Day Trader column for January 20 - 2015

Before Christmas I stated I would be away from internet access for several weeks and hence market access. Well I am now back from the Southern Ocean and it appears I have not missed much.

After downloading stock data for the past month I find the market did run up in the few days just prior to Christmas, as it very often does, and as usual on low volumes. A weekly chart of the All Ords also shows the market closing higher for four weeks in a row, but last week the steep decline wiped out the previous three weeks gains, and looks set to fall further. My reason for that observation is the fall was the largest single week fall in over a year and it closed the week close to the weeks low.

There were also a large number of stocks across the board which formed weekly pivot points to the downside. As a result it is unlikely we will see clear reversals to the upside for these stocks this week.

We may see the fall arrested, but some time will be needed for the volatility to slow down.

I am still waiting for a number of the higher volume stocks to break their downtrends. Three of the four major banks are still in serious downtrend and despite the rises of the past four weeks may still fall to their next support levels as I detailed in a column in mid December. The Commonwealth (CBA) is the exception as it is at new highs. However, last week it formed a weekly pivot point to the downside on a big volume increase so it will be interesting to see where it goes this week.

Many of the big mining and oil stocks suffered as expected with the sharp falls in commodity prices.

I also mentioned support levels for a number of these stocks and they certainly are still on track to fall to the next predicted levels.

The big falls in the price of oil over the last few months, which I might add still has a further downside to it has been a big boost for Qantas (QAN), but it too had a weekly pivot point to the downside last week so maybe its run is over for the time being.

Last week it was gold stocks both small and large which defied the trend and continued to move up with some of them actually breaking the downtrend they have been in for a long time. Some of them may form buy setups in the near future so I will be keeping a close eye on them. Newcrest (NCM), Ramelius Resources (RMS) and Perseus Mining (PRU) are three I am watching.

Oh! and one other stock defying the trend is Telstra (TLS) and it looks as though it may continue up to its next target around $7.50, but as it lost some momentum last week we may see it take a breather before the next leg up.

Now as promised last week, how to calculate how many share to purchase.

The first thing to decide is how much money you can tolerate losing. Let’s say you decide this figure is $400, then divide this by two. You now need to calculate the difference between the potential purchase price and the stop price. Now divide this difference into the amount you are comfortable losing to find the number of shares to purchase.



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Portfolio Position

Cash $315,824

Shares Nil

Total $315,824