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Posts Tagged ‘Market Analyser’

Which Stocks are Potential Comeback Candidates?

Friday, December 2nd, 2011

The Australian market has pulled back since its spectacular run in October this year, when the ASX/S&P 200 climbed a staggering 15 percent. In light of this you may wish to find stocks that are likely to stage a comeback in the near term.

In our recent article on identifying stocks with pullback potential we highlighted three candidates due for a pullback, and anyone who followed those ideas could have picked up between 5% and 12% on these trades over the past few weeks.

Market Analyser Can Help

You can use the Market Analyser software to identify keys stocks which are indicating they’re due for a comeback.

Start by using the Watchlist Wizard tool to quickly create a watchlist of stocks from the ASX Top 300. (For help with this tool check this post.)

We can then use the Prealerts scanner to identify stocks that indicate there is “accumulation” taking place, meaning the stock is being picked up by stronger hands as we run into the end of the year.

A scan yesterday produced the following list:

As you can see there are a number of stocks that are currently undergoing accumulation and could offer a potential buy signals. You may want to research these companies further before entering a trade.

The effectiveness of this scan depends on the current trend of the underlying stock and we have illustrated this in the following three candidates that came up in the scan in the past couple of days:

1) ANZ Bank (ANZ)
2) Wesfarmers (WES)
3) S&P/ASX 200 Index (XJO)

Note that you can also use volume as a confirmation for the buy signal, as you would be looking for volume to pick up as the prices rise.

ANZ Bank (ANZ)

ANZ is a major Australian-based bank operating retail and business banking franchises throughout Australia, New Zealand and the South Pacific. ANZ’s goal is to become Australasia’s leading, most respected and fastest growing major bank. Strategic expansion in Asia differentiates ANZ from its peers, and ANZ CEO Mike Smith has said that he expects 30 percent of its income to come from the Asia-Pacific unit by 2017.

You can see that the Prealerts worked pretty well for ANZ earlier in the year. Even though the overall market was trending down, the Prealerts gave five successful signals that ANZ was due for a bounce. When the stock price was trading into a potential support zone the Prealerts offered a great signal of when the stock price was likely to bounce. ANZ has now surged 8 percent since the signal.

Wesfarmers (WES)

Wesfarmers Limited (WES) is a diversified business covering supermarkets, department stores, home improvement and office supplies, coal mining, insurance, chemicals, energy, fertilisers, industrial and safety products.

Wesfarmers has been trading sideways for the past four months and the Prealerts indicator had given a good signal that the share price was due for a comeback. If you took this signal you would be up around 3.5% in two days and would be watching carefully for price action around the $31.30 level, which had been the key support level in the past month.

S&P/ASX 200 Index (XJO)

Since mid-November the S&P/ASX 200 Index had been sold-down heavily with the all negative sentiment over the eurozone debt crisis, but the index appeared to be due for a relief rally.

Again the Prealert scan has given some great signals in the past six months. There was another signal in the middle of last week which suggested a comeback was due and the index has since risen 5.5%. We would now be monitoring price action around the key pivot level of 4180.

Summary

Utilise the Prealerts features in Market Analyser to scan the markets for your specific trade selection criteria. You will save time and identify some likely comeback candidates.

Disclaimer: The information provided within this article is not a recommendation to trade a specific stock, but is intended for educational purposes only.

By Michael Hevern
Investment Adviser

For Buy and Sell recommendations on ASX listed companies register for a FREE trial of MDS Financial Research. Subscribers are in successful trades for ANZ, BHP, XJO, NAB and RIO to name a few of the recommendations over the past week.

Tags: accumulation indicator, ANZ Bank, Charts, Market Analyser, technical analysis, trading tools, watchlists, wesfarmers
Posted in Trading Software, Trading Strategies | No Comments

Which Stocks Are Ready To Pull Back?

Friday, November 18th, 2011

The overall Australian market had a spectacular run in October this year, up a staggering 15 percent from trough to peak on the ASX/S&P 200. In light of this you may wish to ask the experts what stocks are likely to pull back in the new term.

