ASX Momentum Trade Book - Part 2

[peter2]

Trading update: New trade

CLQ: Bought at 0.76, iSL at 0.65.
It's a 1st blue bar on the chart after a HL. I'm anticipating that the up-trend has resumed after the low volume pull-back.

 

[peter2]

EOW 124 update: ASX Momentum Portfolio +57.7% ( 51% invested in 5 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +9.9% (past 124 wks)

This weeks sells: nil
This weeks buys: CLQ

The market continues in it's current range ending the week higher. Our portfolio however lost value as prices in our trades drifted lower. It's no fun reporting losing weeks and the compounding effect makes the losses seem bigger than they are.

I had no thoughts about hiding in the cupboard waiting for a better week to report. "Head in the sand" is not part of my trading approach. We're active traders. It's important to be aware of what's happening every day. When we're out of sync with the market, we have to notice it quickly or we'll miss the opportunity to rectify it. The index rose this week due to demand for the large cap stocks. This portfolio didn't currently have any trades in this sector. That's our bad luck.

We started a few extra trades in small/mid caps knowing the market was volatile and tricky. It didn't work this time so we'll take our "losses" and try again.

FBU: A reversal setup that hasn't attracted more demand. This shows why we should be buying stocks that are clearly going higher in preference to reversals with little demand. Our iSL wasn't tight so we can allow it a little more room.
CAJ: BO failure, a close < 0.25 would be reason to exit.
CPH: Close < 0.50 is reason to exit on next open. I thought I saw renewed interest in this sector (AC8 looking attractive.)
GEM: Our only shining trade. We'll hold and give it a chance to get to initial target (4.20).
CLQ: Wouldn't like to see C<0.70.

Outlook: WD DD. Index remains in volatile range. We'll defend our portfolio after our attempt to start more trades in this tricky market hasn't worked out favourably. If we see any low risk setups in the large caps we'll trade a few.

Note: The weekly portfolios are more invested in the large caps for liquidity reasons and they're going great. The manager of the weekly portfolios has been giving me heaps over the week-end. He's got a chart that shows the stark contrast in performances over the last week.

 

[peter2]

Sorry: Just found an error in the spreadsheet that displays the % performance.
The correct value is +61.0% not 57.7%. The P&L on the pic calculates to +61% also.
A down week but not as bad as it looked.

 

[Skate]

Sorry: Just found an error in the spreadsheet that displays the % performance.
The correct value is +61.0% not 57.7%. The P&L on the pic calculates to +61% also.
A down week but not as bad as it looked.

Some days you win and some days you lose and at its bleakest remember "it could be worse"

 

[peter2]

"It could be worse" is always a frightening possibility when dealing with the market.

If we really believed this then we'd all manage our downside exposure much better. This thread has always emphasised strong risk management as it's the only thing we can control to some extent.

Another day with >1% movement for no reason is bewildering. It certainly makes short term trading more difficult. Profits appear one day then disappear the next.

 

[peter2]

Trading update: A few exits.

FBU: Sold today (7.15) after unscheduled bad news trading update. Price opened below our SL (7.20) but luckily for us it got closer. A slightly larger loss (-1.1R) than planned but these things happen.



CAJ: Closed <0.25 yesterday. Sold today (-0.7R).
CLQ: Closed < 0.70 yesterday. Sold today (-0.4R).

GEM our only open trade has pulled back and is testing the BO level. We've raised the TS and have only a little at risk.

This portfolio hasn't been in the right stocks over the past few weeks, so closing these trades is a chance to rectify that. We've now had seven losing trades in a row for -4.4R. Our current draw down is only -5% so it's well within our comfort level even if it feels worse. We know we will trade our way out of it.

 

[peter2]

A copy of this famous photo by Philip Plisson is on my office wall. This aerial photo was taken during a gale with wind gusts up to 130km/h. It represents ME vs The Markets.

 

[craft]

Trading update: A few exits.

FBU: Sold today (7.15) after unscheduled bad news trading update. Price opened below our SL (7.20) but luckily for us it got closer.

If you're managing exits below stops that's a pretty apt photo. Hope the trading plan for that activity is rock solid. Would't want to get unlucky.

 

[skc]

Trading update: A few exits.

FBU: Sold today (7.15) after unscheduled bad news trading update. Price opened below our SL (7.20) but luckily for us it got closer. A slightly larger loss (-1.1R) than planned but these things happen.

That's a great exit for a product downgrade. Considering the NZX equivalent was <$6.90... it would have been an easy (and not incorrect) decision to get out on the open.

 

[peter2]

I don't usually see the open and it was after 11am when I noticed the red figure on FBU. Checked for news and logged-on to exit asap as the sell stops are not in the market. I wasn't going to wait until the afternoon to exit and did so when price was 7.10 - 7.15. The iSL was 7.20 and I didn't wait around to see if price was going to get there.

If price was below the open I would have sold asap knowing that things can always get worse.

I don't try to get a better sell price once the exit is triggered. My results early on showed me that I couldn't do it and the quickest exit works out better in the long run. Prices go down quicker than they go up.

FBU chart (above): Once the BO failed there was a much earlier opportunity to exit (big down bar- arrowed). Not doing so is not a mistake as the initial SL was placed lower to allow a HL to form. It did but today's downgrade thumped the price and forced the exit.

