profits as the fall began. By then the various mining stocks were wobbling. I was too late to grab profit except in LMI where I managed to take 4% accumulated since Feb 7. I've held onto the remaining miners where there is a reasonable chance of recovery since they do not specialise in precious metals.

Last night I threw in the towel on ALVR where I was nursing a 15% loss. As ever you tend to give up just as the bottom has been reached and today we see a small recovery. Makes you want to spit.

With less pressure on my cash I have bought some more from my patented strategy filter. I bought VP. BMY and upped my stake in LAM. ISA's don't let you buy AIM shares and I still don't have sterling cash to spend in my SIPP. As a result I've had to give the AIM shares that came up as candidates a miss till I can free up some more cash.

Back to the panic. The DJI is stuck. It's hovering just above a resistance line and if you add in the days it hovered below it has been sitting there for a month. Will it make the break or is 12875, the high reached last May, going to be a step too far. Yesterday it closed above the 13000 mark and it keeps nudging that level but it needs to move convincingly above it before I will feel confident that resistance has been broken. I wonder if that fall in the precious metals price is a break in the link between gold and Dow. I've just put my money on that bet. But I'm nervous as I walk away from the bookie's counter.

Busy days

Since the last week in January I have been active. I have gone from a portfolio that was half empty to one that has almost no cash. I have a rump of my gold and silver, which is doing very well and represents 9% of my portfolio. I still have that position in cattle which is languishing. I had the opportunity to take a small profit a few days ago but didn't and am now showing a small loss. A big part of the problem here is currency loss. I shall not keep this much longer.

78% of my portfolio is in equities some doing well and some doing badly. In the UK I have three strategies.

• The first looks for shares that have a low prospective pe ratio; a high prospective earnings per share; positive revenue growth; have out-performed the market in price movement and that out-performance is accelerating; they must generate cash flow more quickly than earnings. Picking shares on that basis has generated a profit of over 4% in  a week.
• The second is my surfing strategy which I have been running for about a month, this has generated just over 3% in a month with most of the profit realised
• Finally I seek out high valued stocks in growing sectors and these have generated 1.8% in about three weeks 

I am happy with these returns since the bulk of the profits were made in a period when the market went up by less that half a percent.

I also did well in Hong Kong where I sought out shares with a decent value profile but which had suffered a collapse in price. Here I made almost 3% in a little over a week while the market made 1.5%.

The big disappointment was the US where I looked for  high valued stocks in growing sectors and for small cap stocks that have suffered bad price reversals and they have left me with a loss of 9%. I am holding on because these selection strategies have worked well in the past through thick and thin. If they do not start to perform I will have to do a serious debrief to see what went wrong.

Using my surfing strategy in the US was also a failure. I lost about 1.5% in a month.

Today's graph shows how my surfing strategy works at its best. I look for shares that are trending upwards - shown by the middle blue line. I then pick those which are at or near the bottom of the channel representing a movement of 1.5 standard deviations (the dotted blue lines). I like to see a high percentage movement back up to the trend line. In this case it was 9%. I bought at 125 on 25th January and sold at 133 to realise a 5% profit after costs in ten days. I could have held on to the top of the channel but I had no way of knowing it would get there - it did not before. I think I am happy with this type of trade and will increase my stake to reduce the impact of costs

Comments

Red line represents 200 day MA

I am delighted to have had a couple of comments from readers. The topics are moving averages; and how to get on top of this trading business. In response to the latter I recommended two books which were instrumental in getting me going on a largely successful path many years ago now. (See last post)

I like Richard Koch's book because it gets you to look at yourself and choose an investment style that matches your personality. For me the best approach was finding value shares. Jim Slater's Zulu Principle was invaluable in getting me going on that road. Benjamin Graham has written several more advanced books on the same topic.

Going back to moving averages, Terry showed interest in moving average crossovers as signals for getting in and out of trades. I did a quick test on Unilever and found that simple MA xovers would have lost money consistently. (details in the comments on the last post).

