Day Trader column for December 10 – 2013

Last week was not a pretty sight.  There were very few stocks able to withstand the tide and we saw stocks which were sitting on uptrend lines break through them and fall sharply for most of the week.

To add some scale to the falls last week the All Ords will need to close around one hundred and fifty points higher at the end of this week for a weekly pivot point to the upside to form.   It is possible, but a weekly move of this magnitude has only occurred a couple of times in the past year, so the odds are against it.

The Commonwealth Bank (CBA) which I mentioned last week, did not manage a daily close above $78.   Instead it closed down nearly three dollars for the week, making it the last of the big four banks to form a weekly pivot point to the downside.

The other three banks also fell a similar percentage but, on Friday all four formed a daily reversal to the upside so we may see the beginning of a rebound this week.

There are so few stocks looking positive at the moment and with the banks, BHP and several other large market cap. stocks having formed clear reversals to the downside it is highly likely that the rally will only result in a retest of recent highs, then possibly further falls.  

One thing to watch if the market does rally, will be the volumes on the major stocks.  The other thing will be how the price behaves as it retests the uptend lines that were broken last week.  If the volumes are relatively light then I would lean towards further falls rather than new highs and I will be looking for reversals to the downside as they test the broken uptrend line.

I will not look to buy stocks if the market rallies, but I may be tempted to buy some mini’s if the chart looks like it could provide a reasonable profit without too much volatility.

Another thing I talked about last week was the divergence between BHP and RIO.   As it transpired BHP fell and RIO held its own for the week but three days out of five it opened high and closed low.   To me buying any of these stocks at the moment would be high risk.  

I suspect the serious money will come from buying short mini’s after the rally that looks likely as of Friday.

This leads me to the other topic I promised last week, targets for some of the stocks mentioned above.

I will start with Westpac (WBC) and if it falls through $31 its next serious resistance and target is $27 which is the spike low formed in June this year and it is also the target expected from a break below the pattern formed since September this year.

In the case of the National (NAB) a break below $31.50 would give it a target of $27.50 which is also the spike low it formed in June and what is expected if the pattern formed from September is mirrored down.

If ANZ breaks below $30 then it has a target of $26, the June spike low and a mirror of the pattern formed since October.   

 

I remind readers this column is not an advice or tipping service.   It is a commentary on my trading and views on the market based on charting and technical analysis.

 

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

 

Portfolio Position

 

Cash       $295,234

Shares    Nil

Total      $295,504