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Absent but Not Out!

Welcome to this newsletter.

First of all, apologies for it being so long since my last newsletter. I have been extremely busy with business, renovating a house, volunteer commitments and personal challenges, and as I am sure you are all aware of the feeling, sometimes somethings just gotta give, and this time unfortunately it has been the newsletters and to a degree my websites free signals along with  the regular update of my public experimental  portfolio….that yes I am still trading.

However, nothing stays the same (as we have seen with the market) so I am back this month and I hope you enjoy this brief but current newsletter.

ATAA Melbourne (Adelaide and Perth in July)

On Thursday 13^th of this month I am speaking at the Melbourne ATAA meeting, if you are interested in attending then posted below is the website link for more details. I hope to see you there and meet you in person if we have not already done so.

I  will be giving a similar presentation to the ones I have given at Newcastle, Sydney and Canberra ATAA chapters, continuing to show traders an alternative to short term trading by using a medium term trend trading approach. Also I will be presenting an updated presentation taking into account the recent markets movements.  I will also make some commentary and tips about the recent interest in dividend versus growth stocks discussion, one that seems to be dominating some of the popular investment articles at the moment.

Here is the link for the ATAA presentation here

http://www.ataa.com.au/display-view/melbourne-thursday-9th-july-at-5-30pm/melbourne-meeting.html

In July I will be speakiung in Adelaide and then Perth, details in the next newsletter.

Review of the market

It has been an interesting time indeed the last 12 months. In that time the All Ords has risen from 4100 to  4729 (as of Friday last week). A rise of around 15% .

It was doing a lot better than that of course before the recent sell off, a correction I would have thought that most people expected, expectation being a dangerous word, probability being a far better mindset to approach trading with.

So, what are the probabilities going forward? Lets start by looking back, then at the present.

Using the market Bull filters I teach in my courses (come along you Melbourne people to ATAA on Thursday and learn them) the market went into strong buy mode early August 2012. There was a brief pullback in November 2012 and then another one in March/April this year. Now we have another pullback and the bull market is all over…or is it?

So far, using the Bull filters, the short term trend is down, but the medium term trend although under pressure, is still up, so positions are being “tightened” (raising of stop loss levels) but core positions are being held for further confirmation of what this market is doing. Until more sell signals are given by the market, it’s hang in there and see. I know that can be hard emotionally but unfortunately it is part of being a good trend trader.

The market is down but not out.

12 months ago the markets were extremely oversold, particularly dividend paying stocks with strong fundamentals. With interest and bond rates so low, commodities falling, and  a lack of faith  in growth stocks we have seen the outstanding  rally in the saftey sectors of finance, health and food stocks, those 3 sectors clearly (in hindsight) being the place to be.

Now we have a battle going on between the sellers and buyers. The market is churning, looking for direction, or most likely, the new “best place” for money to go. This rally of the last 10 months has been thin, not a lot of breadth to it. What I mean by that is that its been dominated by the large cap stocks, the Small Ordinaries and the Emerging companies index have not benefited  at all from this rally, of course there are always a few exceptional stocks that perfrom and hang in there not being stopped out when the market pulls back.

So what now? As always it’s best to let the market tell us what to do. If after this correction the markets continue to grind higher, we may see some rotation of investment money into dividend paying growth stocks. This will take confidence by investors that this bull market is sustainable and not a fly by night rally created by too much stimulus.

Is it all a bubble and therefore will burst?

Or will the upward markets create confidence in the broader economy and will we get some breadth at last in this rally?

One of the hardest things to do when trading, if not the most difficult thing to do is to see “what is” as opposed to what you think or expect to happen. I will tell you something of significant importance that happened recently, it’s a fact, not an opinion, it is a “what is happening in the present moment”

The U.S. markets have made an all time high. As shown in the long term chart of the SP500 below.

I will leave you to ponder that, and what it may mean for global markets, I will continue this discussion next newsletter.

One systems performance

The system I will be discussing at ATAA on Thursday night has returned around 36% p.a. on the Aussie top 500 since the market turned up in August 2012. Not bad for 10 months and considering the ferocity of the recent pull back. Good systems that suit YOU help with the understanding that....

Trend trading is a relatively  easy methodology to understand and implement, its the emotional side of it that creates the difficulty, particularly when markets are swinging around, something else I will cover on Thursday night.

Thanks for reading, if you got this far, I will be back again soon :)

Cheers

Peter

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