ASX Momentum Trade Book - Part 2

[peter2]

API: I was watching those last three bars, the retest of the low (1.45), but not enough volume done on that last bar to convince me the low is support.

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Trading update:

New trade: Bought DNA today as it closed above 0.80 yesterday (SL 0.72).

SRF: On watch list, missed out due to very low market depth.
CDA: On watch list, Very thin bid depth also. I can buy it but will I be able to sell it when I want to.

 

[tech/a]

API: I was watching those last three bars, the retest of the low (1.45), but not enough volume done on that last bar to convince me the low is support.

Volume isn't always a preceding indicator of strength.
If Supply is withdrawn then price will rise un abated
with our without volume--anywhere in a trade.
Often volume is a sign of weakness.

 

[peter2]

EOW update: ASF Momentum Portfolio +5.9% ( 62% invested in 6 trades ) XAO -6.3% (18wks)

This weeks sells: AMA
This weeks buys: BAL PPS DNA

Bright new colours for a bright new FY. When the market turns up we'll jump into a few short term trades and bag some quick profits (+1R) to kick us along. Many of the large caps have formed higher lows and their BO-NHs look promising.

 

[tech/a]

Considering the market---basically marking time since you took over.
Not a criticism. That in itself is hard enough!

 

[peter2]

I agree, and I'm pleased to hold the portfolio steady as the market drops. The market will find a bottom at some stage and then we'll profit from the rally. Then we'll hold through the next dip and profit from the rally . . .

The XAO ended up almost even for the year and I think the market will remain in this range for another year. We'll be lucky to see a 10% rise. Today's dip was totally irrational, but a good buying opportunity for the longer term investors with div yields much better than term deposits.

The market is forming nice buy setups (HLs) that we will probably use next week.

 

[lindsayf]

Really enjoying your work Peter.
You articulate your processes (technical and psychological) very well.
When i eventually clear away some time committments i will be referring here when I begin to draft my new trading plan.
Thanks

 

[maglincer]

My personal trading plan is buying stocks near 52 week high whenever they breakout and holding for the short - medium term. Is that similar to what you are doing Peter? Can you tell me what do you think about the technicals of ACX if you have time.

 

[peter2]

Trading update: The markets will need further resolution of the ongoing Greek tragedy.

ISD: Exit next open.

Comment: There's not much to do at present. I notice that the number of charts stronger than the index (RSC(XAO, 13wk) has dropped by >65%.
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Welcome maglincer, yes, most of the stocks I prefer seem to be near their yearly highs.

ACX: There is not much to say about this chart. It's up and was one that I was very close to buying for this thread.

 

[bonkerrs]

I use daily volume or more accurately average value traded per day to look for our long only setups. I use two value filters across the whole ASX, >$40K/day and >$600K/d because I have portfolios of different sizes. There are always plenty of short term moves in stocks outside the XAO500.

OK I'm confused Between this post and a previous one. You do (or don't) only use daily charts for scanning. My confusion may be more apparent with the below break down.

(1) I'm looking for charts with clearly market horizontal resistance in a weekly or monthly up trend. They're for my SMSF. (Weekly Darvas scans)

This scan is to search for BO patterns. You scan the weekly charts.

(2) Next I'm looking for charts near their yearly highs with shallow consolidations (in weekly charts). (Daily Darvas scans)

This is a scan to help confirm scan (1) for break out? You use the weekly charts but with a daily Darvas scan for this one?

(3) Then I'm looking for 10d BO with volume (thrust bars) You can see these in all three of tech/a charts HSN, SIQ, YOW. (Daily pm scans)

Now you break it down further by using only the daily charts. And now you will consider volume to hone in on opportunities.

(4) Then I'm looking for small consolidations in strong trends (hope this rings a bell, Pav response)

Every weekend I find all the stocks that are stronger than the index (XAO) over the past 13 weeks (RSC(XAO,13) > 0). I throw them all in a watch list and sort through them. Charts with clear resistance levels go into a pending BO list. Charts showing corrective pullbacks go into a pullback list. Charts that are going sideways after a down trend go into a reversal list. Every PM I review those watch lists and wait for perfect low sized risk setups to buy them. There are approx 20 charts in each list. I don't let them get too big. When the chart looks poor and the anticipated opportunity isn't progressing as I'd like I ditch it.

