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MDSFinancial
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Archive for December, 2008
You are currently browsing the Online Stockmarket Trading Update blog archives for December, 2008.
Friday 19th December 2008 MDS Morning Wrap
Friday, December 19th, 2008ASX Top 20 Update
Thursday, December 18th, 2008Dear Members,
I have updated MDS Radio with a new recording covering the XJO, DJI and the ASX Top 20.
Best Regards,
Leon Hinde
Click here to watch the presentation.
Thursday 18th December 2008 MDS Morning Wrap
Thursday, December 18th, 2008December Reflections – FAQs
Wednesday, December 17th, 2008Can I view the research recommendations on other computers?
Yes you can, as long as you know your username and password you can login anywhere onto MDS Financial Research.
How much experience do your analysts have?
Our analysts have a minimum of 7 years of market experience with the total of the team totaling more than 4 decades. They have been working in both bull and bear markets, and are well qualified to give you expert recommendations and commentary on the markets.
Am I able to establish an online account to trade these recommendations?
Yes, Trader Dealer Online, a subsidiary of MDS Financial, allows clients to trade online or via a phone trading service at very competitive rates. To find out more about Trader Dealer please visit the website, or call 1300 853 856.
Can you trade the recommendations for me?
Yes, MDS Financial has a CFD advisory desk which will trade the CFD recommendations for you and our subsidiary Trader Dealer provides an online trading service for trading the shares and options recommendations. Trader Dealer Online has both online and phone trading services at very competitive rates. To find out more about Trader Dealer please click here, or call 1300 853 856.
Who's who in the Zoo – Jeff Cartridge
Wednesday, December 17th, 2008Meet the staff at MDS Financial Group Limited and this month will feature our Education Manager Jeff Cartridge.
Jeff’s association with the markets started in 1998 when the technology boom was in full swing and making money trading shares, appeared to be very easy. This changed dramatically in 2000 when the internet bubble burst and the following two years saw the markets fall heavily. Jeff decided to expand his knowledge so that he could make money in different market conditions and learnt about options, warrants and contracts for difference (CFDs) and began trading these instruments with some success.
The market recovery from 2003 onwards saw his investments grow and trading improve having researched, developed and practiced a number of successful trading strategies, which he now shares with a broader community. Jeff has shared his in-depth knowledge of the markets by educating tens of thousands of people in Australia and New Zealand about trading and has presented for numerous organisations including Cube Financial (a subsidiary of MDS Financial), E*Trade, CMC Markets, Trading and Investing Expo and Pavilion Securities.
Jeff strives to be the best he can be by helping others improve their results in the markets and declares trading the markets as his favourite past-time! The markets are constantly changing and evolving, which ensures he keeps current and sees the need to keep learning. He is a skilled presenter, with a logical, organised and creative approach who sees himself similar to a dolphin flexible and goes with the flow!
To relax, Jeff enjoys sailing around the Bay of Islands in New Zealand (Jeff s home base is Christchurch) and when the opportunity arises unwinds in a hot spa/pool after participating in rather active sports like skiing, kayaking and windsurfing.
He has many passions and other than his partner in life and trading, he savours the beauty and driveability of his classic jaguars. It is no surprise with his love of fine women and fine cars that his favourite movie is Taxi.
Volatility & The Markets
Wednesday, December 17th, 2008Volatility has been white hot in the past few months. We have highlighted the impact of volatility on market movements in previous reports. The volatility index (VIX) is referred to as the fear gauge and has been at historic highs in recent months. The market movements of late have been spectacular, as you can see from the attached chart. The VIX spikes have coincided with significant down moves in the S&P500 and consequently on other world markets.
What this means is that traders are now more prepared to hold positions, while at the same time they are hedging all or part of their holdings.
The markets are desperately trying to form a base in the short term. Markets in the US have priced much of the bad news into the equity prices, this is confirmed by the fact that is the past week or so it has been able to shake off the barrage of bad news that seems to appear daily. The key catalyst in the short term will be some resolution to the Auto Bailout package, with the White House acting as the white knight; then then implementation of the TARP program. Keep an eye on the NASDAQ and the Dow Jones Transportation index as lead indicators for any recovery.
