Stocks of interest

There are many stocks of interest appearing on the ASX at the moment.

Stocks meeting the criteria of our RCR technique include BPT, NCM, PPT and BHP (we discuss this technique in our book, Simple Tactics, Profitable Trading).

Stocks making solid and easily identifiable chart patterns include FLT, WES, WPL and SYR.

We take a closer look at SYR in this post because it is an example of taking the easy path in trading by applying our Two Best Case Scenarios, as outlined in our book, Simple Tactics, Profitable Trading

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Time to be cautious

We start with the S & P 500 in the U.S. It is in a trend channel, heading upwards, which is a good sign, but it is currently flirting with the support line. It is time to be cautious and to watch what happens here. A break and close below support will be a clear signal to sell for many traders. While a break below the support of the SP500 is not catastrophic, the reasons behind the negative mood that causes the downside break might well be catastrophic. What I am talking about here is Greece. The Greek Drama and now, it appears the Spanish Drama have the potential to crucify global markets.

We should also be looking at the SSEC chart - the Shanghai Index so that we can get a feel for what is going on in China. The SSEC is making a double bottom....but will the bottom hold? Again it is dependant upon the European situation. Europe is China's largest customer. If Europe hits the wall completely (some might say it already has), then China's exports will slow. If they slow, the whole region slows and stocks like BHP in Australia look less attractive.

If BHP slows then it drags down the entire Australian market because it is the largest weighted stock on our index. I have previously discussed the BHP effect and it cannot be ignored if you are an Australian investor or trader. Our index is looking directionless - this shouldn't be a suprise. We are looking at Europe and China and watching and waiting for outcomes, decisions and action from these guys. While they stall, our market stalls. In fact if you look at the STW ETF (an ETF over the ASX200), you will see that the current upside breakout of the pennant chart pattern has failed. This shows us that our market's expectations have already tipped towards a negative outcome in Europe and the subsequent domino effect world wide.

We get a further indication that the overall sentiment is negative by looking at the Guppy Multiple Moving Average indicator (GMMA). Those who are familiar with the GMMA can see in the chart below how the selling pressure in our market is killing off an attempted rally. The STW ETF is not the ASX200 but we use it here as a proxy for what is going on in the broader Australian market.

So it is clearly a time to be cautious. Some serious news and action has to be seen to be coming out of Europe before the SP500, the SSEC and the Australian markets turn bullish.

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New Stock On The Radar

A new stock has hit the Technical Report radar. It is a stock which meets several criteria that we look for and which we use to trade a stock using different methods outlined in our book.

For example this stock meets the criteria of our RCR and DEMAC techniques concurrently, so it has hit our radar and we will observe how it performs and then reflect back to see which trading method (the RCR or DEMAC technique) proved to be the better method.

The name of this stock is reserved for those who have purchased a copy of our book. But what we can tell you is that the company describes itself on its website as:

".....an emerging ASX-listed petroleum exploration and production company, headquartered in Perth and with oil and gas interests in Vietnam, Indonesia and California"

The chart of this stock is shown below: