ASX Momentum Trade Book - Part 2

[peter2]

I can refer you to an ASF lithium/graphite thread, that is mainly lithium, but there was a good post from pixel with a link to an outside source.

http://www.australian-lithium.com/lithium-stocks.html

 

[ukulele]

Cheers mate

 

[peter2]

Whoops: Sorry I missed the exit trigger on JHC yesterday as it closed below 2.90. The correct exit price was today's open at 2.87. Paper traders will put in the 2.87 exit price, but we can't do this in the real world.

The next open is the next best exit, but there is a problem with that. JHC will trade XD tomorrow (div 0.0575). Orders are purged by the system on XD morning, so the order book might be very thin. I'll place a limit sell at 2.79 (executed if 2.80 trades) and re-consider the exit after tomorrow. We have to accept the larger loss due to the mistake, but the loss is mitigated a little by the div.

Mea culpa: This mistake is the result of moving my routine ASX stock trading to weekly charts. I no longer look at the ASX charts regularly each day. My personal exit trigger on JHC is approx 2.70. This allowed for the div payment and gives price plenty of move to move as the market decides where it's going.

AMA: Immediate rejection of higher prices. We'll give it one more day for demand to reappear at this level.
EGH: Low volume sideways movement.
JHX: Low volume sideways movement. The next move up/down will depend on the US market.
NVT: Retest of BO and 5.00 levels.

 

[Wyatt]

I have dragged this over from the derivatives "Frustrating markets" thread. As it is equities based question, it is possibly better served here. I have edited the original question and follows on from a previous question about trading multiple systems during varied market conditions.

Posted by peter2
Hello wyatt;
Systematic traders do not try and match their methods to the market because nobody knows what the market conditions will be. They will have multiple systems that work best in different market conditions.

Thanks Peter2 for your reply. I'll be more specific this time around. I intend to run a momentum /TF system with a 200 day MA filter on the XAO, it can leave you partially/fully on the sidelines for extended periods, which is not a bad thing as avoiding losses is as good as winning trades. Even great stocks go down in difficult periods, only to jump back up quickly when the market relaxes.

Which brings me to my question, which is when the higher momentum stocks do dive they seem to reverse at defined points of support/resistance, nothing new there I guess. Maybe my bias is only allowing me to see what I want to see, but there seem to have been a few examples of this recently. Check out ACX, BKL, PME, BAL, DMP, SGF, CKF etc etc. With a tight stop, could this be a worthy concept for a bit on the side and what would you call it? oversold reversal? Can one code up support resistance lines over various timeframes?

Cheers,
Wyatt

 

[VSntchr]

Might not be everyones cup of tea due to the longer term downtrend, but I quite like the look of the BO for IMF. Fundamentally things seem to be starting to head in their favour too - with a few recent settlements in their favour and announcements regarding new cases


Also like GEM which is consolidating at the BO level after going ex-div at the end of March.


Have been riding ALU for a while, not sure if I mentioned that here or not. Anyhow, it looks to be coming for a retest of the latest BO level after a bit of a blow-off top yesterday.

 

[rnr]

Might not be everyones cup of tea due to the longer term downtrend, but I quite like the look of the BO for IMF. Fundamentally things seem to be starting to head in their favour too - with a few recent settlements in their favour and announcements regarding new cases
View attachment 66220

Maybe potential for a 2 - 3.5R profit depending on how it plays out (my concerns are mentioned on the chart).

 

[peter2]

Trading update: new trade by popular acclamation (2 posts) (replacing JHC)

IMF: Bought BO-HR at 1.38, iSL 1.25

BO of shallow sideways range, price acting stronger than XAO.
Initial resistance anticipated at 1.50 (< +1R), we'll see what happens then.

Note: I will not trade companies in this business sector.

 

[peter2]

Trading update: New trade, brought to our attention by pixel.

AHF: Bought BO of 0.30 level (at 0.305), iSL placed at 0.25.

 

[peter2]

EOW 58 update: ASF Portfolio +18.5% ( 58% invested in 3 stocks ) XAO -14.9% (past 58wk)

Portfolio and market drifting sideways. No update necessary.

JHC: Sold one day late at 2.81 earned 0.0575 div. Still, it was a slightly larger loss than planned.
AMA: Bought BO of sideways price range.

