Hunting Trip - returning home empty handed

My Buy Limit on Hunting Plc (HTG.L) was filled today and although there is a possibility that this is a pullback, the volume spike of a couple of days ago (which moved the price upwards) has not been supported by further volume increases and price action.

I've moved the stop up to right underneath the trade (452.6p), so I expect to be stopped out at a small loss (0.7%) tomorrow.

AtticManTrader goes Hunting...

My analysis this weekend suggests that sometime in the near future we are due a correction in the FTSE.

However, until such time as this becomes clear, I'm still trading in exactly the same way. Tonight I found a stock I'm interested in. The company is called Hunting plc (HTG.L). Hunting are in the Oil and Gas sector. They have had 4 or more years of consistent Net Profit growth (albeit on decreasing t/o). Their Debt/Equit ratio is low and they have recently made 2 strategic acquisitions.

What I really like about this company is the chart. Since the end of April, volume has been exceptionally low (pretty much the same as the whole of the FTSE), however in the last couple of days volume has spiked and the share price has responded accordingly. The company is still in the squeeze (see chart below), however if this squeeze fires, its likely to fire long.

My order details;

Buy Limit @ 463p (Pullback to just above 8EMA)

Stop - 438p (Below recent range - I'm giving this some room, if I'm wrong I'll likely exit before stops is hit)

Target - 496p (Top of channel)

Position size - £8/point. (£8 * 25pts = £200)

Max risk - £200 (1.8% of The AtticFund)

It's off to Spain for some golf

Tomorrow I take a well deserved break. I'm off to Spain for a 4 day golfing weekend. 

There will be 12 of us, battling it out over 72 stableford holes to be crowned Tweksbury Champion Golfer 2009.

I'm leaving my Lonmin (LMI.L) long position open. It's currently trading around 1500, down 60 today, but overall the position is up 14%. I may take the odd peak at the market (In today's wired world, its hard to completely step away from everything!), but I don't plan on changing any of the trades parameters.

The markets in general do show signs of turning (steady upward moves on little volume would indicate no professional money is in the market), but I'm actually looking forward to focusing on some leisure time and letting the trade run its natural course.

Trading Update - Lonmin +16%, Talvivaar, Spice

Trading Update 1st June 2009

Lonmin (LMI.L) continues to move North. When a trade starts to make a nice move in my direction(+16% on the trade - 2.1% for the AtticFund) I find myself considering closing the position in order to protect the profits without having any real exit signals. Lonmin still looks strong to the Long side and so I'll amend the parameters of the trade in order to lock in some profits, and I'll stick on in there and try and ride this bad boy higher. The annotated graph below should serve as a reminder of why I still like this stock (it's also the first glimpse of my AmiBroker Interface....exciting stuff huh!)

My attempted short on Talvivaar Mining (TALV.L) wasn't filled (thankfully!). The stock rose 13% today! I did write yesterday that it was an experimental short trade, and I stick by that. My position size would have been small. I was expecting a small retracement, but as the overall market conditions are bullish I do not currently want to be too heavily exposed to the short side. What actually happened was that Talvivaar came roaring out of the blocks and never looked like retracing. I guess this happens with a strong stock in a strong market.

For the time being I have canceled my order on Spice (SPI.L). I'm expecting a retracement, but it's not clear just how large that retracement may be. All the signals are looking bearish (Momentum reducing, Overbought RSI). I'll continue to monitor it and will look to get in when I see some signs that the current trend is likely to continue.

Trading Update - Lonmin +9% and a short opportunity.

Trading update for Sunday 31st May 2009.

Lonmin (LMI.L) is up nearly 9% since I was filled on 27th May. (See AtticFund details here)  Technically it still looks very strong. I've tightened my stop but will continue to give the trade some room.

I'm still waiting to get filled on my buy order for Spice Holdings (SPI.L). The stock continues to edge up, but I need a small drop to value for my Buy Limit to get filled.

My scan revealed a couple of potential shorting opportunities. The one that caught the eye is Talvivaar Mining Co (TALV.L). The RSI indicates that the stock is overbought and when coupled with reducing momentum and the last daily candle with a long wick, I'm expecting to see this stock retrace on Monday's trading. Given the overall market conditions are bullish, this is a small experimental short position.

