Archive through June 17, 2008

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kate

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Post Number: 915
Registered: 04-2005

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Votes: 0


Monday, June 16, 2008 - 12:37 pm:

Resillent
I guess TA becomes less important the longer your time frame but would anyone trade without it if they were trading short term (days/intraday)?

A little while ago when I was collecting all my trading information for the accountant, looking over the pages just emphasised the importance of what you said above. With the very odd exception the losses were much smaller than the gains. I remember reading some US trader only had success 30% of the time but still made a huge profit.

I also never ignore support, resistance and trend lines.
I do a bit of fine tuning, but follow the KISS principle school of thought closely!

Regards
Kate

paddy

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Post Number: 160
Registered: 03-2008

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Votes: 0


Monday, June 16, 2008 - 12:41 pm:

Hey Resillent1 ; Lighten up! I was only making a comment about them making use of the word "scientific" . Fibonacci ratios are everywhere in this world / universe . Fibs are not the be all-end all. They are just another tool in the basket for technical analysis. I wish it was a scientific tool but then it would be of no use as everyone would use it to Buy and Sell. At times I think that there must be automatic trading programs that, amongst other tools, have Fib values incorporated into their program. Must be how some of the rebounds from Fib levels are almost instantaneous . See that today in Globex Light Crude .

Always open to learning more about technical analysis. I do consider Fibs a significant tool - the "why" it works is beyond me and I shan't lose sleep wondering about the "why"although I shall keep wondering as I make use of it.

Must go and see if Light Crude breaks below 133.93 .

Regards,

Paddy

kate

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Post Number: 916
Registered: 04-2005

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Votes: 0


Monday, June 16, 2008 - 12:48 pm:

Rudy
I was reading recently that Chinese shares are now better value than US shares. Makes me wonder whether they are now worth investing in. The only problem is that the government manipulates the share market by altering policy, however it may be worth keeping an eye on as their inflation rate has actually gone down recently!

Regards
Kate

ody

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Post Number: 2533
Registered: 10-2006

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Votes: 0


Monday, June 16, 2008 - 01:10 pm:

BUYING AND SELLING

I remeber Eugenio describing himself (engagingly) as a "thief" in stealing other people's ideas. I didn't think I'd end up doing the same, but that's what is happening. I have had so little time just (and that is still happening - checking pages and numbering them etc. before they go off) that I am really very reliant on concentrating on very few stocks and on seeing what others are doing. Hence, unashamedly, I am following Eugenio himself - on the late side - and Rudy (far more within a shot timespan!) by buying MGX. I think Eugenio was ALWAYS right on the stock because of iron (and because it is intrinsically strong), and that Rudy picked it up at just the very best moment as a stock he wanted but at the right price. Couldn't have timed it better. I am now paying a little more, but it has been picking up very well, AND I EXPECT MORE TO FOLLOW.

This last sratement does not apply just to this particular stock: I feel ongoing good results, though with periodic sell-offs, are very much in the offing for GOOD STOCKS SUPPlYING MATERIALS VERY, VERY STRONG IN ONGOING DEMAND. It is crucial, I think to concentrate notably on those, as by no means all commodities are intrinsically doing well. Iron ore certainly is.

And the reason why I am not buying energy at the moment - notably oil - is that the correction we had been expecting in in some ways occurring. I do not expect oil to go up in a straight line, but to correct first. Also, I do not trust the people who are predicting $250. But I would think that e.g. a return to $100 is very feasible, and then a rise to $150. So I am on the lookout for buying oil some time in the hopefully not too distant future (probably WPL, because of other strengths it also has, and when all is said and done it is the most obvious, least eccentric choice).

While resources (including oil and other energy) are sectors I have intrinsic confidence in, those are the ones on which I will concentrate. I have a substantial holding in just one bank - WBC- but given the lousy performance of this whole sector, I think one is enough, for sure. I do not worry about it, but I am not optimistic about the sector on the whole, and despite inevitable rises here and there I think it is feeble and vulnerable and on the whole to be avoided. The whole financial sector is still plagued, ultimately, by the subprime plague and its consequences, plus several other problems (high interest rates, etc.). Not the place to be, though I presume over a period of some three years or so one MIGHT do well.