EOW 59 update: ASF Portfolio +20.2% ( 84% invested in 6 stocks ) XAO -11.4% (past 59wk)

Wow, the market jumped +4% this week after four consecutive days up. I'm pleased to see the demand for the banks. Our market can't go higher without them. The XAO chart looks much more bullish with the HL and price at the sloping resistance line.

Finally, our portfolio starts moving higher with AMA, IMF and JHX moving up. I was just about to start looking for lithium in my back yard.

This weeks sells: nil
This weeks buys: IMF, AHF

Outlook: I'm not going to get very bullish just yet even though my weekly and daily trends have turned UP. Our market is still in a wide range and our economy is not looking like improving quickly. This leads me to anticipate more sideways trading between 5000 - 5400. In addition the US markets get a bit jittery around May when all we read about is the "sell in May" phenomenon.

We're going to remain cautious and protect our portfolio. You will notice that we've already moved a few exit stops higher to reduce our downside exposure (yellow outline in graph).

AMA: We have a limit sell order (profit target) itm at 1.05 (+2R).

Recent break-outs in MLD, CTD, CGF, SUN and TNE have got my interest.

 

[peter2]

Interesting price action in our JHX break-out momentum trade (ASX momentum thread). OK it was sad.

JHX: price was at +1R, but we want more ( at least +1.5R) and I thought another day up and we might get there. JHX was sold off heavily today even though last night's price action in the JHX-ADR on the US NYSE was positive. No news other than an overnight disappointing US housing starts number that didn't impact the JHX.us.

I notice that BLD was also sold off today. Perhaps a little profit taking in both JHX and BLD after such good price rises.

I'm thinking that today's lower price is a good buy opportunity or the opportunity might be to short sell JHX on the US market tonight. I'll be watching as I have no research to support either idea.

 

[peter2]

EOW 60 update: ASF Portfolio +19.0% ( 84% invested in 6 stocks ) XAO -10.2% (past 60wk)

The market is moved up 1% this week and our portfolio drifted down 1%. We're not in any of the hot sectors atm and we've got some cash to use for another trade.

In an attempt to stimulate a bit more action in the portfolio I'm going to look for charts where price has left a gap from the previous day. I'm going to scan for these gaps in the afternoon and we'll trade a few of them. This will be in addition to our normal trend continuation break-outs.

That should provide a bit more action and interest.

 

[skc]

EOW 60 update: ASF Portfolio +19.0% ( 84% invested in 6 stocks ) XAO -10.2% (past 60wk)

The market is moved up 1% this week and our portfolio drifted down 1%. We're not in any of the hot sectors atm and we've got some cash to use for another trade.

One of the difficulties in trading. The hot sectors at the moment are the very dog sectors up until 4 weeks ago. It's often hard to adjust your mindset to buy with confidence when you are so used to seeing it dropping week after week. There has been quite a few false starts but they were just that... so one normally waits for confirmation which sometimes ruins the R:R.

P.S. ACX blew up today.

 

[Telamelo]

Short term momentum candidates that am watching/liking at the moment are (in no particular order):

BNR
MSM
BAU
BAR
ANO
PGC
PPS
SEH
AVH
AVB
CLQ
SMR
MRM
OTC
OPT


Please DYOR as always and feel free to contribute thoughts etc. as to how some of the above may play out etc.

Cheers tela

 

[peter2]

Trading update: I'm reluctant to include intra-day decisions in this mostly EOD trading thread, but occasionally things happen.

AHF: Sold at 0.255, just above our exit trigger. This was sold as price is going sideways and there is a lower high within the trading range. There is also an info related concern. MGC is due to report tomorrow am. If this report is bad (any downgrade) then AHF may also be impacted and our trade may get a little slippage as our exit would be on the following open.

We're taking a comfortable loss now. I'm still bullish AHF and have placed a re-buy order at 0.305 if price is not hit by sector sentiment.

Thanks to skc reminding me of the MGC TH.

 

[peter2]

Thanks Telamelo for those codes. I've looked at the charts in view of this thread's trading plans.

OK: MSM (break out of small consolidation), AVH (gap up setup)

Volume too low: BNR, BAU, ANO, OTC, OPT
Too late (missed entry): BAR, SMR, MRM
No setup for this thread: PGC, PPS, SEH, AVB, CLQ.

