Day Trader column for August 11 – 2010

Last week our market gave the strongest signal for a long time that it may well move higher.   I expect a positive move this week, after the market traded in a narrow sideways band for most of last week.   A close 55 points higher for this week of the All Ords will provide the weekly pivot point I have been patiently waiting for.

Adding to my belief the market could move this week, is the number of stocks with setups prompting me to add them to my watch list.     Last week only seventeen stocks passed my watch list criteria; this week eighty five stocks passed the test.   Many of these stocks have moved up strongly to just above or below all time highs, or significant resistance levels.  All that is needed for me to begin buying is the weekly signal on the index and buy signals on the particular stocks via the pivot points.  

Of the two stocks mentioned last week, Regis Resources (RRL) moved up above the March, April high of $1.07 on a large increase in volume, then began a slow retracement on reducing volume to test that high.   If the market signals a rise, then a daily pivot point would be the buy signal.   Independence Group (IGO) is still consolidating above the July, August high of $5.50 but has not yet given a daily pivot point buy signal.

Some stocks, of the many that came onto my radar this week, are Sundance Energy (SEA) and Texon Petroleum (TXN).   Both are likely trades if the index closes above 4,641 this week.  

Another which may take a little more time before giving me a buy signal is Rex Minerals (RXM).

SEA has moved up to 30 cents after trading below this resistance level for two years.   The resistance level was the base of the trading range dating back three years prior to that.   After touching 30 cents it moved back slowly and formed a daily pivot point on July 29.   If the market had given a signal (via a weekly pivot point on the Index) this would have been the buy signal.   The next buy signal would be a close above 30 cents.   If the price moves above 30 cents, there would be a potential target around 55 cents.   This is determined by mirroring the pattern formed over the past two years.

TXN exceeded the November 2008 price spike of 50 cents in April this year. Since then it pulled back to 30 cents and the past month has seen it consolidate just below 50 cents.   A small pullback and a daily pivot point, or a close above 50 cents would be a buy signal, again subject to the index giving the buy signal.  

RXM moved up from 80 cents to $2.60 in August, September 2009 on increased volume.  From that spike high it fell to $1.20 over the following nine months on reducing volume.   Over the past month and a half the price has moved back up to $2.50 and I will be watching it for consolidation around the 2009 $2.60 all time high.   Any move up above that all time high would indicate a potential target of between $3.80 and $4.00.   This is determined by mirroring the pattern formed over the past twelve months.  

As the market may soon give me some buying opportunities I have decided to put the promised shorting discussion on hold for a while.  

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Portfolio Position

Cash        $267,166

Shares     Nil.    

Total        $267,166

Starting capital $50,000 in July 2006