This week we look at a rare Time Cycle on the All Ordinaries and how it could be bringing us a major market bottom in or around October 2012.  We’ve never looked at Time Cycles before on ASX Market Watch, and most technical analysts never get to this stage in their analysis.

As most of you know I prefer to use solid techniques to identify trends in the market, but this video is also another interesting way to look at the way the market moves – in cycles from trough to trough in repeatable patterns.

Check it out!

http://youtu.be/MNeP9kD_ZHs

Of course please do your own due diligence – a great place to start is the free trading and investment course on this site.  Check out the strongest sectors report to find out where the best places to be in the market right now, and our free S&P ASX 200 shares list with ASX 200 prices, charts and top movers.

Comment on the video in the comments section below!

Happy trending,

Dave McLachlan

. Access Your FREE Stock Market Video Course Here! Valued At $97. Or Absolute Beginner? Get The Beginners Course Here.

And so the curse of May rears its ugly head again.  Despite the upward breakout on the All Ords recently, and the Dow Theory entry signal, the Golden Cross entry signal (for those who use Moving Averages) and many others, it looks like the saying “Sell In May” might be the trump card to all of them.  Again.

It is nice (and important) having a stop loss in the market, as it means that if a stock goes down, it sells out automatically.  I don’t have to be around to watch it or make it happen.  While it is a touch frustrating to watch your stocks be stopped out, it also might be the best thing that ever happened.  For example if your stocks were stopped out in December 2007, it may have been frustrating at the time, but in hindsight it would have been a great outcome.

And that’s what stop losses are for - because we can’t tell the future.  We can have a good stab at it, we can talk about it around the dinner table, but even the “gurus” who make fabulous claims out there don’t really know the future and still get it right only around 50% of the time.  And so our stop loss gets us out if it becomes apparent that the stock has changed direction, which is what we want.

May Doesn’t Bring Us The Best Track Record: Check It Out

Below is a chart of the All Ordinaries, showing the last three years and the selloffs in May.  Basically, it doesn’t look good.

Further to this, the upward breakout on the All Ords is close to failing, with a short term exit on the All Ordinaries only a few points away.  While it is only a short term exit, it is an exit none the less, and enough to negate the upward breakout if it does happen this week.  The chart below shows the possible short term exit and then a Fibonacci extension down, giving an indication of where prices might head to.

Using Fibonacci, there is a possibility that we could see falls to 3,886.

While I had shown this scenario in the Market Watches previously, the upward breakout made it less likely.  Now it seems the upward breakout is failing, and the downward target scenario becomes more likely if it does fail.

Trading Diary Buys And Sells

In times like these I don’t open new positions.  Basically I want the overall market to be going in the right direction first.  Many stocks have been stopped out, some at a profit, others at a loss.  Check out the trading diary to see the list.

Now is a great time to test a stock market trading plan or system.  The market has not been easy over the last 12 months.  If the market continues down the stop losses are in just in case.

Have a great week everyone, and happy trending!

Dave McLachlan

See ASX 200 Prices with ASX 200 Charts

. Access Your FREE Stock Market Video Course Here! Valued At $97. Or Absolute Beginner? Get The Beginners Course Here.

This week we look at the All Ordinaries, using technical analysis to determine where the market is heading.  We also look at the strongest sectors in Australia right now and some individual stocks within them, and also some sectors that are very weak right now.

Check out the video below!

http://youtu.be/3DzslbNvjNo

Of course please do your own due diligence – a great place to start is the free trading and investment course on this site.  Check out the strongest sectors report to find out where the best places to be in the market right now, and our free S&P ASX 200 shares list with ASX 200 prices, charts and top movers.

Comment on the video in the comments section below!

Happy trending,

Dave McLachlan

. Access Your FREE Stock Market Video Course Here! Valued At $97. Or Absolute Beginner? Get The Beginners Course Here.

The old saying “Sell In May and Go Away” believes that stocks generally under perform during the months of May to October each year.  For the last two years that saying has proved more than adequate, and we are now coming up to May again.

Will May 2012 prove to be another pitfall for investors?  Personally, I don’t think so.  It might get volatile and we might see a few larger swings, but personally I don’t think it will be as bad as the last two years.  Of course, that is just an opinion.  In reality, all we can do is take entry signals as they emerge (as long as the overall market continues sideways or up), and then take the exit signals as they evolve.  Opinions really don’t matter, but they are fun to have and make for good conversation

Last week we called a few banking stocks for entry signals: ANZ, WBC, CBA coming close.  They are holding up and performing well currently.  A quick look at the strongest sectors report will show you that the Financials sector is outperforming the overall market as well.

