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Commander T's Diary


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I don't know if this is a possible potential intermediate top in equities right now. Jesse Livermore writes about the leading stocks in the leading groups rolling over first ("How To Trade Stocks"), and that is how he saw the 1929 crash coming. BDEV and TW. and struggling to make headway, the Beverages are in a consolidation phase (maybe it was just unlucky timing). I need more time to do some more research, such as looking at the Advance/Decline line, and more leading shares. It's another bank holiday weekend in the UK.

 

We'll have to see how this pans out.

 

Whiteboard Key Levels -

 

FTSE ALL SHARE; 3,506 pts bullish

3,500, beneath I become neutral.

2,600, beneath I become bearish.

 

SP500; 1,649 pts bullish

1,600, beneath I become neutral.

1,100, beneath I become bearish.

 

GOLD GBP; £ 896/Toz bearish

1000, and above I become neutral.

1150, and above I become bullish.

 

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Illumin+L2.PNG

 

Illumin+S1.PNG

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Halfords a UK retailer specialising in big out of town stores selling bicycles and automobile aftercare products, parts and tools., LSE:HFD.

 

How technical analysis can get hammered by a fundamental news release. A case study of a false breakout and gap down.

 

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This looks like a good set up, with a trading range with a upper potential pivotal point at 360p (go long at 360p and above), and a lower potential pivotal point at 200p.

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One could put a stop just under 360p, just in case you are wrong. You would then have a nice ride up to 400p, and maybe have a stop raised to just under 400p.

 

But wait! An unexpected news release marks these shares down drastically. http://www.independe...ve-8630211.html Halfords' boss invests £100m but warns profits will dive.

 

Now see the charts below, particularly the daily chart which has the action zoomed in, in the lowest chart. It is likely that your stop would not have triggered.

 

The lesson here is not to put all your eggs in one basket.

 

hfd.PNG

^Top chart is a weekly chart, and the one below is a daily chart, which is zoomed in.

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Going away and thinking about it more, I think the bullish stance on equities is about to become neutral (rather than all out bearish). The leading stocks in the leading groups didn't power on, for example IPO, TW. BDEV, DGE, and SAB, and the left field pick JRIC. We look back to our old BOK pick which has performed well when markets went down / had an intermediate top, a key pivotal point is 130p. When in doubt of market direction, look to the East or West. East of the UK is the Asian markets. I see the Nikkei has backed off significantly from 16,000, after a good advance from under the 10,000 area, so we are in a period of congestion, and I believe this will impact on equities as a whole globally.

 

Neutral for me, means, don't sell out of winning positions, unless your stops are triggered, but maybe watch them closely, and don't take out new big long positions either. We were in this position before in this diary where this happened and there was a need to tighten stops. In the second long portfolio, which was started after the first one, when it got filled up, it was hard to make any headway, and it is just about treading water (average gain at this time is 1.7%, compared to 16.3% in the first long portfolio started in later 2012), I think this is a key indicator too.

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Going away and thinking about it more, I think the bullish stance on equities is about to become neutral ...

Neutral for me, means, don't sell out of winning positions, unless your stops are triggered...

 

That works.

After a jump like today, you can just raise your stops.

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Taken from http://www.greenener...200#entry275674

 

The monopolising of the worlds crops would be a good plot for a James Bond film. Tie farmers into a crop that has a planned in obsolescence, so GM crop biotech companies can receive a regular "rent" when the farmers have to buy new seeds. It appears however crops do still produce seeds for the next generation of plants - http://www.monsanto....save-seeds.aspx

 

Hmm Unfortunately, Monsanto would look like a buy at $105 in this period of time. Would it be it be unethical for a GEI forum poster to recommend to buy this.... Jim Rogers did say invest in "agriculture".

 

mon.PNG

^Take $100 as a potential pivotal point

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Taken from http://www.greenener...76

 

http://www.telegraph...le-trading.html

 

27th May 2013

 

Tweet your way to profitable trading

 

Amateur investors are starting to use social media to guide their trades.

 

 

Those with less expertise might like to try a platform called eToro, which allows customers to copy “star traders” directly, and can make traders of even the least informed of punters.

 

The company, which celebrated its 50 millionth trade last week, allows its clients to link their portfolios to so-called “guru traders”, who are paid per month for the people who follow them. When the guru trader invests, his or her copy traders mirror the trade in real time.

