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ASX Momentum Trade Book - Part 2

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EOW 146 update: ASX Momentum Portfolio +132% (58% invested in 3 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +16.7% (past 146 wks)

This weeks sells: EHL (-0.6R), WFD (+3.7R)
This weeks buys: nil

The XAO stays within the current range (consolidation) having failed to go higher. Meanwhile our portfolio continues to grow and makes another equity high. Even though our equity curve may look like a crypto price chart, it's not a bubble that will eventually burst.

We sold our WFD trade on the next open after the offer was announced. Another good decision as the AUDUSD has risen a little since lowering the price of WFD shares. NWH and FBU are rising nicely.

Outlook: WU DU. We're still bullish even though the index remains in it's range. The index won't rise without the banks and it take a while longer for the sentiment towards the banks to improve.

There are other opportunities available but I'm a little cautious at the moment. I'm seeing opportunities in charts showing pull-backs in strong weekly trends. We'll start a few more trades soon as the portfolio has plenty of cash available. Portfolio heat is low at 3.1%.

 
Whenever I'm waiting for a scan to finish or have lull in activity I check out Brett Steenbarger's blogspot. http://traderfeed.blogspot.com.au/

I'm looking at his Dec 3rd post where he discusses three ingredients for success. I want to relate his discussion to the trading in this thread. Hopefully you'll then relate it to yours.

"The first contributor to success is simply the market environment."

It's no coincidence that the portfolio's current remarkable gains have occurred at the same time the market rallied out of it's sideways range. Our long only trading strategy needs the market to be going up to profit from most of our trades. This rally has improved our W%. Since Oct 12th when the XAO closed >5850 this portfolio has had 20 wins and 2 losses.

The second contributor to success for traders is an overall visionary goal. This larger goal provides the motivational thrust. I have to admit that this thread had no visionary goal other than to create a profit and provide real time educational content. The motivation was/is still present and that comes from my commitment in this thread to you, the readers.

The third success element for traders is having small goals to accompany their large visionary goal. There's no doubt that I enjoy posting new equity highs in the EOW updates. These are small goals that provide short term boosts of energy and satisfaction. If we're making new equity highs then we're making good progress towards the greater goal.

On this third topic I should mention another short term goal that probably helped. This goal was to get +100% within three years. No sooner had I posted this goal, the market got stuck in a sideways trading range for six months and this goal wasn't looking very likely. Then the market rallied, BOOM we got there very quickly. The W% >90% certainly helped.

No doubt the market was the major contributor to this success, but let's not overlook the focus that the shorter term goal provided. We were "locked and loaded" to take full advantage of that rally.

Brett's ending comments are worth reposting.

"When you have an inspiring vision and a robust process for working toward that vision each day, you set yourself up for success when opportunity arises.

How are you preparing for success in 2018?"
 
Trading update: New trade as we've got almost no risk itm atm.

LLC-cfd: Bought today at 16.47, iSL at 15.80.
A reversal opportunity as the current daily trend is down. Price has bounced off a weekly support level (zone) and the RR at this price is very promising.

I've posted the charts in the LLC thread as IMHO this is a good opportunity for medium and longer term traders/investors.
 
EOW 147 update: ASX Momentum Portfolio +132% (85% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +18.1% (past 147 wks)

This weeks sells: nil
This weeks buys: LLC-cfd

What a week. The market broke out and continued higher without the banks. Our small portfolio stayed the same after it's recent rally.

I look around at all the stocks that have gone higher without me (and us). I know we've missed a lot of them. Yes I get frustrated that we missed out, but I won't chase price. If I've missed the correct time and price to buy it, then I try to find out if it appeared in my scans and why I passed on it.

There are many sectors that I'm not interesting in trading, gold, oil drillers, new drug companies and new internet companies. I can't buy these. They boom for a while, then bust very quickly. I hate having to sell when there's no buyers.

I know there'll be great setups soon. No rush.

Outlook: WU DU. Bullish but not completely convinced as the banks aren't moving higher.

On a seasonal note: Enjoy the holiday period and don't forget to let your family and friends know how grateful you are for their support. Spread some of your trading profits around and you'll get their support quick enough. When you get a few spare minutes, think about how you're going to make next year your best ever.

