Day Trader column for August 31 - 2018

The volatility in our market continues as last week many top 200 stocks had sharp falls while others maintained their position or moved up.    What concerns me is volatility is usually seen at the top of a move which leads me to think we may see a market correction, if not a reversal before we reach the all-time high.    There is an old adage which says you should sell double tops and that is what we are coming up to, so it is worth being very cautious.

Some of the stocks which fell last week were the big four banks, Qantas (QAN), flight Centre (FLT) and Speedcast International (SDA).    SDA fell from $6.80 to $4.00 on huge volume taking back all the previous twelve months gains in two days.  

Axsesstoday (AXL) had a similar fall on big volume taking back the past years gains.

Last week’s falls in the banks all occurred as they approached the top of their respective downtrend lines indicating they will likely continue falling.

However, as I have mentioned over the past year or two, the new market leaders are likely in healthcare, technology and alternate energy.    We are now seeing this with the rise of the likes of Cochlear (COH), CSL and Pro Medicus (PME) which I bought on Wednesday and Codan (CDA) which should form a buy signal soon.

A number of retail stocks are also looking strong, including Wesfarmers (WES) and JB HI-Fi (JBH).   

Another stock of interest is NRH Holdings (NWH) which has just broken above the $2.00 resistance level.    I am watching to see if this leads to another false break and a reversal, or if it slowly pulls back to retest the $2.00 level and then continues to the upside where the next resistance would be $3.00, then the previous all-time high of just above $4.00.

As mentioned above, I bought 1,000 PME on Wednesday at $10.11 for a total of $10,140 including brokerage.   The consolidation at $10.00 was the trigger for the buy, but the next target is $11.00, so I will look seriously at selling at that level depending on what the market is doing at the time.    The initial stop is $9.61, the low of the recent consolidation.

I also bought 2,000 PWR Holdings (PWH) on Tuesday at $3.22 for a total of $6,460 including brokerage.    The initial stop is now Tuesday’s low of $3.15 and the target is initially $3.45, the all-time high and we will likely see it reverse from near that level.

Now for the bad news!   BIG UN (BIG) was finally delisted this week and administrators appointed, so the likelihood of shareholders receiving anything is somewhere between unlikely and non- existent.    Because it started to fall at a time when I was experimenting with my stop procedure, I did not sell it when it broke where its stop should have been, which would have meant selling around $4.20.     A very important and expensive little experiment that turned out to be.

On a more positive note Aurelia Metals (AMI) has recently broken above 60c for the third time in the past three months and if it can now form a buy signal after a weekly pivot point to the upside and a slow daily pullback I will buy it. 

 

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

Portfolio Position as at close of trade on August 29 - 2018

 

Stock

No. of Shares

Purchase price

Stop

Wednesdays Close

PME

1,000

$10.11

$9.61

$10.45

PWH

2,000

$3.22

$3.15

$3.22

 

Cash       $376,762

Shares    $16,890

Total       $393,652