Day Trader column for June 4 – 2013

 

In last week’s column I noted the All Ords looked like it had run out of momentum to the downside as it approached the 4,900 resistance mark.

All last week the All Ords traded sideways above the 4,900 level except for a brief spike below 4,900 and the April 05 low on Thursday.     The S&P/ASX 200 on the other hand traded just below 4,900 but it formed a divergence against the All Ords when it failed to trade below its April 05 low.    This divergence indicates to me there is a strong possibility the move down may reverse to the upside.

If however, yesterday or today sees both indices trade below the April low then all bets are off and 4,600 is a strong possibility.    We will see!!! 

Another interesting observation was all the chatter about the banks being set to fall lower and most of the falls in bank stock prices has seen them testing resistance at the uptrend line drawn from mid 2012.   If we are going to see a reversal in their price it is highly likely it will be from this level.

If that turns out to be the case then it will be another example of when everybody is talking about prices going is a particular direction then the opposite is most likely to happen.

 

Now back to our portfolio.    I did sell Clough (CLO) on May 27 at $1.11 for a total of $6,720, and as often happens the price has moved up from there to close last week at $1.165 and on increased volume on Friday.    Still I will need to see it close above $1.20 before looking at it again.

On Monday of last week Dyesol (DYE) formed a daily pivot point to the upside on increased volume after slowly moving down on reducing volume for several days.  This prompted me to again buy 20,000 shares and I paid 33.5 cents per share for a total of $6,720.   The initial stop was 26.5 cents and it has since been raised to Thursdays spike low of 38.5 cents.   Any sign of a reversal around 55 cents and I will take some profits.

Of the other stocks held only Thorn Group (TGA) lost some ground last week.

I am now in the position where none of the stocks held are losing money and their stops are above break even or very close to it.

Looking through my data base at the weekend it appears many of the lower market capitalised stocks have not suffered too much over the past couple of weeks.    Then when looking at stocks which have recently traded above previous spike highs and particularly those which have traded above all time highs they have so far only moved down to retest those old highs.

So, although there was nothing to get enthusiastic about from last week’s market action, as yet the damage has not been all that bad and if we see a recovery from these levels, then I expect there will be some good trading opportunities to be had.  

When and if the uptrend does resume many of the large cap stocks will be forming the fifth leg of a 5 point reversal.    Caution will be necessary.

 

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

24c

TGA

5,000

$2.15

$2.12

$2.19

IFM

10,000

48c

48c

50.5c

SIP

10,000

80c

79.5c

80c

DYE

20,000

33.5 c

38.5c

41c

 

Cash       $266,376

Shares    $37,000

Total      $293,376