Profiting from The Looming Indian & Australian Market Corrections

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“Indian market correction looms,” we read in a headline yesterday. We wanted to ignore the story and read about Australia being in the ‘box seat’ for uranium. Then we remembered our vow to cultivate our indifference and read the story. The plainly-dressed stories often have the most investment potential.

“India commanded nearly half of foreign fund flows into emerging markets tracked by Morgan Stanley (NYSE: MS) last year, the average market capitalisation last year nearly 50 per cent higher than a year earlier,” the article continued.

This caught our attention because a 50% increase is worth paying attention to. The problem we’ve always had with Indian stocks and the Indian market is the lack of transparency and regular data feeds. And then we remembered a conversation we had with our friend Anil, who’s just launched a data service on India’s National Stock Exchange.

We had lunch with Anil when he was last in town and he showed us some of the features of his new site at BuySellSignals.com. We were delighted to find more of the tactical trading information we were looking for, but this time about the Australian market. We’ve included some of it below as a sample of what’s on offer. You can visit the site directly for more details.

Certain data sets are more useful than others when you are trying to read the market’s signals. Paying attention to daily volumes and its variation from average volumes over a certain number of days tells you, roughly, about the increase or decrease of activity in a share. BuySellSignals keeps track of volume data on a daily and weekly basis, showing you data like what you’ll find below:

MAJOR VOLUMES

Major volumes were traded in:

Agincourt Resources (ASX: AGC) which had 17.4 times average volume (up 25.3% to $1.80).
Glengarry Resources (ASX: GGY) which had 8.1 times average volume (down 12.7% to 6.2c).
South Boulder Mines (ASX: STB) which had 6.0 times average volume (up 11.3% to 29.5c).
Scimitar Resources (ASX: SIM) which had 2.7 times average volume (up 2.9% to 70c).
Arafura Resources (ASX: ARU) which had 2.0 times average volume (down 0.5% to 92.5c).

If you’re following the money, surfing the liquidity, you want to look for the highest rises over a week. It can give you some good leads, or at least some ideas on which sectors to focus on.

HIGHEST RISES

A total of 52 stocks (or 81.2%) rose during the week. Major price rises included:

Southern Gold (ASX: SAU) which soared 14c (or 32.9%) to close at 56.5c.
Goldstream Mining (ASX: GDM) which climbed 10c (or 17.2%) to close at 68c.
Kalgoorlie-Boulder Resources (ASX: KAL) which added 1.5c (or 13.6%) to close at 12.5c. 30.5c.

We haven’t used them much yet, but BuySellSignals also offers sector reports and analysis. We looked at the uranium sector to have a better look. Some of what we found is below:

URANIUM SECTOR

Up $557.88 million (0.4%) January 29, 2007 16:00:00 AEST

The Uranium Sector market capitalisation (MCap) rose by $557.88 million or 0.4% to $139.51 billion. Access current Sector Research on URANIUM for: Dynamics Table, Major Volumes Traded, Summary, Trading Floor Report, Top Rises and Falls(Updated hourly) and Constituents, Daily Report, PDF Report, 5- day Report, 5-day Dynamics Table (Updated Daily)

TRADING FLOOR NEWS

Since open turnover value of $852.07 million was 3.5 times the average turnover value of $246.49 million. A predominant number of trades (or 96.8% by turnover value) were at ask price suggesting a seller’s market. This is a bullish signal. Since open its percentile rank in the Australian market was 98.5. Falls outnumbered rises 17 to 10.

There were 10 rises (32.3%), 17 falls (54.8%) and 4 stocks (12.9%) were unchanged.

The BST Arms Index (trin) defined by [Number of rises / Number of Falls] / [Turnover of stocks that rose / Turnover of stocks that fell] was 0.2 and rising. A Trading Indicator of less than 1 is a bullish indicator.

NEW 52-WEEK HIGHS AND LOWS

Four stocks that hit new highs were:

Marathon Resources (ASX: MTN) which soared 40c (or 16.7%) to hit a new 52-week high of $2.43.
South Boulder Mines (ASX: STB) which soared 3c (or 11.3%) to hit a new 52-week high of 27.5c.
Scimitar Resources (ASX: SIM) which was up 2c (or 2.9%) to hit a new 52-week high of 72c.
Strike Resources (ASX: SRK) which was up 5c (or 2.2%) to hit a new 52-week high of $2.33.

For traders, the interesting bit of data there is the number of trades executed at the seller’s price. This is bullish because it means buyers aren’t being particularly picky about what price the trade gets executed at. They want to accumulate, and are willing to settle at the seller’s price. Worth noting.

It’s also worth noting that very soon, all of our talk about investing in small cap stocks will soon be turned into action. In the next twenty six days we’ll be debuting the Australian Small-Cap Investigator for your inspection. You’ll be able to read about our own proprietary research into Australia’s best undiscovered small stock opportunities. And hopefully, we will have some luck in locating the next generation of stock market winners right here in Australia. Stay tuned!

Seriously, don’t touch that browser address bar!

We mean it.

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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Comments

  1. can annyone say whats gonna happend with “tomahawk energy”, am stuck with this stock 4 ages, /asx ,thk / thanks in advance.

    Reply

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