Thursday, May 11, 2006

Pendulum of fortunes

Day 27 - Thursday
Total Account Value: $5263
Available Equity: $3377
Positions Opened: 2
Positions Closed: 3

Well there ya go! For the fourth day in a row my account balance has changed by more than $600 a day. Does this mean I'm an inconsistent trader or is it just an example of sharemarket volatility?

There is little to report today as I didn't actively trade as much as I have in the past. Most of the past couple of days has been dedicated to scanning monthly and weekly charts, paying particular attention to moving averages and plain old lines of resistance and support. If a stock's chart displayed scrappy looking, inconsistent movement I removed it from my watchlist. One of these was what had become my trading nemesis - Lend Lease Corp. (LLC). I think this stock a nightmare for both traders and investors.

Some charts showed really nice looking trends and pullbacks, and some of these were very close to the current price of the stock. In a spreadsheet I have written notes beside all my stocks documenting the overall trend (bullish if above 40 day EMA, bearish if below) and short term trend (possible temporary reversal toward support/resistance). The actual values of major support and resistance prices have also been recorded. I plan to take longer term positions when bullish stocks recover from short term reversals and take shorter term positions on trending stocks that change position against the prevailing trend. As such I will avoid some resources stocks such as BHP and Oxiana. Even though these may be profitable, recent gains have gone exponential. With such uncertainty currently surrounding the market I would prefer to wait out these on the sidelines.

Newcrest Mining (NCM) and Promina (PMN) are two stocks that are resuming bullishness. Check out the weekly chart of PMN on a 2-3 year time frame and you'll see why I was keen to go long. It has just broken major resistance and the market depth chart agrees - a strong looking barrier has built up around the $5.80 mark. BNB continues to accelerate and I will stay long with a "loosish" stop (than usual for me) until it adds roughly another dollar.

I barely looked at the daily charts while trading was in progress, but there were some tempting entry signs which I refused to take. If I'm disciplined about trading from the forest (rather than the trees), my crippled trading account will surely recover.

1 Comments:

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