I mentioned that I almost always show a 200 day moving average on my charts. I don't use this as a signal but as a guide to where the instrument I am looking at is going. 200 day MA above the price indicates a downtrend. A big and growing gap suggests that there is a good chance that a recovery in price is likely in order to narrow the gap. In an uptrend the opposite is true.

Red line is 200 day MA

Today's chart is chosen to show the value of the 200 day MA. I've chosen IRobot Corp. A share which I bought because it had demonstrated a big fall from its trend. It had just announced excellent results for the past year but had also issued a profits warning for the fallowing quarter and year. I bought it on 21 February several days after the big gap down and when some recovery had already taken place. It is a risky trade because there is nothing to guarantee a recovery, but a potentially profitable one. A recovery to the top of the open on the first day following the profit warning would represent a 12% return. The share price dove through the 200 day MA and there was what looked like mass panic. A classic opportunity to make money as wiser heads begin to prevail and see that the market fall has been overdone.

Looking at the second chart we can see that the 200 day MA has been a helpful guide for the past 5 years with consistent price movements that demonstrate that the MA acts as a magnate for the price, always pulling it back when it strays too far. I don't know if you find this helpful. I do but I do not see it as a reliable signal. Choosing your entry and exit point is a matter of judgement. Hope that helps Terry. Remember I recommend nothing. I just point shares out that might be of interest.

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.

Bull

My switch in approach from bear to bull is paying dividends. The strategies I have adopted are paying off and I now have evidence that if I had been less lilly livered through the past year I would have made lots of money  instead of losing some. I have back-tested share picking strategies, using Vector Vest, in the US the UK and Hong Kong. With the right strategies in those three territories and picking shares at the beginning of each month and selling them at the end I would have made profits of at least 50% on my capital. I also know that I would have made money in more than half of the months but the profit in the good months would have more than made up for the losses in the bad months.

So I embark on my new approach. I bought shares using the best performing strategy in the UK on 7th of February. They are slow movers (mostly in the mining sector which is notoriously volatile and is currently having a few days of weakness), nevertheless they have covered trading costs. I bought another batch on 13th February and they are already in modest profit (GSK BKG SXS AMEC BRBY). - as ever these are not recommendations but shares you might like to watch to see if my strategies are working. - The batch of shares I bought in the US on 6th Feb are also in profit with SPPR leading the way with a 13% rise. And finally I bought shares in Hong Kong last night and they have delivered a little bonanza straight away (3360 410 1128 1068 2342).

I am still running my wave theory shares. (I guess a better name for the system is surfing - I pick shares that trade in a channel and at or near the bottom.) I cashed in profits in the US on MDP (8.5%since 25 January) and am holding on to the others pro tem until I find myself some better prospects - I said on Sunday that I had screwed up when picking these shares, but until I find something better I might as well stick with them till they recover some of the losses already incurred. I have put limit price orders on all of them to reduce the emotional toll of deciding when to sell.

In the UK I cashed in ROR (2.9% since 25 Jan) and MRW (loss of 5.3% but luckily I only bought a very small stake so the cash loss was minimal). I have now refined the surfing system so I now by shares which have very good potential over a relatively few days and I only buy one which are in an uptrend. My latest buys in the UK are POLY and EVR (which has made 5.7% since Monday. I am hoping for over 8.5% and over 6% from POLY.

There is always a danger that some ghastly news will spook the market and I will have to beat a rapid retreat but I'm making hay while the sun shines. Today's picture is not a chart. Instead I show you Elk. The Aberdeen Angus bull who lives in the field at the end of our garden along with two of his sons and his mother. I think it is appropriate that he is rather muddy. My feeling about the bull market that he represents is rather muddy too.

Just hanging

Keep watching

The markets took a tumble on Friday and my new portfolio took a step back. Nothing terrible just losing a little of the ground that had been made. One more of the UK wave trades hit its target and I took profits. There are just four left to go plus the new ones I bought on Thursday. They continued to do well despite the pull back in the market showing that the strategy is good as long as you are careful.

