XAO Banter Thread

[rnr]

Noting the market trend for timing is one thing, but buying quality is another. I don't buy the market, I am learning to buy the company and learning to use the market to time purchase decisions.

@tinhat
Are you talking fundamental analysis?

 

[tinhat]

@tinhat
Are you talking fundamental analysis?

Yes. I'm a subscriber to Lincoln Indicators Stock Doctor.

 

[tinhat]

@tinhat
Are you talking fundamental analysis?

But I'm also talking technical analysis. Be fundamentally right while the market spends the next ten years being wrong. How has copper worked out over the last ten years?

My most genuine suggestion to anyone is to give support to art and culture and training all boys and girls in the fact that Australia is leading the world into environmental destruction.

 

[qldfrog]

Seriously?
At least we are leader somewhere...

 

[qldfrog]

"Be fundamentally right while the market spends the next ten years being wrong."
@tinhat
The market is always right
It can be dum, dummer but it is never wrong
If i may give you one advice:
This is the first hard lesson to know when investing or trading
It costs me dearly as well: always too early for trends in my case
but it would pay for you to really get out of this thinking.

 

[gartley]

Noting the market trend for timing is one thing, but buying quality is another. I don't buy the market, I am learning to buy the company and learning to use the market to time purchase decisions.

As long as it works for you that's all that matters. Personally I am not interested in quality, only "movement" up or down. I seldom keep positions for any longer then 2 or 3 days))

 

[Gringotts Bank]

Speccies very weak today. Usually a sign.

 

[Gringotts Bank]

October only days away. Has a reputation, so I'm lightening up a fair bit.

 

[Gringotts Bank]

Measured move plus ascending wedge breakdown. Ords daily.

 

[Logique]

Compared to July, this rollover is a lower high, always disconcerting.

 

[rnr]

October only days away. Has a reputation, so I'm lightening up a fair bit.

Hi GB,

I thought you traded a short term (Long) Mean Reversion system?
Your comment (in blue above) appears somewhat discretionary in nature or am I on the wrong track?

Cheers,
Rob

 

[Gringotts Bank]

Hi GB,

I thought you traded a short term (Long) Mean Reversion system?
Your comment (in blue above) appears somewhat discretionary in nature or am I on the wrong track?

Cheers,
Rob

Hi Rob, I do but there's a few discretionary elements, one of which is position size. Sometimes the All Ords is looking bearish enough that my position size goes to zero. I have tried using an index filter but you miss too many good opportunities that way.

I think our market might go back to 6600 and test that support. Not a big drop.

 

[rnr]

Hi Rob, I do but there's a few discretionary elements, one of which is position size. Sometimes the All Ords is looking bearish enough that my position size goes to zero. I have tried using an index filter but you miss too many good opportunities that way.

I think our market might go back to 6600 and test that support. Not a big drop.

Thanks for your response GB. Have you attempted to develop a short mean reversion strategy at all?

 

[Gringotts Bank]

Thanks for your response GB. Have you attempted to develop a short mean reversion strategy at all?

Yes I tried just recently. Best I could do was a flat equity curve - there seems to be little follow through when stocks get pummelled. The 'up via the stairs, down via the elevator' quality of markets means that short opportunities need to be anticipated in advance, and even then you might find yourself having to wait, or get stopped out. It's not a good idea to move into a short position when it's well underway. I think shorting is hard and probably best done with a fundamental approach. Maybe have a look at Modest's thread - he seemed to be able to trade in both directions without any trouble.

 

[rnr]

Yes I tried just recently. Best I could do was a flat equity curve - there seems to be little follow through when stocks get pummelled. The 'up via the stairs, down via the elevator' quality of markets means that short opportunities need to be anticipated in advance, and even then you might find yourself having to wait, or get stopped out. It's not a good idea to move into a short position when it's well underway. I think shorting is hard and probably best done with a fundamental approach. Maybe have a look at Modest's thread - he seemed to be able to trade in both directions without any trouble.

Thanks again for your thoughts GB. The problem with a short MR system is you need to make an entry (sell) when the down move is well underway otherwise you end up with that flat equity curve to which you refer.

 

[Gringotts Bank]

Thanks again for your thoughts GB. The problem with a short MR system is you need to make an entry (sell) when the down move is well underway otherwise you end up with that flat equity curve to which you refer.

I actually got a flat equity curve when the trend was underway. The systems I was experimenting with would short stocks like ISX during the dead cat bounce. So that's why I think shorts need to be anticipated, but correct me if you've found otherwise. The biggest limiter I think is that you can't easily short small stocks without crossing a huge spread.

 

[rnr]

I actually got a flat equity curve when the trend was underway. The systems I was experimenting with would short stocks like ISX during the dead cat bounce. So that's why I think shorts need to be anticipated, but correct me if you've found otherwise. The biggest limiter I think is that you can't easily short small stocks without crossing a huge spread.

It's a while ago now since I did any short mean reversion system testing. From memory, the universe of stocks I used for back-testing was the F.P. Markets list of stocks that could be used to short the market using CFD's which was almost identical to the ASX200 constituents. The universe may be much larger now.

 

[Gringotts Bank]

I think our market might go back to 6600 and test that support. Not a big drop.

6600. Now, bounce or plummet? I'll say bounce.

 

[tinhat]

6600. Now, bounce or plummet? I'll say bounce.

I'm hoping for a bit more of a correction. A bit of volatility over the next few days, however, would be helpful for me to exit a couple of short-term low conviction trades.

Looking at the weekly chart, we just put in a lower high with the week ending 20/09/19 being lower than the high reached during the week ending 02/08/19.

Eyeballing the weekly XAO chart, the last time the XAO put in a higher low from which it subsequently rebounded was the lower high of the week ending ending 07/11/14. Previous to that a lower high in the week ending 03/01/14 also saw the market rebound to higher highs.

Those are the only two instances I can see of lower highs not signalling further correction since the GFC.

If we break below the 6500 range then maybe it's down to around 6,050. This would not surprise me when I look at many stocks on my watch list that have jumped up in recent weeks with gaps that, if closed, would make for excellent buys.

In other words, when I look at many individual stocks, across many sectors, rather than just the XAO, I feel that stock prices have got ahead of themselves. There has been some exuberance that could be easily subjected to campaigns of shaking out weak holders. Look at COL for goodness sake yielding 1.6% before franking credits. You would be better off personally hording coffee beans than buy those shares surely?

 

[Logique]

The thing is:
"The cash rate of 0.75% is a new record low and marks the first time the Australian cash rate has ever been below 1%.."

Not a great incentive to put your money in a bank, and watch inflation and fees eat it up.

Props up equities and property..to some extent at least?