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A prayer before Top40 explodes

 

Our Fed, Who art in Washington, Yellen be thy name, Thy printing come, Thy will be done by Ben as it is with Janet, Give us this day our daily billion, and increase our debts, As we bail out our debtors, And lead us not into inflation, But deliver us from down markets, For thine is the printing, the bubble and the euphoria, Forever till taper. Amen

Hi Pilot,

 

Great thread, been following it since you started it.

 

I was wondering how you determine in which way the trend is heading? Is it through technical analysis?

 

Hi pilot thanks for the great advise. I'm sure most of us would like to know this but you keep talking about you triggers and indicators. Would you mind giving your break down of your ticks/rules that a trade needs to make for you to consider it?<br /><br />Thank in advance. 😄

 

Morning Gents

 

Just to give you bit of background.

 

I have been investing since 1994 and was fascinated with the Stock Exchange (and I still am). I have a strong maths background and wanted to figure out why and when to buy shares. Warren Buffet , had me hooked on value investing by 2005, but I was a big fan of technical analysis. So since 2006 I backed only value shares and used technical analysis to determine good entry points. I started using SSF in 2008 to increase my exposure, but at the end of 2008 and beginning of 2009 I lost everything. I was holding shares like BRN, OML, SHF and TKG. In those days it was the best value I could find on the market, and had I held them till today, I would have done well. But if there is panic and fear in the market, you can hold the best of shares, they will get smash. And when you think its the bottom.... they get smashed some more. 19 and 20 February 2009 was the end for me when OML dropped 7,3% and 5,8% in succession, after dropping from my R8-00 entry to R7-00 before the 19th. Not happy times, to say the least.

 

Now on to the better news. The lessons I learned from this experience, has changed my view on the way the market is moving. Fundamentals wasn't moving it, in the short term anyway. So my interest changed to reading up everything on market cycles and trends, which shares do best in which part of the cycle. It is all good to know this, but when is the start and when is the beginning and when do the certain sector start moving. It was very vague. And that took me right back to my Technical analysis. Three years ago I was full time into technical analysis and tried about 100 different technical indicators. Using them in different ways, and added % chance of success on each of them. Most of them don't work on their own effectively, but I had about 15 that worked the best.

 

The last year my focus swung to what happens right before an uptrend or downtrend and I found that certain (modified) indicators do the same thing nearly every time a new trend starts (about 85% success). In March this year I ran preliminary data on Jan, Feb and March of 2015 and came to the astonishing conclusion, of doing 67%, 80% and 55% in each of those months (with gearing of course). Around 10-20% without gearing.

 

My next step was to prove it with real trading scenarios and thus the thread, I started here on sharechat. I am in the process of leaving my current job, and to pursue trading shares full time. 

 

If someone can come up with a descent 8 digit amount for my model, I would sell it.   But I don't want to jeopardise the sale of my model by giving all the information that I have. 

 

 

I do use RSI indicators, Divergence indicators (I developed myself), STS indicators (modified), MFI indicator (modified), sma's and wma's. Most of these indicators values have been changed to give smoother and more accurate trigger points. Some of the short term Indicators need to do the same thing at the same time, to validate a trend changes, but then I need to see a trend break on the RSI indicators as well. (Not on the graph). I would sometimes say a trend has broken, but it has broken on the RSI and not on the graph. 

 

Lastly, I would go to the graph, and especially with big formation breaks, it confirms the new trend and the break. Then a new trend has started (most of the time)

 

I know I'm not giving you a lot of information, but hope this will help. 

 

In the meantime, I will be posting on here, to share my view. Thanks to everyone for all the interest!

 

Happy Trading

 

 

Pilot

Attached is tommorrow's shares. 4 New shares showing bull trend entries and changes to some of todays missed trades.

The traded shares today did well with the 2 x one star Long positions (BAT + INL), being weakish, but is in the uptrend.

 

Heaven knows why I went for R66-00 on IMP today (should have been R67-30, where top 3 day resistance was)

Might have dozed off  Anyway, all traded positions are in trend.

