So Much Uncertainty

That darn dollar and Alan Greenspan adding uncertainty to the market and keeping the timid players with the big swinging … wallets on the sidelines. Nevertheless we hunt and search and this is what I have found in the recesses.

Value-growth

Looking at what is on my radar in terms of companies with strong price trends, good yields, increasing profits and increasing turnover and price-earnings-growth suggesting the price does not reflect value.

On my radar this week include :

Again housebuilders – Persimmon – despite interest rates rising. It is a bit toppy and do not be surprised about a delayed reaction. Presently, given the strong uptrend, my view is as long as it continues (ie depending on your time frame does not make a 3 or 4 day new low, then continue with things).

Interestingly Prudential pops up. Usually a major stock does not appear on the Value-Growth criteria as they are so highly bid up by fund managers crashing in. Watch for a break up of resistance at 514p. Any fall below 470p is a strong indication the trend is over.

Bellway has come off a bit as everyone re-evaluates and treads water to see what the effect on stocks of rate changes will be. So look for a break above 700p before being premature. Nothing is holding ROK Property back and I mentioned them a month ago, since when you would have had healthy returns.

CareUK I mentioned a couple of months ago since when you would be up 20%. Watch Enterprise Inns, again a lot of strength. It should not make a 10 day low if the current momentum lasts for a holder looking for a 10% gain in a month. If I am wrong losses should be limited to 5%.

Wimpey up there, but unless I see some clear move up I would not be interested because the price is just too volatile on a daily basis.

Peacock Group looks ready to make an ascent north after a few months of rest and relaxation. The obvious major target has to be 240p high of November. Taylor Woodrow is up there too, but like Wimpey, the price is too volatile.

Volatile Prices

Let me explain what I mean by volatile or spikey prices. You know when you enter a position and you get ?stopped out? because the price falls, hits your stop-loss exit level. But then it turns around and rises. This might happen several times if you are persistent and each time you lose money. How do you avoid it?

Setting wider stop losses increases risk. Changing your upside target to compensate for the additional risk of a wider stop loss is one thing, but inherent in that would be extending the trading time frame for the likelihood of the upside target to be hit to be maintained. You may not want to take a longer term view on the stock.

So what do you do? My view: stay clear of spikey priced stocks. I know it sounds whimpish, but it works.