I have reviewed the US wave purchases and have concluded that their poor performance is down to bad judgement on my part. In an excess of enthusiasm, I bought too high up in the range. I now need to decide whether to cut losses and move on to better prospects, or to wait to cash in the meagre profits that I now believe is the best I can expect from this miserable batch.

I have used up most of my US$ so I have none left to try out new strategies. I have now found good VectorVest selection criteria for buying into reliable profits on the US market and I am anxious to try them out. The first group that I bought on Monday are already showing a modest profit. One of the picks is up 4% in a week.

It continues to be hard work digging out good UK strategies since I have no mechanical aids. I have to do all the work manually. I am half way through the task and have five promising candidates. I bought shares using the first one that came to light on Tuesday. At present the selected shares are struggling because all but one came from the mining sector which took a hit on Friday. But it's early days, I will keep the faith.

As for the market, commentators are suggesting that it is overbought and due for a tumble. I don't listen to commentators, preferring to watch the charts. So back we go to the old Dow chart which shows that Friday's fall tried to touch the top of our old rising wedge but pulled back at the end of trading. A promising sign for us bulls. On the other hand, if that wedge gets broken to the downside I'll be out of there like a shot and will rejoin the bear camp.

It seems to be working

I put a lot of money into this one so the 2.2% in 10 days was well worth it

I've had a couple of good days despite the market being weak. I am continuing to take profits. For the first time in my life I am using automatic limit sales. Yesterday I came home to find the stockbroker (Selftrade) had netted me profits of £700 and the shares sold (TATE and TALK) had pulled back from the peak . I have now put limit sales on all my wave trades. And I have opened new trades in SDL and SGC. SDL has risen by 1.2% since I bought it at lunch time.

Let's hope this one works

My initial reaction to this strategy the profits were poor. A friend pointed out that I had been holding the shares for days and the percent gains made in those days were exceptional. Looked at that way the strategy does seem to be working. (2% in 10 trading days works out at about 50% per year, if you can keep it up).

You may remember how it works. I look for shares that are trending and are sitting at the bottom of the 1,5 standard deviation confidence line. I am now tweaking the strategy. I only working with the shares where the distance back to the middle of the channel is at least 4%. I am also favouring shares where the trend is upward. Rather than going for a large number of shares with small investments in each I am putting more money in fewer shares.

US shares bought using this strategy have been sluggish so far.

I am working hard to find good VectorVest strategies for the UK. It is proving a long and tedious search because it cannot be automated. I found one search which perform well consistently through last year's troubles. It picks out shares in rising sectors that have a good fundamentals. The selections made were mostly in the mining sector ANTO KAZ LMI MIDD and XTA. My plan is to hold them for a month and then to refresh the portfolio. The shares are already making some headway.

My life has been blighted in the last couple of days. Someone hacked into my Skype account and made a whole bunch of phone calls, mostly to Africa. The sum of money I lost was not great and Skype seems to have put most of it back. But I needed to find out if my computer had been compromised. A scan revealed that some infections had slipped past the firewall. I called the security company (ESET) and they assured me that nothing really bad was sitting there and the hack must have occurred at Skype's end. ESET spent half an hour doing a thorough clean of my computer through a remote link. Nevertheless I thought it sensible to change all my passwords. Another tedious task.

The buying continues

Behaving as expected

I have not mentioned it before but I subscribe to an American service called VectorVest. I have been a subscriber for about eighteen months and it has paid for itself many times over. In the early days of my subscription the market was running along nicely. An ideal time to use its remarkable data bases and tools and I made loads of money. The more tricky conditions of the past year has meant I have held back and not used it so much. It offers a number of tools to help the investor:

• a market timing system, with which I have yet to come to terms
• individual stock analyses which need some getting used to but are fine if you accept an element of black box technology. I do but I would prefer a more transparency so I could do a more of my own analysis
• almost three hundred systems for picking stocks that match the criteria that you think will find future winners in the market
• a back testing facility for those stock picking systems that is truely amazing and which is what has made me all that money

They also provide a user education system which is delivered by easy to follow videos - one a week and they are available for ever so you can always look back.