 

JDG is a scary long, after its hard push, but has entered a new uptrend. (Not sure how fast it will move or for how long)

 

 

hey A, where do you get your seasonal info from? thx.

Learning the hard way by trading against it through the years, but mostly from UBS and their cycles!

 

Best is to go back and study historical charts (don't always follow the same pattern but more or less), other key factors includes earnings season months, ECB meeting dates, futures close-out, Santa rallies (triple witching), seasonal bearish/bullish months etc

 

Jan  - Earning season month (first half bearish..second bullish)

Feb - Bullish but if Jan bullish followed by an uptrend then could be a top month (refer to previous years)

March - Bearish first half but futures close-out month so rally latter part

April - Earning season month (first half bearish..second bullish)

May - Tricky, sometimes bullish sometimes bearish but known as a very zig zag month

June - Mostly bearish but futures close-out month, after it is bullish...

July - Earning season month (first half bearish..second bullish)

August - Depend on bullmarket or bearmarket, if bull then bullish, if bear then bearish

September - Futures close-out month, first half bullish, second bearish

October - Earning season month (first half bearish..second bullish), also called month of bottoms

November - Bearish

December - First half bearish, latter bullish (Santa rally)

 

BUT...all of this must fit in with the tape, pattern and trend it is busy with!

 

Again, not set in stone but a good overall guideline!

 

A

If Advanced Health (AVL) can execute to plan they look set to significantly benefit from a potential secular shift in the healthcare industry.  In an attempt to reduce costs the Health Insurance providers (Discovery Health leading the charge) are incentivizing specialist to perform more surgeries at day clinics. South Africa is only has 45 day clinics vs 245 private hospitals so there is plenty of room for growth.

 

AVL is raising R100mln to triple the number of Day clinics they operate. If mgmt can execute this stock could be a 5 bagger over the net 5 years.

 

Nevertheless the 100c/shr listing price looks reasonable. 

 

Here are some of my thoughts and numbers http://wp.me/p3RKee-6x . 

 

 

Good analysis although you may want to spend a bit of time doing a bit more risk analysis. The risks to this business are substantial.

Firstly, regulatory risk - as you know the private sector is under scrutiny and prices could soon be regulated (read WILL be regulate). Now this as you say could well play into the hands of Advanced Health. Thing is though, in the words of Warren Buffet, you need a moat and I don't see how these guys will compete against the like of the big groups. Surely if the trend begins to push patients from hospitals into day units the big boys are not going to sit around and watch it happen? If this market is viable, mark my words, you will se aggressive expansion of the big hospital groups into it. Advanced Health could get bought out if they have enough mass by then, or they will be relegated to minor leagues.

 

My question is, if they are so brilliant at what they do, why is it they have only 2-3 clinics in Oz?

 

ps, to be honest, I like this sector and possible macrotrend. I've seen it personally in other parts of the world and SA is slow to the crease however I'm not convinced this company is the right one to take advantage of it.

 

Just my 2c..

Hi LWVi,

 

There are numerous options here:

 

1) TRADING IN YOUR PERSONAL CAPACITY

 

Pros

- Any profits/losses can be added to/deducted from your other income (salary etc) under normal circumstances (there are exceptions if make recurring losses, ie. ringfencing if you're taxed at the maximum marginal rate, but that becomes very detailed)

- Cheaper structure than Trust or Company

 

Cons

- If you're a director, hold a bond or have any other "risks" associated with your personal capacity, your portfolio is at risk to your creditors

- Forms part of your estate and when you die, would be subject to estate duty

- Can become quite tricky on your personal tax, and will probably lead to quite a few tax queries in the future in the case of losses

- Comes administrative, unless an accountant deals with the secretarial issues

 

2) COMPANY

 

Pros

- Easily accessible for other investors as you mentioned

- Can be sold quite easily (sell the shares of the company)

- Lower effective tax rate than marginal individual rate of 40% (38.80% taking into account profits after dividends tax distributed)

- Tax affairs are easy to deal with (for accountants anyway)

- Company continues after your death (see Cons - shares)

 

