Stock Market peaks

We'v been waiting a few weeks now to see the stock market peaking. It seems as if the turn has finally come and that the bulls are finally running out of charge. There are numerous signals supporting a down turn in the market is pending now.

As of yesterday the 30 yr T bill chart shows an Evening star or bearish candle pattern at resistance. The dollar has also made an opposite bullish candle pattern or Morning star suggesting that it is going to go stronger the short term. This should put some pressure on commodity demand therefore resource based stocks and emerging markets. Watch the Shanghai.

The Dow Jones Industrial and the S&P 500 also look very top heavy at their respective resistance levels. They have also reached 161% fib extension levels and now sit testing their respective 10ema or 20ema support moving averages. This is dangerous territory if you are a bull or if you are expecting the market to go higher yet.

Our local stock market is also peaking displaying shooting stars at resistance levels. Not to say that this is the beginning of the double dip recession. We are not of the belief that a double dip recession will take place. However, we are due for a wave four count in our current macro wave cycle. A wave four count is a negative move which does go below the lowest point of the previous low. This would be around 9800 on the Dow Jones.

Trade well; not often.


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Stock Market Investment Workshops, ebooks & financial freedom @ http://www.wealthskills.co.za Visit Forex Fund Management for consistent returns by a Forex Pro looking after your money while it works for you.

Caution: Shooting star candles

This was the subject line of an urgent mail sent to our trading and investment clients on Tuesday morning 9h05!

Caution: Shooting Star candles across the stock markets and indices especially for Resources so take caution today.

We considered that short term traders should take profits and that investors be aware of a pull back but to use it as an opportunity to add to their existing investment positions at a discounted price in the resource rally.

Some prices have already bounced including Kumba our preferred stock pick. It pulled back to the moving average as support at 31600c and is now sitting right back at 330000c in just 2 days.

Platinum stocks had a similar experience. Some sectors like construction failed to secure a higher top so therein lies a potential opportunity to short the sector and construction stocks like Murray (target 4000c) and Group 5 as well to name a few.

We also discussed how the pharmaceutical sector have topped out and are due for a pull back and it happened this week. Aspen is now testing the 50ema support at 7000c and for medium term investors could prove to be a fair entry level as this is off the high of 7350 or so and provides an opportunity to enter with a 5% discount. It may be early however. Consider confirmations...

GOLD Futures reached $1145 and beyond in the recent rally discussed from $1075 low. The dollar yoyo effect is playing havoc with short term position calls so it is best to wait it out until the dust settle and take the next swing position as it comes.

Keep an eye on TECH stocks.

Best stock trading this quarter.

Financial & Investment Workshops, ebooks & financial freedom @ www.newsweek.co.za

Visit Aurora Global Markets for Global trading platform in equities, foreign exchange, commodities, precious metals and interest rates.

Make Money Trading

Make Money Trading

This December I was in a fantastic swing trade in a base metal miner called Kumba Iron Ore listed on the Johannesburg Stock Eexchange. The swing trade in this stock signalled as early as 23200c and I took profit at 26000c.

The stock then retraced to 25000c where we entered the swing trade again for the next bullish rally. The stock has flown from there to 32500c in little over a couple of weeks.

I certainly guaranteed myself a year-end bonus by applying the financial and investment knowledge I have and implementing my stock trading plan.

I've been bullish in Platinum and Platinum stocks since early October 2009 and seen Platinum rocket from $1390 to $1580 recently.

My stock picks included Impala Platinum @ 18000c now 21700c, Northam Platinum @ 3900c now 5000c, Lonmin @ 20800c now 25000c and more recently East Plats, Jubilee and Anooraq as smaller platinum miners move after the majors and carry more risk as well.

I make money trading the stock market and teaching people to do the same. Over November my members made 7% return and in December, they made 11% return on their portfolio. These are low risk and high return trading positions mostly in swing trades.

Investors that have lower risk appetite held positions in Kumba and others for longer periods and now look at an average of about 25% return for the last quarter! They carry a lower cost of business due to trading less and paying fewer broker fees.

New Exchange Traded Funds listed globally for Platinum and Palladium metals and this also pushed momentum in these metals. They are bound to provide a good deal of carry-momentum over the next few weeks as these funds pump capital into the market for these metals.

Gold futures have also turned positive again and the bullish swing has taken place from $1075 level to $1145 again. Watch it carefully now as the dollar will determine the next time to entry.

Financial & Investment Workshops, ebooks & financial freedom @ http://www.newsweek.co.za

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Another Alsi 40 trade and market run

What a great day on the JSE!!

(I have neglected to post for a week and I owe my apologies. I'm working on a personal mentorship programme for people interested in learning from the very basic investment level to advanced day trading involving futures and ALSI which will take place over three months. Drop me a line if you have some ideas on this!)

The stock market had run so hard over the last 10 days that it was time for it to take a breather. Tuesday and most of today constituted that breather in the short term.

Besides the short trade from this morning which I missed as I was attending to a large beekeeping goods order. I also run a full time beekeeping equipment supply business. While I was getting my weekly prescription of manual labour packing out the order of bee hives, beeswax and queen excluders I was not at my computer.

There was a grand 200 odd pts trading there for the taking this morning in the ALSI 40 short trade. Then the market started to move sideways for a couple of hours.

So, as I worked on my personal investing & trading mentorship programme, I kept a beady eye on the ALSI. I noticed a swing change and challenge of the 89e happened but failed. The moving average worked as support confirmed by the stochastic. Check 1 confirmed!

