What a treat we have for you this week – we’ve got updates on individual stocks in Dave’s Trading Diary, and updates to the market strengths in Oliver Ward’s Strongest Sectors.  And as a special bonus, Oliver has sent his chart on the market PE growth where we currently sit and what to expect.  For those that missed it, Oliver gave a rundown of this approach in his ASX Investor Hour speech, reviewed on this site.   This is seriously not to be missed.

Dave’s Trading Diary

So – the trading diary has been updated, adding some smaller buys using a daily chart to try and catch some of the remaining trends.  Buys have been GMG, BEN, and CWN.  Yes the market is moving slowly, but entry signals are triggering, and so all I can do for now is follow what the market says.  Check out Dave’s Trading Diary right now! 

Are You Investing In The Best Sectors and Stocks?

Also, the strongest sectors have been updated exclusively by great Australian Portfolio Manager Oliver Ward.  Notice SGP has been kicked from the leader board of individual stocks (yes, Oliver sends in the strongest individual stocks too), but CBA and RIO remain on top.  This is an amazing tool, and highly recommended to check it out before making trading decisions.

More To Come

There is a lot more to come guys – the next article will be on Oliver’s PE Growth Chart, where the market price tends to revert back to the mean.  You get to see exactly where we are and what you can expect.  Then on the weekend there is the ASX Market Watch, and more updates to Dave’s Trading Diary as they become available.

Happy Trending!

. Access Your FREE Stock Market Video Course Here! Valued At $97. Or Absolute Beginner? Get The Beginners Course Here.

I need to make a decision about the direction of ASX Market Watch, and what better way to make it than ask the most important people of all – YOU!  

What is that decision? 

Well, from this point I can either do one of two things (alas, with many commitments I cannot do both!)  Here are the choices:

1:   I can continue doing the trend directions of the Top 20 stocks each week (under Free Research On Australian Stock Trends) or;

2:   I can open my trading diary up to the general public, showing any new trades as they occur, the reasons behind them and the back-tested probability of the stock.

Of course the free trading and investment course, wealth building articles, and Oliver Ward’s strongest sectors will remain as is.

So if you have a preference of either two please swing me an email at dave@asxmarketwatch.com - I would love to hear from you!  Or if you have any other suggestions feel free to include those too.  I’m always open to suggestions!

All the best,

Dave

. Access Your FREE Stock Market Video Course Here! Valued At $97. Or Absolute Beginner? Get The Beginners Course Here.

By Dave McLachlan

This month I have learned a valuable lesson.  Often the market is such a simple place to go to, and yet because we are human we tend to make it complicated.  And the more complicated we make it, the better we feel about ourselves. 

But the only thing wrong with this scenario is that the best trading plans are simple ones – and the more complicated they are, the more likely it is we are losing money because of it. 

So this month I went back in time and back-tested the Top 20 ASX stocks properly.  I got their stats – like which tools they work best with, their Win Percentage and their Profit to Loss Ratios over 20 to 30 years.  And every time I update them I will include the stats for you to see also.

This does two things – one you get to find out which tools work best with that stock.  You may have heard it and it is true that different stocks will have different “personalities”.  They are not all created equal, and they will respond better to some rules than others.  So you get to find this out.

The second thing is that you get to know with a higher probability what to expect when you make a trade.  For example, if your backtesting yields a 60% win percentage, you can expect that 4 out of 10 of your trades might be losing trades.  You won’t be disappointed when a loss happens – you will know it is part of the game and part of your expectancy, all moving along nicely as it should.

Backtesting can do wonders for your psychology and your trading, especially if you are still in the “Trader’s Apprentice” stage.

Trend Changes For February 2010

So which stocks have updated their medium term trend direction this week?  We have:

ANZ, BHP, MQG, QBE, WES, CSL and WDC.

CSL and WDC have changed direction, others have simply been updated after my backtesting found they worked better with certain rules.  Go check them out!  And if you want to swing me a line, feel free: dave@asxmarketwatch.com .

Happy Trending!

Dave McLachlan

. Access Your FREE Stock Market Video Course Here! Valued At $97. Or Absolute Beginner? Get The Beginners Course Here.

This week four more stocks in the Top 21 confirmed medium term down trends.  This brings the ratio of up and down stocks to 7:14, or 66% of stocks pointing down. 

And it is a mix heavily weighted towards financials, with AMP, ANZ, and QBE all falling in line with the overall market.  BHP was the only different sector involved this week, closing twice below its uptrend line to make the only down trend change for the materials sector.

Amazingly, Suncorp (SUN) remains in the strongest up trend, while others are hanging on, and only just.

Many people are calling a bullish run in 2010, but you can’t ignore the trend – especially a stronger trend like that of a weekly chart.  And right now, the majority are pointing down.

. Access Your FREE Stock Market Video Course Here! Valued At $97. Or Absolute Beginner? Get The Beginners Course Here.

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Commentary:

Westpac Bank has resumed its medium term up trend, closing above the previous peak at $26.17.  The up trend would be considered wrong with a close below $24.00 – half way between the recent continuation pattern.

Using  Dow Theory combined with a close above the 12th weekly bar (after a protracted down trend to avoid whipsaws), WBC has a brilliant 76% win percentage, and a 3 to 1 profit to loss ratio.

Click the chart below to enlarge:

Previous Trend Changes:

    – November 2009, Dow Theory Exit at $24.15

. Access Your FREE Stock Market Video Course Here! Valued At $97. Or Absolute Beginner? Get The Beginners Course Here.