Market Analyser Can Help

You can use the Market Analyser software to identify keys stocks which are indicating that they’re due for a pull back.

Start by using the Watchlist Wizard tool to quickly create a watchlist of stocks from the ASX Top 300. (See below for instructions on using the Watchlist Wizard.)

We can then use the Prealerts scanner available to Market Analyser users to identify stocks that indicate there is “distribution” taking place, as stock is offloaded into the weaker hands.

Set up this scan through the Analyser Wizard, a handy tool within the Market Analyser allowing you to access the Prealerts indicators. For help with this tool check this post.

Yesterday’s scan produced the following list:

As you can see there are a number of stocks that are currently undergoing distribution and could offer a potential sell signal. You may want to research these companies further before entering a trade.

The effectiveness of this scan depends on the current trend of the underlying stock, and we have illustrated this in the following three candidates which came up in a recent scan:

1) AWE Limited (AWE)
2) Metcash (MTS)
3) Spotless (SPT)

Note that you can also use volume as a confirmation of the sell signal, as you would be looking for volume to pick up as the share price falls.

AWE Limited (AWE)

AWE (formerly Australian Worldwide Exploration Limited) is engaged in exploration, development and production of oil, gas and condensate primarily in Australia and New Zealand. AWE concentrates on exploration and appraisal-type assets, in regions of proven prospectivity and where there is a high chance of commercial success.

You can see that the Prealerts worked fabulously for AWE earlier in the year, giving four winning sell signals when the general trend of the stock was down. Now that the stock price is attempting to recover, the Prealerts offer a good signal of when the stock price is likely to take a pause. AWE is now at a key resistance level, but you would want the stock price to trade below the previous swing to confirm a sell signal.

Metcash (MTS)

Metcash Limited (formerly Metcash Trading) is a wholesale distribution and marketing company specialising in grocery, fresh produce, liquor, hardware and other fast-moving consumer goods. MTS has four business units: IGA Distribution, Campbells Wholesale, Australian Liquor Marketers and Mitre 10.

Metcash has been trading sideways for the past couple of months and the Prealerts signal has given a great signal that the share prices was due for a pull back. If you took this signal you would be up 4.5% in two days and would be watching carefully for price action around the $4.10 level which has been the key support level for the past couple of months.

Spotless Group (SPT)

Spotless Group Limited is engaged in the provision and outsourcing of labour-based services in Australia, NZ and USA. Their Retailer Services division provides hanger systems, labels and packaging to the garment manufacturing and retail industries worldwide. Facility Services provides facilities management and support services like cleaning, food, linen and garment services in Australia and NZ.

Again the Prealert scan gave a great signal back in mid-May. There was another signal in early October which pre-empted a sideways move for 3 weeks, but now we have a signal in as the share price finds resistance at multi-year highs, and offers a low risk sell signal. Note that Spotless Group has confirmed it has received a $698 million takeover proposal (at $2.63 per share) from buyout firm Pacific Equity Partners, but says its directors view the bid as too low. The bid from PEP comes six months after Spotless rejected a $657 million offer from US buyout giant Blackstone Group.

Summary

Utilise the Prealerts features in Market Analyser to scan the markets for your specific trade selection criteria. You will save time and identify some likely pullback candidates.

By Michael Hevern
Investment Adviser

For Buy and Sell recommendations on ASX listed companies register for a FREE trial of MDS Financial Research.

Instructions – Using the Watchlist Wizard

1. In Market Analyser, open a watchlist window by selecting Menu > Watchlist
2. Click on the Watchlists item on the top menu bar, and select Watchlist Wizard.
3. In the Watchlist Wizard window click Next, select Australia from the Countries list, then select ASX Top 300 from the Available Watchlists list on the right of the window.
4. Click the Update button. Your new ASX Top 300 watchlist will now be available from your watchlist window.

Disclaimer: The information provided within this article is not an invitation to trade a specific stock, but is intended for educational purposes only.