My order details;

Sell Stop @ 332p (Below current close price)

Stop - 342p (If it's not going down, I'll know pretty quickly - hence a tight stop)

Target - 328p (Expect a small retracement to around this level in early trading)

Position size - £7/point. (£7 * 10pts = £70)

Max risk - £70 (0.06% of The AtticFund)

Trading Updates - AtticManTrader returns...

After my period of self-imposed exile it's time to get back on the horse......

My AmiBroker software is now spewing out buy and sell signals and although some further tweaking is required, I'm able to quickly locate potential stocks to invest in. Purchasing AmiBroker has definitely improving the efficiency of the AtticMan Trading operation. I can upload and analyse over 400 End of Day prices in about 10 minutes. I'll go into more detail on exactly what and how I'm scanning, but in essence the strategy has not changed since I blogged about it earlier this year

Orders placed tonight;

Spice (SPI.L)

• Utility Support Services.
• Income growth yr on yr (04-09).
• Weekly and Daily uptrend.
• This is a low volume stock, so spread may be an issue.
  
• Rating - Strong Buy

My order details;

Buy Limit @ 64p (Pullback to just above 8EMA)

Stop - 51.47p (Below recent Trading Channel)

Target - 80.47p (Potential Resistance)

Position size - £13/point. (£13 * 13pts = £166)

Max risk - £166 (1.5% of The AtticFund)

Lonmin Plc (LMI.L)

• South African based Platinum company.
• Income growth yr on yr (04-09).
• Weekly and Daily uptrend.
• Looking for Pullbacks to 1314 for entry.
• Rating - Strong Buy

My order details;

Buy Limit @ 1315p (minor pullback to 8EMA)

Stop - 1215p ('Artistically placed' below 4 day lows)

Target - 1631p (Potential Resistance - Triple Top)

Position size - £1/point. (£178 - note: not using guaranteed stop on this one at extra spread would be 10 points)

Max risk - £178 (1.6% of The AtticFund)

Stocks on the watch list

Fresnillo (FRES.L)

• Mining & associated activities (Non-ferrous minerals).
• Income growth yr on yr (04-09).
• Weekly and Daily uptrend.
• Looking for Pullbacks to 654 for entry.
• Rating - Strong Buy

McBride Plc (MCB.L)

• Personal Care products.
• Steady income growth yr on yr (04-09).
• Currently too far from value entry.
• High Debt/Equity Ratio is concern.
• Looking for Pullbacks to 130 - (will then reassess)
• Rating - Medium Buy

Homeserve Plc (HSV.L)

• Insured repair & Emergency services to the home.
• Steady income growth yr on yr (04-08).
• Loss in 09.
• Currently too far from value entry.
• Looking for Pullbacks to 1277 (will then reassess)
• Rating - Medium Buy

Telecity Group Plc (TCY.L)

• Pan European data centres.
• Steady income growth yr on yr (06-08).
• Looking for Pullbacks to 282 (will then reassess)
  
• Rating - Medium Buy

Premier Oil Plc (PMO.L)

• Oil and Gas exploration.
• Steady income growth yr on yr (04-08).
• Looking for Pullbacks to 1041 (will then reassess)
  
• Rating - Medium Buy

Software Sector - Due a correction?

I'm sat in front of the screen listening to Sinatra whilst browsing through the charts. My little boy is having his afternoon nap just a couple of yards away - he looks so peaceful. A beautiful way to spend a Sunday (for me and for him!)

The weekly software sector chart has caught my eye. The chart is very bearish - (candlestick with a very long wick) Is the sector due a correction?

This will act as a warning sign (filter) for me. I'll tread with caution when considering software stocks over the next couple of weeks

Solarworld AG - A real ray of light?

In a previous blog post, I mentioned Solarworld AG (SWVG.DE) as a good friend of mine had invested in the company as part of his mission to manage his own investments. 

Today I decided to take a closer look at the charts (for more information on Solarworld, click here)

Starting with the weekly chart (below) - first things that jump out are:

1. It's trending up, and has been since late Feb/early March this year.

2. It's trading above the 8 and 21 EMA which is bullish

3. 3 candles ago, a bullish (Doji) candle formed. It's bullish because it has a long tail, indicating selling pressure, but closed nearer its highs indicating that buyers won.