I use the back testing to look at periods in the past which are similar to the one I expect for the market in the near future. I then identify stock picking systems that match the circumstances. For example in the past few months I have looked for systems that work well in recovery markets. They have generated fantastic percent gains in short bursts.

I am now looking for systems that do well month in and month out. Again I am looking for good returns inside a month. I have found several which over the past 15 months have generated 4.5 to 6 percent each month. Think about it, that's 60% in an indifferent year. They don't make money each month, and you have to refresh your portfolio once a month but for 60% in a year it's worth it.

I'm working on the principle that there is a bit more of this bull run to go even if we get a bit of a pull back in the short term because the market is overbought. So I'll buy the shares and hope for the best. Worst case scenario is that I will be stopped out.

I have an automatic system for picking the best search systems in the US. It cost a lot but it is worth it. So I have bought the top 5 shares that are becoming more attractive to investors and are in sectors of the market that are rising. The shares I picked are SPPR OPXT ALVR SILU (Not recommendations remember, just shares you might like to watch).

I have to do the backtesting for the UK manually so it will take me a while but I will report on my progress.

In the mean time my shares from a week or two ago struggle on (shares that have touched the bottom of a range). I offer Weir as today's chart to show that sometimes these shares behave as expected. I have plenty of cash so I can wait. But this plan has not been a red hot winner.

What's wrong with being wrong

Here's a share chart for a change

You all know of the struggle I've had with gauging the direction of the market over the last few weeks. I've been waiting for a fall that never came, finally accepted that I was wrong and switched my position. I accepted that the bulls were in the ascendant. But joining a bull run after it has already made a lot of ground means that you are probably paying too much for the shares you buy and they are poised to go down. I have attempted to mitigate this risk by looking for shares that are moving in a regular wave pattern and are near the bottom of the wave.

This is a risky business because there still is the danger of a big fall in the market which will leave all ships stranded. But  nothing ventured nothing gained. In the last post I listed my fist batch of shares bought on the 25th. Here are the ones I have bought since then. UK QQ. and IRV. US PGN VZ TE SO. (no recommendation just some shares to look at).

We buy , we hope

Of all the shares I have bought SVS is the only one that has done well and is the main chart today. TATE is running along the bottom of its channel so I show that too. I have a way to go before I can cash in and nothing looks close to a stop loss, so I am holding on. It feels good to be picking shares again.

My portfolio is now divided as follows: Gold 4% Commodity 5% Equity 46% Cash 45%

Monday was my birthday and I was taken out on a treat to the Hand and Flowers at Marlow. It was fabulous. It has recently been awarded its second rosette by the Michelin guide. I had a Parsley Soup with Smoked Eel, Bacon and Parmesan Tortellini to start, followed by the most wonderful fish and chips ever and for my pud I had Pear Soufflé with Poire William Purée, Sweet Cheese and Mace. It was all topped off by my lovely friends singing happy birthday. They pretended to be too shy but in the end they girded their loins and most sweetly they did it too.

The birthday celebrations continued on Wednesday when I was taken to a Burns night supper at a local pub called the Foxham Inn. It has yet to be discovered but has a fabulous chef. I had never been to a Burns night before and it was a lot of fun. The Haggis came in the form of a Scotch egg with the haggis on the outside and an quail's egg on the inside. This was to help us sassenachs to cope. It was a most enjoyable evening with poems from the bard punctuating the courses (melt in the mouth roast Aberdeen Angus with roast potatoes and neeps followed by cranachan - a desert made of toasted oatmeal, whiskey, honey cream and raspberries).

So many well known phrases come from Rabbie Burns; My love is like a red red rose, Oh wad some power the giftie gie us To see oursel's as others see us!  and, most appropriate when trading, The best plans of men and mice often go awry.

