Wednesday, March 4, 2009

ALSI Top 40 is Tops today!

The ALSI Update

What a fantastic day on the ALSI. I wasn't able to enter the trade on the ALSI at the open and hence saw the index run away from me for most of the morning session. The support of 16071 held and played its part perfectly.

The Fibonacci also confirmed the support with it being at the level of 161% extension to the downside from the previous high end of day. The other short term indicators also confirmed that the market was very oversold on the 60 min as well as end of day.

So, patiently I wait for my entry trigger with support of 16060 as stop loss main. My live chart's main support is 16125 with a resistance level of 16681. The 60 min has told me I can go in but the 15 min chart has jumped the gun and doesn't give an entry until 11:00.

Go long at 16618 and close it at 16763. Swing the trade to the downside from 16737 in a short trade to close 16557. This trade is followed by another long at around 15h35 at 16595 to close out at 16685. That is business done for the day.

In total we are talking 145 +180 + 90 points which equals 415 for the day!
That makes up 80% of my week's target in a single day. In a case like this it's best to go play golf tomorrow.

And the overall trend was certainly weak and the retracement or bounce in the market was expected this week as discussed in my newsletter. The newsletter is available by visiting Investor Newsletter which is a Free weekly Market Outlook.

Pretty much all of the sectors were screaming for a bounce otherwise known as a retracement after a move into an extreme situation. Resources, Financial & Industrials, as well as the General Retailers all were primed to do the same thing. The set up was ready and wound. It just needed to be released.

What was going to have the effect of releasing the hounds of the bounce? It could well do with the Chinese Rescue Package coming out later this week. With the Chinese economy being resuscitated it could be the driver the commodities need in order to rally for an upswing over a few weeks, perhaps days but it would be short term.

Our call on the Anglo American trade in our investor newsletter and on the blog earlier this week gave us a late entry yesterday afternoon but at the lastest for end of day buyers to get in first thing this morning. Our entry was yesterday afternoon at R136 with the view to take between 8-10%. This is the structure of my trading plan. I do suspect that the swing could be carried forward until Friday unless the US closes down before then.

So Anglo American pretty much met my trading plan target when it hit R147 and some change intraday. I also use LIVE charts to time entries as well as exits from the market.

Both Kumba and Implats were on our radar as well this week. But have you seen the drop in Grindrod? over 20% in this week alone. It is usually one of my shares to follow. This time round it left me behind. I will ensure that I am looking for the retracement there as well. When it moves it goes for quite a distance before momentum is lost.

Good trading today. Do you want to learn more? Come on the ALSI Apprentice programme.

The real question to be tackled is, whether this rally could be the market turn around point for the stock markets going foward? Some work needs to be done on this topic. Catch you next time...


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