Many traders out there would no doubt be thinking ‘Thank God It’s Friday’ after a dramatic end to the trading week. It has been a fortnight of sustained selling pressure that has seen the XJO decline around eight percent after today’s -2.7% touch up. Times like this highlight to me a couple of things. One is a plan with with which to engage in the markets and to stick to that plan. The second is an extremely valuable tool used here at The Chartist; the index filter. Nick’s new book “Unholy Grails” details the use of an index filter on several longer term trend following system so it is well worth the read if you haven’t already. An index filter is used on both the ASX Systematic Portfolio and the Growth Portfolio and serves two main purposes. It stops taking buy signals when the filter is triggered and tightens stops on existing positions, thus relegating the trader to cash if the market continues lower. Both aspects minimise drawdown and pain – a valuable tool indeed.

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Friday 18th May, 2012

Opening gains on our market were given up in a hurry and the morning saw the downward bias of recent days continue. The XJO tagged support around the 4143 area twice in early afternoon trade and managed to bounce from these levels to post slight losses for the day. It seemed to be a struggle however, rather than a definitive rejection, but time will tell. I’ve not seen final volume figures at the time of writing but the indications are that it will be a large volume day. Bulls stepping to the plate perhaps? Resource sectors had a reasonable day and the Small Ordinaries’ afternoon recovery looked a little more forceful to close in positive territory. It was a tightly ranged trading session within a deeply oversold position.

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Thursday 17th May, 2012

US index futures are down just slightly at the time of writing after declining around half a percent overnight. Major European markets were also down around half to three quarters of a percent. This moderate downward lead has been ignored as our market has capitulated somewhat. The XJO closed just over one hundred points or 2.4% lower as the bulls took their bat and ball and went home. They were no-where to be seen right from the open, succumbing to the pressure after the broader market had hung in there for a few days. The Small Ordinaries is thereabouts at last December’s low and fast approaching those of last August and September, whilst the Australian Dollar slid below parity yesterday against the USD. Those that trade the ASX Systematic and Growth Porfolio’s can take comfort, however, in the fact that these systems play great defense, the former one hundred percent in cash a week ago. All they have to do is respect stops and exit signals.

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Wednesday 16th May, 2012

The XJO continues to flirt with a small zone of support around 4250, probing that level shortly after the open today. It clawed its way back off the lows over the course of the trading day to close 0.7% lower, but it was slow going and hard work. This was in spite of US index futures being up around half a percent at the time of writing. Not doing so well once again, was the Small Ordinaries, as it continues to come under immense pressure. It closed down 1.8% today, influenced no doubt by metals prices being sold off again overnight. Sectors were mostly down, those resource related receiving the brunt.

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Tuesday 15th May, 2012

Our market traded within a pretty tight range today. Early gains were given up quickly and range trading took place thereafter posting in a modest rise of around 0.3% for the XJO at the closing bell. The Small Ordinaries broke ranks once again – down 0.4% after trending down virtually all day. Sectors were mixed with all inside a one percent move either way, except for Telecommunications, up 1.1% and Gold, down 1%. US index futures are down slightly at the time of writing as they trade the night session, so not much indication there as to how tonight’s session will unfold. JP Morgan and Greece still dominating the headlines.

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Monday 14th May, 2012

A soggy end to the trading week with the market closing down a fraction. This came following a relatively flat close on US markets overnight and despite the US index futures being down heavily in after hours trading throughout our trading day. They are still off some three quarters of a percent or so at the time of writing. A week to forget; it was only nine sessions ago that the XJO was dragged kicking and screaming above resistance to poke its head above an eight month trading range and now more than three percent lower from that day after finding any excuse to sell off. The majority of the damage came on ‘mad Monday’ of this week when the market shed 2.2%. It is all systems off now as the SMSF Timer has joined the other portfolios in defensive mode. So far the old adage “sell in May and go away” is ringing true!

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Friday 11th May, 2012

A little respite from the selling for both the broader market and the small caps today. The XJO and the Small Ordinaries closed 0.5% and 0.9% higher respectively. This followed a pretty flat lead from the US where major indices closed with declines but rebounded well off intra-day lows after tagging support levels. Major European markets also recovered well off session lows. Those sectors that have been on the receiving end lately bounced well, Materials, Gold and Metals/Mining all up more than one and a half percent (Gold +4%). It was a wild ride intraday, with the highs and lows visited a couple of times each as the market struggled for direction. US futures are starting to gain some ground during the night session, up approximately a third of a percent at the time of writing.

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Thursday 10th May, 2012

Overnight, the major US indices rejected their intra-day lows to close with modest declines, but this was not enough to influence our market today. It was dragged down by resource stocks, following decent sell offs in metals futures overnight. The Gold sector was hammered, down almost five percent, while Energy, Metals/Mining and Materials were all punished. As a result, the Small Ordinaries suffered further, its sixth day down out of the last seven and it is closing in on November and December lows in a hurry. Buyers so far, conspicuous by their absence. The XJO closed down almost one percent after a small afternoon respite into the close. The Growth Portfolio continues on the defensive and the ASX Systematic Portfolio is now 100% in cash.

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Wednesday 9th May, 2012

Our market made hard work of eeking out some small gains by the close. It was up on the open, having factored in further declines on US markets overnight, which did not happen; the US put the breaks on the selling for the time being to close flat for the session. From the open, trade tracked lower in a choppy fashion throughout the morning. The afternoon saw the opposite – an erratic attempted rally resulted in a 0.3% rise for the XJO, but certainly nothing convincing there. Of the sectors, the Small Ordinaries managed to close 0.6% higher, most others found positive territory at the bell with the exceptions being Gold, Metals/Mining and Materials – the latter two down just slightly and Gold off just over one percent. Today looked like a pause to the selling rather than bulls stepping up, but time will tell.

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Tuesday 8th May, 2012

A decidedly weak lead from US markets from Friday night, the S&P 500 down 1.6%, prempted a tough start to the trading week for our market. And so it was; down sharply on the open, losses were extended during the day with little respite or interest from the bulls. The XJO met the S&P 500′s decline and then some as our market has factored in further falls on US markets tonight, as the US index futures are currently down quite heavily during the night session. Our XJO closed down 2.2% for the day. Resource sectors copped the brunt, which was also reflected in the Small Ordinaries which was down three percent. The declines were enough to send the Growth Portfolio onto the defensive. Buy signals will cease until the market turns back up and the system will play to another of its strengths – a great defense.

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Monday 7th May, 2012