This is a great idea. One I will employ once I have a better charting software to make the scans, also once I understand why and how to scan.

Currently using Incredible Charts, am struggling to create the scans. For example... trying to figure out how to re-create these parameters (RSC(XAO,13) > 0). IC is OK for $19.95 a month for the software and EOD data but would like to upgrade to Amnibroker soon.

 

[debtfree]

Currently using Incredible Charts, am struggling to create the scans. For example... trying to figure out how to re-create these parameters (RSC(XAO,13) > 0).

Hi Bonkerrs: I'll let Peter2 answer all your questions you have for him to put more clarity into the scanning process he uses.

I still use I/Charts, for whatever reason it does not matter here. Yes the scanning ability is limited but you can do it, you have to think it out a little to get it to produce what you want to see in the results of your scan. In regards to Peter2's 13 week RSC Scan this is what I would do in I/C, there might be a better way of doing it but I wanted to answer you asap. Time frame below is from 2nd April to 3rd July - 3 months or roughly 13 weeks.



Then go to your scanner and input -5 into the (min% box) in the Percentage Price Move Section, now press (add) now press (run screen) once you have the area you want to search such as Watchlist or Index as you want it. You will now have all the stocks that have outperformed the XAO over this period. Naturally this might result in still a lot of stocks to view but after adding more filters such as volume or value and others to knock this list down a little.



Hope this comes out right and helps.

Cheers ... Debtfree

 

[peter2]

Nicely done debtfree.
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It's important to have a clear idea of what you're looking for and what you're trading before you run your scans. Most of my scans are designed to help me find opportunites that I might trade in my SMSF and other momentum portfolios. I've had to make minor mods to find charts for this portfolio.

Weekly procedure:
1. Review all market sector charts, note strong / weak sectors.
2. Weekly Darvas scans for BO setups.
3. Weekly scans for other setups, candlestick patterns, 10wk BOs
4. Weekly scan for stocks stronger than the XAO, relative strength scans (RSC(XAO,13wk)>0). I then look at each chart from this scan and sort into my watch lists (BO, PB, ... ). I will review these every afternoon.

Daily procedure: (pm before close)
1. Look through watch lists for charts almost ready to trigger entry or have triggered that day.
2. Daily scans (re; this thread) 10d Darvas, 10d BOs, price/vol spikes,
3. Other daily scans for my own purposes.
4. Other daily scans done EOD.

Volume: I use different volume filters to reduce the amount of results in the scans (weekly and daily) and to ensure there is enough daily volume for the appropriate position sizes required for the portfolios. A 50K portfolio can trade stocks with lower daily volume traded than a 1M portfolio.

Adding a volume filter to your scans can be tricky. eg. Volume generally increases in an up trend, but decreases when price forms a consolidation. A high vol filter may miss charts in a low volume consolidation. These are the charts I want to find.

Small cap stocks can have great strong looking trends (like ACX) but their daily volume is too low for a large portfolio so they can be missed with a high vol filter. They are picked eventually when their volume and price increases, generally too late into their trend for me.

It's a balancing act especially when I'm looking for opportunities in both a small portfolio (this thread) and a larger one. If I use a low volume filter to pick up every chart then I'll have too many and won't have enough time before the market closes to select/pos size/place orders.

 

[bonkerrs]

Thanks debtfree and Peter2. I'm still rereading your replies. Takes a few read overs for it to start to sink in

debtfree: Just wanted to bring up a quick point. Peter2's 13 week RSC scan is done on a weekly chart however in your example (thank you for the break down on creating it, was very helpful) you've created it over a daily chart.

 

[bonkerrs]

Just tried the scan in both weekly and daily. Yielded the same result.

 

[debtfree]

Peter2's 13 week RSC scan is done on a weekly chart however in your example (thank you for the break down on creating it, was very helpful) you've created it over a daily chart.