Tags: asx/s&p 200, Market Analyser, market scanning, technical indicators, Trader Dealer, Trading Strategies, XJO
Posted in Trading Software, Trading Strategies | No Comments

How Understanding Volatility Can Improve Your Trading

Friday, November 11th, 2011

The markets have certainly been volatile lately. This is a comment that you may hear on a regular basis and it is often used to describe a share or market when it falls sharply, but what does it really mean? And more importantly, how can we use an understanding of volatility to improve our trading?

Volatility is the fluctuation in share price as measured over a period of time. If one share moves in a range of 20 cents in a week and another share moves in a range of $1.00 in a week, this would be considered a more volatile share. Note that this says nothing about the direction of the movement, just the range of movement. This is one way to measure volatility and there are many other ways to measure it as well.

The average true range (ATR) is a measure of how volatile a share is on a daily basis. The true range is the movement from the high of the day to the low of the day including any gaps that may occur. The average true range is the true range, averaged out over a number of time periods. In Computershare, shown in the chart below, the ATR(10) varies from a low of 10 cents to a high of more than 30 cents. A spike in the ATR has occurred recently following the announcement that Computershare has gained approval to take over a US based share registry. Looking closely at the chart you will see that when the volatility spikes it can be a sign that the share is about to reverse direction as it did in May and August this year, but the reversal was slower coming in January.

Statistically speaking the range can be defined by the standard deviation, which is the range required to contain a certain percentage of price movement. 99% of price movement is contained within 2 standard deviations of the current price, so only in very rare cases will the price move beyond 2 standard deviations. Bollinger Bands display two bands that are 2 standard deviations from the current price as shown on the chart below. When the bands tighten up the volatility is low and when the bands widen out volatility has increased. As you can see in the chart below volatility has increased sharply following the announcement. From a trading perspective, when the share price breaks outside the band then expect a reversal as can be seen in August, September and October and again recently.

While these measures can easily be applied to an individual share there is a more sophisticated way to look at volatility which is more informative than a simple mathematical calculation. The volatility index, known more widely as the VIX, measures the premium that is being paid to purchase options on the S&P 500 index. To correctly price options it is necessary to take into account the volatility of the underlying market. If option prices spike then it is a sign of an increase in volatility in the market. In Market Analyser the volatility index is accessed by the code .VIX and the underlying index is the S&P 500 .INX. Both of these can be displayed on the same chart using the Overlay security function.

The VIX is shown in pink on the chart overlayed on the S&P 500. Volatility has certainly been higher during the last 4 months than in the few months preceding it based on the VIX. Note the turning points in the index often coincide with the turning points in the VIX. Once the index reaches an extreme a reversal is imminent. High readings in the VIX correspond with points where the market turns higher and low readings in the VIX can signal sharp drops.

Using these tools you can measure whether the market is volatile right now and also use this knowledge to assist in identifying turning points in the share or market you are following.

By Jeff Cartridge
Education Manager

Test this strategy for yourself! Download a free trial of the Market Analyser software here.

Computershare was recommended as a buy by MDS Research Team at the start of November. You too can get advantage of our buy and sell recommendations on ASX listed companies by registering for a free trial of MDS Financial Research.

Tags: bollinger bands, charting, Market Analyser, S&P 500, Trading Strategies, VIX, volatility
Posted in Trading Strategies | No Comments

Finding True Performers in the Market

Friday, September 30th, 2011

I was talking to some traders recently who were upset that the companies they held were not doing well. At the same time the markets were lower and the question I was asked was how much the market was influencing the performance of the shares. Fortunately there is a very simple way to answer that question using Market Analyser and the Overlay Security function.

A rising tide is said to lift all boats, so if the market is going up most shares go up and when the market is falling most shares go down. The overlay allows us to pick out the true performers by comparing their performance to the market.

From the Standard Indicators list, click on Overlay Security, then type in the XCode of the security you want to compare to. .AXJO is the Aussie 200 index which is representative of the Australian market. You are not limited to comparing your shares to the market as a whole, you could compare your shares to the sector, gold or even another share.