 

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This is an interesting development. We may scoff at people on Facebook who share when they last used the toilet or last went to the shops to buy broccoli, and update their "status", but we are entering a new stage in social media where this could fuel a super stock boom. A new age of information and dis-information. Imagine stock brokers data mining their entire client base, seeking out the best trader in terms of drawn downs, win-loss ratios, maximum return on investment, and in the quickest time. Instead of brokers and insiders keeping the information themselves and following the trades, they share this out, so more people can buy, and like a tinder box, we have ignition.

 

http://pages.etoro.c...f=2&dl=30000587

 

Experience the Social way to trade at eToro

Connect with thousands of traders and investors and tap into the wisdom of the crowds to make smarter trading decisions. Copy the trading actions of our best traders and enjoy the benefits.

  • Over 85% of copied trades on eToro are profitable
  • Connect with 1000’s of traders and investors
  • Copy the network’s best traders
  • Build your own people based portfolio
  • Save time by having others work the markets
  • 24/5 Support by phone or live chat

http://www.youtube.com/watch?feature=player_embedded&v=gtdktnKHr0w

^Wisdom of the crowds :unsure:

 

An interesting experiment...., So if I created a "notanewmember" facebook profile and opened up a Etoro account would anyone be interested in following...?

 

There are questions to be answered, with any new frontier;

Does a trader need followers to be more profitable? Or does a profitable trader stand in one place knowing they are right, and with the truth wait for the crowd to discover the truth themselves, and come over to them. Would it be considered market manipulation? What kind of line does it cross, if it does, about giving financial advice regardless if it is done by a 3rd party who is relaying the information? What about small illiquid stocks? What about market abuse? Etc...

 

What would Jesse Livermore think? He chose to be secluded and be quiet about his trades, yet was still the best stock trader in the world.

 

I would think it would be tough to get followers - one would need to be in the top 1% of traders. Naturally everyone would gravitate to the top 1 or 3 traders out of the thousands or millions in a brokerage.. So far I'm 21st out of 67 on the May http://www.stockchallenge.co.uk/ challenge with 5.06% gain.

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Dot.com boom - we're buying this because of the number of mouse clicks and page views. (No profit, no cash flow etc)

 

Social Media Led Stock boom - we're buying this because of the number of guru traders that are buying this. (No profit, no cash flow etc)

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Boo both the beverage plays (LSE:SAB, and LSE:DGE) have been stopped out. Chuck in LSE:BDEV to the list, and TW. that I have been watching. So all market leaders from my analysis are unable to make headway. Either I need to go back to the drawing board, or this is a intermediate market top we are witnessing.

 

For the record I shall say - This could be a top! All stopped out stocks need to make a new high past their stopped out positions to become valid buys again.

 

May 2013 - Sell* at the end of May and look away!

 

 

*Sell as in being stopped out, NOT shorting the market as we become neutral. Remember the whiteboard key levels.

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FTSE-350

 

Strongest Sectors

1st NMX2710 Aerospace & Defense +58%

Leaders - RR. +325% (Pivotal Point 1200p), SNR +75% (Pivotal Point 260p)

 

2nd NMX3720 Household Goods And Home Construction +58%

Leaders - BDEV +200%, (Pivotal Point 330p), TW. +170% (Pivotal Point 100p)

 

3rd NMX3530 Beverages + 50%

 

Weakest Sectors

NMX1750 Industrial Metals -78%

NMX1770 Mining -31%

 

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New into the sector leader board is Aerospace and defense. Rolls Royce (LSE:RR.) had a early start by doubling its value a few months ago. The next interesting share is Senior, LSE:SNR at 271p.

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FTSE-350

Strongest Sectors

1st NMX2710 Aerospace & Defense +58%

Leaders - RR. +325% (Pivotal Point 1200p), SNR +75% (Pivotal Point 260p)

 

Weakest Sectors

NMX1750 Industrial Metals -78%

NMX1770 Mining -31%

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New into the sector leader board is Aerospace and defense. Rolls Royce (LSE:RR.) had a early start by doubling its value a few months ago. The next interesting share is Senior, LSE:SNR at 271p.

 

First may be last, and the Last will be first, at some point.

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Yes, I am watching the miners very closely - they will be a phenomenal place to be when the time comes.

 

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Randomly I am shorting the weakest stocks that I could find, for the July stock challenge competition. There are 91 entries this month (I am 7th currently).

