Wednesday, January 28, 2009

Update on JSE All Share Index

Update on the JSE All Share

We have been trading a fantastic long on the market this week especially in Gold and gold shares. But the general market also referred to as the All Share Index, has had a significant week of upside.

How did we become aware of the move in the market over the last week? We use our technical analysis of local and some international stock markets. We get an overview of the local stock market using different fundamental and technical indicators. For instance, our position on GOLD from last week was to buy from around the $840 mark and to sell at $880 this week.

Buy understanding some chart patterns, in particular the ascending triangle pattern, we could plot an expected target of $140 possible upside to the Gold price once the gold price broke above $830 last week. This also triggered our positions in gold shares like GoldFields and AngloGold from Monday this week. We have since closed our positions yesterday as we saw on our short analysis that Gold could pull back slightly, likely due to profit taking. So we moved our money off the table as well.

ALSI End of Day Report: we are at the 21 day EMA and we have resistance at 19360 on our LIVE 15 min chart. There is also a double top pattern formation on the ALSI live at the moment which suggests some downside after the nice bull rally we have experienced.

The MACD is about to cross down as well on a LIVE chart with the Stochastic 13 also looking very overbought. All of these types of indicators suggest some sell off in the ALSI 40 index today and tomorrow.

Fundamentally speaking however, the CPI and PPI are being anounced in South Africa this week. CPI was very positive yesterday which will add comfort to the market going higher. Once the interest rate cut which is said to follow next week, this will inflate the local JSE market to the upside.

Keep an eye on Sasol as it may have a pull back to around 26500c over the next few days. Obviously keeping an eye on Brent Crude oil would be a good idea at this point. Well, we keep an eye on it at any point when it concerns our position on Sasol. The two are very much linked to each other.

For more info on learning to assess the market the way we do... go visit and We have also put together a free basic tutorial about money and investing.

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Thursday, January 15, 2009

The JSE for 2009 and the Rising Wedge NOW

The South African market has triggered the rising wedge, on the end of day chart, which has now played out to show the market will be heading down again for a few days. It has already started doing so. The benefit of knowing how to take advantage of this using Short Term Trading strategies we can make good profits by short-selling the market.

On the Futures Mentorship I run, we shorted (expected the price to go down) both Implats and Billiton earlier this week. We have made over R6000 in Implats since Tuesday using just over R7000. As far as the stock market is concerned, one can still look and find opportunities using our successful strategies! On Billiton we made good money as well.

Shoprite, as the superb example, was brought to my client's URGENT attention during my workshop in the last HALF of 2008! By putting together the Equity Strategies and tieing them with Equity Fundamentals, we assessed the market and Shoprite was undoubtedly the best performing share across the market at the time! In fact, it still is. But I know you value our input and enjoy benefiting from our outlook on the market so I believe that you could find value again in the rest of this letter...

I ran through the market with our Equity Trading Strategies process and Shoprite came up TOPS! Then since August 2008 a BUY triggered in Shoprite at around 4200c and there has been no signal to Sell the share. The share price was 5400c yesterday at closing. This is after 114 days for a 27% return! Why wouldn't you want to achieve those kind of returns, especially considering the bearish market at the moment?

To get the right education on investing and trading, look at the people teaching you the strategies that they use themselves. Strategies that make them money. Lecturers that trade the market. We also love to train and teach others to do the same. Come grow your knowledge. Grow your portfolio account! Achieve your financial goals.
Here's wishing you the best financially profitable year ahead!

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Monday, January 12, 2009

Focus For 2009 & Ahead!

Welcome to 2009! Great to have you on board for the trip.

This year I plan to focus on bringing you many more posts and indepth insight into my trading style, personality, concerns and stresses as well as triumphs and tribulations!

I am lookign to focus on the following instruments in 2009:

  • ALSI40 - South African top 40 index using Spread tradin instrument
  • Certain shares within the top 40 of the South African local market with a focus on the RESI sector (Resources, mining)
  • Forex trading - looking at EU/$ over 4 hours and daily chart

So, if you have any questions on any of these give me a shout! I have noticed that the JSE-All Share index has made higher lows as well as break up through the 89 day moving average. This could be a signifcant event for our local market in the short term as it suggests a possible bullish rally after a short test of the 89 simple moving average ("SMA").