I should like to explain why I sold a stock today: Ausenco (AAX). I had bought it in a lukewarm way (only about $25,000 in it), but it has performed miserably. That concerns me the more BECAUSE THIS SECTOR IS NOT WHAT IT WAS. In short, I think it is important NOT to be overexposed to service companies from here on. They used to be wonderful: Bradken (one of my favourites and a good winner for quite some time), Monadelphous, Imdex (Rudy's marvellous discovery, but which though recovering after its very big fall, does not show its accustomed power right now). I believe that the market thinks that there are too many of these companies, and that partly in competition and - particularly - HIGH COSTS, the going for them is harder. If you inspect a swag of these stocks, their lower performance (as a group) is very, very clear. In a way, they are of course industrials. That means, these days, that matters are less straightforward for them than for those miners who sell the "raw goods". I don't mean that THEY have no problems (both in costs, and in weather-related disasters, and bad infrastructure).

NEVERTHELESS, A NUMBER OF MATERIALS THEY SELL ARE AT LEAST IN DEFINITE DEMAND AND SALEABLE. If you are an engineer and you miss out on a contract, you in that respect will earn zilch. If you are a miner you may lose on a number of things, but at least much of what you have is in demand. (This includes, by the way, oil in China etc.). So I veer more towards DEFINING DEMAND as exactly as possible, and buy the best stocks related to the need for that demand to be satisfied.

Hence, at the moment, I am quite content to have some miners in my (small) portfolio, and interested in more. It is a matter of sensible selecting and timing, and close watching, but this is where matters keep on showing strength, even after falls, while most other sectors are far more "iffy".

paddy

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Post Number: 161
Registered: 03-2008

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Votes: 0


Monday, June 16, 2008 - 01:13 pm:

Resillent1 : An example of Fibs in action . I had never looked at a Light Crude Oil chart until I read the Captain's post .

I found the chart - got the High and Low . Worked out the infant triangle as I saw the pattern . Checked for support and resistance levels - made estimate of downside target for this correction. That value agreed with support on chart $125.

Calculated Fibs - I usually do several orders and saw that the Close was below a significant Fib level and that the next level down would have to be tested before there would be any rebound . That level was 134.21 . It was tested and Failed which set up 133.93 for a test and that's where we are now .

May my words suffice for lack of a chart .

Paddy

ody

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Post Number: 2534
Registered: 10-2006

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Votes: 0


Monday, June 16, 2008 - 01:26 pm:

Ausenco again:

In fact the stock has very clearly slipped further since I sold, and my impression is that sentiment is turning negative.

In a market like the present one, people will try to identify only those stocks which they feel really good about. Anything dubious (and Ausenco is not altogether convincing), and the stock is in danger of going out. I believe that as always it is best to stay with strength, and not to take the view of "stocks are weak on sentiment, so it does not really matter, for they'll recover". That is only very partly true. In general, market sentiment will affect the weaker stocks more strongly ("weak" for whatever reason), so you will see a weaker price even if ultimately that is unjustified. But if people feel that the stock is too "unknown" (and AAX is), and that there MAY be a reason why a director sells a holding (even if small), while moreover the SECTOR is at present seen as unreliable, I think it is better to be OUT.

Both bull markets AND bear markets throw up stocks it is better not to have. For sure: bear markets do price stocks down unjustly, and those are worth having. However, they also tackle others in just the same way as a bull market, and in that case I tend to quit them both in bull markets and bear markets, and the case in bear markets is often stronger.

Sure, IMD was sold down FAR too much (I did not at once realise that the 23% related to a SMALL downgrade, though AFTER an upgrade in February). BUT ... it remains true that, after a bounce, IMD is now performing weakly, and if I owned it I'd quit it, for I don't think it will soon return to its former glory. These stocks often do typically well in a bull market and get bid up high. However, once people come to have less than COMPLETE confidence in them, they withdraw support. As I say, if you look at a swag of these service companies they are nowhere near as attractive as they used to be.

rdumas

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Post Number: 1463
Registered: 11-2006

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Votes: 0


Monday, June 16, 2008 - 01:29 pm:

Hi Kate,

How would you contemplate actually investing in Chinese stocks? The only way that I know of is to get involved in a fund of some type that specialises in trading a portfolio of selected Chinese shares.

