ASX Momentum Trade Book - Part 2

[peter2]

Trading update: New trade that I'm a bit wary of posting here, but we're all friends.

ANN: Bought today's BO-NH at 22.50, iSL at 21.70.
Not the sort of stock I trade very often, but the target is acceptable. This stock's price does seem to bounce up and down in a large channel and that's what I'm trading on as price comes off support.
Since we had the cash available I've not used cfds. I may convert to cfds later if we need some cash for other opportunities with bigger potential.
This is the sort of trade and stock that I'd be happy to grab a quick +1R in 5d or +2R in 10d.

 

[peter2]

Trading update: New trade

MLD: Bought today's BO-NH at 2.12, iSL at 1.97.
Although we started a weekly trade in MLD a few weeks ago, I've waited for the report to be released before starting this trade.


We've now run out of cash and will convert the ANN trade to a cfd trade. This change does cost us but the lower margin for the cfd trades free's up some extra capital.

 

[peter2]

EOW 135 update: ASX Momentum Portfolio +71.4% (86% invested in 6 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +9.8% (past 135 wks)

This weeks sells: APX (+1R)
This weeks buys: MND, ANN-cfd, MLD

Our MAH trade has pushed the portfolio to another equity high, but nothing to get excited about in this market. There were a higher number of bullish weekly bars than usual in this arvo's scans. That's promising.

I've been avoiding mining stocks as they require a bit more time to monitor. There were recent BO-NHs (KDR, RVR, AGY) that I've chosen to ignore. This may be a significant bias that's crept in as I'm not satisfied with my trade selection over the past few months. I've been thinking about how to improve. This may involve a modification of my pre-trade checklist with more emphasis on stocks showing relative strength (RSC(XAO)) and sector analysis. The ASX doesn't have very good sector indicies and I'm starting to wonder if it might be worth my time creating my own. If anyone has already done this I'd be interested in your opinions (either privately or publicly).

Outlook: WD DD. Remains bearish as the index stays within this range. There's no point speculating what's going to happen next. We're ready for anything. (copied from last weeks' post)

 

[peter2]

Trading update: A few TS have been raised, reducing heat and allowing us another trade.

CTD-cfd: Bid 21.90, bought at open 21.85, iSL at 21.20.
I'd have to call this a reversal after the impulsive move down on the annual report (which I thought was good). Price has formed a basing pattern of accumulation (TMF rising) and looks likely to go up from here. We'll take +1R in 5d or more in 10d.

Total capital at risk across 7 trades is 3.8% (that's comfortable). Heat = 6.8%

 

[peter2]

Trading update: Trade closed.

In response to the two down days (cf. US two record high days) and the index trading near the low of the range I've increased our emphasis on minimising our downside exposure. We'll grab the few +1R results that we can and make sure we keep the losses smaller than -1R.

MLD: Sold at T1 (2.29). Result +1R in 4d is a good momentum result from our BO entry. Normally I'd like to get more than this but I'm wary of the bearish sentiment in our market.
I have not closed my weekly trade as it doesn't worry about the daily price action.
MAH: Remains open at +1.7R with a tighter exit trigger in case of a down day to protect most of this profit as well as allowing it to get bigger.

Our other trades have stalled, but I don't mind seeing that as it shows they're stronger than the market which has gone down for two days. They may recover quickly when the market is bullish.

 

[peter2]

EOW 136 update: ASX Momentum Portfolio +76.9% (101% invested in 6 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +9.9% (past 136 wks)

This weeks sells: MLD (+1R) reasons explained previously.
This weeks buys: CTD-cfd

Another weekly "doji" in this unprecedented sideways market. Scrolling through the ASX100 most of the charts are showing a down trend so it's surprising that the index isn't also going down.

A few stocks in our portfolio (EHL, MAH, CAJ) have started to move higher creating another equity high. Once again, our portfolio is full of winning trades.

Outlook: WD DD. Our market filter remains bearish as the index hasn't moved. In spite of our filter there are plenty of trading opportunities. This contrast highlights the disadvantages of using a broad market index as the basis of our filter and using the filter as an ON/OFF switch for your systems. The small ordinaries index (XSO) has been bullish for the past seven weeks and it's this sector that is currently providing plenty of trading opportunities.

