moneyworx shaun van den berg 22 february 2011. international outlook brent crude oil gold-$ &...

MoneyWorx

Shaun van den Berg

22 February 2011

International Outlook• Brent Crude Oil• Gold-$ & Platinum-$• Silver $ & Copper• US$ versus Euro & GBP• JPY versus US$

• DJ Industrial Average • S & P 500 Index• Nikkei Index• Hang Seng Index• DAX Index• CAC 40 Index • FTSE Index

Local OutlookGold RandPlatinum RandRand vs US $ & Euro

JSE Overall IndexTop 40 IndexMid Cap & Small Cap Index Alt-X Index

Gold Mining IndexPlatinum Mining IndexResource 20 IndexFinancial 15 IndexIndustrial 25 IndexSummary & Conclusion

Technical Market Overview

Economic Indicators

• Brent Crude Oil• Gold-$• Platinum-$• US$ versus Euro • US$ versus GBP• JPY versus US$

Brent Crude Oil

Still BullishStill Bullish

Gold-$

SupportSupport

SupportSupport

ResistanceResistance


BullishBullish

SupportSupport

SupportSupport

Platinum-$

SupportSupport

SupportSupport



SupportSupport

BullishBullish

Silver-$

BullishBullish


SupportSupport

SupportSupport

SupportSupport

Copper-$

BullishBullish




SupportSupport

SupportSupport

US$ vs Euro$ Weakness / Euro Strength$ Weakness / Euro Strength

$ Strength / Euro Weakness$ Strength / Euro Weakness

SupportSupport

SupportSupport


US$ weaknessUS$ weakness


US$ vs GBP

$ Strength / GBP Weakness$ Strength / GBP Weakness

$ Weakness / GBP Strength$ Weakness / GBP Strength

SupportSupport


US$ weaknessUS$ weakness

SupportSupport

JPY vs US$JPY Weakness/ $ StrengthJPY Weakness/ $ Strength

JPY Strength / $ WeaknessJPY Strength / $ Weakness

ResistanceResistanceSupportSupport

ResistanceResistance JPY turning weakerJPY turning weaker

What can we learn? • Bullish Brent Crude oil price Bullish Brent Crude oil price

– Demand / Speculation?Demand / Speculation?– Uncertainty around Middle EastUncertainty around Middle East

• Precious Metals Precious Metals – Bullish gold $ (25-year high) Bullish gold $ (25-year high) – Bullish Silver (30-year high) Bullish Silver (30-year high) – Bullish Platinum-$ & Copper Bullish Platinum-$ & Copper

• US DollarUS Dollar– Weaker against Euro & Weaker against GBPWeaker against Euro & Weaker against GBP– Turning stronger against JPY in short-term/ Turning stronger against JPY in short-term/

Weaker in longer-termWeaker in longer-term

International Markets

• DJ Industrial Average • S & P 500 Index• Nikkei Index• Hang Seng Index• DAX Index• CAC 40 Index • FTSE Index

DJ Industrial Average

SupportSupport

BullishBullish


SupportSupport

SupportSupport


S&P 500 Index

Very Bullish!Very Bullish!

SupportSupport


SupportSupport

SupportSupport

Nikkei Index

BullishBullish

SupportSupport

SupportSupport


SupportSupport

Resistance / SupportResistance / Support

Hang Seng Index

Bullish but sidewaysBullish but sideways


SupportSupport


Resistance / SupportResistance / Support

DAX Index

BullishBullish


SupportSupport

SupportSupport

CAC 40 Index

BullishBullish


SupportSupport

SupportSupport

FTSE 100 Index

BullishBullish


SupportSupport

SupportSupport


What can we learn? • US Markets (DJIA / S&P 500) US Markets (DJIA / S&P 500)

– Very Bullish (Broken above resistance/ Overbought)Very Bullish (Broken above resistance/ Overbought)– Overbought (Sustainable?)Overbought (Sustainable?)

