Chart Watch 2009-03-04

XAO - All Ordinaries

The first decline in Australia's GDP for eight years was reported today with a fall 0.5 per cent in the December quarter.  The All Ordinaries followed to close at a five and a half year low to 3,125.90 or 1.43%.

Fears of recession took hold of traders with the next 6 months looking a lot gloomy, and all sectors took a hit. 

The world markets are anticipating another Chinese stimulus package to be announced that could help limit the length and depth of the recession in the

industrialized world.

LST – Lionsel
LST came up on my TAZ scan yesterday and today a confirmation candle formed.  Volume is too light for me to take a position, and like all bullish trades, against the market timing.

1. Pulled back to Traders Action Zone

2. Respected support and 50% Fib
3. ADX above 25 indicating start of a trend

4. First pullback

Quick Trends

Symbol	Short Term (10MA)	Medium Term (50MA)	Long Term (200EMA)
XAO	Down	Neutral	Down
XDJ	Down	Down	Down
XEJ	Down	Neutral	Down
XFJ	Down	Down	Down
XHJ	Down	Up	Neutral
XIJ	Down	Up	Down
XMJ	Down	Neutral	Down
XTJ	Down	Down	Down
XUJ	Down	Down	Down

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Chart Watch 2009-03-01

XAO - All Ordinaries



Three trading days in a row closing below 3300, with multiple attempts to break through. All trends on the XAO still pointing down.

WOW - Woolworths



Wow indeed. Late last week I highlighted Woolworths ... made the critical mistake of not checking the economic calendar. Earnings come out below expectations and gapped down well under my stop loss (open $26.9). Take the hit on this one.

JBH - JB Hi-Fi



JBH has created a throwback patten. "A throwback is simply a return to the point of breakout on an upward break ... If the breakout is true, price should hit and then bounce off the point of breakout and then surpass the point at which momentum waned and price turned".

Some rules for trading the throwback

1. Return to point support, trend line or pivot point

2. Oversold on your favorite indicator

3. Pullback to a major moving average, such as the 30, 50, or 200 day.

So how as JBH played out so far:
* Resistance was $10.30 (5/11/2008) and $10.26 (7/01/2009)
* 17% gain on 10/02/2009 closing at $10.80 on extremely high volume
* Pullback to support closing $10.29 and just below 200EMA on 25/02/2009
* RSI(2) was oversold on pullback to support (25/02/2009)
* Stock pulled back into the traders action zone

See how this stock plays out. Stop loss ideas include $10.26 (support) or take low from swing at $10.05.

From swing-trade-stocks "Forget buying breakouts. Step away from the crowd. Wait for the breakout buyers to get scared and sell. This sets up the pullback that you can get into with low risk, high odds, and a profitable reward."

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Chart Watch 2009-02-06

BRM - Brockman Resources





A recent trade, which I am still holding, is Brockman Resources. Explaining my reasons
1. Mid term the stock as come of a strong base, between October and start of January
2. A strong short term break out occurred on strong volume to a high of $1.17 (16th Jan)
3. Close on 15th and 16th both closed below 50MA
4. Stock pulled back on low volume back to the 38.2% Fib, and into the TAZ
5. GMMA show a the short term averages breaking above the long term.

I bought on the high of the 29th Jan, @ $0.90 with a stop at $0.84.
My target is the 50MA, and I have moved my stop to above break event at $0.95, below the low of the 3rd of February.

Not sure how I'll play this Monday. A lot of volume yesterday all at $1.00. If signs of this stronger buyer/seller at this level leaving I may decide to exit, to try and lock in a good profit. I'll will be watching this one intrad day early next week for an exit sign. I may end up missing an up-trend that is starting, but a profit is a profit in a any, especially a bear, market.

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Swing Setups

I’ve been doing a lot of reading on swing trading, especially the blogs of Trader Mike and Taz Trader. Taz Trader’s strategy really intrigued me especially about the area he calls the TAZ.

“The Traders Action Zone (TAZ) is a buy and sell zone on a chart that swing traders can use to identify possible reversals in a stock. This is just simply "area" that we look at to see if a stock that is in a strong uptrend, after pulling back to this area, will likely reverse.” TAZ

This area is located between the 10 sma and the 30 ema. For entry into a stock we are looking for specific pattern once in this area. We are looking for the first candle makes a low, the second candle makes a lower low, and the third candle makes a higher low. This will be clearer once you see the charts below.

I added this scan to the program I’m developing, Market Ninja, and came up with following charts. A new trailing stop needs to be developed as TAZ's exit system wont work for the selected stocks. Initially I'll just put the stop loss below lowest of the three setup candles.

This is just a learning exercise, so hopefully I have the setups correct. I think DMX might be the closest to the setup required as the higher low was below the 10MA. CIR had a close below the 30EMA, not sure if that counts that one out. TAZ Trader does mention he likes the pullback to be closer to the 30EMA and this was the closest I could find. Also be aware some of these stocks have low volume, and after doing some back testing don't perform as well as high volume opportunities, but we'll follow the trades anyway.

COZIRON RESOURCES LIMITED (CZR)



Last close at $0.80, Stop loss $0.74

DOLOMATRIX INTERNATIONAL LIMITED (DMX)



Last Close $1.17, Stop loss $1.08

KIP MCGRATH EDUCATION CENTRES LIMITED (KME)



Last Close $1.42, Stop Loss $1.37.

CIRCADIAN TECHNOLOGIES LIMITED (CIR)



This one has a slightly different setup, but we'll follow it anyway.
Last Close $1.70 , Stop Loss $1.66

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