 

The leader chose to short the builders and is doing well - PSN and BDEV.

 

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^The blue squares indicate being long, and red, being short.

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Can I buy Calls on NUGT and beat them all ?

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Self Reflection, perspective and meditation time

 

I posted this elsewhere (LINK), but at this time, it deserves to be here;

 

http://www.youtube.com/watch?v=o0oHlX8Kmxk

 

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One billion, a thousand million. A million is 1,000,000.

 

The size of the universe is massive, we are just one star, in a galaxy of billions of stars, in a universe with billions of galaxies. The earth is 4.5 billion years old, the universe is 13.7 billion years old. We are on this planet for a fraction of that time, and occupy a fraction of this space. LIVE LIFE NOW. What have you got to lose?

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June is shaping up to be a tough month largely, for equity bulls.

 

90% of the entrants are underwater.

 

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Not bad : #5 !

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Now SNR long stopped out. It looks like there's no point in trying to swim against the current with all these market leaders faltering. I think I will look for more probing shorting candidates at the weekend, as it seems the market wants to go that way. It is not natural to short for most, like for most trying to use their left hand to play golf when they are right handed.

 

FTSE ALL SHARE = NEUTRAL 3,345 pts (break above 3,600 will become bullish, below 2,600 bearish)

SP500 = BULLISH 1,626 pts (break below 1,600, will become neutral)

GOLD GBD = BEARISH £864 T/oz (break above £1150 T/oz will become bullish)

 

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Thanks for posting these updates, I find this a very interesting trading dairy.

 

Anyway, for what its worth, this "big picture" call back in 2009 has proved uncannily accurate and may provide an excellent roadmap going forward ... looks like we're still on track for hyperinflation:

 

2 Years ago I posted this http://deflationhype...8.blogspot.com/

 

2008.jpg

 

Will the crash of 2008 be like 1987 [hyperinflation] or 1929 [deflation]

 

1987.jpg

 

1929.jpg

 

2008.jpg

 

Look at where we are we now

 

TheDow2008-1987-1929_5yr_2009-10-27.gif

^

It means, by January 2013, we'll be following the green line [1987, hyperinflation, or hyperdevalation of the currency], the Dow will be at at 14,000 pts. This is what we are on course for so far.

 

It is possible still, at the late stage for the DOW to follow the red line, and the DOW to be below 4000pts, and follow a 1929 deflation or hyper-increase in the value of currency. But I do not think this the likely path.

 

 

Just for the record: the Dow closed January 2013 at 13,860pts !

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^Thanks for that post. I had nearly forgotten about that!

 

I am looking to use these pages as evidence one day, I want to join a fund or investment house at some point in the future - I don't have any other real life work experience otherwise and I am glad this forecast worked out (well I extrapolated someone else's idea).

 

So what next after 14,000? - Don't bet the house on it of course, there are black swans etc and unknown, unknowns. Could the DOW reach 40,000? We are certainly on course for it. And by when? I haven't worked that out yet. The Japanese Nikkei index did double in the space of a few months recently. We live in interesting times.

 

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^Nikkei on 2nd June 2013

 

The DOW (which I don't pay so much attention to, the SP500 is a better index) needs to hold the 15,000 level, pivotal point, at the Friday close, or we are in for more additional congestion in equities and I become neutral on this index.

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^Thanks for that post. I had nearly forgotten about that!

 

I am looking to use these pages as evidence one day, I want to join a fund or investment house at some point in the future - I don't have any other real life work experience otherwise and I am glad this forecast worked out (well I extrapolated someone else's idea).

 

So what next after 14,000? - Don't bet the house on it of course, there are black swans etc and unknown, unknowns. Could the DOW reach 40,000? We are certainly on course for it. And by when? I haven't worked that out yet. The Japanese Nikkei index did double in the space of a few months recently. We live in interesting times.

 

I find it is often interesting and worthwhile re-visiting old posts or predictions (even when they turn out to be wrong). Anyway, obviously this analog is by no means a guarantee that the DOW will reach 40,000 or higher, but it remains an interesting (and perhaps useful) analogy to keep in mind, especially to open ones mind to the possibility of a break out to unforeseen highs ... even as we seem to be entering into a correction in the shorter term. It provides some context for price action.

 

In theory I consider the 1960's/70's secular bear a better analogy, nonetheless, this example helps emphasise the point that in practice it is all about price.

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