Right well the ALSI has continued on its downward trend after trying to test the 17800 level on Monday.
The end of day outlook on my chart for the week is still playing the negative card. The Stochastic and RSI indicators on the short term are signalling an oversold position on the ALSI at the moment.
16871 is the nearest support level and if this is broken we should see a retest to the level before the market breaks down in earnest.
The support of the Monday and Tuesday trades now become the resistance of the rest of the week unless broken. This is the 17231 level.
Be wary at this level as many of the main sectors and indices have broken down through their most recent support levels which until this week had been fairly robust. There may well be a retest of these support levels -now resistance- but be aware not to be caught out thinking that this is a new rally...
It is likely, in my opinion, that we will test the old support levels - now resistance - before heading south again. But the trick here is to wait for the market to tell us where it is going.
But it is important to watch resources and financials sectors to get a better indication of the ALSI's direction. When both Fini and Resi are finding the same direction, then the ALSI rockets....
Just bear in mind that the end of day chart is in oversold territory.
Financial & Investment Workshops, ebooks & financial freedom @ http://www.newsweek.co.za/
Wednesday, February 25, 2009
Sunday, February 22, 2009
ALSI & Market Outlook
ALSI & Market Outlook
I just finished downloading the data from Friday's stock market close. What a turn of events. It looked as if the market was going to be depressed and close down badly in the red. The along comes the gold sector and platinum sector which was having none of it.
In essence, the ALSI regained its losses for the day and eventually went right back to close the gap left when it opened in the morning. The gap down was significant. The stock market was red everywhere!
It just so happened that I got just over 100 points around mid morning which was followed by another 200 points late in the afternoon if I had been at my pc. I had a client to meet about a particular strategy he had heard about and wanted to discuss it over with me. I happened to be in Rivonia at the time the trigger happened. Such is life.
It just so happens that looking at the Resources Index, a.k.a the RESI, the market certainly looked to be heading further south. Considering however how the gold and platinum sectors closed off our resources heavy top 40 index swung in the late afternoon.
Many safe haven investors taking to the apparent refuge of gold and other precious metals like platinum with the aim of protecting their capital. Both Anglo Gold and DRD Gold have made new highs as discussed they might last week. Platinum is looking strong to test the R150 resistance if it can break above the old resistance of R145 which it closed on Friday afternoon.
Considering the ALSI end of day chart, there could well be a swing come Monday morning depending on the close of USA on the Dow and SNP. It doesn't look good right now as both of them made new lows. It would be worth a look at the FTSE. We could well look for some confirmation from the movement Monday morning when the FTSE opens.
The ALSI end of day chart does indicate very oversold position with stoch and rsi below 30 and 10 respectfully. Immediate resistance is at the close of 17681 with support at 17160. We could find ourselves challenging 18071 if the open is positive and the market swings bullish.
The low oversold levels on the indicators imply a 200-300 upside in the morning but again lends itself to the sentiment of the US close which was negative. One may like to look at the Asian open to confirm our direction until FTSE opens.
I would consider the LIVE charts as well and seeing as though we closed up on my LIVE charts I conclude that 17426 is 1st level support followed by ultimate support at 17210. 17844 seems a strong resistance level too on the upside.
It certainly warrants waiting for after the open to assess again the market sentiment. Bearing in mind that the end of day chart on the short term indicates a retracement with the medium term still implying probability of downside after a short pull back.
Keep an eye on AngloGold and DRD gold. Anglo American is heading into oversold position as well. and has broken recent support levels. But it may require another 2-3 days before it retraces briefly.
On closer look into DRDGold, the share does look overbought now. It is displaying a well known reversal pattern on a candlestick chart called a Morning Star. It closed on Friday with an upside hammer. There certainlys seems to be strong support at just below 900c.
DRD's old high of around 971c to 989c is set to be the strong resistance. The share's momentum may well fall off here and we may find it having a small retracement back to 692c and find support there again. It is vital to trace the movement in GOLD using the NewGold ETF as a precursor to how DRDgold and other gold derivative shares will perform.
We may only see a slight retracement of 23% to 789c before the momentum in the gold price forces the share onwards and upwards. Likewise with AngloGold. on DRD gold 875c is quite an important support level and would signal that the retracement is in play with potential to move to 789c.
It certainly pays to get access to good training regarding your trading.
Financial & Investment Workshops, ebooks & financial freedom @ www.newsweek.co.za ,
I just finished downloading the data from Friday's stock market close. What a turn of events. It looked as if the market was going to be depressed and close down badly in the red. The along comes the gold sector and platinum sector which was having none of it.
