Monday, 13 February 2012

The treasure hunt begins anew

Now that we have indications of a rising tide for global equities, it's time to resume my favourite task as a trader. 

What I like best is to search for the strongest stocks in the market, the ones that might (might might maybe might) double in value in the years ahead. If I'm exceptionally lucky I might find some that double again. 

To have even the slightest chance of finding such gems, a trader simply must buy stocks that are making 12 month highs, and even better those that are making all time record highs. By definition a stock that is in the process of doubling in value and doubling again, is hitting 12 months highs regularly. This is simple logic. The stocks that are hitting 12 months highs must be identified, and then bought on either strength or short-term weakness, according to a trader's style. 

In past years I have restricted myself to the Aussie market, and that's where my search begins now. Likely I will search further afield if a global bull market develops. My preference is to buy the strongest stocks in the strongest markets. Right now that would mean looking at the US tech stocks.

Let's take half a step back here. To state the obvious, we don't have a bull market in Australia, not by any means. But there is enough potential for one to form, given developments in the biggest stock market on earth (the US), that it is at least time to start building up a watchlist of stocks that might do best if a new bull market develops.

It's too early to say that a bull market will develop in Australia or globally, but in case it does, I intend to have both a watchlist and portfolio featuring stocks that are leading the charge. 

Tox Free Solutions (TOX) forming a Cup and Handle continuation pattern

The chart of ASX traded Tox Free Solutions (TOX) appears to be forming a Cup and Handle continuation pattern on the long term weekly chart. A breakout would have a measured target of approximately 4.50. That said, I am not big on measured targets. I would rather keep a rising stock until I see a confirmed reversal pattern. Anyway that's all cart before horse stuff for TOX. For now, it is one to watch, and if it suits your style, to take an anticipatory position in.