Dave’s Trading Diary: “Sell In May” Moving Closer But Banks Moving Up
This excerpt from the trading diary is for educational purposes only and is not to be interpreted as trading or investment advice. See Terms Of Use here.
The old saying “Sell In May and Go Away” believes that stocks generally under perform during the months of May to October each year. For the last two years that saying has proved more than adequate, and we are now coming up to May again.
Will May 2012 prove to be another pitfall for investors? Personally, I don’t think so. It might get volatile and we might see a few larger swings, but personally I don’t think it will be as bad as the last two years. Of course, that is just an opinion. In reality, all we can do is take entry signals as they emerge (as long as the overall market continues sideways or up), and then take the exit signals as they evolve. Opinions really don’t matter, but they are fun to have and make for good conversation 
Last week we called a few banking stocks for entry signals: ANZ, WBC, CBA coming close. They are holding up and performing well currently. A quick look at the strongest sectors report will show you that the Financials sector is outperforming the overall market as well.
This Market Separates The Grown-Ups From The Children
This market is truly a great test of a trading system. Some stocks are rocketing upwards, others are tanking severely downwards. If you were ever going to test a stock market theory to put it through its paces, it would be now.
This week a raft of stocks were stopped out in the trading diary. BTA, MTU, COF and SWM. And they didn’t just casually trail down to their exit level, no! Almost all of them dropped over 10% in a day to their stop loss. Of course, these moves are just a tiny fraction of the overall portfolio. And that is why we use a Stop Loss! To protect us when things go bad. As they say, look after the downside, and the upside can take care of itself.
Buy Signals In The Trading Diary
Some shorter term plays are evolving now, in the form of continuation patterns. Complete Course members will have a good handle on how to trade with these patterns. SEK (Industrials), SHL (Health Care), and ACR (Health Care) are all evolving these patterns.
Regular medium term setups are evolving too. AGK, ALZ, ASZ. BWP, CCL, COH and SAI, TGR and UNS.
Others are very close to new entry signals, so I am keeping an eye on: CTX, DUE, GPT, PXS.
That’s quite a list! Which is one of the reasons I am sceptical about dramatic falls in May 2o12.
New Feature For The Trading Diary
I am looking into including charts for all the current trading diary holdings as well as setups. It would be quite a task to include this, but if you think it would be worthwhile I could get started on it and see how it goes.
Have a great week everyone, happy trending!
Dave McLachlan
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April 29, 2012
Tags: ASX, learn to trade, online trading, technical analysis, trading diary Posted in: Dave's Trading Diary
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