In the overlay chart above of BHP versus .AXJO you can see that BHP follows the index very closely. This is hardly surprising given that BHP makes up 15% of the index, so a move in BHP will have a significant impact on the index.

Consider the performance of some other shares that have recently featured in the ASX Company News section of the Trader Dealer blog.

Castlemaine Goldfields (CGT) was certainly outperforming the market strongly through July and August, but currently is falling in line with the market.

Sedgman (SDM) fluctuated between strong outperformance in August to underperformance during late September.

GoConnect (GCN) is currently outperforming the market quite nicely.

We can compare sectors to the index as well and the two strongest performers at the moment are the Health Care and Consumer Staples sectors. These sectors are considered defensive, with investors buying into these sectors when they fear that the economy is weak, because regardless of how bad things get we all have to eat and when medical attention is required it is not usually a choice.

You can use the Overlay Security tool in Market Analyser to strip away the forest so you can examine the trees that are ripe for harvesting.

By Jeff Cartridge
Education Manager

Try this feature for yourself!

Download a free trial of the Market Analyser today.

Tags: Charting Software, Market Analyser, technical analysis, Trader Dealer, Trading Strategies, XJO
Posted in Trading Software, Trading Strategies | No Comments

Using Chart Templates in the Market Analyser Software

Friday, September 16th, 2011

Using templates in the Market Analyser software is an easy way to quickly scan through your shares and identify trading opportunities for today.

You can create your own templates, or use the preset templates in Market Analyser to view your charts with all your favourite indicators automatically applied.

At the bottom of your chart you will find a range of templates that have been pre-set for you. Click between the templates to view different overlaid indicators and find the right combination for your style of analysis.

Starting with a blank chart you can create your own template by overlaying different indicators. Put all your favourite indicators onto the blank chart. Once you have the chart looking the way you want it to be displayed, right click on the chart and click Save New Template.

Now that you have created a new chart you can apply this template to a number of shares that you have in a watchlist. To do this right click on the chart and click Select Watchlist, then click on the watchlist you wish to apply the template to.

Now click on Display Next X Code from watchlist (the third blue circle on the chart tool bar). Using this button you can move through the securities in the selected watchlist.

Using templates, you can look at all the different shares with the same indicators to identify those shares that stand out as trading opportunities for today.

By Jeff Cartridge
Education Manager

Free Software Trial

Not a Market Analyser client? Visit the website to find out more about Market Analyser’s features and to download a free software trial.

Tags: chart templates, charting, Market Analyser, software trial, technical indicators, Trader Dealer
Posted in Trading Software | No Comments

Intra Market Relationships: the S&P/ASX 200, Aussie Dollar and US Treasury Bonds

Friday, September 2nd, 2011

I had a nice trade this week in the Aussie 200, trading contracts for difference. I’ll show you how I made the decisions to enter the trade, but first of all a quick lesson in intra market relationships.

The US Treasury bond is seen as one of the safest places in the world to invest money. It is backed by the US government and despite the recent downgrade in its credit rating, the US has never defaulted on a payment. The market perceives that it is so safe that in the financial crisis of 2008 bonds were pushed up to a level that meant interest rates went negative. This means the US government was being paid to borrow by the investors!

A bond pays interest and the price of the bond changes as the market’s expectations of interest rates rise and fall. If interest rates rise, bonds fall in value and if interest rates fall then bonds rise in value. The higher the price is, the lower the return on the bond.

When investors perceive that the market environment is risky, money flows into bonds. When people are scared by stock market falls, they will buy US Treasury bonds and when people are prepared to take on more risk, they will sell bonds and buy shares. So the normal relationship between Treasury bonds and the stock market is:

• bonds up, stock market down
• bonds down, stock market up

Adding in another independent variable we can follow the relationship between the Aussie dollar and the stock market. If money is flowing into the Aussie dollar then some of it will find its way into the Aussie stock market, and if money is moving out of the Aussie dollar then the Aussie market is likely to fall. The Australian market and dollar are perceived to be more risky than the US markets so when investors are scared they sell Aussie dollars and Aussie shares and when they are prepared to take on risk they become buyers. The normal relationship between the Aussie dollar and stock market is:

• AUD up, stock market up
• AUD down, stock market down

Now back to the trade from Wednesday morning. I was watching the last hour of trading in the US markets and the setup highlighted in the charts below unfolded. The charts are hourly charts of Aussie dollar (AUD=), Treasury Bonds Dec Expiry (ZBZ1) and the S&P/ASX 200 (.AXJO). The highlighted setup occurred. The Treasury bonds fell sharply, and at the same time the Aussie dollar and Aussie 200 both fell away as well. This is not normal behaviour; remember if bonds are falling then Aussie 200 should be going up. The sharp fall in the bond market had me believe that a turnaround in the Aussie 200 was likely.

I watched the market closely for signs that the Aussie 200 had stopped falling and made my first entry around 4325 as it began to climb higher. Instead of rocketing to the upside as I would have liked, the market broke to a new low. It was still above my stop loss, but I was losing a small amount at this stage. The bonds were still lower and the AUD now turned up, this gave me the conviction to add to the trade near 4315 once the Aussie market began to climb again. The trade was supported by simple technical analysis with the market bouncing off an up trend line.

My first exit came about very quickly as the market climbed to the down trend line. There was no guarantee that a breakout would occur so I chose to take some profits early, with a gain of about 15 points on the second entry. The remainder of the position was exited just below 4350 with a limit order set to take me out when my objective had been reached. This was a gain of about 25 points on the second entry and happened to coincide with the market rolling over and falling away from this level. This was more likely good luck than good management.

By combing the view of different markets and understanding the intra market relationships I was able to make a nice profit on this trade.

By Jeff Cartridge
Education Manager

Charts from Market Analyser: download a free Market Analyser trial and test this trade setup for yourself.

Tags: asx 200, aud, Australian Dollar, Market Analyser, Trading Strategies, us treasury bonds
Posted in Stock Market Analysis, Trading Strategies | No Comments

Free Stock Market Webinars to Help Navigate the Volatile Markets

Thursday, August 18th, 2011

Get expert help with Trader Dealer’s free stock market webinars

Do you know how to profitably buy and sell shares in a market this volatile? Could you use some expert help?

Join the conversation at our next Traders’ Café, an informal online discussion led by successful trader and author Jeff Cartridge.

In these sessions participants can ask questions about market conditions, interesting charts, share performances, strategies and results, all from the convenience of the living room.

Volatility in the XJO. Chart source: Market Analyser

For info about other upcoming webinars visit the Trader Dealer website.

Tags: Market Analyser, stock market education, stock market webinars, Trader Dealer, volatility
Posted in Trader Dealer News, Trading Strategies | No Comments

The Covered Call Collar – Part 3 of Options Trading for All Types of Market Environments

Friday, August 12th, 2011

Part 3: The Covered Call Collar

The Covered Call Collar is an options trading strategy that traders can use to protect an existing position that has recently surged into a key resistance level. Rather than simply taking profits on the share position and potentially missing out on future upside, the trader enters into a Covered Call Collar. This options trading strategy seeks to protect your existing share position while still participating in some of the upside for a minimal or no outlay.

The Covered Call Collar allows you to participate in some of the future gains up to the sold strike price, while being protected by the put position.

Covered Call Collar: ideal for participating in future gains, while being protected on the downside.

If you are of the opinion that the stock is likely to sell-off with little chance of breaking the key resistance level, but you still want to hold on to it, you could use a Covered Call Collar options strategy. The Covered Call Collar strategy is similar to the protective put options strategy in that you also buy put options as protection. The difference is that you will now finance the purchase of those put options with the proceeds from writing an equal number of out of the money call options.

The position will still protect you from losses below the strike price of the put options at minimal to no cost to yourself, but it will also stop the position from profiting beyond the strike price of the short call options should the stock stage a rally. That is, you would miss out on a strong rally in exchange for putting on the protection of the put options for next to no cost (apart from commissions, of course).