We haven't been using our marker filter as an on/off switch. Instead we're using it to modulate our portfolio heat. I've always used it like this as I'm aware of the current number of trading opportunities. Had I paid more attention to the bullish XSO index, perhaps we'd have taken more trades in the small cap sector a bit earlier.

 

[peter2]

Trading update: Don't chase, don't chase. New trade.

Today's bullish sentiment and rising prices allows us to raise a few exit stops on our large cap trades. This in turn lowers our capital downside exposure allowing us to start another trade if we have the cash. The low margins that cfds require mean we have plenty of cash.


My main concern this afternoon is "don't chase".

MMS: Bought near the BO-NH at 14.79, iSL at 14.10.
The RR is acceptable and I notice prices of other car lease companies (SIQ, ECX) are going up.

 

[peter2]

A couple of textbook patterns of our fav setup. It's important to know exactly what we're looking for.

Break-outs of horizontal resistance (BO-HR)
- there's a higher low (HL) before the BO
- TMF (OBV) above 0 and rising (indicates accumulation)
- stock prices stronger than the XAO index (RSC)
- 10 ema > 30 ema recently indicating new trend
- both BO prices were above significant numbers (>1.50, >8.00)


ps: BAL was one I didn't want to chase. I didn't place a conditional/pending buy stop order to try to buy it at 8.01, limit 8.05.

 

[Rypieee]

Hey Peter2,

Hope you've been well

How's ALL for a trade since you wish to avoid the junior miners/explorers??
Improving USD against weakening AUD could bode well for ALL.

Acceptable R/R and could push through $24 mark as supply has dried up.

 

[peter2]

Thanks I'm well and feeling frisky (bullish) once more. There's three days remaining in the week and I'm hoping this week can stay up.

You must have been reading my notes re ALL. I liked yesterday's BO and bought some today (limit 21.50) for one of my portfolios. With an iSL at 20.00 I shouldn't have to worry about this for a long time. There's a small risk setup using an iSL at 20.90 and I did consider placing this one in the momentum portfolio, but I think there's enough going on there atm.

 

[peter2]

Between you and me:
When I get the time I update the table showing the results of various exits strategies vs the exits I've actually done. There's a lot more work to do to get it up to date but I came upon this set of results that stunned me. I know I've missed out on a lot of profit on certain trades but I didn't realise I'd missed this one.

This was a trade in ALL, a larger priced stock that I like to trade in order to grab quick profits to keep the growth ticking upwards. ALL went up with the market and I grabbed the +1.1R when it opened higher than my limit order. This trade is similar to what I'm currently doing with the trades in ANN, MMS, CTD, MND (grabbing a few R's while the market is rallying).

However, the demand for ALL was a lot stronger than the market and price continued to rise, even when the index dipped. The 2xATR(21) EXIT strategy earned +3.4R and the 3xATR(21) earned a lot more (+7.6R). At the time, an R unit was ~$800.

I don't worry if the price goes higher after I sell so long as the sell was planned. However, I don't like that I took my eyes off the ALL chart and didn't re-buy any of the subsequent BO-NHs. Clearly ALL was stronger than the index (RSC(XAO) in top pane).

My TP has a re-entry rule that I overlooked on this occasion and the opportunities were missed.



Discretionary exits may save $00's but mistakes can cost $000's.

 

[Roller_1]

Hi Peter,

Great thread btw, what is the TMF indicator?

Cheers

 

[peter2]

TMF is the Twiggs Money Flow invented by Colin Twiggs from Incredible Charts.

It's an indicator that uses price and volume and I use it along with OBV (On Balance Volume) as an indicator of accumulation or distribution. I like buying BOs when the TMF and OBV are rising.
These next pics are from
https://www.incrediblecharts.com/indicators/twiggs_money_flow.php
There is a lot more information as well as the calculation on that page.

 

[debtfree]

Between you and me:
The 2xATR(21) EXIT strategy earned +3.4R and the 3xATR(21) earned a lot more (+7.6R). At the time, an R unit was ~$800.

You talking to me?

Thanks for the chart Peter, it did made me look at it on my charts and I did notice that if we didn't have our SL in the actual market (which you don't normally) the 2 x ATR(21) did not trigger (EOD-Close) on the 12th May or the 15th and we would have survived and been still in. I understand you must have done up the chart with the view the SL would have been placed into the market, is this correct or is my ATR level on my chart a fraction different? I have attached a chart for your viewing.