Cons

- May require an audit or independent review (unless you are the sole director and hold the shares in your personal capacity, and the Public Interest Score in terms of the Companies Act is low enough, then it would just be a compilation) - which can become costly (ie. more expensive structure)

- Shares will fall into your personal estate and are not protected (same as for individual capacity) unless the shares are held in trust - which will then definitely require at least an independent review of the financial statements (costly)

 

3) TRUST

 

Pros

- Assets are protected against your creditors if you maintain the trust structure properly

- Assets don't form part of your estate (better tax planning)

- Profits can be distributed to the beneficiaries and taxed in their capacities (ie. at lower rates), unless section 7 is triggered (don't want to go into the detail here, it can become lengthy)

- Tax affairs are fairly simple to deal with (by an accountant anyway)

- Cheaper than a company structure

- No audit required unless it is required in terms of the trust deed

 

 

Cons

- Not as easy for other investors to enter as you'd have to amend the trust deed and create very specific beneficiary groups - although if you have other investors interested you can start a company and dispose of the shares in terms of group rules (a simple section 42 transaction could then transfer the portfolio into a company structure, with the company's shares held in the trust)

- Can be slightly administrative (secretarial records, trustees, resolutions etc), but much less so than with a company structure

- New legislation regarding the capital gains in trusts expected soon, and it is expected to be onerous amendments

- If profits are not distributed, it is taxed in the trust at 40%, but that's the same as the individuals' maximum marginal rate.

 

 

Hope that helps. If you want further detail you could go see an accountant (CA) or attorney on the above.

 

From the info you've supplied, I would suggest a trust as this would be the least costly whilst protecting your assets.

Money Management (when trading) is simple:

Do not expose more than 2 – 3% of your trading on any given trade. So if your trade flops, do not lose more than the 2-3%.

 

The more difficult part is your trading strategy (regime and discipline). In theory, using the above Money Management strategy, will allow you to never lose all of your trading capital, BUT there will come a time when the money remaining (after many losing trades with little to no winning trades), you cannot physically adhere to the Money Management strategy anymore. So the goal is to balance your preservation strategy for money management with your growth strategy (trading strategy) for wining trades. It is a double-sided ethos.

 

Example: R100k trading account. Do not risk more than 2% per trade, thus a trade may never incur a loss in excess of R2k. This leaves you with trading a single Mini or 2 x Micro contract(s). Your trading strategy will be better if you allow a couple of 100 points leeway, so now you are left with trading 2 Micro contracts on ALSI (assuming IG) of which you will not risk / incur more than 500 points loss (a healthy margin in current market if you ask me).

 

If it is not clear, money management (how much and at what risk) is one side of the formula, the other is your actual trading strategy(when, how long and in which direction).

 

And also I know it's a broad question and many opinions, but what's the best way to money manage?

My 5c ... this volatility could continue into next week ... then we rally into the 3rd week of Aug for another parachute jump.

 

Remember ... it's only 5c and by the time you read this it will only be worth 4.892c and falling

scalp traders using the crossover(1min) system ..this is how this morning action(at time of post) should read/interpret for you! 

 

short the open with a break of the 100ma and triple ema crossover confirmation 8:58am(tight stops in place)

close position with ema crossover 45850-just under 100pip.....remain out of longs until ema's give your long entry signal

(it didn't though, did it )

firstly, there was no confirmation crossover of 13ema over the 62ema and secondly a classic pin bar reversal(9.25am) off/on 100ma

-notice how price met resistance on that 100ma

 

100ma isn't generally used/applied in the "standard" subset rules, i've added it only as a extra trend support/resistance indicator -works well!

if using rsi, recommend a "9" setting. personally imo, heart of the system lies in the ema's

simple and very profitable once you have the feel of it

 

go get 'em!

