The volume’s up, so now we’re away

LAST week our market had a big fall on Tuesday, then for three days the market forces were not able to push it any lower.

Wednesday, Thursday and Friday’s market action was to push the index lower, but the bulls in the market were able to overcome the downward push and force the market to close back at its open (and close) for the day.

The move down on Tuesday last week, I believe, was the final exhaustion move, down from the April/May highs.

The next three days were the reversal days and then on Tuesday this week the big move up on increased volume was, for me, strong confirmation the market will now resume the uptrend.

The strong move was reflected in the banks, which will carry the market at least until it gains more momentum.

As a result of this new confidence, I have bought three stocks and, in line with my risk management methods, I will buy more when I have locked in profit on these three by raising their trailing stops.

I bought 3000 A2 Milk Company (A2M) on June 13 at $3.25 for a total of $9770 including brokerage.

I was stopped out of A2M a couple of weeks ago and have been watching them move sideways on greatly reduced volume until the increased volume and move up on Thursday last week.

This was followed by a daily pivot point to the upside on Friday.

This coupled with the reversal days on the index was my buy signal.

If it continues up it has a target around $4.

The stop is now $3.20, the low of the day it was bought.

I bought two stocks on Wednesday this week.

The first was Pantoro Ltd (PNR), which I was also stopped out of some time ago.

It broke above its February 2017 high last week and pulled back for two days, testing the 24c level. Tuesday was a low-volume indecision day when the price opened at 24c, traded a half cent either side of that and closed the day at 24c.

I bought 25,000 at 24c for a total of $6020.

The target for PNR is 31c, which is a major resistance level, so I will sell it around 30c and wait to see what it does there.

The initial stop is 23c, last Friday’s spike low.

If it continues to move up it will strike further resistance around 50c.

The second stock bought on Wednesday was Resmed (RMD), which I have been watching for some time.

It broke above its March high of $9.60 on June 1, then had a slow, low-volume pullback to test the $9.60 level and then formed a daily pivot point to the upside on increased volume on Tuesday. This pivot point was the buy signal and I bought 1000 shares on Wednesday.

It opened at $9.95 (which was a gap to the upside) and the total cost was $9970. The initial stop is $9.62 and the first target is $10.20 but the bigger target is around $13.

I am watching the other stocks mentioned recently as most are close to forming buy signals.

PORTFOLIO POSITION

Cash ............................ $327,782 Shares .......................... $26,400 Total ............................ $354,182 Starting capital of $50,000 in July 2006. www.daytrader.com.au