Kaz Minerals

The chart of Kaz.L is shown below and it’s a share that’s featured in this blog many times over the past few years. The chart is in my usual format with the VectorVest valuation plotted as the green line study above the price. Earnings per share (EPS) is plotted as the blue line study in the window below the price.

kaz.l

As you can see the share is much undervalued by the market and growing EPS strongly on the back of a vastly improved Copper price. The share gave the last Buy signal on VectorVest at the end of June 2017 and since then the price has moved from 500 to 816 as I write. This is a stellar return and position traders should be sitting and enjoying the move which as I will explain looks set to continue.

I traded the share during this period via a leveraged spread bet and it was a good time. I got stopped out of the position in the pullback that occurred on the 11th of August. In a leveraged position I always place a stop with the market maker which is actioned without any extra input from myself. The pullback occurred at a FIB objective which is shown on the next chart below. Kaz.L found resistance at a 1.618 extension of the last major pullback. Found resistance is a flashy name for swing traders taking profits at the FIB target and this profit taking caused the pullback that stopped me out.

kaz fib1

As you can see the resistance was temporary and growing EPS in Kaz.L is driving the share price higher. The old high at the 1.618 extension was exceeded a few days ago. The next price objective now becomes the 2.618 extension of the last major pullback which I show on the next chart below. That’s at a level of 928 and I would expect Kaz.L to get there quite soon. For the record 1.618*1.618 equals 2.618 and it’s a vital number in FIB analysis.

FIB KAZ 2

I am back on board Kaz.L, again on a spread bet, as the share broke up through the old high made on the 9th August. The initial stop was at the last swing low which was 695. After the strong move of the past few days, I have now brought the stop to entry.

Many will question all this effort and say why not just sit out the move. As you will note, the VectorVest Buy signal did not change to hold or sell on the pullback. There is no concrete reason save in my trading plan. In my trading plan for my leveraged account, I feel more comfortable taking smaller controlled bites out of the market and keeping stops close to the market action. I thoroughly enjoy swing trading using fast 3-5 moves. It’s also very profitable and much more profitable (for me) than intraday trading.

If I buy the share outright, I do my best to sit in the moves and use the VectorVest calculated stop to exit a winning position via a trailing stop loss. I wrote about this a few weeks ago in a lengthy blogpost. In my leveraged account I prefer smaller bites with tighter stops and use FIB techniques to coordinate targets as described above. VectorVest does the calculations for you.

Kaz.L is a great example of how VectorVest combines excellent fundamental and technical analysis to pinpoint high probability moves in the share market. Please note that it’s not FIB, moving averages or oscillators that is driving the price upwards. It’s the profits that the company will make that’s driving the price upwards buoyed by the copper price. Dr DiLiddo, the founder of VectorVest, says that “Good portfolio management starts with buying the right stocks”. That’s the first and most important step and just having those stocks in your portfolio is a big and vital part of success in the stock market.

In my trading in any time frame (whether position trading or swing trading), I look for shares that are undervalued and that are growing earnings strongly and reasonably safely. I then apply some simple technical analysis to get entry points as described in Lesson 4 of the Successful Investing Quick Start Course which is built into the VectorVest program.

Please let me know if this has helped.

 

David Paul

26th August 2017

6 thoughts on “Kaz Minerals

  1. Hi David, it certainly has helped. Thank you. I wouldn’t of known about this share if it wasn’t for you and since then I have made £20 grand from it. I have found the VV eps graph and the VV valuation very helpful in planning my exits. As it stands I’m still in the trade. I haven’t paid much attention to FIBS but I understand a lot of traders do so I have to take it seriously so thanks for letting us know about the next extension. Best Wishes, Si

  2. Thanks for the update – I just love this share; it’s the most successful share I’ve had for a number of years and is now 120% into profit – with more to come.
    Interesting on the numbers with Fibonacci; I’ve not considered using 2.618 extension before, but it makes total sense when one looks at the numbers.

    Thanks
    Vance

  3. Hi David, thank you for a great blog on teaching trading mentality. I previously had the FIB line drawn in VV as per the one given above. From 09/08 – 11//08/2017 there was a pullback from 752.5p to 653.25p and I redrew my FIB line on this; this 1.618 gives a price of 813.8p. On 25/08/17 the high=843p, low=814p, close=816p, i.e. spot on values. I somewhat left wondering which line to keep and next time you are at Manchester User Group I am interested to hear your views, I presume both are correct and it is a case of, ‘take your pick’

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