I have been holding Hastings for some months and spoken of the purchase in this forum on many occasions. This patience seems to be paying off. The share has broken from a pennant formation and has exceeded the 52-week high achieved at the end of September 2016.
A few weeks ago, I wrote about corporate action involving the company which I deemed very positive for the share.
The chart is shown below. I have removed the valuation and EPS plots. They are both excellent and VectorVest values the share at 405, while the last trade on Friday the 30th December was at 249.
On the chart, the vertical line represents the extent of the last move. Technically this move should repeat in what chartists refer to as a “measured move”.
If my sums are correct, this should result in a short term target of around 280. It may take a few days to clear the “round number” of 250. The 52-week high is at 240, and the share is probably going to come back and “kiss” this level before moving higher, even under the most positive circumstances. Letting your winners run seems a simple concept in a trading class, but in reality, it takes a high level of presence and self-awareness.
On the 20th of December, the share charted an “outside bar”. This simply means that the range of that day (high minus low) engulfed the range of the previous day. In this case, the outside bar engulfed the range of the last two days. I refer to this as “multiple outside bar”, and it’s a very positive sign. Of note was that the outside bar closed in the top 25% of the range of the day. Many chartists argue that this adds to the probability of success.
On the 20th there was also a Green Light on both the price column on the Color Guard on VectorVest and on the Buy/Sell ratio. The trends both long and short term on the VectorVest Composite were both UP.
I used the mixture of Green lights (a general market signal), the outside bar and Hastings excellent fundamentals as a reason to add to the position. This was the first addition since getting into the position a few months ago.
I will consider adding once more if and when the share closes above the round number of 250 and the general market continues to show Green Lights. You get very lucky just following the Color Guard and buying undervalued shares that are rising in price.
A cornerstone of my ability to make money in speculative markets is to be in a larger position when I am correct than when the market proves my efforts incorrect. “Press all winners without hesitation or reservation” was the slogan of one of my first mentors away back in the 1980s.
I will write about the general market, gold and currencies in a separate blog post over the holiday weekend. When the market is moving strongly, as has been the case over the past few weeks, it’s easy to think that you have somehow been awarded Guru Status by the trading gods. Try not to think about the past or the future. Focus on here and now and listen carefully to the voice of the market as defined by your trading rules and the VectorVest colour-coded metrics. The lessons within the Quick Start Course on VectorVest will help formulate some rules.
Focus on letting profits run, cutting losers quickly, never ever adding to a loser while pushing (trader slang for adding) winners and you won’t go far wrong.
We don’t know what’s going to happen next on a trade-by-trade basis. However we can prepare for what we will do, should the market react and move in a certain way. You can break the rules in the last paragraph and get away with it. Eventually, those rules will break you for not respecting them.
Wishing all reading a very happy, healthy and prosperous 2017.
December 30th 2016