No6's Financial Markets Thread

[No6]

Just shorted DOW again. 11775 seemed a bit high

 

EDIT that should have said 11750, now it's at 11775, which is where I should have (planned to) shorted it, doh!

Was that a mechanical trade or intuition (see post 349)? Just wondering.

[John Doe]

Was that a mechanical trade or intuition (see post 349)? Just wondering.

It was actually a mistake.

 

Still, managed to close out for a flat trade.

 

It was a bit of a TA trade, bit of int.

 

I made a few pounds shorting it each time it got to 11750 as it seemed a decent resistance area (few failed attempts at breaching).

 

Then, after it had broken 11750, the plan was to short at the next high (which turned out to be ~11775). However, I mistakenly put a sell order in at 11750, instead of 11775 (as in my post).

 

 

[John Doe]

It was actually a mistake.

 

Still, managed to close out for a flat trade.

 

It was a bit of a TA trade, bit of int.

 

I made a few pounds shorting it each time it got to 11750 as it seemed a decent resistance area (few failed attempts at breaching).

 

Then, after it had broken 11750, the plan was to short at the next high (which turned out to be ~11775). However, I mistakenly put a sell order in at 11750, instead of 11775 (as in my post).

That should have read 11700 not 11750.

Guess that's what happens when jumping in and out and not checking details It's, lucky I got away with a flat trade.

Need a holiday!

 

Intuitively though, 11750 does look like a potential top. As in the rally looks like its running out of steam (either that or getting ready for a big pop up )

 

That number 11750, just keeps coming up, although not rational, I think I am going to have to short it again just for fun!

 

[jerpy]

It was actually a mistake.

 

Still, managed to close out for a flat trade.

 

It was a bit of a TA trade, bit of int.

 

I made a few pounds shorting it each time it got to 11750 as it seemed a decent resistance area (few failed attempts at breaching).

 

Then, after it had broken 11750, the plan was to short at the next high (which turned out to be ~11775). However, I mistakenly put a sell order in at 11750, instead of 11775 (as in my post).

 

Two things to add to No 6's debate, from your trade.

 

1. You clearly demonstrate a plan

2. You had discipline in your trade. - which should mean any losses should be small, bar keyboard error!

 

 

[John Doe]

bar keyboard error!

Yep.

 

I have to admit that I have done such things before, usually while trying to get a quick trade in before meetings etc.

 

A few years back I bought a rake of BPP instead of BP as I was rushing (they were listed one space below BP in the look-up table on my share trading account).

 

Saw them fall ~30% over the next few months, until a while later, they received a takeover bid which took them back to where I had bought them.

(Actually made about £100 profit in the end ).

 

However, I had quite high paper losses for a time. I never made that particular mistake again.

 

[jerpy]

Interesting discussion No 6 on when and even what to buy. Picking up a few points.

 

Anybody who bother's to read my post's probably get's bored with me saying I look for theme's or sector plays. Stocks can often be unloved, neglected, bombed out or sometimes new plays in some way different. So by that nature high risk, but also at a low price relative to that risk. That's probably the bit I use charts for, the rest is intuition, based on researching a story.

 

Two simple examples of my trading, demonstrate my success and failure. Both penny share stocks I really fancied and both fell strongly into the above. Share A at the time I invested could potentially have gone bankrupt. Without telling a 2 year story, let's say shrewd management planning turned it around and I invested making good profit before the crowd. My mistake in short, or I would go on endlessly, was not seeing the dilution that followed. So convinced of the longer term picture, I kept buying as it fell, developing a sizeable holding, when I could have traded so much better. Problem was I sold earlier spikes and thought I was smart buying a big retrace - over confident? Maybe. End result massive profit turned to fair sized loss. JUST FAILED TO PULL THE TRIGGER! STUPID! Worse I still hold some

 

Share B I caught real early, put my faith in management and other factor's, by and large recognised early the opportunity. When it was being spammed on many bulletin boards, it rose strongly as other's listened, so I took some profit - call it instinct, the shares fell (shook out trader's) and I bought those sold back, late last year. The ascent began again, even as news of dilutive placings came out (for a reason yet to be known) I began selling until the story was clear. It's a greed stock though (some will recognise it), I sold on the strength of that greed, but having already tested the sell strength - it' was not easy to shift between 2-2.5% of a micro cap - knew I had to move quick. End result this time, massive profit.

