Volatility brings a nasty hit for week

ANOTHER week has gone and we’re still seeing the indices trading sideways.

On Wednesday, when this column was written, the index formed a daily reversal, which would indicate the market might move up again soon.

Last week the portfolio took a bigger hit than I normally expect to see, but I guess – until the uptrend resumes in earnest – volatility is to be expected.

This is the reason I am limiting exposure to the market at the moment.

The biggest loss for the week was the big fall in Bathurst Resources (BRL), after it closed below its stop on September 14. It opened the next day at 12c and was sold at a loss of $2000 for the week. However, this was a loss of just $400 on the initial purchase price, which is not so hard to swallow.

The 40,000 shares were sold at 12c for a total of $4780. After BRL was sold, it traded back up to 15c before closing at 13.5c on Wednesday.

It looks like it will fall further before maybe finding support around 12c.

There was a consolidation between 12c and 13c for about three weeks in August, which might prove to be support as it was also the spike high formed in November last year.

There is a bigger pattern formed since early 2014 that is still in play and if the price does reverse from the 12c support level, then the target would still be 28c – the high in the pattern formed in late 2013.

I will be watching it closely to see how it behaves in the short term. It may form another buy signal for me.

I forgot to adjust the purchase price of Lynas (LYC) to the average purchase price of 14.9c after my latest purchase of an additional 60,000 shares. This figure is now reflected in the portfolio position table.

The number of shares held in LYC now means a 1c move in price will mean a $1000 change in portfolio position.

This, along with the loss on BRL, was partially offset by rises in the price of Altura Mining (AJM) and NRW Holdings (NWH), resulting in an overall loss for the week of about $1500 – still not a particularly good week.

I mentioned some time back that there was a lot of movement in gold stocks. We have seen some move up sharply only to fall back, while others have slowly moved up to new levels.

The differences in the way stocks have reacted to the move in the gold price have made it risky for me to trade individual stocks. This volatility may change as the market trend eventually stabilises and provides some trading opportunities, along with other resource stocks.

At the moment, only two stocks have their stops above break-even and I will consider adding one more stock to the portfolio until the uptrend is reestablished.

Two stocks I am looking at are Highfield Resources (HFR), which is consolidating just below $1.20, and Artemis Resources (ARV), which is set to break above the high formed in 2013. Both may soon form buy triggers.

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