 

[skc]

I don't try to get a better sell price once the exit is triggered. My results early on showed me that I couldn't do it and the quickest exit works out better in the long run. Prices go down quicker than they go up.

No I didn't think you would so I was surprised that your exit was $7.15 rather than the open. But your explanation of not seeing it until 11am makes sense.

The leisure of a EOD/weekly trader!

 

[peter2]

EOW 125 update: ASX Momentum Portfolio +59.0% ( 15% invested in 1 trade)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +9.3% (past 125 wks)

This weeks sells: CPH, FBU, CAJ, CLQ
This weeks buys: nil

The index ended down a little for the week and the general selling forced us to exit most of our open trades for losses.

CAJ: Sold after price closed <0.25. Since then price has closed at 0.265 and is showing signs of going higher. We may re-enter this trade next week at 0.27.

Outlook: WD DD. Fully Bearish. Index remains in a volatile range. We started a few more trades hoping that one or more of them would work out OK, but unfortunately none of them did and we took the losses. The current DD is only -4.6% so that's not a concern. Of course it feels worse than it really is due to the compounding of our account.

Our task remains the same. Look for perfect setups and start only a few trades due to the tricky market conditions.

 

[peter2]

A reminder for short term traders to check for scheduled news now that we're approaching another reporting period.

GMA: Chart shows an attractive BO-HR but won't be traded due to 1H17 earnings due in one week.
1Q17 earnings report reversed prior rising price swing.


I anticipate there'll be more fodder for the ASX shockers thread soon.

 

[peter2]

Trading update: Two consecutive up days.

CLQ: Re-bought at 0.77, iSL at 0.67.


Comment: This is the second re-buy after exiting last week (also re-bought CAJ on Mon.) which implies that our earlier exits were a bit pre-mature. They may have been, but they were a defensive response to the high volatility and huge down days. Our trading will never be perfect. We manage the portfolio and each trade in response to what happens in the market at the time.

I think that if you are going to be quick to defend your portfolio (trade book) then you need to be able to re-enter just as quickly.

 

[peter2]

Trading update: There were a stack of 10d BOs to consider today.
My short list included ASL, BUB, CKF, IDX, SEK

ASL: Bought on the close at 1.96, iSL at 1.80.
This stock is at yearly highs and has been in a strong trend since May. Price has paused, creating this second box pattern that we'll use as our setup. There may be some resistance at 2.00.

 

[peter2]

EOW 126 update: ASX Momentum Portfolio +59.8% (43% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +8.7% (past 126 wks)

This weeks sells: nil
This weeks buys: CAJ, CLQ ASL.

The volatility in the market continues this week (3 up and 2 down days for little change).

You'll notice that we've re-bought two trades that we closed recently (CAJ, CLQ). I mentioned that I may have been a little pre-mature with these exits but they were a defensive response to the volatility and huge down days.

If you notice that you're doing this a lot then it's an indication that you haven't fully accepted the initial risk of the trades. We exit early because we don't want to accept the full loss. This is a destructive and very costly trading trait.

We place the initial SL below support, but exit before this support proves or disproves itself. We're not giving it a chance. We're undermining our analysis and beliefs in price action.

The weekly pic shows the two losses in CAJ and CLQ from last week. I took the $900 loss trying to avoid a $1650 loss. Obviously I was subconsciously aware that we had too much open risk in this volatile market and reacted by closing these trades pre-maturely. The portfolio has taken a $900 hit unnessesarily and illustrated the high cost of this bad trading trait.

This is the sort of thing a regular review should pick up. I didn't notice this at the time but one week later I've realised that I've had a Homer Simpson "doh" moment.


Outlook: WD DD. Fully Bearish and still waiting to see what happens next.

 

[peter2]

Trading update: New trade

NWH: Bought today's BO-NH at 0.705, iSL at 0.64.
I like box patterns sitting on top of support. The initial target is 0.80.

 

[peter2]

Here's one I overlooked or ignored. There out there if you're really open minded.

 

[Country Lad]

Here's one I overlooked or ignored.

I have been ignoring it as high risk, not really sure about the product and the China risk. Couldn't ingore it any longer, in at 43 today.

There out there if you're really open minded

Like WHA, same sort of higher risk profile. I had it as a buy if it closed at 48, then 59 but didn't. Latest was a buy if 62 but I thought there would be a positive reaction to the announcement and reinstatement so this time didn't ignore it and bought in open.

 

[peter2]

EOW 127 update: ASX Momentum Portfolio +60% (39% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +9.1% (past 127 wks)

This weeks sells: GEM (-0.2R)
This weeks buys: NWH

The market keeps going sideways and so does this portfolio. We haven't been able to get into something that keeps going up. Our trades look like they might but haven't yet. Perhaps it might be worth our time looking at the small cap stocks that move due to their own company specific sentiment rather than the general market sentiment.

GEM was closed at our TS for a small loss. The trade started well but reversed.

Outlook: WD DD Our filter remains bearish and I'm becoming more frustrated. Our index won't move without the banks and our large resource companies all going in the same direction. Last weeks rally in BHP and RIO was offset by the dump in CBA.

I've included the DD chart that shows this current DD is < 5%. This is within our comfort level and we just have to be patient as usual.