15/2/12

Eight new leading stocks have hit the radar and are on the move!  All industrial leaders. Investors may be distracted by Greek woes and the current debacle sweeping through the mining stocks with many like BHP touching new lows for the current cycle but some are jumping out of their skins!

Our focus on these negatives is highting a still predominantly bearish status amongst investors which is possibly why our our refusal to focus on and acknowledge the great potential of a rising group of leading stocks continues to flatten sentiment. Yes we're making the same mistakes by not identifying the breakouts and potential ahead for a stream of stocks coming on to the radar. If you focus on the index you wont't "see" them, but they are there.  

What a market and even here we find the adages true that no matter what heed your stop loss as some promising rallies come to little while some drive higher and despite our overall sense of its gotta go up this time, when the bell rings the fight is over and its time to call it quits. A week such as this week reminds of the wisdom of that.There are some horrible looking stocks out there (AGO BPT PDN BHP RIO NCM OST PAN PLA LNC ERA GBG KCN AQP ) and some we're lucky we exited (FMG STO BLY KAR) and some are standing rigidly perpendicular amongst our new breed of movers in the leading industrial space.

Alas it is a different part of a cycle we have to live through where trends and trading opportunities are fewer and the cash balance is forced to remain high. For how long? New sparks from the above mentioned 8 leaders continue to offer up trend starts. We need to be quick and detached to identify the opportunities and what's happening in the market. With cash rates dropping even those returns are diminishing but it is an attraction for stocks and especially the income stocks with responsive market support adjusting into these shares. The safety of leaders with income well that's probably what some investors need now which is a sensible deployment of cash so if we can ride that wave that pushes prices up, we will, with 3 new recommendations of that type this week.

The big declines are mostly amongst the miners with BHP and RIO  testing important supports this week as they remain well out of contention and lag badly at the bottom of the Trend Intensity table.

Don't you love the stock market as we see BHP amid a mining boom is well off its highs, and still sinking, while NWS amid its media woes just marches higher. That's because its making money and BHP overpaid again!

It actually all makes sense in the end as the stock market challenge is to have a passion to take on these tests of our objective analysis skills and carve a responsible and common sense path through the what appears to be a mire, but perhaps its not!

3/5/12

It appears the alternative to Rupert may not be so bad as long as its not James! The freeing up of the 40% control with only 12% of the stock is another plus. NWS certainly has an amazing suite of assets and if someone else were to run it like a media company intead of a family empire with a loss making love of newspapers the possibilities are quite enthralling. Having said that I doubt Rupoert will go without a fight and that may not be s good for the share price. As finally the meek (governments) may have a voice it will be an iteresting time ahead.

Keep an eye on the share price which recently has been comfortably outperforming both the ASX/200 and the Dow Jones. The upward bias has a good supporting structure but now it moves into a big resistance zone at $20.00 and is stalling somewhat.

My Stock Pick and Trend Intensity Report out each Sunday updates all covered stocks (currently 180) with regard to recommendations, trend, stop losses and stocks coming onto the radar.

2/5/12

And up goes the NWS price again today just as Rupert gets a serious bagging by the UK parliament. Yet another twist in the tale. This is a great example over the recent weeks and months of the benefit of investors and traders following and understanding price action and not the news!

1/5/12

As I go through the weeekend exercise of analysing all the charts I cover in the Stockradar Universe to calculate Trend Intensity Ratings and adjust stop loss and reversal levels some things jump out at me as abnormal. One of those abnormalities I try and spot is volume variations. Volume of transactions is a great  guide to the potential and substance of a price move. Is it strong or weak and from there we make our own assessment.

A simple technique called an explosion of volume is a big tip off a move is coming or buying is building for a bid! One of the favorite disguises is to buy into a falling market as then the new buying doesn't necessarily trigger a rally but merely absorbs the plentiful stock on offer. A rise in volume may also validate a support or resistance level. There is plenty of opportunity to do that in this struggling market.

As I went thorugh the boring old banks this weekend something struck me. Normally CBA, ANZ, WBC and NAB display basically the same patterns which they did. But when I moved to the smaller capitalised banks that I cover BEN and BOQ, the BEN chart was a "no change"  but if we look at the BOQ chart it is clear for all to see. Volume has spiked higher abnormally over the last 6 weeks. Someone is doing a heap of buying - Why? Not my interest nor my business but the fact that it is occuring suddenly piques my interest and puts a big lid on downside prospets as BOQ has been trending down nicely with BEN over recent months. At some stage a value level is reached.

For BEN  the resistance at $10.00 proved to great a barrier and selling has now driven the price to $7.00 and is probably on its way to $6.00 the next major suppport.