 

[peter2]

Lets review the setups in our trading plan. We plan to buy at the start of a trend which is usually a BO-HR. Our next opportunity is to buy the first/second trend continuation setup that is a BO-NH after a small price consolidation. These small trend continuation patterns are Pav's (original thread starter) favourite.

Using this chart of BAR as an example.

#1: The price up-trend started with the BO-HR (>0.025) Price also gapped up and closed above the 0.025 level. This sort of price gap is our latest trading setup to use. This will ensure we buy stocks in demand and create a little more action in the thread.

#2: BO-NH after a two bar consolidation. the up-trend is now confirmed with a HL. This bar also creates another gap up.

#3: Another BO-NH after a two bar consolidation.

Today's bar created another bullish gap that looks like the other gap setups. However the current risk:reward is much higher than near the start of the trend and this makes it not suitable for this thread's trading plan. If you were to place an oscillator on the chart it will most likely show very overbought. Higher prices are very probable but is the RR worth it at this stage?



You can buy the BO-HR or you can scan for these (30d, 60d, 90d break-outs) and place them in a watch list and wait for the first price pause (quick, shallow consolidation) to use for your trade (BO-NH).

I hope this thread inspires you to create your own TP. You only need one robust strategy. Validate it to your satisfaction. Trade it and manage your risk carefully.

 

[fiftyeight]

Great post Peter, one of many in this great thread

 

[Telamelo]

Thanks Telamelo for those codes. I've looked at the charts in view of this thread's trading plans.

OK: MSM (break out of small consolidation), AVH (gap up setup)

Volume too low: BNR, BAU, ANO, OTC, OPT
Too late (missed entry): BAR, SMR, MRM
No setup for this thread: PGC, PPS, SEH, AVB, CLQ.

Thanks very much Peter for your thoughts/analysis.. as excellent work/contributions from everyone to this thread.

P.S. MSM am quite happy with.. as 'bit the bullet' on earlier low vol backtest @ 0.105c support last week

Cheers tela

 

[peter2]

EOW 61 update: ASX Portfolio +18.4% ( 71% invested in 5 trades ) XAO -9.9% (past 61wk)

Our portfolio continues to drift down while the market pauses after it's recent rally. Our portfolio didn't profit from this rally and I'll post a few thoughts on that next.

The trailing exit triggers have been raised on all trades now. This reduces our downside exposure (heat) in case the market falls again.

This weeks sells: AHF

Outlook: I remain cautiously bullish even though I think our market will trade mostly sideways for the rest of the year until the sentiment for our economy improves. This may even take a lot longer. Who knows. We will continue to see short term bullish rallies in sectors throughout our market and one will need to be quick to spot them and even quicker to trade them profitably.

 

[peter2]

I've been a bit disappointed in the recent performance of this portfolio. There have been plenty of trading opportunities but I've been focused on my own systems (ASX weekly and other markets) to the detriment of this one.

I want to continue this thread and that'll mean getting back into the daily charts and trading the shorter time frames. The ASX has been very volatile this year with ~50% days moving +/- 1% (info from Coppo). This increased volatility is what sent me to the weekly charts and I've been pleased with the results. My weekly system is doing much better than this thread with the same amount of downside exposure. If we're doing extra work trading shorter time frames then we expect better results (more trades, more profits, if you have an edge).

Most of the good price rises lately, have been in small cap companies, especially resources. I haven't been interested in either sector for a while as I've been trading mostly medium cap industrials. Looking at the chart of BAR I posted last week made me realise that my scans were not finding the initial break-outs in these small caps as their daily traded value (not volume) were not big enough. I've spent some time creating new scans that will find the initial BOs in stocks like BAR, EDE, TAS, GMM. GXY etc. There's no value in finding them once they've already doubled in price. We want to buy when the trend starts or after the first pause. I've created a gap scan and lowered the value traded parameter in the 10d BO scan. These scans now produce many more charts and the task now, is to sort the wheat from the chaff.

The best way for me to ensure a proper level of commitment is to allocate some money to trade the trades in this thread. Shoosh, don't tell anyone. I trade most of these setups but use a wider exit stop to give price more time to move higher. If I trade them with the same tighter exit stops I'll be more focused.

I'm also going to add another setup to our list (BO-HR, BO-NH) and it will be a daily pullback (PB) setup in a weekly up-trend (details later). This will allow us to buy after a market dip and increase our opportunities to buy into price momentum.