ASF is here if you want help with your trading/investing.
 
Thanks Peter, appreciate the assistance, support, inspiration and guidance you offer so freely to everyone throughout the year. We are very lucky to have you at ASF.

Wishing you, your family and everyone else here at ASF (too many to mention) a Merry Christmas and a Happy New Year. Enjoy.

Cheers ... debtfree
 
Appreciate the thread Pete,

Do you typically stead clear of the entire materials/energy sector or just certain portions of them listed above?
 
Trading update: Went shopping, but ignored the drastically discounted ones.

GXL: Bought today's second BO-NH at 6.15 using a conditional order at 6.10 limit 6.15.
Initial SL at 5.80, but the exit trigger has already been raised to 5.90.
We're using the shallow consolidation as our setup after the impulsive move from $5 to $6.

 
Last edited:
Trading update: We didn't buy only one item.

AGY: Bought today's BO-HR at 0.265, iSL at 0.23.
Today's BO of a long consolidation pattern would indicate higher prices. Target 0.35.
 
Trading update: General comments about our open trades.

NWH: Considered adding to this trade after seeing the long wick two bars ago (22/12).
Missed out this afternoon as price went higher earlier. Our TS is under this long wick (1.48, +1.6R)

FBU: Price starting to drift lower due to profit taking. Our TS is 6.83 (+1R). I may exit soon to grab the +1.3R profit on this reversal trade and place a re-entry buy order at 7.05-7.10 in case demand suddenly improves.

ABP: Our other REIT that stopped going higher as soon as we bought it. No regrets as we also bought WDC at the same time. Our idea of getting something from this sector worked out well.
Our exit trigger for ABP is 4.05. Price has traded at this level three time now but always closes much higher. We could exit this trade because there's no upward price momentum. I would use this reason to sell if we needed cash for other opportunities.

@kid hustlr I do use a fundamental filter in that I prefer to trade in companies that are producing income with products or services. In these stocks I'm trading the price swings created by insto's and longer term investors. The price movements of mineral explorers, oil/gas drillers, biotech (new drugs) and now internet software companies are driven by dreamers, gamblers and day traders. I apply a tighter exit trigger when trading the boom and bust type stocks.
 
Thanks p2. As usual I agree.

the last comment about the tighter stops especially. I find the 2x and 3x atr exit not quite as effective in my (limited) sample of boom/bust type stocks given how quickly volatility can change. I think this is where the likes of duckman comes into his own in regards to ability to read the story bar by bar
 
EOW 148 update: ASX Momentum Portfolio +132% (91% invested in 5 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +18.2% (past 148 wks)

This weeks sells: FBU (+1.3R)
This weeks buys: GXL, AGY

The market and our portfolio ended the week as they started. Materials are doing the heavy lifting but the banks are not helping.

FBU: Sold today to grab profit and realise some cash.
ABP: Prepared to give it another day or two next week.

Outlook: WU DU. Bullish. Opportunities are out there. We have to find them and trade them.

 
Hi Peter, I've been watching this thread closely. It's influenced me to change my strategy from buy and hold to trading breakouts. I changed the strategy around 1 July and the chart below clearly shows that trading breakouts is working better for me. My portfolio includes legacy bank stocks (25%).

My exits are discretionary and are either higher lows, ATR, sometimes parabolic SAR when they run hard, or 50 day XMA. My trading results would greatly improve if I held my winning trades for longer. There are many I sold way to early eg A2M KDM BIG. I also need to improve my risk management, my heat is currently at 16% and I am risking 1% per trade, therefore I can get about 20 open trades. I'm thinking about moving to 1.5% risk.

Anyway I wanted to thank you for your efforts and all the best for 2018.

Moose





R Result
 
Hi Peter. I was wondering if you ever trade US stocks or is it just ASX stocks? I use trend following for my trading strategy and I've noticed that when the trends run over there they can run hard and consistent for a long time with some stocks. Also I'm very impressed with your returns, well done.
 