In essence, the ALSI regained its losses for the day and eventually went right back to close the gap left when it opened in the morning. The gap down was significant. The stock market was red everywhere!
It just so happened that I got just over 100 points around mid morning which was followed by another 200 points late in the afternoon if I had been at my pc. I had a client to meet about a particular strategy he had heard about and wanted to discuss it over with me. I happened to be in Rivonia at the time the trigger happened. Such is life.
It just so happens that looking at the Resources Index, a.k.a the RESI, the market certainly looked to be heading further south. Considering however how the gold and platinum sectors closed off our resources heavy top 40 index swung in the late afternoon.
Many safe haven investors taking to the apparent refuge of gold and other precious metals like platinum with the aim of protecting their capital. Both Anglo Gold and DRD Gold have made new highs as discussed they might last week. Platinum is looking strong to test the R150 resistance if it can break above the old resistance of R145 which it closed on Friday afternoon.
Considering the ALSI end of day chart, there could well be a swing come Monday morning depending on the close of USA on the Dow and SNP. It doesn't look good right now as both of them made new lows. It would be worth a look at the FTSE. We could well look for some confirmation from the movement Monday morning when the FTSE opens.
The ALSI end of day chart does indicate very oversold position with stoch and rsi below 30 and 10 respectfully. Immediate resistance is at the close of 17681 with support at 17160. We could find ourselves challenging 18071 if the open is positive and the market swings bullish.
The low oversold levels on the indicators imply a 200-300 upside in the morning but again lends itself to the sentiment of the US close which was negative. One may like to look at the Asian open to confirm our direction until FTSE opens.
I would consider the LIVE charts as well and seeing as though we closed up on my LIVE charts I conclude that 17426 is 1st level support followed by ultimate support at 17210. 17844 seems a strong resistance level too on the upside.
It certainly warrants waiting for after the open to assess again the market sentiment. Bearing in mind that the end of day chart on the short term indicates a retracement with the medium term still implying probability of downside after a short pull back.
Keep an eye on AngloGold and DRD gold. Anglo American is heading into oversold position as well. and has broken recent support levels. But it may require another 2-3 days before it retraces briefly.
On closer look into DRDGold, the share does look overbought now. It is displaying a well known reversal pattern on a candlestick chart called a Morning Star. It closed on Friday with an upside hammer. There certainlys seems to be strong support at just below 900c.
DRD's old high of around 971c to 989c is set to be the strong resistance. The share's momentum may well fall off here and we may find it having a small retracement back to 692c and find support there again. It is vital to trace the movement in GOLD using the NewGold ETF as a precursor to how DRDgold and other gold derivative shares will perform.
We may only see a slight retracement of 23% to 789c before the momentum in the gold price forces the share onwards and upwards. Likewise with AngloGold. on DRD gold 875c is quite an important support level and would signal that the retracement is in play with potential to move to 789c.
It certainly pays to get access to good training regarding your trading.
Financial & Investment Workshops, ebooks & financial freedom @ www.newsweek.co.za ,
Wednesday, February 18, 2009
ALSI Trade today
Today the ALSI had an interesting move.
We had positive divergence on the Stochastic plus the stochastic was very low. The ALSI was also sitting on my fib line and support. Despite the fact the overall stock market was saying down, the ALSI managed a short but very quick rally to the next Fib level.
I was in the trade from 18067 going long with a price target of around 100 pts according to my assessment. I cut back 10 pts as I set a stop profit order on my trading system as I was going to be leaving soon and couldn't watch the screen. My trade closed out at 18157 automatically for me.
This is a 90 point trade on the ALSI in the morning session. Following that trade the market then swiftly did an about turn for a short which is playing out.
At 12 noon, the trigger came for the change again and we are in short from 18020 and are about to bank my short profits at 17785. This is a total of about 300 points for the day on the ALSI. Only 200 pts short of my weekly target in one day.
Using my combination of indicators and time zone map it is possible to trade for a nett of 100 points on the ALSI most days. How much does this work out to be in profit terms?
Profit depends on your instrument and your gearing. If you were using CFDs or Spreads you can trade with much smaller amounts of money in margin and therefore take a lower gearing. So on Spreads, your margin requirement for R1 spread trade is R1200. In essence, this means you could get R10 spread bet at R12000 which means every point the ALSI moves in your favour after costs you make R10.
If you are using ALSI via SAFEX as a future index then you need R21 000 margin for 1 future's contract which enables you to either make or lose R10 per point as well.
Say in my example above of my trade this morning I took a R1 Spread bet on the ALSI going up in price. I am required to provide R1200 in margin or refundable deposit in order to facilitate the transaction.
