Day Trader column for April 12 - 2019

The divergence between the SPI futures and the ASX/S&P 200 I spoke of last week certainly followed through.  The falls on Thursday and Friday last week were the result and the uptrend has not as of Wednesday this week resumed.   However some of the stocks on the portfolio moved up strongly.   The fact any moves down in the market are short lived and lose momentum fairly quickly and many stocks not in the news manage to hold their own and or continue to move up indicates to me the market has underlying strength.   

There was a divergence on Wednesday this week when the ASX/S&P 200 traded above Tuesdays high and the SPI only managed to trade up to and not above Tuesdays high.   This means it is possible we will have seen a pullback yesterday.  

The difficulty with divergences is that they do not give any indication of the extent of the likely move.    For this we need to look at other chart patterns and where the price is in relation to the trend.   The way the market is behaving at present we could see the move down that started on Thursday last week followed by the small recovery this week turn down again and test the 6,200 level before resuming the uptrend and breaking above last week’s high and testing the next resistance level at 6,500.

Last week I mentioned that Battery Minerals (BAT) went into a trading halt and I would decide what to do with it when it relisted.   The trading halt was, as is often the case to announce a capital raising.   And, as is usually the case the price falls after the stock is reinstated and in this case it fell from a high of 3.6c the day before the trading halt was announced and opened at 2.6c when re-instated.   You might call me cynical but I have seen the price of stocks move up on increased volume over a month or two before announcing a capital raising and then fall back after it is reinstated to around the level it was prior to the sudden market activity.    These moves certainly have a funny smell to them in my opinion, as they can be seen to occur on a regular basis.

In the case of BAT it was sold on April 05 at 2.6c for a total of $5,180 after brokerage.

On a more positive note, I have had to look carefully at the other stocks held as they have been moving up strongly and have not had the slow, short pullbacks to form progressive spike lows for me to use as new trailing stop levels. 

What I have done is move the stop on Mount Gibson Iron (MGX) up to the top of the spike high formed on March 21.  

In the case of Cirrus Network (CNW) the stop is now the top of the spike high formed on March 19 and for Rhipe (RHP) the new trailing stop is the recent spike low formed on April 03.

Netlinkz (NET) has moved up to its projected target and has continued to show strength.

I am reluctant to take profits as it still shows considerable strength.

 

Past columns, information and DVD’s on my methods are available at:-www.thedaytrader.com.au  

Portfolio Position as at close of trade on April 10 – 2019

 

Stock

No. of Shares

Purchase price

Stop

Wednesday Close

MGX

20,000

62.5c

95c

$1.125

CNW

200,000

2.4c

4.5c

4.9c

FPL

400,000

1.2c

1.2c

1.3c

NET

150,000

4.1c

8.6c

10.5c

RHP

8,000

$1.79

$1.82

$1.975

 

Cash       $349,762

Shares    $69,050

Total       $418,812