Stockradar: CSL (CSL)
March 10, 2010
Who cares what the market thinks! My take is that CSL shares are back in demand!
In our last Off the Chart report we looked at Seven and the demand criteria required to buy the stock for a trade and as SEV now launches itself higher we turn our attention to CSL and use the same “market edge” (everyone needs one!) technique to open up a high probability trade on CSL. This will be the first “glance” at CSL for nearly two years as uptrend qualities have been muted – until now!
To trade the odds that a market edge offers we must take all generated signals as by definition of “the odds” it tells us that not all signals will evolve into a profit and of course we don’t know exactly which ones will and which ones won’t. Yes I know, tough but true, and for those stocks that don’t rise as expected we cut them short and for those that do rise we run them as hard as we can thereby making a profit.
A consistent profit can be generated by buying with a market edge and then selling within a controlled environment of money management rules. And the reason we have money management rules is to bring about the best outcome – making money – so the selling rules need to be robust, smart, and able to turn a profit. The selling is about you taking control of the trade yourself. Something many of us fail to do or fail to think we can. No we should not be the mercy of the market and if you are you’ll lose. Respond to the market yes but our responses should be carefully crafted and acted on thereby taking that control of your trading actions and in turn your destiny.
This may seem simple and yes it sounds simple enough but at any point in time we still don’t know what is going to be a profit and its size and what is going to be a loss until that profit or loss is crystallised. There is always a mental tussle in our minds thus my definition of the stock market being likened to a horse race that has no end – until you sell. Thus there is always a battle in our mind, up or down, of in the case of a horse race, first past the post. The sentence above is the old age question which is unanswerable now but always eagerly answered in hindsight. So can we take that unanswerable question out of the equation and turn a consistent profit? Unequivocally yes!
I play a market edge that tells us the stock market trades higher for the majority of the time so I base all my buy signals on simple soundly based demand weighted price actions that repeat themselves just like trends do, over and over again! How often have you looked at a chart of a stock you have bought and for the life of you, you can’t work out why the hell you got out of it when you did because in fact it was still trending beautifully, as we now know. Trends in stock prices are so prevalent that we should all do better if only we knew how to control ourselves. We need to learn to follow rules and the answer to doing that successfully is to take “us” out of the equation and let the things we know like trends, stop losses, and money management rules takeover thereby gaining the control essential to successful and consistent trading.
Base your trades firstly on entering using a market edge, whatever that may be, to give yourself every chance of turning a profit and those entries should be simple and rule based and then let your money management rules take over to ensure you cut any developing losses and maximise the opportunities any developing rallies offer. Once you’re in a trade the brutal fact is that it is now about making money and not any stock picking wits or glory.
On the money management and selling side we can have risk assessment, volatility, position size and many other conditions as a part of it. My approach is to use a simple stop loss strategy worked in with buy signals which is then limited by a certain amount of risk to each trade. Some large trends are made up of lots of smaller trend moves so if a stop loss is hit, which protects me against calamity and losses, any subsequent New High, if it occurs (if not I stay neutral), is bought to ensure exposure to any new trends and inevitably using this approach I must then capture the big ones. Recent examples include TPM and CBA. Again not able to lay claim to picking the ones that will take off I simply take all signals. In order to do that you must control the amount of stocks you cover so as your money doesn’t run out when a roaring bull roars loudly and buy signals are in abundance.
Let’s now run the simple “buy” template over CSL which has now swept through the criteria ticking each and every box (rule) to enable me to make a sound “odds on” buy recommendation based on changing demand and supply indications of the CSL share price and this has zip to do with fundamentals or what anyone else thinks.
Key Low Reversal Description: Clear evidence of support at a Trading Range or Key Low that must followed and enhanced by evidence of a increased demand taking on the form of a reversal price structure. (e.g. Candlestick Engulfing pattern)Detailed steps using weekly only data:
1. Key Low price level is hit and it holds.
- Support for CSL is strong at $29.00/30.00
2. Volume rises in response to new buying.
- Steady increase in volume since lifting off $29.00/30.00
3. Follow through buying
- CSL share rallies from the support to $35.00
4. Reversal price action breaks identified trigger point on a weekly basis i.e. Fridays closing price.
- Predefined “buy” trigger was set at $35.00
5. Stockradar then adds a further filter using Stockradar Trend Intensity rating to give confirmation.
Trend Intensity rating rises to a qualifying 8 out of 10.
6. Buy the open the following Monday and set stop loss
Stop loss set at a maximum 10% risking 2% of capital = $32.50
In our last Off the Chart report we looked at Seven and the demand criteria required to buy the stock for a trade and as SEV now launches itself higher we turn our attention to CSL and use the same “market edge” (everyone needs one!) technique to open up a high probability trade on CSL. This will be the first “glance” at CSL for nearly two years as uptrend qualities have been muted – until now!