Hi all<br /><br />Time for a stats update!<br /><br />292 pips for the day....single contracts.<br /><br />Since 18 Mar 14 the following:<br /><br />From 853 trades<br /><br />Won 19 478 pips with mainly single contracts<br /><br />And<br /><br />Lost 26 431 pips<br /><br />Leaving me with an overall loss of 6 954 pips in red. <br /><br />If I stopped after my 1st trade of the day....would only have been 245 pips in red.<br /><br />Cumulative up to 5th trade of day.....1 467 pips in red<br /><br />Thereafter major jump up. <br /><br />Moral of story....for me.....do not over trade on days where I should have stopped after 2nd bad trade..<br /><br />But with having made many trades some learning also took place.<br /><br />Goal for the fin year still to break-even.<br /><br />Happy trading all!<br /><br /><br /><br /><br /><br /><br /><br /><br /> <br /><br />

If you don’t understand why you are in a trade, you won’t understand when it is the right time to sell, which means you will only sell when the price action scares you. Most of the time when price action scares you, it is a buying opportunity, not a sell indicator. - Jack Schwager

I see PNC announced with great fanfare a repurchase of their own stock. 

 

1. Management dumped their own shares prior to announcing the arrest of one of their directors to the market.  When they stated that they didn't know what the arrest was for, and delayed announcing the arrest to the market by almost 3 weeks, one can assume that they were lying, since the arresting officer had to make the reasons for arrest known.  So own wealth protection was important for these guys

 

2. Now they are using shareholder funds to prop up their shareprice! If it wasn't for their efforts in stabilising the price, surely the stock would be at lower levels.  Except for the small amount of stock bought by the fourie trio, the rest of the management has shown no faith in commiting own capital into the business. 

 

Anycase, tomorrow will be telling when Tshivhase appears in court, hopefully a whole nest of cockroaches gets opened

closed  SHP short @R140.00 from R190.00  that's a 26% capital drop...ON cfds its a 571% gain!!  Plus interest teceived for last 4 months!!

Hi guys

 

I think SA's tourism and leisure industries are in for a boom. Or perhaps not a boom but definitely a sure growth period in the medium term.

I work in the airline industry and I've got a good degree of what the view points and strategies are for the time to come. Both Cape Town and Johannesburg are at the top of the list with regard to current targets to expand Longhaul frequencies and aircraft size. In short, more people will be flying here.

Here's why:

 

In recent time South Africa has spent some serious time in the spotlight post football world cup and also the passing of Mr Mandela putting us more on the map. CPT was also recently voted as no1 destination to travel to in 2014 by the NY Times.

Then there's looking at the state of the Rand, the cost for the international holiday maker (especially from the recovering European countries) is cheap as chips!

AND since overseas is more expensive for us, locals will also be more inclined to holiday in South Africa rather!

 

What I'm describing isn't a flash in the pan occurance like the FIFA world cup was with a flock of people to SA for a few weeks. I'm talking about a sustained period of SA becoming a ever popular destination for traveling for Americans and Europeans and also us.

 

 

To then bring things back to what matters - making money of this situation. Where is best to take advantage of this from a investment point of view? Specifically in shares.

Here are my thoughts but I'd love to hear other views.

 

SUI - Sun International - Both hotel and gambling industry. Owns hotels in western cape, including garden route, and obviously Sun City up north.

TSH - Tsogo Holdings - Also hotel and casino. Quite diversified geographically but mainly gauteng and also kwazulu natal. 

COM - Comair - This is the only SA airline I would touch. Code share with Kulula and UK management influence keeps this one attractive.

 

I'm sure there are a few more that would benefit both directly and indirectly.

 

 

 

 

Told you guys to accumulate on weakness in the 50s and then the 60s.

Now after a few months of slumber...

 

 

Like I said..BOOM!

AWA Arrow A 3.85% 9.31% BTI Bats 6.81% 13.51% CML Coronat 16.50% 7.99% FFA Fortressa 8.41% 9.84% MPC Mr Price 10.89% 10.16% RIN Redefintl 4.14% 14.18% SAC Sa Corp 10.40% 18.77% VOD Vodacom -11.83% 11.57% ZED Zeder -5.56% 4.67%

I don't get it; the market's going up and no one seems to be happy!

 

Today's price action is BEAUTIFUL! It's a welcome relief. Let's celebrate it.

 

Happy trading.