Use a Covered Call Collar when you expect the share price to move modestly higher or pull back significantly from current levels.

Recent Trade: Newcrest Mining (NCM)

A recent trade which is yet to pay off was Newcrest Mining. We initially entered the share position when the stock price broke above its 50 and 200 day moving averages, around $38.50. It shot up soon after we entered the trade and has now been trading sideways for the past few weeks. We considered a covered collar was appropriate for this position. Based on technical analysis you can see from the chart that the $42.50 resistance level has held for over a year.

So we bought protection at $39.00 by buying 3900 SEP11 Put for $0.645 and then wrote the $42.50 SEP11 Calls for $0.775. We received a credit for this trade and the position remains open. We are protected until September expiry down to $39.00 and profits will be capped at $42.50.

Chart 1: Newcrest Mining Covered Call Collar Trade

You can plan and analyse your trade as shown above, using the Derivative Profiler option in the Market Analyser software.

MarketAnalyser also provides a payoff diagram for further trade analysis as follows:

Chart 2: The payoff diagram for the Newcrest Covered Call Collar trade.

Trade Note

Newcrest (NCM) is still trading between the $39.00 and $42.50 option strike levels and only time will tell whether the share price will end up at expiry, but we are protected until September expiry down to $39.00 and profits will be capped at $42.50.

The Trade

Options can be used in order to reduce your risk while still participating in potential profits from a modest move in the underlying stock. Here we’ve explained the Covered Call Collar strategy which allows you to participate in some of the future gains up to the sold strike price, while being protected by the put position.

In future articles we will talk about the High Yield Covered Call strategy and the Stock Repair strategy which is particularly relevant to this market.

Utilise the features in the Market Analyser software to plan your trades for the particular options strategy using your specific trade selection criteria. You will save time and potentially reduce your trading risk. Sign up for a free 14-day software trial here.

By Michael Hevern
Head of Research

For buy and sell recommendations on ASX listed companies register for a free trial of MDS Financial Research.

MDS Financial Advisory Services offers general advice on trading options to generate consistent steady income on your investment portfolio. Call 1300 610 024 for further information.

Tags: covered call, Financial Advisory, Market Analyser, Newcrest Mining, options, options trading, Trading Strategies
Posted in ASX Trading News, Trading Strategies | 1 Comment

The Protective Put – Part 1 of Options Trading for All Types of Market Environments

Friday, July 8th, 2011

Part 1 – The Protective Put

Options are a financial instrument that you can use for all types of market conditions, whether you’re hedging your stocks or looking to salvage a losing stock position.

Over the next weeks I’ll be covering a number of commonly used options trading strategies that you can execute without any margin requirement. Today we will look at the Protective Put.

Protective Put – it’s like buying insurance for your stock position

If you are of the view that a stock may start to recover but you still want some protection in case it continues to fall, you could use what is known as a “Protective Put” strategy in order to stop your position from making further losses. The Protective Put strategy simply involves buying 1 contract of put options for every 100 shares that you own, at a strike price below the level at which you do not want to own the stock.

The Protective Put options strategy not only protects your stock position if the price goes down further, it keeps the upside open so that if the stock turns around and rallies, you will not miss out on the move.

An example of a protective put situation would be News Corp. The stock is trading into resistance at the moment and if for some reason you did not want to sell your News Corp holdings, you could by a protective put.

If you bought the stock at $16.00, you could buy the Aug11 17.00 Put for $0.17.

This would protect your position down to $16.83 (= $17.00 -$0.17) thereby locking in profits on your position and protecting your downside risk at the same time.

This can be analysed using the Derivative Profiler option in the Market Analyser software.

The Market Analyser software allows you to modify the prices to reflect the current price and provides Profit & Loss diagrams for your strategy.

If you are more convinced that the News Corp share price is about to fall then you should simply sell the stock and buy the put outright for far more superior returns, while only risking the premium you paid for the put.

