Day Trader column for June 11 – 2013

 

There was no joy in the market for me last week.   It now looks very likely the All Ords and the S&P/ASX 200 will come close to the 4,600 level which is the target from the five point reversal which formed on the daily chart in May when both indices traded above 5,200.    

It did look like 4,900 would prove to be resistance, particularly when the divergence I talked about last week was in place.   But early trading last week did not confirm the divergence and we saw another one hundred and fifty points wiped off the market.

I am kicking myself for not taking a short position in some stocks (particularly the major banks) when they reversed trend after retesting the April/May highs.  

However, the major and second tier banks and several other stocks have now formed a clear fourth leg of a five point reversal.   This means if they do now reverse and make new highs they will be extremely vulnerable to a reversal and some pretty serious falls.

But, that all depends on them recovering the past month’s losses.

In the meantime I was stopped out of two stocks early last week.

Infomedia (IFM) closed below its stop last Tuesday and was sold at 48 cents for a total of $4,780 after brokerage.    It still has not formed a weekly pivot point to the downside so there is a chance it may still move up, but while I am uncertain of the market direction I will just monitor it.

Sigma Pharmaceutical (SIP) also closed below its stop on Monday last week and was sold on Tuesday at 78.5 cents for a total of $7,830.    

Now to Dyesol (DYE)!   I put a sell order on it to sell at 59 cents but was too greedy, as it touched 57 cents the short term target and fell away.   Its stop is still 38.5 cents, the most recent daily swing low, so I will hold it, and maybe it will reverse to the upside before then and make it to its more serious target around 80 cents.

Now to two stocks I have mentioned in recent columns.

An understanding of targets helps greatly in managing a trade.   For example back in April when Telstra (TLS) broke above $4.60.    If the pattern formed during the two months prior was mirrored or turned upside down it projected to around $5.00.   Then by checking TLS’s historical price data it can be seen the price formed several spike highs at $5.00 in 2007, so it is prudent to look for a reversal around that level.    Now looking at the last three weeks it can be seen, after the price traded above $5.00 for a while it had a one day fall to below $5.00 and a then a couple of days later it retested $5.00 before again reversing to the downside.   There is still a current unfulfilled target to around $4.20.    Armed with this knowledge, as a trader, I would not think it prudent to look to buy TLS until these targets are reached or there is a clear reversal to the upside.

Amcor (AMC) which broke to new all time highs a couple of months ago has also reversed and if it falls below $9.50 it may fall much further.    

 

 

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

 

Portfolio Position

Stock

No. of Shares

Purchase price

Stop

Fridays Close

CAJ

20,000

20c

22.5c

22.5c

TGA

5,000

$2.15

$2.12

$2.19

DYE

20,000

33.5 c

38.5c

43.5c

 

Cash       $268,986

Shares    $24,150

Total      $293,136