This Market Separates The Grown-Ups From The Children

This market is truly a great test of a trading system.  Some stocks are rocketing upwards, others are tanking severely downwards.  If you were ever going to test a stock market theory to put it through its paces, it would be now.

This week a raft of stocks were stopped out in the trading diary.  BTA, MTU, COF and SWM.  And they didn’t just casually trail down to their exit level, no!  Almost all of them dropped over 10% in a day to their stop loss.  Of course, these moves are just a tiny fraction of the overall portfolio.  And that is why we use a Stop Loss!  To protect us when things go bad.  As they say, look after the downside, and the upside can take care of itself.

Buy Signals In The Trading Diary

Some shorter term plays are evolving now, in the form of continuation patterns.  Complete Course members will have a good handle on how to trade with these patterns.  SEK (Industrials), SHL (Health Care), and ACR (Health Care) are all evolving these patterns.

Regular medium term setups are evolving too.  AGK, ALZ, ASZ.  BWP, CCL, COH and SAI, TGR and UNS.

Others are very close to new entry signals, so I am keeping an eye on: CTX, DUE, GPT, PXS.

That’s quite a list!  Which is one of the reasons I am sceptical about dramatic falls in May 2o12.

New Feature For The Trading Diary

I am looking into including charts for all the current trading diary holdings as well as setups.  It would be quite a task to include this, but if you think it would be worthwhile I could get started on it and see how it goes.

Have a great week everyone, happy trending!

Dave McLachlan

See ASX 200 Prices here | See the Trading Diary here

. Access Your FREE Stock Market Video Course Here! Valued At $97. Or Absolute Beginner? Get The Beginners Course Here.

Uncertainty And The Stock Market

You never know which ride will take you the furthest.  This is where trading often differs from life, and why so many people find it hard to adjust their mentality to investing in the stock market.

If you study a subject in life - say you go to school to become an engineer, a salesperson, an accountant or whatever you choose, there is a very high chance that you will come out of that schooling with the skills to BE an engineer, salesperson or accountant, and that you will have a job or career in that field in the future.

But when you buy a Stock or Share in a company, no matter how much research you do, no matter how good your “Margin of Safety” is, no matter how much you believe in it or wish hope and pray, you can’t MAKE it go up or down.  Once you buy a share, you’ve exhausted the actions you can take to influence the outcome, and all you can do now is wait for your signal to sell, whatever that may be.

The ride could be a long one (i.e. CAB or IMD in the portfolio right now) or the ride could be a short one (i.e. FKP or BLD in the portfolio right now).

As old Pat Hearne from “Reminiscences” said: “You can’t tell ’til you bet”.  In other words, buying a stock is all you can do.  The market takes care of the rest.

Welcome The Big Four Banks, Giving Entry Signals This Week

Yes that’s right, ANZ, WBC, and NAB have all made entry signals or are very close to making entry signals.  Macquarie (MQG) made an entry in February and has risen nicely since.  CBA is close.

See the ASX 200 Top Movers and Price Charts here.

New Buys In The Trading Diary This Week

I bought API and CSV this week myself.  To be honest I was looking at CSV to be the better pick, but it turns out API is the winner so far, buying at $0.33 and currently at $0.39.

Other signals that have triggered recently are in stocks: AAD, CCL, OMH, SAI, SDL, UNS, and the banks as mentioned before.

Stocks that are close to triggering a signal are: ASZ, CBA, COH, CTX, IGO, FXL, MNC.

See the Trading Diary here.

Current Performance In The Trading Diary

Current performance continues to stand out, with IMD, CAB, ASL, MEO all over 20%.  Average wins on winning trades so far are over 9%.

The average loss on losing trades so far is a tiny 2.75%.  This is part of the difference that gives me a solid edge over the general market.  Win more than you lose, and win more when you win.  Like most things in the market this concept is simple, but not easy.

Have a great week everyone, and happy trending.

Dave McLachlan

. Access Your FREE Stock Market Video Course Here! Valued At $97. Or Absolute Beginner? Get The Beginners Course Here.