The Trade

Options can be used to reduce your risk while participating in the profits from a significant move by the underlying stocks. The Protective Put is simply buying insurance for your stock position. In our next article we will talk about the Covered Calls for generating monthly “rental” income from your current stock position.

Utilise the features in Market Analyser to plan your options trades for the particular options strategy, using your specific trade selection criteria. You will save time and potentially reduce your trading risk.

By Michael Hevern
Head of Research

For Buy and Sell recommendations on ASX listed companies register for a FREE trial of MDS Financial Research.

MDS Financial Advisory Service offers general advice on trading options to generate consistent steady income on your investment portfolio. For further information please call 1300 610 024.

Tags: Financial Advisory, Market Analyser, MDS Financial, MDS Research, options, Protective Put, Trader Dealer, Trader Dealer News, Trading Strategy
Posted in Trader Dealer News, Trading Strategies | No Comments

Identifying What’s Hot and What’s Not

Friday, July 1st, 2011

The Heat Map display in Market Analyser is a fantastic way to identify the hot shares on any given day, and also the shares that are not so hot. The Heat Map takes an enormous amount of data and presents it in a simple-to-view format. To access this feature go to the Market Analyser Menu button, select Tools, then Heat Map. Once you are in the Heat Map window you can select the sector you want to examine more closely with a click on the left hand menu.

The Heat Map displays price movements for the day as well as the volume traded. The higher the volume is, the larger the size of the box, and the more movement, the brighter the colour. Today the strongest performer in the Materials sector was Renison (RSN). Simply double click on this square and you will see a chart of RSN displayed in Market Analyser. RSN (shown in the chart below) has a huge volume spike showing in the chart today, but it is also a very low-priced share, which means strong moves are more likely to occur. The shape of the candlesticks pattern here shows evidence of a share that normally trades in very low volumes, and on some days there is no volume at all.

Often you will find the biggest movers among these low volume shares, or illiquid shares as they are often called, but it is usually not practical to trade these shares. Buying can be easy, but trying to sell when there are no interested buyers can be very costly. You can exclude an individual share from the Heat Map, with a right click on the box of the share you wish to exclude. This way you could drop out RSN and redraw the map to identify other hot shares. You can reload the sector to reinstate all the shares.

There are two other shares in the top right corner of the Heat Map that have had strong moves today: Paperlinx (PPX) and Cougar (CGM). Taking a look at the charts of these shares, with a double click on the appropriate box in the Heat Map, provides an interesting perspective.

Cougar has been climbing higher more rapidly each day, resulting in a parabolic move to the upside. Buying after such a strong move has a very poor risk reward. While the share can continue higher, the risk is that the share pulls back sharply, resulting in a losing trade. Paperlinx would appear to have broken out of a significant down trend and is climbing higher. You can do more research on each of these shares by checking out if there were any related announcements made for these companies today.

The Heat Map can also be applied to any watchlist you have created, allowing you to identify the hot shares among the shares you wish to follow. Right click on the watchlist, and then click Create Heat Map. It’s that easy to identify which shares are hot and which are not with Market Analyser.

By Jeff Cartridge

Tags: Cougar, Heat Map, Jeff Cartridge, Market Analyser, Renison, shares, Trader Dealer, Trader Dealer News, volume, watchlists
Posted in Stock Market Analysis, Trader Dealer News, Trading Software | No Comments

Posts Tagged ‘Market Analyser’

Market Analyser Can Help

ANZ Bank (ANZ)

Wesfarmers (WES)

S&P/ASX 200 Index (XJO)

Summary

Market Analyser Can Help

AWE Limited (AWE)

Metcash (MTS)

Spotless Group (SPT)

Summary

Instructions – Using the Watchlist Wizard

Try this feature for yourself!

More Tutorials

Free Software Trial

Get expert help with Trader Dealer’s free stock market webinars

Part 3: The Covered Call Collar

Covered Call Collar: ideal for participating in future gains, while being protected on the downside.

Recent Trade: Newcrest Mining (NCM)

Trade Note

The Trade

Part 1 – The Protective Put

Protective Put – it’s like buying insurance for your stock position

The Trade

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