 

Morale of my story for me - without discipline and a plan, I do not win. Personally most high risk trades I make come with a mind set they can fail (that is my trader psychology), but recognising they are not working or taking profits I sometimes find hard. The latter example, showed me it paid off moving early, which relieved me because the last few months i've seen so many i've made money on, go on to even greater gains. Should I be grateful or should I learn to look for signs that suggest greater strength?

 

Just a few musings

[No6]

Yep.

 

I have to admit that I have done such things before, usually while trying to get a quick trade in before meetings etc.

 

A few years back I bought a rake of BPP instead of BP as I was rushing (they were listed one space below BP in the look-up table on my share trading account).

 

Saw them fall ~30% over the next few months, until a while later, they received a takeover bid which took them back to where I had bought them.

(Actually made about £100 profit in the end ).

 

However, I had quite high paper losses for a time. I never made that particular mistake again.

 

Well, we've all made mistakes, although I must confess that mine were mainly during my buy and hold days when I forgot to sell and saw all the profit whither away to losses as the market engaged in one of its throwing the toys out of the pram periods. As I was in the buy and hold camp I would listen to so called "experts", the usual suspects that the media always roll out on such occasions who would say hold tight, it always comes back. Well, just to remind myself of the buy and hold fallacy, I still own a couple of these dogs and they are both still well down from when I bought them. They never did come back with the general market recovery although on fundamentals they have put up respectable numbers. I don't expect to ever get my money back on these, but for the moment I continue to hold for the decent divi I get. Both are on p/e's well below the current market, so you never know, perhaps in time they will become a darling of the market again? Needless to say, the lesson I learnt is that even with a buy and hold strategy you must remember that there will come a time to sell and with one of the above, I could have had a 200%+ profit had I sold near its top. The "experts" never tell you to sell, their city friends are too busy doing that at the expense of the buy and hold brigade.

 

Just one thing though, if you bought the wrong company what made you keep it?

[No6]

Interesting discussion No 6 on when and even what to buy. Picking up a few points.

 

Anybody who bother's to read my post's probably get's bored with me saying I look for theme's or sector plays. Stocks can often be unloved, neglected, bombed out or sometimes new plays in some way different. So by that nature high risk, but also at a low price relative to that risk. That's probably the bit I use charts for, the rest is intuition, based on researching a story.

 

Two simple examples of my trading, demonstrate my success and failure. Both penny share stocks I really fancied and both fell strongly into the above. Share A at the time I invested could potentially have gone bankrupt. Without telling a 2 year story, let's say shrewd management planning turned it around and I invested making good profit before the crowd. My mistake in short, or I would go on endlessly, was not seeing the dilution that followed. So convinced of the longer term picture, I kept buying as it fell, developing a sizeable holding, when I could have traded so much better. Problem was I sold earlier spikes and thought I was smart buying a big retrace - over confident? Maybe. End result massive profit turned to fair sized loss. JUST FAILED TO PULL THE TRIGGER! STUPID! Worse I still hold some

 

Share B I caught real early, put my faith in management and other factor's, by and large recognised early the opportunity. When it was being spammed on many bulletin boards, it rose strongly as other's listened, so I took some profit - call it instinct, the shares fell (shook out trader's) and I bought those sold back, late last year. The ascent began again, even as news of dilutive placings came out (for a reason yet to be known) I began selling until the story was clear. It's a greed stock though (some will recognise it), I sold on the strength of that greed, but having already tested the sell strength - it' was not easy to shift between 2-2.5% of a micro cap - knew I had to move quick. End result this time, massive profit.