I've noted my observations on the graph below;

So, the weekly is telling me its bullish.

So now lets take a closer look at the daily chart and take into account other stuff like Support & Resistance;

General observations;

1. Its bullish and in a nicely formed uptrend

2. It pulls back nicely, and (in the main) respects the 8EMA (good buying opportunities)

3. Nothing on this graph indicates that this stock is due a major correction.

4. The 1,800 Level of Resistance became Support

5. The stock pushed through 2,000 at the 2nd or 3rd time of asking

6. 2,200 is potentially setting up to become a level of resistance

7. 2,400 is potential resistance

So, that's all well and good, but how to trade it? Well that depends if and when you got into the stock and what time frames you trade!

If I had planned to invest in the long term in Solarworld and the fundamentals are unchanged, then there is nothing technically to convince me to exit the position.

If I had hit a predetermined profit target, I would book some profits and move my stop to around 1,800 in order to protect my gains, and then let the remainder of my position run.

If I was looking to get invested in Solarworld for the first time (which I am now seriously considering), then I'd look for pullbacks to the 8EMA (likely to be around 2,050-2,100). I'd invest 2% (as always!), with my initial target around 2,400 and my stop around 1,800 - giving me a respectable Risk/Reward ratio of 1:1.4.

Trading Update - A lesson in drawing Trend lines

I was filled today on my Wellstream (WSML.L) order as the market continued to react to Swine Flu fever!

I've been drawing trend lines on the graph all day (I know, I am trying REALLY hard not to look at these blo*dy things during the day but...). Take a look at the trend line defining the bottom of the upward channel that I drew on Wellstream yesterday when working out where to place my Buy Limit

Check out the badly drawn channel base trendline - Note how it is drawn directly through a couple of candles....

Now, check out a much more accurately drawn trend line, that doesn't cut through candles. Note how the stock respected the trendline today

As you can see from the second graph, Wellstream hit support today at/around 505 which, looking at the second graph, does more clearly indicate the channel base.

LESSON LEARNT: Draw your trend lines against what you see, not what you want to see! I used to used a Line in Close graph to draw Support and Resistance levels. I'm going to experiment with this approach once again.

Check out the updated portfolio to see how badly Wellstream behaved on its first day in the AtticFund!

Trading Update - Wellstream

Today Wellstream (WSM.L) traded down on very low volume.

The stock looks to be consolidating and a pullback is very much on the cards.

Since 17th April average daily volumes are down to less than 10% of average April volumes. But what does this mean? Well, from my point of view, it means that the 'prices moves' the stock has made since the 17th April have no real conviction behind them (eg there is no professional money in the market) and more importantly, the large down day on 20th April was not a reversal, but a pullback.

So, revised Wellstream order

Buy Limit @ 535p (A minor pullback required for a fill)

Stop - 485.85p (Well below potential support - giving this trade some room)

Target - 606.85p (My initial target - depending on how/if it gets here, I'll make a decision)

Position size - £3.75/point. (£3.75 * 53pts = £198.75)

Max risk - £198 (less than 2% of AtticFund)

Trading Update

Just a quicky tonight.

I've decided to go in at the market with Centamin, so have cancelled the limit order from yesterday and will place a market order tomorrow - details will be posted over the weekend.

I have also amended my Wellstream order, in an atttempt to get filled.

My Revised Wellstream order details;

Buy Limit @ 542p (A VERY minor pullback required for a fill)

Stop - 500p (Not much room on this trade now, but if it hits 500 then I got the direction wrong))

Target - 600p (My initial target - depending on how/if it gets here, I'll make a decision)

Position size - £4.50/point. (£4.50 * 42pts = £189)

Max risk - £189 (<2% of the AtticFund)

Trading Update - 2 new orders

Today I placed two buy limit orders:

Centamin Egypt (CEY.L) - Having closed my previous position to protect a profit, I placed a buy limit order today. I've reduced the risk that this position carries as (like I've stated before) I'm keen to hold onto this for as long as I can. Their first gold pour is due in early June, but I'm assuming that as this nears, this will be priced into the market, so should see a steady rise.  See below for order details

My Centamin order details;

Buy Limit @ 51.5p (A minor pullback required for a fill)

Stop - 45.03p (Well below potential support -giving this trade some room)

Target - 60.03p (My initial target - depending on how/if it gets here, I'll make a decision)

Position size - £15/point. (£15 * 7pts = £105)

Max risk - £105 (1% of The AtticFund)

Wellstream (WSM.L) have enjoyed a steady bull run since late February. I should have got involved earlier, but it looks to be consolidating before making another move, a nice potential entry point.