• Asian Markets Asian Markets – Nikkei Index: Bullish / OverboughtNikkei Index: Bullish / Overbought– Hang Seng Index: Bullish but moving sideways / Hang Seng Index: Bullish but moving sideways /

Becoming more OversoldBecoming more Oversold

• European MarketsEuropean Markets– DAX Index: Bullish / OverboughtDAX Index: Bullish / Overbought– CAC 40 Index: Bullish CAC 40 Index: Bullish (Broken resistance)(Broken resistance)

– FT100 Index: Bullish FT100 Index: Bullish (Trading within an up-channel) (Trading within an up-channel)

Local Market

• Gold Rand• Platinum Rand• Rand vs US $• Rand vs Euro• Rand vs GBP

• JSE Overall Index• Top 40 Index• Mid Cap Index• Small Cap Index • Alt-X Index

• Gold Mining Index• Platinum Mining Index• Resource 20 Index• Financial 15 Index• Industrial 25 Index

Gold Rand

SupportSupport

SupportSupport

BullishBullish


SupportSupport

Broken ResistanceBroken Resistance

Platinum Rand

BullishBullish


SupportSupport

SupportSupport


Rand vs US $

Rand Strength / $ Weakness Rand Strength / $ Weakness

Rand turning weaker Rand turning weaker

Rand Weakness/ Euro StrengthRand Weakness/ Euro Strength

TestingTesting SupportSupport



SupportSupport

Rand vs Euro

Rand Strength / Euro WeaknessRand Strength / Euro Weakness

Rand Weakness/ Euro StrengthRand Weakness/ Euro Strength

Rand WeakerRand Weaker

SupportSupport

Broken SupportBroken Support


SupportSupport

Rand vs GBP

Rand Weakness/ GBP StrengthRand Weakness/ GBP Strength

Rand Strength/ GBP WeaknessRand Strength/ GBP Weakness

SupportSupport

Rand WeaknessRand Weakness


SupportSupport

Testing SupportTesting Support

What can we learn?

• Gold Rand Gold Rand – Bullish / Broken Resistance Bullish / Broken Resistance

• Platinum RandPlatinum Rand– Bullish/ Broken ResistanceBullish/ Broken Resistance

• Rand turning weaker vs USDRand turning weaker vs USD– Testing Support trend linesTesting Support trend lines

• Rand weaker vs EUR & GBP Rand weaker vs EUR & GBP – Testing Support trend linesTesting Support trend lines

• Rand Hedge Shares?Rand Hedge Shares?• Opportunities?Opportunities?

Market Indicators

• JSE Overall IndexJSE Overall Index• Top 40 IndexTop 40 Index• Mid Cap Mid Cap • Small CapSmall Cap• Alt-X IndexAlt-X Index

• Gold Mining Index Gold Mining Index • Platinum MiningPlatinum Mining• Resource 20 IndexResource 20 Index• Financial 15 IndexFinancial 15 Index• Industrial 25 IndexIndustrial 25 Index

JSE Overall Index (Weekly)

SupportSupport


BullishBullish


SupportSupport

JSE Overall Index

BullishBullish

SupportSupport


SupportSupport

Top 40 Index

BullishBullish



SupportSupport

SupportSupport

Top 40 Index

Bearish DivergenceBearish Divergence

Overbought/ Bearish DivergenceOverbought/ Bearish Divergence

Top 40 Index

Market OutperformingMarket Outperforming


SupportSupport


Mid Cap IndexMid Cap Index

SupportSupport

Turning / UnderperformingTurning / Underperforming


Small Cap Index



SupportSupport

Alt-X Index

SupportSupport



What can we learn? • JSE Overall Index JSE Overall Index

– Double-Top (Weekly)Double-Top (Weekly)– Bullish but turningBullish but turning– Testing ResistanceTesting Resistance– Rising WedgeRising Wedge

• Top 40 Index Top 40 Index – BullishBullish– OverboughtOverbought– Bearish Divergence Bearish Divergence – Outperforming Outperforming

• Mid Cap Index Mid Cap Index – Sideways / OversoldSideways / Oversold– Market Underperform Market Underperform

• Small Cap IndexSmall Cap Index– BullishBullish– Testing SupportTesting Support– Market Underperform Market Underperform

• Alt-X IndexAlt-X Index– Sideways / BearishSideways / Bearish– 50% Retracement50% Retracement– Underperforming Underperforming

Market Indicators

• JSE Overall IndexJSE Overall Index• Top 40 IndexTop 40 Index• Mid Cap Mid Cap • Small CapSmall Cap• Alt-X IndexAlt-X Index

• Gold Mining Index Gold Mining Index • Platinum MiningPlatinum Mining• Resource 20 IndexResource 20 Index• Financial 15 IndexFinancial 15 Index• Industrial 25 IndexIndustrial 25 Index

Gold Mining Index



SupportSupport

Bullish / Overbought / Market PerformingBullish / Overbought / Market Performing

OverboughtOverbought

Gold Shares - Anglogold

SupportSupport


BullishBullish

SupportSupport

Gold Shares - Anglogold

Volume Volume AccumulationAccumulation

MarketMarketOutperform?Outperform?

