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The market’s continuing rally over the last 9 months has presented a vast number of trend continuation trades for ProfitSource users. By using the precomputed scans within the software, there are literally tens of trades available each and every day and it’s a simple job running through your checklist to see which ones fit the bill and which ones don’t. If you want a checklist you can use for each trade, attend the TradingKey (www.hubb.com/tradingkey) course delivered by Rob Roy and you’ll receive both simple and advanced checklists during sessions 2, 3 and 4 – all designed to make the trade selection process both prescriptive and easy.
In this trending environment you might not see too many trend reversal opportunities, but when they come it’s again a case of using your confirming indicators and general technical analysis knowledge to whittle through the chaff. A favourite share Andrew Page is United Group (UGL.ASX). This company has not only a strong health ranking (a new feature in ProfitSource, illustrated below) but also matches all the criteria to be a DividendKey stock. The health ranking considers a key set of fundamental criteria that act to drill down to the core health of the business. An excellent filter by itself, but one that really comes into its own when considered in conjunction with technical analysis.
When UGL presented a reversal opportunity recently by showing up in a Wave 5 scan, it then became a process of running through the checklist to see if it was indeed a valid trade. Both the MACD (Moving Average Convergence Divergence) and OBV (On Balance Volume) were supporting the set up and, with an appropriate trigger, a long position would have been taken.
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The resulting trade (still open) would have returned close to a 7% in just a matter of a few days. If a trader was looking to use leverage (CFD’s or options), obviously the actual dollar return would have been extremely sizable.
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Even now, with Elliott Wave presenting the scenario of a turn, the trader should be looking to maintain a long position. The reason? Well, once again, the MACD and OBV continue to support the long position. Stops could be run up in a trailing fashion around the underside of the EBOT, until this is broken (stopped out) or the count was to change. Either way, profits will be booked, perhaps the last ones of the decade!
No doubt traders and investors will be reviewing the ‘year that was’. Some will be looking back with healthy returns, others not so. Regardless, we should all be striving to make next year better. For me personally, 2009 has yielded some excellent profits and I feel (like every year) that I now know more about the markets than I did last year. I hope you too can look back on 2009 as a better trader than you were in 2008.
I sincerely wish for all our readers that 2010 is the best year yet.
Stay sharp
John Jeffery
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