Compass Resources, CMR

Compass Resources (CMR) is a favourite company of mine. I've been trading this for a while now and have been in and out a few times. Huntleys newsletters have been talking CMR up a lot lately, and investors are antcipating news of recent drill results and hopefully further confirmation of uranium supplies.

The current chart development is very encouraging forming an ascending triangle.

The citeria set out for a ascending triangle are as follows
The stock should be in an established up trend. 'YES'
At least 2 reaction highs should form the top horizontal line. 'NOT YET'
At least 2 lower reaction lows should form the ascending trendline. 'YES'
Volume usually contracts. 'YES'

As you can see from the checklist above we are waiting for a second test of the ascending trend line. This is an important phase to complete before hopefully confirming an ascending triangle.

Once the horizontal trend line is broken, this line then becomes support.

A good entry point for CMR after confirming the ascending trend line would be a close above the horizontal trend line ($5.74). We would then have a stop loss established as our ascending trendline. Aggressive traders might enter after the second confirmation of the ascending trendline, and this is the re-entry I will be looking at.

Once the breakout has occurred, the price projection is found by measuring the widest distance of the pattern and applying it to the resistance breakout ($5.74-$5.14 = $0.60, target $5.74 + $0.60 = 6.34).

I will follow the progress next week, happy trading.

Disclaimer: No trade setup is 100%, and above is my views of the current setup.

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Important Reading 2007-01-05

Kitco has an important article to read if you hold shares that participate in the copper market. Included is some interesting technical analysis.

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Chart Watch 2007-01-04

Charter Hall (CHC)
This is the first post about CHC (close $2.25)
Count Back Line = $2.17



Easter Star Gas (ESG)
This is the first post about ESG (close $0.32)
Count Back Line = $0.275



Riversdale Min (RIV)
This is the first post about RIV (close $2.20)
Count Back Line = $2.07



Sunland Group (SDG)
This is the first post about SDG (close $3.66)
Count Back Line = $3.53

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Count Back Line

The Count Back Line is a indicator I currently use as a stop loss for my trades. After using the Market Ninja software and finding a stock that fits the Guppy MMA indicator, I plot count back lines to my chart to see if this stock is a candidate to use this as a stop loss. Some stocks that fit the Guppy MMA are still too volatile for this trading strategy and I find that back fitting the count back line indicator to a chart helps produce reliable trades.

I'm trying to find stocks that haven't broken the count back line for at least 2 months. These stocks are in a strong uptrend as defined by the Guppy MMA and are not choppy, causing me to be stopped out.

Below is an example of Riversdale Mining Limited (ASX:RIV).



The indicator at 2006-09-13 shows the last time the stock close below the count back line. This chart demonstrates an excellent trend trading opportunity.

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Guppy MMA

Guppy MMA are extremely important to my trading style. For the past 6 months I have been trading using Daryl Guppy's 'Trend Trading' technique to trade the ASX. Multiple Moving Averages are important in this strategy to determine the trend of a stock.

Gupp MMA consist of 2 groups of EMA's. The first group know as the 'short term' group consist of 3, 5, 8, 10, 12 and 15 day EMA's. The second group consist of 30, 35, 40, 45, 50 and 60 day EMA's.

There are numerous ways to trade this type indicator but I only use to to determine the trend of a stock. I find this the fastest way to determine if a stock is a potential trend trade without requiring me to draw trend lines.

Below is an example of Riversdale Mining Limited (ASX:RIV)



The current aim of the Market Ninja software is to scan the entire market for this type of situation. My current scan looks for any stock with a separation of the 15MA and 30MA of 4% or more with volume greater than 300,000. I'm currently alternating between stocks above 50c and below to try and determine what I find as the best opportunity to trade.

In later posts I will discuss the count back line that I also plot before determining the strength of the trend.

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First Post

Market Ninja is a commentary of the development of my trading software, along with discussions about areas of trading, specifically technical analysis, to help the readers understand the aim of the software along with the techniques of trading I find important.

My strategy is simple and easy to follow, but it isn't mechanical and requires the trader to have a simple understanding of technical analysis. The most useful tool I have is the Market Ninja software I am developing. Although there are many technical analysis solutions available, I developed Market Ninja to suit my trading strategy.

The initial aim of Market Ninja is to download free end of day data, apply an array of indicators to each stock and provide me with a list of stocks that have potential to fit my criteria for a trade. Market Ninja performs this task differently to most scanning software available that I have trialled, which will be discussed in later posts.

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