BullishBullish


Hold

Gold Shares - Harmony

BullishBullish

SupportSupport



Gold Shares - Harmony

Market Market OutperformOutperform

Volume Volume AccumulationAccumulationBullishBullish


BuyBuy

Gold Shares – Gold Fields

BullishBullish


SupportSupport

Gold Shares – Gold Fields


Volume Volume AccumulationAccumulationBullishBullish


HoldHold

Platinum Mining Index


Bearish but turning / Overbought / UnderperformingBearish but turning / Overbought / Underperforming

SupportSupport


Market Market UnderperformUnderperform

Platinum Shares -Angloplats Platinum Shares -Angloplats




BullishBullish

SellSell

Platinum Shares - Implats



OversoldOversold

BullishBullish

BuyBuy

Resources 20 IndexResources 20 Index

Bullish/ Overbought / OutperformingBullish/ Overbought / Outperforming

Resource Shares - Anglo

BullishBullish


SupportSupport



Resource Shares - Anglo




BullishBullish

Hold

Resource Shares – BHP Billiton




SupportSupport

Testing SupportTesting Support

BullishBullish


Resource Shares – BHP Billiton




BullishBullish

Hold


Resource Shares - Sasol



SupportSupport

BullishBullish

SupportSupport

Resource Shares - Sasol



VolumeVolume Accumulation Accumulation

BullishBullish

Hold

Resource Shares - ArcmittalArcmittal

BullishBullish

SupportSupport

ResistanceResistance ResistanceResistance

SupportSupport

Resource Shares - ArcmittalArcmittal



BullishBullish


Hold

Resource Shares - ExxaroExxaro



SupportSupport

SupportSupport

BullishBullish

Resource Shares - ExxaroExxaro


OverboughtOverbought Market Market OutperformOutperform

BullishBullish


Hold

Summary – Mining & Resources

• Gold Mining IndexGold Mining Index– BullishBullish– Broken ResistanceBroken Resistance– Market PerformMarket Perform

• Platinum MiningPlatinum Mining– BearishBearish but turning but turning– OverboughtOverbought– UnderperformingUnderperforming

• Resource 20 Index Resource 20 Index – Bullish Bullish – OverboughtOverbought– Market Market

OutperformingOutperforming

Financial 15 Index

Bullish/ Down channel / OversoldBullish/ Down channel / Oversold


SupportSupport

Banking Index

Bullish/ OversoldBullish/ Oversold


SupportSupport

Bank Shares - ABSA

OversoldOversold


BearishBearish


Watch

Bank Shares – Firstrand


VolumeVolume Accumulation AccumulationBullishBullish


Bullish (Just!)Bullish (Just!)

Buy

Bank Shares – Stanbank


BearishBearish


OversoldOversold

Watch

Bank Shares – Nedbank


VolumeVolume Distribution Distribution


BearishBearish

Watch

Life Assurance Index

Bullish/ Overbought / OutperformingBullish/ Overbought / Outperforming

Life Assurance - Sanlam


VolumeVolume Accumulation AccumulationBullishBullish

OversoldOversold

Watch

Life Assurance– Old Mutual




BullishBullish

Hold

Real Estate - Growthpoint

OversoldOversold



Bullish (Just) Bullish (Just)

Watch

Real Estate - RedefineReal Estate - Redefine

OversoldOversold



BearishBearish

Watch

Industrial 25 IndexIndustrial 25 Index

Bullish to Neutral / Overbought / Bearish DivergenceBullish to Neutral / Overbought / Bearish Divergence

Industrial Shares – MTN Group

OversoldOversold



BullishBullish

Watch

Industrial Shares – BATS




BullishBullish

Hold

Industrial Shares – SAB Miller



Market Market PerformPerform

BullishBullish

Hold

Industrial Shares – Industrial Shares – RichemontRichemont




BullishBullish

Hold

Summary – Financial & Industrial

• Financial 15 IndexFinancial 15 Index– BullishBullish– Down ChannelDown Channel– Oversold Oversold

• Banking SharesBanking Shares– BearishBearish– OversoldOversold– UnderperformingUnderperforming

• Life Assurance SharesLife Assurance Shares– BullishBullish– OverboughtOverbought– OutperformingOutperforming

• Real Estate SharesReal Estate Shares– BearishBearish– OversoldOversold– UnderperformingUnderperforming

• Industrial 25 IndexIndustrial 25 Index– BullishBullish– OverboughtOverbought– OutperformingOutperforming

Share Recommendations: Sasol

• The company trades at a p/e of 13 which is much lower than the current market average.

