Day Trader column for April 14 - 2017

 

The three market indices I monitor closely (All Ords, ASX/S&P 200 and SPI futures) all marked time last week as they traded in a narrow range just below the top of the previous weeks range.    As of Wednesday this week they had all moved up again and at the end of trade on Wednesday they had all closed above 5,900.     The gap between them has also narrowed further and the SPI was only 5 points lower than the ASX/S&P 200 which it is traded against.   I am looking for this to trade positive to the index, as that would indicate the professionals in the market were also optimistic and looking for the market to be positive, at least in the near future.     This is all adding to my belief the market is on the verge of moving to all-time new highs.    At the moment we still have stocks moving up and then making a sharp pullback as traders take profits instead of holding stocks for a bigger move.    We should start to see these stronger continued moves as the general public slowly realises the stock market is again the place to be.     Historically the positive stock market cycle begins as the real estate market peaks.    What happens is money then comes out of real estate and moves into stocks.   This helps drive stocks higher.

As I am now more positive the market is gaining momentum and two of the three stocks currently held have moved to a level where the trailing stop is now higher than the purchase price.   I bought 25,000 Resapp Health (RAP) on Wednesday April 12 at 38.5c for a total of $9,645.    The initial stop is 35c and as soon as it closes above 39c (Wednesday’s high) I will raise the stop to 37c, Wednesday’s low and the resistance level around the top of the early April trading range.     The initial targets are 45c then 50c, which are projections of the chart patterns formed since November last year.   If and when it trades up to 50-55c, and depending how it behaves there, it has the potential to move much higher.

The A2M Milk Company (A2M) has had a slow pullback on decreasing volume since it traded to within a cent of $3.00, and now a reversal to the upside should see its next move be up to $3.50.

I had said I would look to take profits around 30c on Tawana Resources (TAW) but as it touched 29c on Wednesday and reversed back to the downside I have decided to now wait and see if it forms another higher spike low and I will move the trailing stop to that point.  

I should mention again that the way I manage stops is to wait until the end of the day’s trading and if the closing price is below the stop level I sell the next morning.   

After Whitehaven Coal (WHC) pulled back on Tuesday this week and then traded slightly higher on Wednesday forming a spike low at $3.16 I moved its stop to that level.

Following on from last week, if I want to sell at the open indicative price I place my order at the lowest sell price.

 

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 12 - 2017.

 

Stock

No. of Shares

Purchase price

Stop

Wednesday’s Close

TAW

25,000

17c

21c

26.5c

A2M

3,000

$2.75

$2.83

$2.92

WHC

3,000

$3.27

$3.16

$3.20

RAP

25,000

38.5c

35c

38.5c

 

 

Cash       $321,302

Shares    $34,610

Total       $355,912