BOQ found similar problems at $12.00 and has since slid the slippery slope of a down trend all the way to $6.00 which is in fact a major support level for BOQ that finally held the 2007/08 demise and a rally to $12.00 ensued. At this major supoport level we have had a significant increase in buyer interest as you can see from the much higher volume being traded there.



What next?
High volume at a major support is the start of a potential reversal and limits downside risk - good!

Now we try and move along the path of a reversal gathering evidence along the way. We have a great start with that clear piece of volume evidence the next step we take at Stockradar is to identify a potential trigger for a rally because that's what is likely to happen next. It can be a previous resistance level or key chart point depending on the nature of the reversal whether it be a Key Low Reversal or Trend Reversal, two of our three setups for a trade.

Also the strength of the building evidence wll depend on how low the reversal trigger is set. Using common sense I try and ascertain at what point the sellers will start backing off under this new buying pressure - you can be sure they are aware of it - and pave the way for the buyers to propel the price forward again. These stages are called market imbalances and they cause powerful price moves until the buyer sellers balance is restored to some normality again.  

BOQ has an imminent market imbalance and price reversal in the offing. To pre-empt is dangerous and can be construed as a trading failure. We must wait until all the evidence we require for a reversal is completed.

To track this high odds potential breakout that BOQ is developing keep an eye on my weekly trading update the Stock Pick and Trend Intensity Report out each Sunday.

24/4/12

It's a bit late now. Rain Rain Rain, NCM underperforms expected performance despite record prodcution and Lihir is the noose around everyones neck who goes near it - but there's gold in them there hills but getting it out consistently (there's that word again) well that's another question.



A turning wheel of fortune that did in fact turn along time ago even in the face of a rising gold price. $40.00 is the nemesis NCM just couldn't breakthrough even though everything was rosy and Ian Smith couldn't have done a better job. Markets always look forward and it looks as if the buyers had done all their buying then and there were none left, only potential sellers. The stock couldn't breakthrough $40.00 having had three attempts from Sep 10 to July 11. To a price analyst that screams beware and once supports were taken from the stock it has now collapsed steadily to its lows now under $27.00.

An understanding of simple price analysis techniques is vital to investing and trading success or at least vastly heightens your chances of success.

One of the reasons price analysis has always had such difficulty gaining widespread acceptance is that it often flies in the face of the existing perception of the fundamentals and thus in turn with our emotional attachment to the crowd view of bullishness. It can't be right! Oh yes it can as so often stocks surprise us with their price action and I think NCM is one of them who has slide down the slippery slope of oversupply. Why I can't tell you but it has - fact.

So I sold the stock at $38.75 in January 2011 when the price reversed down and Trend Intensity swung to the negative despite the many positives wheeled out in support of the stock. Something wasn't right with the price action. No trend, no exposure that's a simple rule of engagement.

The disconnect between the perceived bullish fundamentals and a struggling share price highlights the importance of at least a basic understanding of price action. My approach is nothing more than a basic understanding of demand and supply as all the twiddlers of divergences and retracements can never be as reliable as the basic assessment of trend and demand. The more rules the more room for error.

So as the news gets worse the share price has already folded by 32% with probably more to come  Is there any yield support?  I don't think so, maybe a token 1% wow. Not much reason to hold it. Shouldn't it be tied to the fortunes of gold. Another Uh-Uh just as you'd think it was a price driver there are many other catalysts and issues obviously more important like the A$ and problems mentioned above. But maybe there is some foresight there as gold has certainly changed its spots as it stagnates in the $US 1600-1800 range.

If you look at a chart this is a clear change from the relentlessly bullish up trend gold has been following since 2008. The bulls are in consensus still despite this change and there is another disconnect. If I put my price analysis hat on it says a rally through the highs of the range at $US1800, and then clear the absolute top at $1920, a new trend up is at high odds to unfold. For now the trading range shows a balanced money flow due to uncertainty and that's a good enough reason not to have your money at risk - especially as the trend is now neutral. Remember this is an odds game not one of absolutes and guarantees. Working on this basis you will take losses as well as profits as long as the odds set you in the direction of more profits than losses you'll win the game. The big key is not to lose money when obviously the odds are stacked against you just as they were when NCM began retreating from $40.00. Seems so long ago now but that's one of the most common afflctions of losing traders not getting out when they should.

The gold sector sits at the bottom of Stockradar's Trend Intensity scale and has been there for some time. There is some major supporting boundaries for NCM between $17.00 and $24.00 and that's where I'll be looking for some support and potential signs to buy NCM. But until then despite buillish or bearish fundamentals I'll wait for price to indicate fresh demand is appearing and money flows are going back into the stock.