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 arguement

Gold at a support level

It is a cliché to describe stock market movements as an argument between those who think shares are undervalued and those who think they are overpriced - the bulls and the bears. For the past few days the bears have been in the ascendant and there has been a 7% fall in the shares on the Dow Jones and a similar fall on the FTSE. Several important support  levels have been breached and there is little in the way of support until we reach 10800 on the Dow. This does not mean we will get there but the situation is worrying. Especially for me since I have bought shares in the UK and in the US. They are looking sickly to say the least.

I have jumped the gun and have the grizzly task of choosing between cutting my losses or holding on in hope. So far hope prevails. I have chosen good shares that have been beaten down in price and I feel confident that the UK ones will soar once the market perks up. The US ones have been picked on a rather less sound basis  and therefore should be replaced by better rebound candidates. So I must decide whether this break of support is real or false. If it is real I should cut my losses and wait for the rebound from a lower level. If it is a false breakout I should soon recoup my losses. My inclination is to hold on but not for much longer.

The continuing fall in gold and silver are also making my portfolio look sickly. But there again I feel confident that a rebound will occur. This is not a time when prediction is easy. The only price that is near a support level is gold. All the other prices are floating and could go either way.

Present portfolio position: Gold and Silver 24%, Commodity 5%, Equities 25%, Cash 46%.

Happy Thanksgiving

Too quick out of the gate

Now that's a trend! Gold for that last 5 years.

Have we found support for the Dow?

On Friday I bought some US shares in order to make a good start with the rally I was expecting. But I was too quick off the mark. It turned out that my analysis of the market was flawed. The interim support line that I guessed was the bottom of the channel did not hold. Nor did my original candidate for the task and the Dow ploughed straight trough both. But by the end of trading there had been a rally and the market ended some 20 points above the original support line. So the analysis looks sound for the moment.

I had an uncomfortable day watching my purchases tank. I held on nevertheless - foolish? maybe. Time will tell. With the FTSE rally this morning and encouraging futures for the DOW I moved further out onto the ice and bought some UK shares. This is playing a dangerous game but there is no point in doing these analyses and not acting on them. The big problem is deciding if and when I am wrong and need to throw in the towel. (The mixture of metaphors is deliberate).

Gold and silver are also a source of pain. This time I have in interest in holding gold because if the S hits the F I want to have this as my back up. I also believe that this pull back is part of a long term trend and I bough much of my present holdings towards the bottom of the pull back. I have shown a five year chart for gold to illustrate what a real trend looks like.

Running with the bulls of the Dow?

I am writing today's post early because tonight is busy. I have made another big move. I have taken profits on those positions that I opened just over a week ago. When the market turns it is viscous and I am glad I started to take profits on Friday. I did not ditch UK shares until it was obvious that the market was not going to turn around. The US shares I dumped on the open. Hong Kong shares overnight were still generating profits so I held on - may regret it tomorrow.

I switched from US gold (and silver) positions, which are based on futures, to UK physical metal ETFs. The drama that revealed itself when I first looked at the markets this morning was not in equities but precious metals. They had fallen precipitously for no apparent reason. Equities had had a strong run and needed to consolidate but that was not true of gold and silver. A look at the dollar explained what had happened. The dollar rose sharply after its pull back and precious metals bore the brunt.

So there I was this morning grabbing my profits as quickly as I could before they melted away. And despite a hefty chunk being torn out of them I have still recouped over half of my losses for the year.

So what happens next? Today's chart shows the strong run up that has just ended. The broken resistance levels are now potential support levels. As I write the Dow is sitting on the first one at 12090. (Notice how the pull back started after the price hit resistance at 12290). Then we have the 200 day moving average. Then 11880 where the market paused for three days. Then 11715 which has already acted as support on the way up. And finally the top of our old channel at 11530. This is the important one. If it is broken we are back in bear territory but a determined bounce off that or off one of the others suggests we may be running with the bulls.

For now I am mostly back in cash. precious metals 13% commodity 5% equity 12% cash 69%.

My weekend was a great one. My daughter and son-in-law came with their two children - four and six. I had treated my daughter to a session at the new Bath Spa. And the children were left in our care. They behaved impeccably watching the television some of the time and playing happily together the rest.

