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The agreement made by the US to sell Uranium to India despite their continued refusal to sign the UN Nuclear Proliferation Treaty doesn’t make it right for Australia to do the same thing. However, this is exactly what the Federal government have decided to do.

What amazes me is how this issue has slipped through to the keeper whilst we have been distracted by global events and the timely arrival of Barak Obama. This agreement to sell Uranium to India is a big deal and like many changes to government policy I wonder what we are not being told.

Given that Queensland is sitting on a huge debt and with the Commonwealth games to be held on the Gold Coast in 2018, one truly wonders where Anna Bligh intends to get the money to meet funding requirements.

Maybe we should watch closely to see whether the Queensland government are forced to reverse their moratorium preventing uranium mining in the state as the economic opportunity to tap into reserves, estimated to be worth $20bn, is likely to outweigh other important considerations.

What do we expect in the market?

The Australian share market has continued to frustrate investors by merely trading sideways for the past four weeks. What is interesting is that despite a strong start on Monday, this week we have seen more days down than up, which could be a sign of things to come.

Even the release of positive manufacturing data, improved housing and jobs data out of the US could not halt the decline as the market continued to trade lower into Friday’s trade. On the flip side the falls have not been large, and so this current sentiment may not last long.

The past two weeks have seen a lack of positive momentum which is understandable given we still have not seen a resolution from Europe. Also from a technical perspective, the market is due to pull back for one to two weeks to again test support before building sufficient momentum to break through resistance at around 4500 points.

Given this, the current short term move does not come as a surprise, and provided the market continues to hold at around 4100 to 4200 points it is more likely to make the next move up rather than fall.

My advice is that now is a time to be patient while ensuring stop losses are in place to protect capital. This will allow you to be ready for the next rise up to Christmas and possibly into January.

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Dale Gillham

Chief Analyst, Wealth Within

Dale Gillham, ‘one of the country’s most respected analysts’ (Wealth Creator Magazine, Nov/Dec 2004), sought after key note speaker and author of the best selling book ‘How to Beat the Managed Funds by 20%’, has assisted thousands of traders and investors to learn to trade shares and become confident and profitable in their direct share investments. Tired of an industry saturated by quick fix gimmicks and expensive short-courses, Dale co-founded Wealth Within to provide ‘ real education and ongoing personalised support’, as well as independent investment advice to traders and investors who have become disillusioned by the market for one reason or another. As testament to this, Wealth Within launched Australia’s first and only nationally accredited Diploma and Advanced Diploma of Share Trading and Investment.For more information please visit www.wealthwithin.com.au

I thought you might like to read one of my most recent articles published by the Australian Securities Exchange in thier monthy ASX Investor Update newsletter.

Follow the link to the ASX newsletter

The article investigates whether the Australian Share Market has reached the bottom or we need to expect the bear market to continue.

Dale Gillham

Chief Analyst, Wealth Within

Dale Gillham, ‘one of the country’s most respected analysts’ (Wealth Creator Magazine, Nov/Dec 2004), sought after key note speaker and author of the best selling book ‘How to Beat the Managed Funds by 20%’, has assisted thousands of traders and investors to learn to trade shares and become confident and profitable in their direct share investments. Tired of an industry saturated by quick fix gimmicks and expensive short-courses, Dale co-founded Wealth Within to provide ‘ real education and ongoing personalised support’, as well as independent investment advice to traders and investors who have become disillusioned by the market for one reason or another. As testament to this, Wealth Within launched Australia’s first and only nationally accredited Diploma and Advanced Diploma of Share Trading and Investment.For more information please visit www.wealthwithin.com.au

One thing remains consistent over the many years that I have assisted traders and investors; that is the confusion in understanding trends. What constitutes a trend? Where does it start? At what point should I buy and sell? And lastly, how do I draw a trend line?

The concept of trends is the simplest and most effective way to trade or invest safely, whether you are a novice investor or an experienced trader. However, what I find is that many traders try to complicate their trading by adding more tools and rules than they know what to do with. The end result is confusion and ineffective trading.

Charles Dow, the father of technical analysis, and who the American Dow Jones index is named after, refers to trends in these simple terms. An uptrend must have higher peaks and troughs while a downtrend requires lower peaks and troughs.

To a day trader, the uptrend means the current daily bar must have a higher high and a higher low than the previous daily bar to indicate an uptrend as shown in Figure 1.  