I enter the trade and close it with 90 points difference between the entry and exit in my favour (18157 - 18067 = 90). In the example on spreads above I make 90 x R1.00 which gives us R90 after costs.
It's the same?!! How does that happen. Because the required deposit is relative to the size of your trade in terms of R1 per point. However, you have now made R450 in the same trade but you needed R6000 margin to do it.
It is quite possible to trade 15 days a month on good, high probability trades. My kind of trade... and make 100 pts each time. But then what about when you get it wrong. Well, that happens too. It's part of the game. Don't fight it! It will be like trying to air... you can't possibly win.
Ok so let's look at it this way: You trade 20 times in a month. Out of those 25% are bad or go the wrong way. We end up with 5 bad trades and 15 good trades. If we make our stop loss 100 pts that equals:
Financial & Investment Workshops, ebooks & financial freedom @ www.newsweek.co.za Now featuring the ALSI Apprentice package!
We had positive divergence on the Stochastic plus the stochastic was very low. The ALSI was also sitting on my fib line and support. Despite the fact the overall stock market was saying down, the ALSI managed a short but very quick rally to the next Fib level.
I was in the trade from 18067 going long with a price target of around 100 pts according to my assessment. I cut back 10 pts as I set a stop profit order on my trading system as I was going to be leaving soon and couldn't watch the screen. My trade closed out at 18157 automatically for me.
This is a 90 point trade on the ALSI in the morning session. Following that trade the market then swiftly did an about turn for a short which is playing out.
At 12 noon, the trigger came for the change again and we are in short from 18020 and are about to bank my short profits at 17785. This is a total of about 300 points for the day on the ALSI. Only 200 pts short of my weekly target in one day.
Using my combination of indicators and time zone map it is possible to trade for a nett of 100 points on the ALSI most days. How much does this work out to be in profit terms?
Profit depends on your instrument and your gearing. If you were using CFDs or Spreads you can trade with much smaller amounts of money in margin and therefore take a lower gearing. So on Spreads, your margin requirement for R1 spread trade is R1200. In essence, this means you could get R10 spread bet at R12000 which means every point the ALSI moves in your favour after costs you make R10.
If you are using ALSI via SAFEX as a future index then you need R21 000 margin for 1 future's contract which enables you to either make or lose R10 per point as well.
Say in my example above of my trade this morning I took a R1 Spread bet on the ALSI going up in price. I am required to provide R1200 in margin or refundable deposit in order to facilitate the transaction.
I enter the trade and close it with 90 points difference between the entry and exit in my favour (18157 - 18067 = 90). In the example on spreads above I make 90 x R1.00 which gives us R90 after costs.
What is my return? I had to allocate a refundable deposit of R1200 to take the trade. I made R90 on the trade after costs.
So we take R90 (R1 x 90) / R1200
= 0.75 x 100
= 7.5 % return
So you don't think R90 is worth it per day? Well, remember the beauty of the derivative market is that you can now trade R2 per point relative to your account and the margin required. For every additional R1 you want to bet per point going in your favour, you need R1200 in your account.
Lets look at another example now using R5 per point:
R5 per point x 90pts / 5 x R1200 (deposit required)
= 0.75 x 100
= 7.5 % return
= 0.75 x 100
= 7.5 % return
It's the same?!! How does that happen. Because the required deposit is relative to the size of your trade in terms of R1 per point. However, you have now made R450 in the same trade but you needed R6000 margin to do it.
It is quite possible to trade 15 days a month on good, high probability trades. My kind of trade... and make 100 pts each time. But then what about when you get it wrong. Well, that happens too. It's part of the game. Don't fight it! It will be like trying to air... you can't possibly win.
Ok so let's look at it this way: You trade 20 times in a month. Out of those 25% are bad or go the wrong way. We end up with 5 bad trades and 15 good trades. If we make our stop loss 100 pts that equals:
5 bad trades @ 100 pts
= 500 pts lost
15 good trades @ 100 pts minimum
(win more pts than you lose)
= 1500 pts
Monthly total
=1500 less 500
= 1000 pts
1000 x R1 = R1000 p/m
1000 x R5 = R5000 p/m
and so it can go on.
How much can one start off with? Well the real question should be, "How does one ensure a great start - not a false one?" By ensuring that you have a good trading system or know how to build one for yourself and back test it!
Well, I must get ready for the next position trade in my time zone map. Catch you next time!
Financial & Investment Workshops, ebooks & financial freedom @ www.newsweek.co.za Now featuring the ALSI Apprentice package!