Edit: Just seen your post bonkerrs, anyway done now.

 

[peter2]

EOW 10/07/15 update: ASX Momentum Portfolio +3.9% ( 48% invested in 5 trades ) XAO -7.1% (19wk)

The ongoing drift lower in the market has finally impacted our portfolio which shows a 2% drop this week.

This weeks sells: ISD
This weeks buys: nil

Trading updates:
SEN: has hit our sell trigger and is to be sold next open (Mon).
BAL: TS is at BE.
PPS, DNA have not gone higher after our entry and it's time for a action. Close them both on the next open.
Let's also place re-buy orders to buy if price does break higher after we sell. PPS: Buy 0.365. DNA: Buy 0.805.
[Note: My personal exit triggers on both these stocks are lower. I won't be selling on next open.]

As the image shows, our portfolio has hit a new low EOW draw down.

Comment: What a boring start to the year for this portfolio. Can't help that. I'll show you what I'm waiting for in my next post (XAO chart). There are always a few stocks charging up and you're wondering why aren't we in them. Well, for every one that does go higher there is ten that don't. I'm not going to risk money when the odds for success are lower than random.

 

[peter2]

I'm waiting for the index (XAO) to get above 5600 and the sloping resistance line. There are a few large caps (banks) close to breaking resistance and if they do, they'll push the index higher. This assumes that BHP and RIO don't continue lower and offset any rise in the banks.

I'm willing to trade any ASX stock in this thread and if the banks provide a low risk setup. We'll be on them like flies on dung.



What about the ASX200 trading? Some of you must be wondering about this.

I've decided to not clutter this portfolio with something completely different. I'm leaving this thread for ASX equity long only trades. We'll maintain the focus of this thread on trading break-outs and pull-backs in ASX stock charts. Don't worry, this thread will continue to beat the index. The easiest way to do this is to stay out when the market goes down. Like now.

There will be times when it's advantageous to use the ASX200 and I'll not forget to post the setups.

 

[PeterJ]

Hi Peter

great simple analysis,
that double bottom on the chart is nice to see !


What about the ASX200 trading? Some of you must be wondering about this.

I am definitely :bounce:

Peter

 

[peter2]

Trading update:

DNA, PPS, SEN : Sold on open, but watch them closely. I've placed some pending buy stops if they go up.

I'm getting excited. I see many large caps waiting to break higher. Here's a few of them.



ASX, CSL have traded above their BO levels. If all these large caps go higher so will many other large caps and this will push the index higher as well. I'll check the ASX200 chart for a setup so we can profit from any lift in the market.

 

[peter2]

Trading update:

SEN: Traded at 0.155, Bought 0.15 , iSL 0.125.
Got to love the market's sense of humour as we sold this yesterday.

New trades to revitalise the portfolio.
AGI: Bought today's 10d BO at 2.75 (iSL = 2.60)
DWS: Bought today's 10d BO at 0.63 (iSL = 0.58)

 

[peter2]

Trading update: Went berserk, for me that is. Break-outs galore in the large caps. Three new trades for this portfolio.

CAT: Bought BO-NH (1.25), iSL = 1.15. It's taken me two days to partially fill my order in this one. Supply was withdrawn and placed 0.10 higher.
JHX: Pre-empted the BO on this one knowing the overnight US strength (Bought the open).
CTX-cfd: Pre-empted BO on this one too, bought the open. Had to use cfds as we are running low on cash.

Now that the market seems to have started to move higher and opportunities are plentiful we won't be staying with any laggards.

Note: Trades in higher priced stocks (like the break-outs in JHX, ASX, CSL, BEN, CWN, CTX, HSO, WBC even WOW) are done to collect quick profits in a market rally (+1R to +1.5R). IMO they're ideal for cfd traders as the leverage helps start more of them. One still has to be mindful of proper risk control of course.

Yes, I'm disappointed that I didn't start an ASX200 long trade (for this portfolio) after the "aGreekment" on Monday evening. One trade can catch the rally instead of many.