Figure 1  

A downtrend, on the other hand, means the current daily bar must have a lower high and lower low to indicate a downtrend as shown in Figure 2.

 
Figure 2

For the medium to longer-term trader, this would mean a higher peak and trough than the previous peak and trough measured on a weekly bar chart. This may take place over several weeks or even months as illustrated on the weekly bar chart below.
 
Chart 1

Chart 1 reflects a typical uptrend pattern as espoused by Charles Dow. To make a higher peak you must have a movement up in price followed by a down movement in price. This is achieved by having a series of successively higher bars that lead to a peak, followed by a series of successively lower bars that fall away from the peak. 

To make a trough you need to have a down movement in price followed by an upward movement in price. This is achieved by having a series of successively lower bars that lead to a trough, followed by a series of higher bars that rise up from the trough.

These patterns can unfold on a daily, weekly or monthly bar chart. Your trading plan and your time frame will dictate how you trade this pattern. Your investment time frame will tell you when you should enter or exit a trade.

The inverse of an uptrend is a downtrend; that is lower peaks and troughs.

Assuming you are using the theory that you want to buy a stock that is trending up, then you would buy the stock the moment it fills the rules of an uptrend. That is, you would buy the moment you have a higher trough followed by a higher peak. This would be the point at which the stock trades one cent above the previous peak after forming a higher trough which is illustrated in Figure 3.      

 
Figure 3

In the above example, the stock made a higher trough and then rose in price above the high of the previous peak. Once this occurs the stock is said to be in an uptrend.  According to Dow Theory, you would buy at the earliest probable time that a stock is in an uptrend. Based on my experience, if you are trading shorter time frames, for example a number of weeks, then this theory will work well.

However, for the medium to longer term trader you will notice during the long uptrend of a stock, the pattern illustrated in Figure 3 is repeated several times over a matter of months or even years. Therefore, a longer term investor or trader would only want to get in at the first sign of a new uptrend forming so that they are in a position to profit for the duration of the long term uptrend.

This is your first step in learning how to buy and sell a stock. When you understand how to read the trend you can be more confident of the direction the stock is moving in and profit from it. I would like to share with you more on trading trends when I post Part 2 of How to be Trendy.

To get a better grasp on how to make money by understanding the trends you can read my book ‘How to Beat the Managed Funds by 20%’.

Dale Gillham

Chief Analyst, Wealth Within

Dale Gillham, ‘one of the country’s most respected analysts’ (Wealth Creator Magazine, Nov/Dec 2004), sought after key note speaker and author of the best selling book ‘How to Beat the Managed Funds by 20%’, has assisted thousands of traders and investors to learn to trade shares and become confident and profitable in their direct share investments. Tired of an industry saturated by quick fix gimmicks and expensive short-courses, Dale co-founded Wealth Within to provide ‘ real education and ongoing personalised support’, as well as independent investment advice to traders and investors who have become disillusioned by the market for one reason or another. As testament to this, Wealth Within launched Australia’s first and only nationally accredited Diploma and Advanced Diploma of Share Trading and Investment.For more information please visit www.wealthwithin.com.au

Read the latest article by Janine Cox in  Rescu magazine

I was interviewed this week by Julian Allen from First Prudential Markets for thier Trading Intelligence program on Board Room Radio. First Prudential are a direct market CFD provider and this show is a good way get some great information on the markets. The video is around 15 minutes long so grab a coffee, sit back and relax whilst you get some good info. Just click the link to view. Trading Intelligence

Dale Gillham

Chief Analyst, Wealth Within

Dale Gillham, ‘one of the country’s most respected analysts’ (Wealth Creator Magazine, Nov/Dec 2004), sought after key note speaker and author of the best selling book ‘How to Beat the Managed Funds by 20%’, has assisted thousands of traders and investors to learn to trade shares and become confident and profitable in their direct share investments. Tired of an industry saturated by quick fix gimmicks and expensive short-courses, Dale co-founded Wealth Within to provide ‘ real education and ongoing personalised support’, as well as independent investment advice to traders and investors who have become disillusioned by the market for one reason or another. As testament to this, Wealth Within launched Australia’s first and only nationally accredited Diploma and Advanced Diploma of Share Trading and Investment.For more information please visit www.wealthwithin.com.au