GOLD ~ The winning sector
Many moons ago I learnt a really powerful yet simple equity methodology for determining the performance of the different sectors against the market. I do this because I want to know where the money is. Whose money you ask?
The Fund Managers and the Institutes money is key to really making decent money in the stock market. One could follow what the fund managers are doing after the fact and buy what they buy. I prefer to pick it up from the market itself. Generally speaking, the fund managers can't dump hundreds of millions on the market all in one day.
After learning this great skill, albeit simple, I am able to track down the Big Daddy money out there. Once I have done that I go over the sectors with a fine tooth comb to find the shares within those sectors that are the best performers somewhat hand-picked to be on the fund managers team. Those left behind after all the slots are taken get a seat on the bench and don't get to score.
The Gold Index signalled a recent buy in the week of the 16th-23rd of January 2009. Some of the gold mining shares have doubled in less than 2 months. Is it time to get in there now? Not likely. Chances are you have missed the boat. Better not to chase it now...
DRD Gold and Anglogold signalled on my Big Daddy Money system in December already. DRDGold triggered around the 2nd week of December at around 435c and is now over 800c. AngloGold has gone from around R200 to over R300 this week.
But I will be waiting to add to my investment positions as there could well be a pull back or retracement before the gold shares move onwards again. But I will be keeping an eye on it like a hawk.
DRD has been the best performer with Anglogold following closely behind. Some less traded shares like Afgold and GBG Gold also have had some really good moves.
Keep an eye out for our next post about the Yield X on the bonds. Do you own a homeloan? Well, as the debt cycle peaks and the interest rate committee begins to waver under the economic pressures of a debt-laden consumer you could bank money as the interest rate drops off.
Look out for that as we develop some more info on that topic.
Financial & Investment Workshops, ebooks & financial freedom @ http://www.newsweek.co.za/ Check out our NEW ALSI Apprentice!
The Fund Managers and the Institutes money is key to really making decent money in the stock market. One could follow what the fund managers are doing after the fact and buy what they buy. I prefer to pick it up from the market itself. Generally speaking, the fund managers can't dump hundreds of millions on the market all in one day.
After learning this great skill, albeit simple, I am able to track down the Big Daddy money out there. Once I have done that I go over the sectors with a fine tooth comb to find the shares within those sectors that are the best performers somewhat hand-picked to be on the fund managers team. Those left behind after all the slots are taken get a seat on the bench and don't get to score.
The Gold Index signalled a recent buy in the week of the 16th-23rd of January 2009. Some of the gold mining shares have doubled in less than 2 months. Is it time to get in there now? Not likely. Chances are you have missed the boat. Better not to chase it now...
DRD Gold and Anglogold signalled on my Big Daddy Money system in December already. DRDGold triggered around the 2nd week of December at around 435c and is now over 800c. AngloGold has gone from around R200 to over R300 this week.
But I will be waiting to add to my investment positions as there could well be a pull back or retracement before the gold shares move onwards again. But I will be keeping an eye on it like a hawk.
DRD has been the best performer with Anglogold following closely behind. Some less traded shares like Afgold and GBG Gold also have had some really good moves.
Keep an eye out for our next post about the Yield X on the bonds. Do you own a homeloan? Well, as the debt cycle peaks and the interest rate committee begins to waver under the economic pressures of a debt-laden consumer you could bank money as the interest rate drops off.
Look out for that as we develop some more info on that topic.
Financial & Investment Workshops, ebooks & financial freedom @ http://www.newsweek.co.za/ Check out our NEW ALSI Apprentice!
Thursday, February 5, 2009
Interest Rate Announcement
The MPC or monetary policy committee meeting today is 1 week early due to conflict with the budget speech next week...
What does a drop in rates mean for the stock market? Well, for one it should allow fundamentally more spending by the consumer. This frees up monies otherwise tied up in servicing the high debt level the consumer is burdened with.
Generally, banks and retailers benefit quite a bit from a rate cut. But the overal economy will benefit here to because of the heightened debt burden.
Keep an eye on the banks and the general retailers. As I write this post the market is turning green on my screen! The power of the interest rate...
Financial & Investment Workshops, ebooks & financial freedom @ www.newsweek.co.za
What does a drop in rates mean for the stock market? Well, for one it should allow fundamentally more spending by the consumer. This frees up monies otherwise tied up in servicing the high debt level the consumer is burdened with.
Generally, banks and retailers benefit quite a bit from a rate cut. But the overal economy will benefit here to because of the heightened debt burden.
Keep an eye on the banks and the general retailers. As I write this post the market is turning green on my screen! The power of the interest rate...
Financial & Investment Workshops, ebooks & financial freedom @ www.newsweek.co.za
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