 

Morale of my story for me - without discipline and a plan, I do not win. Personally most high risk trades I make come with a mind set they can fail (that is my trader psychology), but recognising they are not working or taking profits I sometimes find hard. The latter example, showed me it paid off moving early, which relieved me because the last few months i've seen so many i've made money on, go on to even greater gains. Should I be grateful or should I learn to look for signs that suggest greater strength?

 

Just a few musings

 

That's interesting. I would say that most of my trades tend to be "safer" companies, if I can put it that way, mainly FTSE 350. I do this in part because if I get it wrong, most of the time the market will rescue you or selling at a loss is not as hurtful as the drop you might get with a smaller company. Of course, with smaller companies the bigger reward from hitting a home run is far greater than what you might get from a lumbering giant in the FTSE 100. I also like to stick with certain sectors, or at least go with those that are in favour rather than those that are unloved.

 

One of the biggest problems I find is mastering the discipline of a trade. I think this might be more difficult for those that swing or position trade because the waiting game can be the most boring thing. Even worse, if having waited you then miss the boat when it pulls out and doubts then creep in as to whether you should jump on boad and hope the ride will go on.

 

One way to go when you hold a share that is rocketing would be to set a trailing stop. If that is hit you then sell/or sell half. The difficult thing is then deciding whether you are going to try and buy back in on a pullback, assuming the upward trend is still in place. This can be difficult with fast movers.

[No6]

Thanks for that

 

Aviva actually looks to be on the rise again, the weekly chart looks to be more reliable on this one right now. Actually, I noticed that a few insurance companies look like they may be about to outperform if the weekly charts are anything to by. Miners look like they might be reversing, so I wonder if we getting some sector rotation here?

[No6]

That should have read 11700 not 11750.

Guess that's what happens when jumping in and out and not checking details It's, lucky I got away with a flat trade.

Need a holiday!

 

Intuitively though, 11750 does look like a potential top. As in the rally looks like its running out of steam (either that or getting ready for a big pop up )

 

That number 11750, just keeps coming up, although not rational, I think I am going to have to short it again just for fun!

 

For those that like repeating patterns, there is an interesting comparison of the Dow now with last year. 10750 was a difficult barrier to break through. The December santa rally was similar to this year and the Dow kept on creaping up until it began to reverse on Jan 20th. The Dow dropped around 900 points before the next rally began, Feb 11. The market is looking stretched again now, but I'd be surprised if we got a fall similar to last year.

 

[No6]

Further to the above post, Vix is warning of complacency right now. Wonder if the market will start looking for an excuse to sell off soon? We may yet se a repeat of last January's sell off.

 

THE BIGGEST DANGER SIGN IN THE MARKET

 

Of all the stock market danger signs confronting investors and traders, today's chart might be most worrisome from a short-term perspective...

 

Below is a three-year chart of Wall Street's "fear gauge," the VIX (short for Volatility Index). The VIX monitors the price traders and investors are willing to pay up for stock options, which are often used as portfolio insurance.

 

When the VIX is high (above 35), it tells us investors are scared... and willing to pay up for protective options. During the credit crisis, for example, the VIX skyrocketed past 75 (blue arrow). When the VIX is low (below 20), it tells us investors are complacent... and see nothing but blue skies ahead.

 

As you can see from the chart below, the VIX is "in the basement" right now... and sits around 16....

 

http://www.dailywealth.com/

[jerpy]

One way to go when you hold a share that is rocketing would be to set a trailing stop. If that is hit you then sell/or sell half. The difficult thing is then deciding whether you are going to try and buy back in on a pullback, assuming the upward trend is still in place. This can be difficult with fast movers.

 

Yes good point on trailing stop's, but a fair few micro caps i've been in, would see market shenanigan's kill me using these. Small stocks are often manipulated on AIM and i'm not just just talking of the much famed market maker's; yet the story can still remain intact. So I try to think of these without setting them, though it clearly never worked in the example I gave.