• It has a dividend yield of 2.8%.

• The current oil price will help the company to improve results.

• The rand can also help if it devaluates further.

Deon Botha

Share Recommendations: MTN

• The company trades at a p/e of 14 which is lower than the current market average.

• The improvement in consumer spending; local and the rest of their markets; would help the company to improve results.

• The management comment of the company is positive.

Deon Botha

Share Recommendations: ABIL

• Still staying with this one

• The company trades at a p/e of 14 which is much lower than the current market average.

• It has a dividend yield of 5.1%.

• The improvement in consumer spending will help the company to improve results.

• Bad debts would also reduce.

• The furniture business is also improving.

• They have given a positive trading update.

Deon Botha

Share Recommendations• Still with Mr Price (MPC) , I believe it should at least reach

the original neckline of 6400, trading around 6050 today.

• Also still with Woolies(WHL) next resistance at 2700 and then 2800 trading around 2600 today.

• My third choice is Discovery (DSY) It has been trading in an upward channel for some months now, at the moment it is at the bottom of the channel and the oscillators are in oversold territory, looking for close to 4400, today trading around 3900

Derick Brooks

Share Recommendations

• Bowcalf: Good results from the company and not expensive

• GFields: Gold shares to outperform the markets. The company is well placed to take advantage of the upside

• Adcock: Defensive share

Nick Chryssanthou

Conclusion• MoneyWorx

– Presentation will be emailed

– On the Forum

• Market is Bullish but Overbought

– Shorting Opportunities?

• Good Luck & Happy Trading!

Trading the Breakout Pullback Price Pattern

version 0211

Marino Kekana

Tel: 082 759 4147

Fax: 012 703 4654

Email: [email protected]

Contents

• What is the breakout pullback price pattern

• Why do I trade this chart pattern

• Where does it fit in the context of other trading styles

• How do I trade the breakout pullback chart pattern

• What are my findings

• What do these findings tell me

• What is my recommendation

Breakout pullback price pattern


• What is it?– Price pattern that begins with an uptrend and followed by a pullback;

and

– A position is entered at the beginning of the next uptrend

• Why trade it?– I can scan for this price pattern setup

– Candidate shares are trending up/down

– Profitable with the first pullback scenario

– I can trade using candlesticks only

– Technical indicators are not a necessity


• Where does it fit in trading styles– Swing trading

• It attempts to capture short term moves in the share

– I do not care about

• Fundamentals of a company

• Kinds of products they sell

• What the name of the company is

– I want to know if

• There is money flowing into the share

• There is money flowing out of the share

• I can trade the share with least possible risk to my capital

How do I trade the breakout pullback price pattern?• Part 1: Trading basics

– Share market stages

– Trending price vs trading range

– Moving averages

– Candlestick price chart

– Share volume

– Price levels: support and resistance

– Relative strength

Share market stages• • Stage 1

– price has been going down and starts to trade sideways

– generally everybody hates this share

• Stage 2– price breaks out, begins an uptrend– fundamentals are still bad

• Stage 3– price trades sideways, ready to

begin downtrend– it is similar to Stage 1

• Stage 4– price on the downtrend– fundamentals probably are still good– nobody believes the downtrend,

they think it is a correction

Stage 1

Stage 2

Stage 3

Stage 4

Stock market stages

Stage 1

Stage 2

Stage 3

Stage 4

Trending price vs. trading price ranges

• Trending price pattern:– Trend is up or down

• Up price trend– Higher highs

– Higher lows

– pullbacks are short lived

• Down price trend– Lower highs

– Lower lows

– rallies are short lived

• Trading range pattern– Trend is sideways

– Price pattern is sloppy

Trending price vs. trading price ranges

Trending price range Trading price range

Moving averages

• I use sma(10) and ema(30)– To determine the price trend

– To recognize changes in the price trend

• When the price trend is– Up sma(10) > ema(30) buy long

– Down sma(10) < sma(30) sell short

– Changing sma(10) x sma(30) stay in cash

• I use sma(200)– to separate the bull territory from the bear territory

Moving averages

Candlestick price chart

• • Categories of candles– Wide range candle:

high volatility (interest in the share)

