Futures premium seems to augur well
THERE was considerable volatility in the indices over the past two weeks and this week, as of Wednesday, we have seen the momentum move back to the upside.
We still have the SPI futures contract trading at a premium to the ASX 200 that it trades against, auguring well for the continued move up.
As of Wednesday, the All Ords again traded above 6100, but closed the day two points below 6100. The ASX 200 closed above 6000, indicating the momentum has a wide base.
My decision to put stops on hold – while I studied the effect stops were having on our portfolio in this transition from long consolidation to the beginning of a strong uptrend – has so far been beneficial.
Some of the stocks purchased had strong moves up from long consolidation and it is usual for there to be a pullback after these strong moves.
Once the uptrend is well established then my policy of placing stops at the most recent spike low will again be my preferred method.
You will notice the stops on the portfolio position have not been amended, so what will happen is the noted stops will be used and adjusted up as the stock price moves up again.
I will comment on each individual stock to clarify what I have in mind.
This is a new concept for me when it comes to stops, because for many years, I have used stops without fail.
It is my plan to revert to rigid stop placement soon and I will make it clear when I am back on track.
There are three stocks in the portfolio trading below their respective stops.
Whitehaven Coal (WHC) I commented on last week and has now moved up. Depending how it behaves this week, I will decide whether to sell or hold it.
Artemis Resources (ARV) fell to trade below its stop and within the October consolidation range early this week and, if it does not reverse to the upside by the end of this week, it will be sold. It is still well above its purchase price.
The other stock trading below its stop is Australian Mines (AUZ) which formed a daily pivot point to the upside on Monday around the level of the recent share placement so it will now need to resume the uptrend or it will be sold.
Now on to three small stocks I am watching closely.
Rimfire Pacific Mining (RIM) looks to be consolidating after a strong move up to resistance going back four years.
Venture Minerals (VMS) is in a similar position and European Cobalt (EUC) is consolidating around 24c.
❝My decision to put stops on hold ... has so far been beneficial
PORTFOLIO POSITION
Cash ............................ $268,187 Shares ......................... $152,190 Total ........................... $420,377 Starting capital of $50,000 in July 2006.