 

As for ship's sailing, before jumping onboard. The difficulty in waiting for price entry levels, truly is being bold to see there is still upside - very much an individual judgement call. Last few days i've seen SOU get away, when I was lining up to play and resisted the temptation to jump when it moved. Frustrating, cost me a profit, but at the end of the day, not trading has lost me no money in reality. Just have to accept it got away.

[No6]

Share watch 2011: I thought I would try a little experiment. I've picked a few bombed out shares to follow for 2011. None of these should be seen as tips or that I have any interest in owning them, I just want to follow what happens to them over a 12 month period and track their performance. I've picked them because they rely on the UK consumer. If the share price of these pick up then maybe we really do have a full on recovery.

 

HMV - 25.50p

Dixons Retail - 23.71p

Cable & Wireless Communictions - 49.61p

Debenhams - 73.80p

Punch Taverns - 76.05p

 

Share watch 2011:

 

HMV - 25.50p now 25.00

Dixons Retail - 23.71p now 21.35

Cable & Wireless Communictions - 49.61p now 49.95

Debenhams - 73.80p now 68.55

Punch Taverns - 76.05p now 71.65

 

Mostly down reflecting the gloom on the High Street for these retailers. Dixon announced poor results today.

[John Doe]

Just one thing though, if you bought the wrong company what made you keep it?

I had also been burnt holding on to a couple of dogs before (circa 2001 etc), but on the whole in my early trading days I would sell good companies on big pull backs, just to see them bounce straight back a year or so later. (I lost more like that, than on the dogs).

 

When I realised what I had done with BPP, I checked the company out and learnt a bit more about it. It was a company that was selling education packages and teaching/learning/training etc, so I then spoke with a friend who knew a bit more about this area and he told me they were well known & seemed a fairly good company.

 

It was also falling along with everything else at the time, so I bit the bullet and held on.

 

That said, it was only when they received a takeover bid that they rose back to where I had bought them. I didn’t hang about, I jumped.

 

 

[John Doe]

Share watch 2011:

 

HMV - 25.50p now 25.00

Dixons Retail - 23.71p now 21.35

Cable & Wireless Communictions - 49.61p now 49.95

Debenhams - 73.80p now 68.55

Punch Taverns - 76.05p now 71.65

 

Mostly down reflecting the gloom on the High Street for these retailers. Dixon announced poor results today.

We have family friends with one of the Punch Directors in their brood. They're about to sell off about 6000 pubs.

 

I was thinking that buying a run-down country pub in a few years time could be a timely and interesting project. (Worked in the pub/building trade for many years before going back to school).

 

Idea being buy at the low, refurbish, get a good manager and chef, build up the business and sell.

[John Doe]

Share watch 2011:

 

HMV - 25.50p now 25.00

Dixons Retail - 23.71p now 21.35

Cable & Wireless Communictions - 49.61p now 49.95

Debenhams - 73.80p now 68.55

Punch Taverns - 76.05p now 71.65

 

Mostly down reflecting the gloom on the High Street for these retailers. Dixon announced poor results today.

Could be the snow

[jerpy]

I was thinking that buying a run-down country pub in a few years time could be a timely and interesting project. (Worked in the pub/building trade for many years before going back to school).

 

Idea being buy at the low, refurbish, get a good manager and chef, build up the business and sell.

 

Lost count of the number of times i've heard that story in general. You would certainly need a good chef, as without food they seldom profit.

[No6]

Could be the snow

That's an interesting one, especially as Tesco today said the same thing. Actually, I'm tempted to believe that in some cases it could be true as you wouldn't expect a retailer like Tesco to struggle while the numbers put up by Sainsbury and Waitrose seemed to be very good. Tesco's figures weren't that bad if you include what they are doing overseas, but in the UK they just about stayed respectable. They believe that as they have more out of town stores than the likes of Sainsbury and ASDA, that is where the snow hit them. I'm tempted to believe them because you can imagine that people did not want to make that extra trip to a Tesco if there was a Sainsbury near by. Tesco's shares fell a silly 4% today on the back of it and they have fallen about 8% since the new year began, so I will be watching them closely as the company is a money making machine.