An hour or so later I look again and there it is! The signal to go long on the ALL Share Top 40! Around 14h30 it gave the signal with the best entry price being around 19300 but waiting for one more confirmation meant watching with baited breath until 19360 with a stop at 19330.

I went long after 15h20 and then added again about 15 min later. This price was around 19410. My target was 19535 which was a resistance level during the live chart yesterday. The SNP500 and Dow Futures were up stronger and our ALSI took off. It wasn't long and my take protif was hit... in fact it was less than 20 min and I was out of the trade.

The trade still went on to 19670 odd after that. This would've added an additional 100 odd pts to my total for the day but I ain't complaining! Besides by adding to the position as it went up I effectively doubled some of the points I did make due to the additional leverage I was using... In essence I got like an extra 80 pts when I added more contracts to the position.

Good trade nonetheless! And the market closed quite well considering its opening...

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ALSI Update and Trade

Mixed morning ALSI Session

It took a while and much discipline to wait for this morning's ALSI trade.After waiting 2 hours for a set up that gave me a signal on my strategy, it finally presented itself.

We went long at 10h35 at 16518 level and closed for almost 100 points as the ALSI went to the top level of our morning range. The range was sitting between 16500 and 16600 for quite a while. It took the positive opening of the FTSE as well as support from strong trading on the SNP and DOW as well to push our stock market to the upside.

Overall market outlook for today is that we may see a pullback again in DRD GOLD which would be mainly fuelled by the gap it left at 887c. In addition to this possible downside also consider that there is a double-top setting up at 950c with a neckline at 767c which gives us a 180c (estimated) target to the downside if the neckline is broken.

Once again, my recommendation in this instance is to keep track of gold and silver. One can refer especially to the New Gold ETF in order to analyse the chart for a view on gold's position.

Grindrod has defied all the stock markets odds and went positive from our call at 1126c last week we have seen it go to 1220c which is not far from our 106c target. In essence, this amount does warrant closing if you are edgy about the market today. Considering the move by the FTSE after it's open one may speculate that JSE will look to the upside. One would do well to consider that a sell on Grindrod today could be a fairly good move considering the overall market sentiment is in negative territory.

To give you an idea of the short term trade on GND last week this is how it reads:

• We call a long end of last week to enter at 1126c in the morning wih a stop loss level set at 1100c straight but utmost stop loss of 1080c due to the overall negativity of the market on Friday morning's open.
• Based on the price of the share we would calculate that we would trade with 30 contracts which gives us an exposure to 3000 shares for only 15% of the capital required, if you decided to trade the shares instead of using single stock futures to trade.
• So, if a contract price is R120 per 100 shares (there are 100 shares in each contract) I would have used only R3 600 plus brokerage in order to purchase 3000 x R11.26 = R33 780 worth of shares.
• I sell my Grindrod shares at R12.20 which gives me a gross profit of 94c which is the same as if you had bought the shares.
• We take the 3000 shares x 94c = R2 820 gross profit less brokerage of about R600 in total (estimated at higher end).
• I make R2 820 using R3 600 which is 78% return.
• As a share trader or someone using shares to trade on the short term you would have used R33 780 to make R2820 nett.
• That is equivalent to just over 8% using the full capital instead of leveraging your capital.

Moral of the story? Learn how to trade with your capital and make it stretch using leverage!

BUT IT'S RISKY!! Ask the right questions! If Grindrod went to 1100c and we both had to close the trade due to the stop loss kicking in, what would we have both lost?

1. In your example, the share lost 26c from 1126c to 1100c. Right? Take your 3000 shares x -26c = -R780 (loss) plus your transaction costs ie brokerage.
2. In my example, the futures contract lost 26c as well. Take my 3000 shares or 30 contracts x -26c = -R780 (loss) plus my transaction costs.
3. What's the difference? Not much! Right? Yes, I am!
4. Is there more risk in trading futures?
5. NOPE!

The risk only comes in when you overexpose yourself. If you are not aware of how leverage and margin works then you could get yourself into trouble. One should never, in general terms, leverage more than three times your portfolio size.

If your portfolio size if R50 000 you shouldn't leverage your trades to a value of more than R150 000. Effectively, you are controlling your leverage by keeping the margin you put on the table low.

You see, you could get leverage of 10 times on your account. This means that with R50 000 in your portfolio you could trade up to R500 000 worth of shares using a single stock futures. Don't go there...

Instead, come learn how to trade ALSI, Futures, Forex with us.

Financial & Investment Workshops, ebooks & financial freedom @ www.alsiapprentice.co.za

ALSI Update

Since the original negative outlook on the ALSI 40 since 16th Feb, we have had a fall of another 1900 points. The 16191 level is old support from Nov 08. This level was broken this morning as the gap on the open raced passed this level to 16071 before bouncing from this level to challenge the gap.

The 60 min outlook on the ALSI is a recovery to 16430 level as resistance but first the gap must be closed at 16494.

With my next Fib level being 16700, how close did the ALSI get to that before turning south. The short triggered now at 17h15 has reaped 200 pts and ought to be closed about now.

Gold recovered well today with AngloGold up 3% and DRD both up after the pull back. That was great. Anglo American is very oversold and indicators imply that the share could experience a retracement/bounce with R134 being a fair support level. The upside target later this week is around R154.

Both Kumba and Implats had sterling days on the market clsing up 7% and 9% up respectively.

Keep an eye out for our new Forex Mentorship

Financial & Investment Workshops, ebooks & financial freedom @ http://www.newsweek.co.za

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.

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

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!

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!

Financial & Investment Workshops, ebooks & financial freedom @ www.newsweek.co.za