My Wellstream order details;

Buy Limit @ 503p (A minor pullback required for a fill)

Stop - 431.7p (Well below potential support - giving this trade some room)

Target - 600p (My initial target - depending on how/if it gets here, I'll make a decision)

Position size - £2.65/point. (£2.65 * 75pts = £198)

Max risk - £198 (2% of The AtticFund)

AtticFund - Current Portfolio Postion

Date: 9th June 2009

Charter plc - A second bite of the cherry.

Today Charter Plc (CHTR.L) is down over 6.5%. My plan was to go long on a pullback such as this one and I was filled at 463.08.

My order details;

Buy Market @ 463.08p (Pre-determined entry point)

Stop - 434.08p (Logical level of support)

Target - 522.08p (75% of the upward channel)

Position size - £7/point. (£7 * 29pts = £203)

Max risk - £203 (1.8% of The AtticFund)

Trading Update - Centamin Position Closed

Today I closed my Long on Centamin before my stop was hit. The reason was pretty simple, it is currently following Gold on a downward path.

Centamin Egypt

Entry: 50.57 (24th Feb 2009)

Exit: 53.36 (20th April 2009)

Attic Fund profit: 0.7%

I will continue to monitor this stock as I am bullish on the long term, but I am happy to dip in an out as the opportunities present themselves.

Lesson Learnt:

Even though I plan on building a fund over time, it is still a valid strategy to buy for the long term on the dips and sell when the stock looks over extended, before re-buying on further dips. With Centamin, I had some obvious opportunity to sell when the stock was looking over-extended on the daily charts, instead I held my position and saw a good percentage of my profits erode.

Trading Update - Autonomy continues to tank

Today saw my 1300 stop on Autonomy hit. It wasn't a great surprise, but left me feeling a little disappointed given it was up at 1400 a couple of days ago. 

Autonomy Corp Plc

Entry: 1237 (17th March 2009)

Exit: 1300 (15th April 2009)

Attic Fund profit: 1.9% 

I will continue to look for buying opportunities on this stock as the fundamentals have not changed, in fact I would expect a continuation North over the next couple of weeks, but I'm going to sit on the sidelines for at least a couple of days before considering my next move.

Trading Update - Hurry up and wait...

AtticFund Update;

Centamin Egypt +12.9%

Autonomy Corp +6.7%

AtticFund +3.8%

Centamin Egypt

After Mondays rise in Gold ($884 to $894), I felt that Centamin Egypt (CEY.L) could well benefit from this rise and from the open things looked good, with Centamin rising from 57.3 on open to a high of 60.8p in only 2 hrs.

As I'm using a leveraged product this 6.1% rise equated to a nice 1% increase in the AtticFund. However by the close Centamin had given back all of these early gains to close at 57.2p leaving me staring at a very bearish candlestick pattern (below).

Further investigation revealed that this candle has been formed on average volume which suggests that this is not a reversal and so I remain invested with my stop at 50p.

Autonomy Corp PLC (AUTN.L) was also down today.

This stock is now trading 7.6% off its recent highs, and the Attic Funds profit from this stock has eroded from a high of 5.2% to 2.3%. Taken in isolation, that is not a bad return from a single position, but it is hard to accept as this is starting to feel like a loss. On the plus side, the chart still looks incredibly bullish, with the current dip in the share price looking like a pullback (as opposed to a reversal). On further inspection, Autonomy looks to be creating a Bull Flag on the daily charts (below).

So I remain invested in Autonomy, with a stop at 1300, guaranteeing a 1.9% return. If I was to get stopped out (which is a real possibility over the next couple of days), then I will continue to search for buying opportunities on this stock as I am still generally very bullish about this company.