I also went back and looked at the EOW Report #838 for this trade and noticed you invested 31% of the bank in this trade and by the looks of things it wasn't a CFD trade, was that correct and if it was why so much of the bank?

Cheers ... Debtfree

 

[peter2]

Looking at the chart and indicator, it looked like price closed below the 2xATR(21). I didn't check. I also looked at the nearby bars and 5 bars back was another large down bar. The index was also down at that time so I'd probably think that close enough is good enough for that exit strategy. The price moves and bearish market sentiment most likely would have scared me out at that time anyway.

If it did there was another BO-NH setup two weeks later that got us into the next move up. Provided we placed the orders and didn't ignore the chart (like I did). My main gripe with myself was that I didn't realise at the time that ALL was one of the strongest charts around and perfect for a re-entry if one setup. This year, A2M is the strongest chart around and has also provided multiple setups for entry and re-entry.

31%* is a large position size. At the start of the thread I had a 20% max size limit, but since then have relaxed it to 25% provided the liquidity is good. ALL has reasonable market depth. The most important thing is to be able to sell when you want. We must have had plenty of cash at the time or I would have used cfds.

* The % values may not be as accurate as they should be since we transferred 15K to another account. This position size was probably closer to 25% at the time including all capital and realised profits from both accounts.

 

[peter2]

Trading update: Trade closed at profit target.

ANN: Sold at 23.95 just below the 24.00 level. Result +1.5R
I saw the contract note of the sale and thought "huh". Stocks like this old slug don't leap up and tag my levels very often. Naturally I'm pleased as we paid double brokerage/commission on this trade converting it from equity to cfds. The extra cash has been used for other trades that are also producing profit.

 

[peter2]

This portfolio has cash to burn and very low level of capital at risk (~1%). Total heat is 4.7%.
In my view the daily trend has turned up and I'll wait for a further rise to change the weekly trend.

Scanning the market this afternoon looking for perfect setups I notice that many charts have had a good run up. We're not going to chase them. Those stocks with prices near a BO level are those that are not in demand atm. We don't want to be the only buyers. One more day to the trading week and I think we should be patient.
Possibilities: Reversals: BSL, CGF, HSN, SVW. IFL remains in a tight consolidation.

 

[peter2]

Trading update: Another cfd trade closed for a quick profit.

CTD-cfd: Sold at 23.05. Result +1.7R
Like ANN price may go a little higher and hit our target levels. I'm happy to bank these profits as they're both above average (AW is $875. CTD, ANN profits ~$1350 ea) and appeared in a short time (<2wks).
Banking these quicker profits allow me to let others grow.
I'm also wary of the unexpected down day that we've experienced during this stagnant period. It doesn't appear to be today (Fri) but next week, who knows.

Can't wait for the EOW update. This portfolio has had another good week.

 

[peter2]

I'm happy to bank these profits as they're both above average (AW is $875. CTD, ANN profits ~$1350 ea)

Sorry, just realised I've made a mistake. I shouldn't be looking at the ave win in dollars. The dollar amounts increase with compounding. eg 1% now is $895 and is above the AW. This implies that a +1R win is above average but it's not. I should be looking at the AW in R multiples. An above average win must be greater than 1.4R.

Thinking in R multiples helps me focus on the trading process not the dollar amounts. If we get the process right the dollars will look great. As you've seen it's easy to slip into bad habits. You "guys"(collective noun for a diverse group of people of every gender) help keep me on the correct path.

 

[peter2]

EOW 137 update: ASX Momentum Portfolio +85.4% (85% invested in 5 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +12.4% (past 137 wks)

This weeks sells: ANN-cfd (+1.5R), CTD-cfd (+1.7R)
This weeks buys: MMS-cfd

That was a surprising bullish close and makes it one of the better weeks we've had for a while. The big four banks are either making new highs or close to it. That augurs well for further rises in the index. I'd expect this BO to be tested next week which will be good for us as it'll form small consolidation patterns.

The portfolio had another good week as we pounced on this rally. We gained 5R this week. Another equity high thanks to our active trading style.

Outlook: WD DU. I've changed the daily trend to up and I could have changed the weekly as well but I'll wait another week. We can't go from fully bearish to fully bullish in one week. Not that it matters, as we were >100% invested last week as we pounced on the rally. We've stashed some of the profits into our bag and have plenty of cash to start more. Another reminder that we won't be chasing over-extended prices.