– Narrow range candle: low volatility (little interest in the share)

– Low volatility → high volatility → low volatility

Share volume

• Volume chart– Shows number of shares traded during a time interval

– Low share volume: little interest in the share

– High share volume: lot of interest in the share

• Liquidity– How easily it is to get in and out of a share

– High share volume → liquidity

• Volume and price– Interpreting volume on a price chart can be very confusing

Price levels: support and resistance• Support and resistance

price levels– Areas where share price

reverses– I do not buy when price

approaches resistance level

– I will not sell when price approaches support level

– Why? Share price tends to reverse in close proximity to popular price levels

support

resistance

Relative Strength

• Buy long– Shares stronger than

the industry– Industry stronger than

the market

• Sell short– Shares weaker than

the industry– Industry weaker than

the market

How do I trade the breakout pullback price pattern?

• Part 2: Trading Strategy– Traders action zone

– Elliot wave pattern

– Market timing

– Scanning for shares

– Entry strategy

– Exit strategy

• Stop loss order

• Taking profits

– Putting it together

Traders action zone• Buy and sell zone on a chart used to identify possible price

reversals in share

• The area between sma(10) and ema(30)

• When the price pulls back into this zone, look for trading signals: support and resistance, candlestick patterns, etc…

Traders action zone

Elliott wave pattern

Wave 1: breakout

Wave 2: Pullback

Wave 3: hold onto position for longer time

Wave 4: signals that the best part is over

Wave 5: last burst before downtrend

Market Timing• What types of trades to focus on

– sma(10) is above ema(30) focus on long positions only

– sma(10) is below ema(30) focus on short positions only

• Williams %R or Slow Stochastic gives an idea of when the market has reached a short term extreme– When to buy

• sma(10) is above ema(30) and Williams %R(3) is below -80

– When to sell

• sma(10) is below ema(30) and Williams %R(3) is above -20

Scanning for shares

USA CANADA RSA

Volume 200,000 100,000 50,000

Price $10+ $5+ R2.50+

Shares 1,200 300 100

USA RSA

Criteria sma(10)>ema(30)>sma(200)

sma(10)>ema(30)>sma(200)

Shares 300 30

Scanning for shares in Traders Action Zone

• Price uptrend – long side– sma(10) > ema(30)– ema(30) > sma(200)– closing price < sma(10)– closing price > sma(30)– ADX(10) > 20– volume > 50,000– closing price > 500

• Add price pullback– daily high < yesterday’s

daily high– yesterday’s daily high < 2

days ago daily high

• Price downtrend – short side– sma(10) < ema(30)– ema(30) < sma(200)– closing price > sma(10)– closing price < sma(30)– ADX(10) > 20– volume > 50,000– closing price > 1000

• Add price rally– daily low > yesterday’s

daily low– yesterday’s daily low > 2

days ago daily low

Entry strategy: Swing point approach

Exit strategy: Stop loss and profit taking

Stop loss

Putting it together

• share_screener.xls

My FindingsEntry strategy: swing point low

Buy price 176

Exit price 150

Months: 0

Exit reason: stop loss

Comment: wide range candle triggered stop loss too early


Buy price 99

Exit price 134

Months 5

Exit reason: sell order – well done

Comment: protected profit after SENS


Buy price: 556

Exit price:

Months: 0

Exit reason:

Comment:


Buy price: 75

Exit price:

Months: 2

Exit reason:

Comment:

What do these findings tell me

• I can scan for this price pattern setup = yes

• Candidate shares are trending up/down = yes

• Profitable with the first pullback scenario = yes

• I can trade using candlesticks only = yes

• Technical indicators are not a necessity = yes

What is my recommendation

• Additions to checklist– Fibonacci retracements

– Candlestick reversal patterns

– Early signals for trading range

• Money management

• Identify professional traders

• Other chart patterns (for beginners)

Bibliography

• http://www.swing-trading-options.com/stockcharts.html

• http://www.swing-trade-stocks.com/

• http://www.stta-conssulting.com/TS/canada.htm

http://www.swing-trading-options.com/stockcharts.html

http://www.swing-trade-stocks.com/

http://www.stta-conssulting.com/TS/canada.htm

Thank YouThank [email protected]

(011) 996 5200(011) 996 5200

mailto:[email protected]

moneyworx shaun van den berg 22 february 2011. international outlook brent crude oil gold-$ &...

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