Trading Update - Rough ride for the AtticMan

It's been a rough couple of days for the fledgling AtticFund. With both stocks falling dramatically in the last couple of days.

Centamin is down 14.7% from a high of 62.2 on 1st April to 54.2 today and Autonomy is down7.3% from a high of 1421 yesterday to 1324 today.

It's never nice when the portfolio takes a battering but all you can do is re-assess the current situation and trade on.

Autonomy is still in an uptrend and todays sharp decline was on low volume, indicating no real conviction in the move. I have moved my stop up to 1,300, meaning whatever happens I will collect a small profit.

Centamin is also still in an uptrend and fell aggressively yesterday in-line with the decrease in the gold price. I've moved my stop to 50, which represents a small loss.

I am learning all the time about how to trade over a long time frame and certainly with Centamin, booking a profit when the trade was 18% up, now seems like a missed opportunity. But I need to keep reminding myself that this is a risky play and that the market opinion of this stock is still postitive. 

Lets see what tomorrow brings.

Trading Update - The AtticFund (5.5% for month)

Centamin Egypt CEY.L (+19.8%)

Daily candles show indecision. There is potential for a pullback/correction.

Keep an eye on the weekly candles, potential bearish formation.

Potential Resistance @ 65

Potential Support @ 60

Stop @ 51.58 (Trade is now risk free)

Target @ 70

Autonomy Corp AUTN.L (+9.11%)

Daily and weekly candles are bullish

Potential Resistance @ 1360

Potential Support @ 1250

Stop @ 1250  (Trade is now risk free)

Target - Currently Open

Building the 'AtticFund' Additions to watchlist

I'm still working toward being fully invested. With 2 positions moving nicely in my direction, I have room for 3, possibly 4 further investments.

I've become to realise that generating investment ideas is not my forte. My forte lies in the analysis of a company that may have been brought to my attention either from another trader or via the press. Ideally I'd like to step this up a gear and develop a method for locating stocks that meet certain criteria. In the meantime however, I'll continue to locate trading ideas from other traders before doing my own analysis and making an investment decision.

Here are a selection of stocks that I'll be analysing for inclusion into the AtticFund.

1. Celsis International - laboratory services to the pharmaceutical industry. First thought - too volatile but nice sector, low debt and potentially consolidating before next move.

Investment Action - Too volatile for the AtticFund

2. Charter - Operates in the engineering industry with products penetrating the Oil & Gas and petrochemical Industries. Turnover is up from £870m in 2004 to £1,887m in 2008. 13.61 Debt/Equity.

Investment Action - Further investigation, look at the technicals.

3. Elementis - A speciality chemicals company with products penetrating construction, oil drilling and personal care markets. No real revenue growth in last 4 years.

Investment Action - No growth, not a candidate for the AtticFund.

4. Heritage - Canadian Oil & Gas exploration company with global presence. Licences in Africa (high risk operating countries). Tiny company - Turnover £1m in 2005 to £3.7m in 2007. Huge Debt/Equity Ratio.

Investment Action - Too small, too much debt. Not a candidate for the AtticFund

5. Petrofac - Facilities solutions to the Oil & Gas industry. Active in Dubai. Purchased Eclipse Petroleum technology in 2008. Turnover up from £950m in 2004 to £3,330m in 2008. 26 Debt/Equity ratio.

Investment Action - Further investigation, look at the technicals.

6. Tribal Group - Provision of Consultancy, support and delivery services to the public sector. Grown through acquisition in last 2 years.Turnover up from £152m in 2004 to £233m in 2008. 18 Debt/Equity.

Investment Action - Further investigation, look at the technicals. Exposure to the public sector is a good investment strategy at the moment.

7. Unite - Construction, management and rental of student accommodation. Operates under the Livocity brands offering accommodation for young professionals. Turnover £74m in 2004 to £133m in 2008. 215 Debt/Equity.

Investment Action - Too highly geared to be considered for the AtticFund

The next course of action is to look at the technicals. In the next couple of posts, I plan on detailing exactly what sort of technical analysis I undertake on these stocks. My aim however is to keep my strategy very very simple but to focus my attentions on managing the money.