Oil making us boil.
10/11/2004
The market is most definitely going crazy. Contrary to my bearishness the FTSE has broken 4700 (tentatively). Why? No point ex-post facto rationalizing it. When I don't like that the market is doing, I do not bet against it - the market is always right of course. Instead, I get jittery - follow the market direction, but become a 'weak holder'.
Weak Holder
A weak holder is someone who gets out of a position at the first sign of trouble. That for me is usually defined by the relative price low of the stock to its low point over the past 1, 2 or 3 days.
Weekly Charts
It is when I look at the FTSE 100 weekly price charts with technical analysis indicators that I see the real strength behind the FTSE. On such a longer term perspective you see the huge weakness impact post the 2000 sell-off, the over-extension to the downside and the first time technical indicators such as the MACD since then are rising from an oversold position.
That said, I do not take long-term positions. The rise in the FTSE since August has been very strong. My view is an astute trader would balance long positions with short ones to be net neutral. You would look for momentum strength and momentum weakness stocks and go long and short respectively. For instance, Man is presently showing some upward momentum, as is BHP Billiton. Such position would be 'hedged' by being short AstraZeneca, J Sainsburt and Liberty in the short-term.
The satisfaction of such a balanced approach is the if the stocks continue rising, you have your longs. If however, as my jitters kick in, they fall, you have your shorts.
You can meet me at IX Expo on October 22/23. Drop me an email with your address to alpesh@tradermind.com if you would like a free multi-media CDROM on 'Investing Better' posted to you.
By the way if you spreadbet and trade commodities then you will want to know hat Silver is showing great strength and traders appear to be targeting the April high. Platinum is not following through.
For the FSTE 250, those of you who followed my view on Paladin Resources are sitting pretty. Rangold's trend is compelling. Burren Energy, which I mention a few weeks back has given you a whopper of a return (you can post me my commission!). It is off up again.
Value-Growth
The stocks on my radar which meet my proprietary criteria on value and growth measuring price to earnings growth, sales, profits, and numerous other factors includes not much change from last week. Hilton now looks to have turned in the short-term at least. Vp remains on the radar, Brandon Hire is there and looks good. BSS too is showing price growth, company growth and value.
Crazy Small Stock
These are high risk volatile stocks which could move sharply higher or move sharply lower in my view, but will almost certainly not stand still. Names on the radar include Nelson Resources, RAB Capital, Petroceltic International
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