Price paid for experiment

IT WAS the middle of January when our market formed a weekly pivot point to the downside and finally last week it formed a weekly pivot point to the upside.

This is the first indication of a change of trend, but it still has a little way to go before it breaks the down-trend line which has been in place since January.

As of Wednesday this week there was still a gap of more than 20 points between the ASX 200 and the SPI futures contract, so there’s not much optimism there.

But if the move up continues, we may see some confidence come back into the market.

In the meantime CCP Technologies (CT1), which broke its stop a while back and was trading on very thin volume, was sold over a couple of days this past week.

I did not sell on the open the day after it broke its stop, or at market which is my usual practice, as the volumes being traded would have meant selling the market down to a much lower price.

Again this is all due to my experiment into holding speccie stocks for a longer period in anticipation of bigger gains.

I knew, but ignored, my own advice about trading in stocks with low volume.

In the case of the stocks involved in the experiment, the volume had increased to a point I was happy with, and in some cases this was after a period of years of virtually no volume.

However, my mistake was to not sell when they broke their stops, because once they started to decline it was not long before the volume again dried up — making it difficult to exit.

Sunstone metals (STM) broke its revised stop of 3.1c — the spike low formed on April 4. Again it was trading on low volume so I put a sell order on at 3c and it was sold over the next few days.

I had raised the stop on Helix Resources (HLX) to 3.8c, the bottom of the recent sideways move, and it closed below that on Wednesday and it was put on the market on Thursday. The details will be in next week’s column.

In all these cases if they had been sold when they first broke their stops I would have sold at a much higher price and as there were higher volumes there would have been no issue selling. I still have Big Un (BIG) in the portfolio list but it is looking very likely that it will be a very big loss unless something unexpected happens within the company.

I am expecting it will be delisted, in which case it will be a total loss.

However, being the eternal optimist I will keep it in the list until then.

Without the stop experiment it should have been sold when it broke its stop in November last year at more than $4.

All in all this has all been a very expensive lesson.

Last week I mentioned the upcoming fund raising by Australian Vanadium (AVL) and sure enough the small shareholders were ignored.

Raising funds like this certainly hurts small shareholders but is within the rules that have been designed and implemented by the companies to benefit the company.

More on this next week.

PORTFOLIO POSITION

Cash ......................... $366,132 Shares ...................... $35,200 Total ........................ $401,332 Starting capital of $50,000 in July 2006.

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