29 October 2008 – More setups appearing

We’ve were squeezed out of the INFA short last night resulting in a breakeven trade. Never an issue with breakeven trades – its a part of the game and ideally our goal is to get the protective stop to breakeven as soon as is possible. We retain a small amount of MIR because of the forced buy in so they’ll also be move to breakeven now.

Whilst the account has given back some of its open profits the recent markets strength has enabled 3 new short setups for tonight. Hopefully if prices roll over again we’ll see those initiated.

Here are the fills for last night:

And the state of the account:

28 October 2008 – A short squeeze…

Going into the 889-pt rise in the Dow we had 3 short positions on. It’s never pleasent to be tilted all one way but its the best play in this enronment and we need to take the good with the bad. It wasn’t long ago we had been on the right side of dramatic moves.¬† Whilst no positions were stopped out we had 105 MIR shares removed due to the new SEC laws. These were removed at $15.00, which in hindsight was a blessing. Why 105 of the 142 I have no idea and it’s never occured before, but then again these are new laws. So we’re now left with 37 MIR and the two other positions. No new setups for tonight but this kind of strength helps some new opportunities come our way. We still want to be a seller of strength whilst the weekly trend is down.

Here is how the account stands:

25 October 2008 – Targets tempted…

The US opened much lower last night with the index futures hitting their ‘limit down’ levels for the first time in a number of years. Prices managed to reverse off those limits but being a Friday after a large negative week it may have been some short covering ahead of the weekend. None of our targets were met on our 5 shorts but some came close. Perhaps another day or two of weakness will see some hit home. HUN is extremely resilient to downside moves so we’ll be taking defensive action there.

The account is now +7.9% in 24 calendar days basis 0.5% risk per trade. This represents gains of 15.8R meaning we can place another 15 losing trades and still be at a breakeven position. Here is how the account stood as at Fridays close:

22 October 2008 – HMY hits the target

We waited patiently for setups. We traded with the broader market trend. Last night was payoff with the S&P 500 dropping 6%. Going into the session we had 2 shorts already in place but another 4 recommendations ready to trigger, all of which did.

HMY hit its target price banking a 3R gain.

Including open profits we’re now +6.6% in 21 trading days using 0.5% risk per trade. Had we been using the standard 2% rule we’d be +26.4%, but slow and steady is our motto. We also know that a few weeks doesn’t make a trading career and bad times will be seen at some stage. We know how to manage risk and keep exposure down so are confident that even with bad times we will continue to prosper over the longer term.

We are now have 5 short positions on; ADM, HUN, INFA, MIR and WMB. Here are the fills from last night:

And the current account position:

Short Selling Ban Remains

Unfortunately ASIC have decided to leave the current short selling ban in place until November 18 for all stocks and through till January 27 on financials.  Considering the market has lost more than 15 per cent in value since the introduction of the ban, and the XJO posting four of its biggest one-day percentage losses and four of its biggest one-day per centage gains since 1992, I find it quite a ridiculous decision.

I’m not prepared to trade against the weekly trend so its back to sitting on our hands until the trend changes or November 18 swings around.

Our account remains unchanged with no trades since October 1.

20 October 2008 – Watching earnings…

The choppy price action is offering up some more bearish setups for us but we now have the earnings season to contend with as well. I highly recommend that positions aren’t held over the respective release so when one is due within a week it makes it a pointless exercise to put a new trade on. That said we do have one new setup for tonight which offers a few weeks window, so we’ll place the order and see what transpires.

The two short positions offset each other even though the Dow Jones had a strong night putting on 4.7%. HMY rallied 4.5% yet HUN dropped 4.1%.

18 October 2008 – More of the same…

Nothing new to report. HMY moved down a little, HUN moved up a little and the model account moved up a little as well. We’re now +3.3% after the first 2-weeks of trading the US account. Nothing to write home about but better than being sucked into the quagmire like most. No new trades were initiated. We’ll see what next week brings.

16 October 2008 – The chop begins…

I’ve been warning subscribers over the last week about the impending and probable ‘choppy’ price action that can be expected. This will cause some frustration for both the bulls and bears, but helps build our desired setups. It’s going to take a significant amount of work to reverse the broader markets trends and until that occurs we’ll keep playing the line of least resistance – down. The expected chop will create setups but we also require the minimum risk/reward and low risk entry before taking heed. As we have specific profit targets determined by the pattern itself, we can measure the risk/reward remembering our minimum requirement is 2.9. Anything below is discarded.

Our two short positions balanced off quite nicely considering the Dow Jones rallied over 400-points. In fact our account actually increased by a fraction due to the percentage fall in HMY. No new positions were entered last night and today’s account statement looks like this:

16 October 2008 – No new dawn today…

The suckers rally over the last week was just enough to create 2 bearish setups for us, both of which activated on last nights 730-point plunge. HMY is a Gold stock and I did express concerns that a flight to quality may put a bid into it, but it too fell over, dropping almost 10% in the session. I have my eye on Wachovia Corp (WB) but the issue here is that US government intervention could be seen into it at any time which would more than likely create an extreme gap higher. It’s simply not worth the risk. The good news is that the price action over the last week, including last nights dive, continues to help our setups form. A little more wiggle and waggle over the coming days will see a multitude of opportunities. But here’s our fills from last night and the state of the model account:

14 October 2008 – An up day does not make a new trend…

Many of the news wires will be chirping away tonight and tomorrow about the great gains made today and the full frontal assault being globally co ordinated. Yes, its all great news in the short term but it’s going to produce inflationary issues longer term that eventually we’ll pay for. In my analysis tonight for subscribers I have discussed an extremely important price pattern that will literally ‘break’ investors unless they take heed. I believe this pattern is by far the most important since my March 2007 Special Report.

The other good news about today’s gains is that we’ll start to see some setups being created. As discussed in earlier posts we will get new setups if we remain patient and vigilant. We have a full 12-months to make gains so there is no need to ‘make or break’ the bank in a week or two. Unfortunately the setups currently under development are bearish, and we’ll only be trading the bear side until the major trend changes. I say unfortunately because as at writing we still remain in the dark about the future of short selling in Australia, although one can now conclusively say that market weakness is not being driven by the short sellers. Indeed last nights 11% gain in the Dow Jones was probably driven mainly by short sellers covering. I’d imagine that today’s gains would have been more had short sellers been involved.

Whilst we’re restricted in Australia we will still be watching closely for new short trades developing in the US.

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