@Moose_ Thanks for the compliment. Your first post here is a high quality one and deserves all the "likes". Your equity curve is similar to this thread's in that we profited very well from the recent rally. Prior to that rally, trading break-outs was a frustrating job. This thread has been trading BOs profitably in all market conditions, but only because we are very disciplined with controlling our downside exposure when market conditions are unsuitable. Please ensure you protect your downside within comfortable levels. The market will turn down eventually.

@maglincer Thank you also. US stocks . . . I agree that the potential is there and I've been looking at them for many years. A few stocks trend very nicely, but finding them at the right time from all the rest that don't move quickly and smoothly is very difficult.

Some observations:
Most stocks move with their index (SPY, QQQ, IMW).
Most stocks move with their industry sector. Within each sector there's stocks showing both relative strength and weakness. (Note: The strongest stocks start moving before their sector. The sector lags these stronger stocks. If we're watching the sectors only then we'll miss the best time to buy the strongest stocks.)
Buying at the best time (stock going up at the same time as the sector and market) is very important.
Shorting is readily accessible and this creates "back filling" which makes break-out trading a little more frustrating.

IMO the greatest potential for trading US stocks is a combination long/short portfolio. This requires a very disciplined application of both a long and short trading strategy with a clear overall portfolio risk oversight.
 
I'm writing this note as a lesson to myself. Since this is an educational thread, you get to read it because it may apply to a few of you.

Two weeks ago I missed a few opportunities that with hindsight were very clear on the charts. I missed them because I didn't do my week-end prep work as diligently as I should. For the past month I've been skimming through the week-end reviews without paying proper attention. This is probably due to the great results we've been getting and that makes me feel that I know what's going on in the market.

It's normal that our focus wanes a little at times. We're not computer algos.

Part of my weekend review is the sector indices and I have to admit that I've been skipping them as I thought I knew which ones were hot and which ones were not. What I failed to note at the proper time (a few weeks ago) was the sector that was getting ready to be the next hot one (ie. now).

The sector that's hot right now is metals and mining (XMM, XMJ). The weekly trend has been up since July17 (black arrow). The swing that I didn't prepare for was the current daily rally (blue arrow) that started 18th Dec.



You know the two companies that dominate this index (BHP and RIO). There are others as well (OZL, ILU, IGO). All of these stocks are trending higher right now and I'm not in any of them. While none of these formed the perfect BO pattern that I prefer, they all had a first blue bar which I scan for every day. I didn't take notice of them because I wasn't prepared for the "break-out" in this sector.

Lesson: Pay more attention to the weekly and daily sector charts every weekend, especially the ones that aren't hot now.
 
Trading update: Trade closed.

peter2 said:
AGY: Bought today's BO-HR at 0.265, iSL at 0.23.
Today's BO of a long consolidation pattern would indicate higher prices. Target 0.35.
Click to expand...

AGY: Our momentum trade closed at 0.345, a tick under the prior high and our target.
Result +2.2R (+$2530). One day's delay. then straight to target. Perfect.

 
Trading update: New trade.

DDR: Bought some at the close (3.06) after seeing today's BO-NH. iSL at 2.90
We'll need to buy some more next week. This is a thinly traded stock and this makes it liable to sudden price volatility. Therefore it's not ideal for this thread.

 
EOW 149 update: ASX Momentum Portfolio +140% (74% invested in 4 trades)
Benchmark index: SPAX2F15 (Incl. divs and f credits) +19.3% (past 149 wks)

This weeks sells: ABP (-0.3R), AGY(+2.2R)
This weeks buys: LLC-cfd, DDR

The market gained 1.1% this week while our portfolio gained 3%. Prices are going higher without pausing on many charts. This means there are few of our perfect setups available and other methods are required to create an acceptable RR opportunity (a la tech/a style).

ABP: Sold earlier in the week as price and sector were not going higher.
AGY: Sold to grab quick, above average profit.

Outlook: WU DU. Bullish. I see indications of demand in the larger cap financials (PPT, IFL, BEN, BOQ). This has to be bullish for our market.

Our portfolio heat is a low 3.4% with the capital at risk even lower at 2.3%. In bullish conditions we should have more risk in the market than we have. Monitoring these heat values tells me that I've been a little lax in my prep.



Note: I will only start another five trades in this thread because that will fill this current batch of twenty trades.
 
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