I prepared a dish which was fashionable a while ago but is seen less often these days. It was moussaka. I made it as follows:

2 large onions coarsely chopped
1 kg of lamb mince
half a bulb of garlic crushed
tsp of ground cinnamon
3 bay leaves
fresh thyme
1/2 pt white wine
1 tin chopped tomatoes
1 tin cherry tomatoes
chicken stock
pepper

3 aubergines sliced and fried in olive oil

I fried the onions and garlic gently and then added the lamb and turned up the heat and stirred till the lamb was almost cooked through. Then I added all the other ingredients (except aubergines) and simmered for a good half hour.

The aubergine slices I used to line a big casserole dish.

While the lamb was simmering I made a Béchamel  sauce by heating 3oz of butter with 3oz of flour and then slowly adding and gently whipping in a pint and a half of whole milk. The trick is to turn the heat right down after melting the flour into the butter and only raising it again once the mixture has become mostly liquid. Once I had a smooth sauce I added a 50-50 mixture of grated parmazan and Gruyère. I put in about half a pound but you could try less. I then added three beaten eggs and a tablespoon full of Dijon mustard.

It just remained to pour the lamb onto the aubergines in their casserole dish and pour the Béchamel  sauce over the lamb. I could then get back to playing with the children. I then put the whole lot in the oven at 190 deg. about half an hour before we were ready to eat. Everyone seemed to enjoy the resulting concoction.

Picking shares

Trading is all about state of mind. I make no bones about the fact that I have had a terrible year and have lost a lot of money. It was just not my type of market. Despite this I could not leave it alone and I lost. I was chasing price movements. Taking positions too late and holding on to losing positions too long. Then realising losses just as the market turned. I was reading the market correctly but I was trading badly. Luckily for me I have faith and continue to try to learn about how to make money in such unfavourable conditions. I need to because those conditions could easily return.

But now conditions have changed. We are back in my kind of market and in just a few days I have made back well over half of my losses.

At heart I am a share picker and the table shows what share picking can achieve. You can see the shares I bought, the date on which I bought them and the percentage profit, after costs, that they have generated. Most have been held for a week or less. The first batch are US shares and the second UK. The performance of the latter is nothing like so spectacular because the UK market moves more slowly.

I have bought some Honk Kong shares too but I only bought them last night they have not yet had time to cook. I bought the following shares: 88 712 571 4 17 and 903. (HK shares have numbers as codes).

But now I start to worry about protecting my profits. Making a return of 60% on a share in a week is brilliant but I begin to wonder when other buyers will start to take profit. Same is true of all the high return positions. Perhaps a little turnover in holdings is needed.

And then there is the market risk. A long solid upward run like the one we have just had is bound to have pull backs. I have no way to tell when a pull back is part of the rising trend and when it signals the beginning of the end. You see what I mean about state of mind. Worry on the way down, worry on the way up. My decision to change tack will be made on a whim. I am not bound by a system. And that, I believe, is how I win in the end. I have never heard a systems player admit to what their return on capital is. I would dearly like to know. Because if they are doing better than I am I will try their system and leave behind all anxiety.

I have repurchase gold and silver. I started to read Boomerang: the Meltdown Tour by Michael Lewis and began to feel very queasy. He talks about disaster waiting to happen inside the world's national banks. It reminded me why I was holding all that gold.

Today has been a sad day. My father has had Alzheimer's disease for the last 14 years. For most of that time he has been cared for by my exceptionally patient and loving step-mother. For the last few months he has moved into a home where the care is exemplary. I went to visit him today. It is disheartening watching human wreckage. Men and women who have lived rich and full lives reduced to sitting staring into space unable to do even the most mundane things for themselves. My father feeds himself and has a huge enthusiasm for his food. I played a game of chess with him. His recollection of the moves is still there but only just. It passes the time.

At the last minute I decided to take profits on the three highest performing shares and hold onto the cash until it is clear that the market continues upward.

Portfolio structure is now: precious metals 16%, Commodities 5%, equities 52%, cash 27%.