This event could trigger a bullish rally for the first quarter of 2009. Which means I could be finding myself in the equity market again on my first choice stock watch list. I did unfortunately miss some very profitable entries over the December period while taking a break... But such is trading. Besides, for the equity market I prefer to buy and hold so my timing needs to be in tune with the economy to a certain extent fundamentally speaking.

For the long term investments I certainly consider the economic cycle as well as global fundamentals before making a decision to enter a trade. On the short term trading side of my business, I focus less on the fundamentals and more on the technical analysis.

My aim tin 2009 is to describe my findings, experiences and outlook on the markets as a whole and then pin point certain trades I take and then elaborate on why I took them!

Come join me on a branch of the Trading Money Tree!

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Over 400 PIPs on Forex

Over the holidays, I take a break from my staple traing environment due to the low volumes. Remember, everyone is away on leave and so not many traders especially the fund managers and banks are trading the market actively. This does not bode so well for the local market as our liquidity suffers quite heavily. I rather take the opportunity that everyone else does and go on a trading holiday... except this year I decided to look into Forex.

Why Forex? Well aside from looking at Dave's Forex Breakout system discussed on an earlier post, I find that forex doesnt suffer the lack of volumes during the festive season when compared to any other market worldwide. So, I was back on the trading platform albeit for just a couple of weeks at the end of my vacation...

What did I discover? Well, that Dave was right all along. The Forex is the cleanest market I have ever traded. Amazing to see first hand how the different candle and chart patterns I use all the time to trade my ALSI and other stocks using Futures and Spread trading intruments worked even better on Forex! I was stunned!

So, I opened a demo account as the people I wanted to open an account with were closed... Not to worry I am LIVE now. But suffice to say what a pleasure trading Forex! The software platform is free from your broker. The transaction costs are the lowest I have ever found to exist on any instrument unless it's free. The risk management side is fantastic as ther eis literally 0% slippage on your stop losses and take profit levels.

So, I did some trades! I sold the Euro against the Pound as well as the Euro Vs $ on the 31st December and closed both positions on the 6th January for just over 400 Pips per position! What strategy did I use? A simple negative divergence trigger on the Day1 chart in conjunction with a 4 hourly chart. Both of these position hit my Fibonacci extension targets which was great!

I am currently selling the Euro vs $ again and watching the trade carefully. I will keep you informed about the trade!

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Predicting the Market with 80% Confidence?

Can financial markets be predicted with an 80 confidence rate?

The amount of cash produced in a trading environment is a function of the hit rate achieved and the risk to reward ratio. In a batch of 10 trades with a hit rate of 50% and a risk to reward ratio of 2:1 the trader would make 0.50c profit per Rand risked. This is a sure way to making lots of money, supposing that the trader can stick to the system through the long runs of bad trades.

It’s a mathematical fact that with a 50/50 system there are 3 bad trades every 8 trades taken. Four bad trades every sixteen. Can you handle a run of 4 bad trades?How will you feel after 4 bad trades in sequence? Will you be able to execute the next without hesitation?

Although a high hit rate is Not necessary to make money it’s normally necessary to allow the trader to play the game of trading emotionally. Let me explain. In a 50/50 system four bad trades come up regularly every 16 trades. In a 66/33 system four bad trades happen every 81 trades. In an 80/20 system four bad trades take place every 625 trades. Most of us could handle a run of four every 625 trades but every 16?

How can we get our hit rate up to 80%? Firstly if we wish to trade with a high hit rate then it’s important to realize that we won’t be trading every move of he market. I always say in my seminars that it’s like only going out with girls that look like Halle Berry; you don’t do that much dating.

Secondly we need to look at technical measures of the market which are unconnected mathematically. For example a candle pattern which occurs over 3 days is unconnected to an ascending triangle which forms over several weeks. When both occur simultaneously our prediction of the future goes up significantly in probability.

In a seminar lasting from 0900 to 1400 I have put together many high probability trading setups. The seminar is aimed at those people (most of us) who need a high hit rate from their trading to make the game of trading stocks enjoyable. The latter are prepared to sacrifice many of the trades which are marginal and wait for the pearls of opportunity to come along.

Welcome to 2009! Come back to the Planet cos we have some serious work to do this year!

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