In terms of attempting to trade Chinese shares in some more direct method (not sure it is possible) my experiences in trading US shares directly put me off a little because of the added complication of exchange rate variations. I too like to keep things simple and adding the extra element of exchange rate variations puts me off.

ody

Member

Post Number: 2535
Registered: 10-2006

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Votes: 0


Monday, June 16, 2008 - 01:32 pm:

CHINESE SHARES

I would distrust these intensely, as most of them cannot be properly researched. Many are very much government controlled and in a corrupt manner. You'd REALLY have to know what you are buying. Yes, they have gone down, but that was after an absurdly high-pitched rally, so their fall is probably quite justified, unless you can identify some REAL value. Not easy to do! Comparisons with US share in a GENERAL way (as though losses can be quantified on a similar basis) are in most cases likely to be far mistaken. Incidentally: the value of INDIAN shares is often easier to determine.

eblode

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Post Number: 800
Registered: 11-2002

Rating: N/A
Votes: 0


Monday, June 16, 2008 - 02:05 pm:

Ody,
I dumped AAX & IMD after reading your comments. They certainly alerted me to a situation I had not been aware of. After a while you get a sense of dullness and apathy with shares you have held for awhile. Your comments woke me up to the fact that both these shares were in the doldrums and drifting south. Thanks ODY for the wake up call.

Eugenio

rdumas

Member

Post Number: 1464
Registered: 11-2006

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Votes: 0


Monday, June 16, 2008 - 02:24 pm:

Hi Ody,

AUSENCO - AAX

As you know AAX is one of the stocks in my portfolio and along with WBC from a short term performance perspective is performing poorly. I can fully understand why you don't wish to be in the stock any more for it has been disappointing since late May. When stocks suddenly perform poorly I like to look at the reasons for their change in performance.

Fundamentals

Ausenco, whilst it has only been a publically listed company for around 2 years it has been operating since around 1991. Since it became publically listed its performance has been outstanding. Its average investor returns over the last 12 months has been 70.41% and this performance has been achieved during a very volatile period in the share market. Its current PEG value is 0.16 as of yesterday's price. Its forecast earnings for December 2008 and December 2009 translate into a PEG of 0.47 and 0.76 respectively. Stock Doctor gives it a Strong financial rating. It has a Debt/Equity ratio of 2.3% and an interest cover of 122.58 which are incredible figures in this time of credit problems.

The recent falls in the share price stem from two events from my observations:

1) The general fall in the share market and
2) Bob Thorpe, one of the non executive directors selling off $4.65M worth of his share holdings.

When a director in a company sells off some of their shares it always causes the market to get nervous in particular when the market is going through a very volatile period. I believe that the 'devil is always in the detail'. What the market doesn't seem to have taken into account is the fact that Bob's share holdings went from a 12.7% share holding in the company down to a 12.3% share holding. I would not believe that this is a drastic reduction in the share holding in a company and I truly believe that the market has read far too much into his share sales.

Technicals

For the period of AAX's life as a publically listed company it has performed outstandingly as can be seen by this chart of its public life.

As can be seen, AAX has been in a Weinstein stage 2 stock of most of its life and it is still the case today.

From a shorter term perspective it can be seen that it is still trading above its 30 week EMA and is currently sitting just above a support level formed by the high of the 4th April 2008.

It is currently around 12.25% below its high in November last year. The ASX200 has fallen 21.6% during the same period. What makes its performance even more outstanding is the fact that AAX is in the Capital Goods Sector which is a sub sector of the Industrials Sector. The Industrials Sector has fallen 36.21% in the same period as can be seen from the following chart.

So taken in the context of the overall market action and that of the sector in which it lives, I believe that AAX has proven itself to be a stock worthy of a long term holding.

kate

Member

Post Number: 917
Registered: 04-2005

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Votes: 0


Monday, June 16, 2008 - 02:36 pm:

Rudy
The only way to keep it simple would be by buying one of Barclay Global Investors ETFs. I'm sending you the link so you can see what I mean. The Xinhua China 25 is a wild price per share however the Hong Kong one which is I presume an index tracker covering a lot more shares than 25, more reasonably priced.

Might keep an eye on it for a while, just in case the money starts flowing back into that market.

Regards
Kate

http://www.asx.com.au/investor/lmi/ishares.htm

rdumas

Member

Post Number: 1465
Registered: 11-2006

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Votes: 0


Monday, June 16, 2008 - 02:46 pm:

Thanks Kate

sway

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Post Number: 337
Registered: 12-2005

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Votes: 0


Monday, June 16, 2008 - 02:54 pm:

Re AAX

I'm with Rudy here. The recent pullback from all time highs has settled for now at the 30W WMA. At a time when market sentiment is generally bad, it has held up OK.

aax

I don't hold any AAX.

Cheers
Sway

This is not a recommendation or advice. As they say .... DYOR.

rdumas

Member

Post Number: 1466
Registered: 11-2006

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Votes: 0