Kevi's morning charts 17th Dec

Morning all,

Its heading into the XMAS/New Year period, and for anyone who hasn't traded at this time of the year before you will find it very quite as the volumes drop right off. I for one will be taking some time over this period to spend some quality time with the family.

Here are some charts of interest.

Elemental Minerals (ELM) - Closed @ $1.20 yesterday which is a new closing high. I have draw the resistance @ $1.19 from that previous spike but I negated to mention that the recent high of $1.25 might offer some resistance also. Nevertheless, its a nice chart and one which looks to have more left in the tank.



Ausenco Limited (AAX) - Its spend a long time consolidating under the $3.00 resistance level, though it decided yesterday that it was time to move on. Strong buying lead to a breakout to close @ $3.13 after hitting a high of $3.19.

Here is the chart from during the day yesterday after it had made the break. There is no real resistance now until $3.80.



Globe Metals & Mining (GBE) - with urnaium stocks still performing well, this stock seemed to be bucking the trend until they announced they had finally raised funds through placement @ 25c. The market liked the news and we saw some decent buying and a turnaround for Globe. Needs confirmation today, but a break above the MA's would be a real positive.



Prima Biomed (PRR) - Looked at this at 11c yesterday and didnt think it would push on. Before I knew it, it was looking to close @ 12.5c on what was impressive volume. Chart suggests there is a fair bit more upside here, but who knows with this stock as sometimes these BIO stocks have a mind of their own.



Altona Mining (AOH) - a bit of a personal favourite this one. Currently setting up a nice pennant pattern here while consolidating. Break point is around the 36/36.5c level which I will be waiting for. One to definitely keep an eye on as there is news due soon. Chart was done on Wednesday, so its missing yesterday's candle which was not work doing a new chart for.



Finally, Flinders Mines (FMS) - Here is a weekly chart I did at the start of the week. Seems to want to still consolidate and retest the old weekly downtrend as it closed back @ 14.5c yesterday. I think there is some big potential in this stock once it starts moving. One to keep an eye on.



Cheers and good luck today

Kevi

Chart focus video - 16 Dec 2010

I had time to do a quick chart video this morning:



Have a good one!

A

ASIC guide to trading CFD's.

While I was on holidays, ASIC released a new guide that aims to provide retail investors with independent advice on how contracts for difference (CFDs) work and the risks that can be involved in CFD trading.

"Our research with CFD traders found that many traders don't know or don't appreciate key aspects of how CFDs work, despite the fact that they are actively trading them," ASIC commissioner Greg Medcraft said.

I'd certainly like to think that my readers are aware of the mechanics of CFD's, and how they differ from regular equities trading. If you're not, you need to be. In my opinion, it's particularly important to familiarise yourself with the difference between Market Maker and Direct Market Access models (Page 12). Choosing a provider with a DMA model is the only choice as far as I'm concerned. Why even risk trading in a situation where your provider could be profitting from your losses.

The leverage available in CFD Trading can certainly lend itself to large losses if you don't manage it properly and show strong discipline...but I personally wouldn't be in the position I am now without CFD's. Trading CFD's and utilising that leverage wisely and conservatively has helped me grow my equity consistently for many years now.

In the coming weeks I'll try to post in more detail what I see as the advantages and potential pitfalls of CFD's, but in the meantime the guide can be found here.

Easing back into trading this week

Well the holiday is over, and now I need to refocus myself in preparation for trading again this week.

After an extended break from the market (and in these conditions I consider 3 weeks an extended break), I find that it's important not to rush back into trading. Even though the process hasn't changed, I think that even those few weeks is enough to create a disconnect from the market. For me, just looking at charts isn't enough to give me a true "feel" for what's been happening.

Part of my trader's edge comes from having a clear picture of how the market is reacting in given circumstances. Are tight range breaks moving explosively? Are stocks kicking on after a break of recent highs? How are news plays behaving? What sectors are hot? While charts can tell you some of the story, for me, only time watching the market can tell the true picture.

So tonight I'll start my market scanning and preparation process. I'll set alerts and create new watch lists for tomorrow, as I would always do. But as the market opens I will try not to rush into positions, and will probably also try to keep position sizes down a little.

As the market tells me more about it's state throughout the week, I'll ramp back up into full trading capacity.

One thing a break does allow is a fresh start with a fresh attitude. It's a great chance to reaffirm all the positive trading habits that you want to pursue. I'll be particularly focussing on making sure I'm trading to plan, and keeping my discipline where it needs to be.

If I continue to focus on the process, the profits should take care of themselves.

Alan