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