[John Doe]

Lost count of the number of times i've heard that story in general. You would certainly need a good chef, as without food they seldom profit.

Yep, good food, good beer and friendly staff, then people will/do come, even in a downturn.

 

While it was true that food was the biggest profit producer, especially in the tied houses (due to the horrendous rates companies like Punch etc charged for their barrels), nowadays, the independents (free houses) can do quite well on wets too (esp softs and even real ales).

 

[John Doe]

That's an interesting one, especially as Tesco today said the same thing. Actually, I'm tempted to believe that in some cases it could be true as you wouldn't expect a retailer like Tesco to struggle while the numbers put up by Sainsbury and Waitrose seemed to be very good. Tesco's figures weren't that bad if you include what they are doing overseas, but in the UK they just about stayed respectable. They believe that as they have more out of town stores than the likes of Sainsbury and ASDA, that is where the snow hit them. I'm tempted to believe them because you can imagine that people did not want to make that extra trip to a Tesco if there was a Sainsbury near by. Tesco's shares fell a silly 4% today on the back of it and they have fallen about 8% since the new year began, so I will be watching them closely as the company is a money making machine.

Yes, I was joking a bit, but it's true that abroad Tesco is growing rapidly, but at home they are already pulling in ~£1 in every £3 spent in UK supermarkets, that sounds like saturation and the markets have now (bandwagon) reacted.

 

I think it is the first time in 13 years that markets have downgraded their expectations (and overdoing it a bit IMHO) so this could well create an opportunity and I agree about watching them.

 

Another 5% down and I would be really tempted to get a swathe.

 

[No6]

Yes, I was joking a bit, but it's true that abroad Tesco is growing rapidly, but at home they are already pulling in ~£1 in every £3 spent in UK supermarkets, that sounds like saturation and the markets have now (bandwagon) reacted.

 

I think it is the first time in 13 years that markets have downgraded their expectations (and overdoing it a bit IMHO) so this could well create an opportunity and I agree about watching them.

 

Another 5% down and I would be really tempted to get a swathe.

 

I read something tonight about Tesco that surprised me, if only because you would not think of them as a big player in the market concerned. Apparently TescoMobile (telecommunications), now has 2.5million customers. That's amazing for a company that you would still mainly see as a food retailer.

 

In non-food, weather disruption for customers travelling to our larger stores was unhelpful and this, combined with demanding comparisons against last year's very good performance, meant that growth was subdued. Nevertheless, there was strong category growth in toys, books and gaming.

 

Tesco Mobile reached a significant new milestone over Christmas, growing to more than 2.5 million customers.

 

Online sales were strong in both food and non-food with double-digit total online sales growth. Tesco Direct had sales growth of 18%, with a strong performance in toys, gaming and small domestic appliances, building on growth of more than 50% last Christmas.

 

http://www.moneyam.com/action/news/showArticle?id=4055578

[John Doe]

I read something tonight about Tesco that surprised me, if only because you would not think of them as a big player in the market concerned. Apparently TescoMobile (telecommunications), now has 2.5million customers. That's amazing for a company that you would still mainly see as a food retailer.

Impressive.

 

There was talk a few years back that they might end up running some of the social security areas. Their estate agency still seems to be bubbling along on the back burner also.

 

 

[No6]

Are we on the verge of Tech boom part 2? I posted an article a week or so ago that highlighted the likely tech upsurge to come and overnight we have impressive numbers from Intel to give some support to this. Today on the FTSE, ARM Holdings, which had attracted some bear comments on this forum, is going great guns up about 9%, now over 550 on the back of those Intel numbers. I think over the weekend I will draw up a list of Tech stocks to follow. I can feel that the market may be in need of a new bubble going forward and Tech part 2 might just be it.

[John Doe]

Well looking back now, it appears 11750 might indeed be a resistance line. Several little pushes up to and around there.

[John Doe]

Well looking back now, it appears 11750 might indeed be a resistance line. Several little pushes up to and around there.

Spoke too soon