Day Trader column for September 24 – 2013

Our market traded sideways until Thursday last week when the All Ords moved up by sixty points to close 12 points below 5,300.   Friday however, saw a small retracement of twelve points.      The divergence I spoke of last week saw the move up arrested and the market move sideways.   As it did not turn down immediately it is another clue the market should continue the move up.   This does not mean we won’t see the market retest of the 5,200 level before moving above 5,300.

I bought 20,000 Capitol Health (CAJ) on September 19 at 37.5c for total of $7,520.   The initial stop is 36.5c and it has a target around 50 cents.   CAJ is a relatively new stock, and as is typical of a great many new listings it began to fall immediately after listing at 25c.   It fell to a low of 2.5c in 2010 at which time it could have suffered the fate of many new listing and disappeared from the board.     However it recovered and has since climbed to break above its listing level and has slowly picked up in volume over the past year.    When a stock lists, falls and then recovers to trade above the listing price it is a strong contender to continue moving up.     

Last week I also bought 10,000 Infomedia (IFM) on September 20 for 63.5c per share for a total of $6,370.   The initial stop is 61c and the target is around 80c.   I have talked about there being many stocks from across the price spectrum which will form five point reversal patterns if they move above recent spike highs.    IFM is one of these stocks and its recent spike high is 65.5c.   Therefore I will be watching it very carefully for any reversal after that, but it does look strong enough at this stage to reach its 80c target.   

To follow up on some stocks mentioned last week:   

Firstly, last week I mentioned the plight of Spark Infrastructure (SKI) which had formed a five point reversal and begun the move down.    It fell from $1.87 to $1.60 in July August then traded sideways from the end of August until last Friday when it broke below the sideways pattern on increased volume.   It now looks set to continue the move down to a likely target around $1.35.    I find it valuable to watch as these patterns play out to reinforce in my mind just what can happen if a stock is held in the hope of a recovery.

One of the stocks I mentioned as a possible buy was Austral (ASB), as it had formed a daily reversal on the previous Friday.     I did say the buy signal would be a daily pivot point if it formed.    A look at the chart will show the pivot point did not form, but in fact the price continued to fall.    This is a good example of why it is best to wait for the pivot point to confirm the reversal before buying.

Elemental Minerals (ELM) continued to fall until last Wednesday when it made the low price for the move down then for the rest of the day had a strong move up on increased volume.   It will now need to close above 58c to form a daily pivot point.    

 

 

 

Past 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

TGA

5,000

$2.10

$2.21

$2.30

IFM

10,000

63.5c

61c

62.5c

CAJ

20,000

37.5c

36.5c

37.5c

 

Cash       $269,361

Shares    $25,250

Total      $294,611