To trade the odds that a market edge offers we must take all generated signals as by definition of “the odds” it tells us that not all signals will evolve into a profit and of course we don’t know exactly which ones will and which ones won’t. Yes I know, tough but true, and for those stocks that don’t rise as expected we cut them short and for those that do rise we run them as hard as we can thereby making a profit.
A consistent profit can be generated by buying with a market edge and then selling within a controlled environment of money management rules. And the reason we have money management rules is to bring about the best outcome – making money – so the selling rules need to be robust, smart, and able to turn a profit. The selling is about you taking control of the trade yourself. Something many of us fail to do or fail to think we can. No we should not be the mercy of the market and if you are you’ll lose. Respond to the market yes but our responses should be carefully crafted and acted on thereby taking that control of your trading actions and in turn your destiny.
This may seem simple and yes it sounds simple enough but at any point in time we still don’t know what is going to be a profit and its size and what is going to be a loss until that profit or loss is crystallised. There is always a mental tussle in our minds thus my definition of the stock market being likened to a horse race that has no end – until you sell. Thus there is always a battle in our mind, up or down, of in the case of a horse race, first past the post. The sentence above is the old age question which is unanswerable now but always eagerly answered in hindsight. So can we take that unanswerable question out of the equation and turn a consistent profit? Unequivocally yes!
I play a market edge that tells us the stock market trades higher for the majority of the time so I base all my buy signals on simple soundly based demand weighted price actions that repeat themselves just like trends do, over and over again! How often have you looked at a chart of a stock you have bought and for the life of you, you can’t work out why the hell you got out of it when you did because in fact it was still trending beautifully, as we now know. Trends in stock prices are so prevalent that we should all do better if only we knew how to control ourselves. We need to learn to follow rules and the answer to doing that successfully is to take “us” out of the equation and let the things we know like trends, stop losses, and money management rules takeover thereby gaining the control essential to successful and consistent trading.
Base your trades firstly on entering using a market edge, whatever that may be, to give yourself every chance of turning a profit and those entries should be simple and rule based and then let your money management rules take over to ensure you cut any developing losses and maximise the opportunities any developing rallies offer. Once you’re in a trade the brutal fact is that it is now about making money and not any stock picking wits or glory.
On the money management and selling side we can have risk assessment, volatility, position size and many other conditions as a part of it. My approach is to use a simple stop loss strategy worked in with buy signals which is then limited by a certain amount of risk to each trade. Some large trends are made up of lots of smaller trend moves so if a stop loss is hit, which protects me against calamity and losses, any subsequent New High, if it occurs (if not I stay neutral), is bought to ensure exposure to any new trends and inevitably using this approach I must then capture the big ones. Recent examples include TPM and CBA. Again not able to lay claim to picking the ones that will take off I simply take all signals. In order to do that you must control the amount of stocks you cover so as your money doesn’t run out when a roaring bull roars loudly and buy signals are in abundance.
Let’s now run the simple “buy” template over CSL which has now swept through the criteria ticking each and every box (rule) to enable me to make a sound “odds on” buy recommendation based on changing demand and supply indications of the CSL share price and this has zip to do with fundamentals or what anyone else thinks.
Key Low Reversal Description: Clear evidence of support at a Trading Range or Key Low that must followed and enhanced by evidence of a increased demand taking on the form of a reversal price structure. (e.g. Candlestick Engulfing pattern)Detailed steps using weekly only data:
1. Key Low price level is hit and it holds.
- Support for CSL is strong at $29.00/30.00
2. Volume rises in response to new buying.
- Steady increase in volume since lifting off $29.00/30.00
3. Follow through buying
- CSL share rallies from the support to $35.00
4. Reversal price action breaks identified trigger point on a weekly basis i.e. Fridays closing price.
- Predefined “buy” trigger was set at $35.00
5. Stockradar then adds a further filter using Stockradar Trend Intensity rating to give confirmation.
Trend Intensity rating rises to a qualifying 8 out of 10.
6. Buy the open the following Monday and set stop loss
Stop loss set at a maximum 10% risking 2% of capital = $32.50
What do I do in bear markets? Contract to cash and preserve my capital.
To uncover more about the Stockradar strategy and now it works go to Stockradar.com.au
“As a weekly long only equity trader my foremost rule is to protect and preserve while profiting from the uptrend cycle of the stock market and this WILL happen if I follow the rules and that’s why I don’t fear losses.”
– Richard Lie
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