Shorting / strike at Saddam - emailed to subscribers - 28th July, 2002

I am not going to show you which stocks, in hindsight, could have been great shorts, just going to show you some examples of the past 6 weeks in trading on the short side, to help with understanding. No point showing what could have been great shorts; this is obvious now. We are not talking about massive wins here, just consistent and steady profits with the trend. Notations are on the charts.

SUN - PDF
ASX - PDF
NCP - PDF

Some further comments, SUN, I was very disappointed that the stock did not do better than it did, i.e. go lower after the break, to previous Sept lows. Maybe should still be short. ?

Small successes with BRL, MRL, CXP, ASX and ALL, but stopped out on TLS. These other charts not attached, you can see the breaks okay for yourself I think. Generally on these stocks, once the down trend started, it was lower top lower bottom all the way, except for CXP. Compare each daily chart and you should see what I mean. Often the break lower occurs without any obvious news at this time, Which may mean you need to have some faith in the way you are trading, and be prepared to take a loss if necessary. This is where back testing, like what Brendan has shown you, is important to give you added confidence to take the trade at the time.

Couldn't short all the breaks, but there were better ones as it turned out, MBL, PPT, for example. I was disappointed how my shorting went in this downturn. In hindsight, a wonderful thing, it may have been better to use a little fundamentals information, and ascertain those stocks with the most unsupportable p/e's, to short sell, this was probably obvious enough at the time, to mention here now.

CLH < about 290, SBC < 864, ALL < 503, AMP < 1400 or so could be watched in the future. But it may be more appropriate now to watch for mid point retracements on such stocks for further short selling opportunities. Not everyone finds it easy to short sell stocks; we are used to only buying them to own outright. But like puts and calls, and options writing, trading does require a how to of trading both up and down trends. I discovered in myself, to my complete shock, some natural bear tendencies; shorting has never been a problem for me, (once I stopped shorting up trends), but it can be difficult to be both long and short of different stocks at the same time. Especially when you have a volatile market. As you have seen now, the public, but especially politicians, do not like seeing markets go lower, and will do everything they can to prevent it. I learnt to stick to the trend of the stock I am in, then watch key date and price areas for that stock. It takes practice.

To other matters
Picked my first juicy red tomato from the garden late last week (no kidding); and a sale of TMO stock upon the news announcement 18/7, (bought 8/7), added sweetly to the flavour. Mid points are a beautiful thing. The chart shows us clearly that the chinese walls at this company are thin. Someone is trading beforehand.

A quote from the HIH Royal Commission, AFR 12th July page 1; quote "Mr Simpson, the deputy chief general manager finance, also told the commission that "while he was at HIH between 1995 and 1999, it had a culture where negative news was discouraged and financial results were driven to conform with predicted bottom line numbers" endquote

No surprises there. Crooked isn't it really though. It is my view those at the top of such publicly traded companies, if found guilty of such crimes, ought to be in jail, regardless of how much they donate to political parties. In fact the larger the donation, the thicker I would make the bars that lock them in.

Speaking of HIH, is it true the AFL are considering renaming Collingwood's home ground the H.I.H Memorial oval? Talk about a round robin, HIH, to Cooper, to the magpie board. Not even lending one's flash car to a young Eddie, so he might impress his lady friends, can get you onto the board these days (so that's the secret to attracting women. And I spent all this time following those dumb hotmail email leads )

French hol's start today Saturday, three and a half million drivers will clog the highway heading to the Meditterainian or Riviera, expected to be driving bumper to bumper on a three lane highway same distance as Melbourne to Albury. 30 degree heat. Can you imagine doing that ? Trucks are banned today at least on all French roads. You gotta see this to believe it.

And one from a subscriber
"QAN appears to have formed a double bottom. 20/06/02 low at $ 4.30 and 22/07/02 at $4.30 with a high at $4.67 on 1/07/02. The price has risen since the 22/7 on higher than usual volume. If the price pushes past $ 4.67 I'd suggest a target of $ 5.04 ie ($4.67-4.30) +$4.67=$5.04. The previous high was $4.92 on the 20/05/02. For what itís worth, the Qantas final result is announced on the 21/08/02. What would Gann say about the dates."

Yes indeed.

Try this for a possibility;
My view, we are being softened up for a US military strike against Saddam. Bush will have to wait for the Persian winter (our xmas season), prepare the PR in advance, and time it so it maximizes his political gains, (what a world we live in) so the date of importance I would watch, which events could hinge around, is December 4th, and 30 degrees either side. Watch for choreographed US media releases on the subject also, and note the dates of release, and letís see what develops.

To a watchlist on the long side AGL > 977, even better above 10.33 mid point A very good trend line can be drawn linking present weekly lows.

BPT looks interesting, you might have to make up your own mind above what level to get in, > 36.5 or > 39.5, nothing date wise sticks out to me on that one.

PSA > 24.5 (is holding in a new range, since its original break of accumulation)

WGR interesting volume and break of accumulation, but an explorer note, more speculative, and is thin.

PPP >9.5

One final thing, a chart of NCP attached, to highlight for you that overcoming psychological barriers needs constant work. You only get to learn this sort of thing about what you actually do in the market, through active trading, which is why as a novice, it is so easy to be sucked in by those get rich quick trading schemes, and why it is so easy to look at a chart and say yep, buy low, sell high, or short sell here, buy back there and before you know it, 100% returns are yours. Every trade ainít that easy. You guys would all know this already, but worth highlighting via the NCP trade, as it happened.

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