In Australia the ASX has been consolidating above the October lows and a close above 3750 will be a trigger for an assault on the 4000 then possibly the 4500 levels. We remain in a bear market but we are looking for a bear market rally in the near term.
To read our special report on recent Share Price Movement, simply take a , FREE trial of MDS Financial Research, by clicking here
Currency Data in Market Analyser
Wednesday, December 17th, 2008With many people travelling over Christmas and sharp fluctuations in exchange rates you may like to take a look at the currency charts in Market Analyser. There are two ways to access this information. Data for currencies is available versus the USD and can be viewed for a wide range of currencies. Most currency codes in Market Analyser are three letters followed with an equals sign, eg EUR= or AUD=. These currencies can be added to a watchlist, charted or analysed like any other security. To find the code of the currency you are interested in use the Search facility.
Currency Pairs
In addition to this cross rates for the major pairs are available through the Currency Matrix. To access the currency cross rates: Click MA Menu, Tools, click Currency Matrix
The currency matrix displays the major cross rates for the currencies, from both directions. Double click on the currency pair of interest and you will be taken to a chart of that currency.
When charting currency pairs, the first currency in the name is the currency that is rising when the chart is in an up trend.
Buy Write Strategy
Wednesday, December 17th, 2008A strategy of buying stock and forward selling is called covered writing or a Buy and Write strategy. A call is a contract that entitles the buyer to purchase from the seller a fixed number of shares at a fixed price up until the expiry date. A covered call writer therefore only sells a number of calls equal to the number of shares already owned. The underlying share price of a stock would have to rise substantially to outperform the covered writer. A few basic points on the Buy and Write
- The major risk in a Buy and Write strategy is the price paid for the stock. Investors should only buy stock at a price that represents fundamental value.
- Equally the investor must be prepared to sell stock at the strike price of the option should the share price rise.
- The Buy and Write strategy is used primarily by investors who are interested in generating income. Private investors often have unrealistic expectations for share price growth and underestimate the inherent risk and cost of buying and holding physical shares. A growth stock that does not have a high dividend may trade in a tight range for a period of time. This would mean that the investor would not receive sufficient return to compensate for the holding costs. A strategy of combining a physical stock purchase with writing calls can provide the investors with a minimum return for a given period at an acceptable level.
Once a share price moves up, there are several different actions the investor can take.
- Liquidate the position by selling the underlying shares and repurchasing the call option sold. This is usually only considered where the delta on an option is close to one.
- Roll up to a higher strike price. This is done by repurchasing the option sold and recording a loss, but then selling a higher strike price to record a greater net gain should the share price continue to gain.
- Create a spread by purchasing a higher strike price than the strike price already sold. This would create a bear call spread. The underlying stock could then be sold out.
- Do nothing and allow the estimated returns form the buy and write to stand.
Here is an example of a buy write strategy showing the difference in capital only and also Margin Lending.
| Lihir Gold LGL 12th December 2008 – 76 days until February expiry | ||||||
| Capital only | ||||||
| Buy/Sell | Stock | Units | Price | Total | ||
| Buy | LGL | 4000 | $2.46 | ($9,840.00) | ||
| Sell | LGL Feb 250 | 4 | $0.30 | $1,200.00 | ||
| Calls | ||||||
| ($8,640.00) | ||||||
| Downside protected to $2.16 | ||||||
| Standstill return 12.19% | Annualised 58.56% | |||||
| Exercise at expiry return 13.82% | Annualised 66.37% | |||||
| Using Margin Lending with an borrowing interest rate of 9% p.a. and a Loan to Value Ratio (LVR) of 60% | ||||||
| Buy/Sell | Stock | Units | Price | Total | ||
| Buy | LGL | 4000 | $2.46 | ($9,840.00) | ||
| Sell | LGL Feb 250 | 4 | $0.03 | $1,200.00 | ||
| Calls | ||||||
| ($8,640.00) | ||||||
| Initial capital required per share – $0.984 | Total initial capital – $3,936 | ||||||
| $0.984 | ||||||
| Total Interest cost for 76 days @ 9% – $110.64 | ||||||
| Downside protected to $2.16 | ||||||
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| 31.74% | ||||||
If you are interested in learning more about these strategies please contact Tom Boland by email.
Message from the Chief – December 2008
Wednesday, December 17th, 2008My first 6 months
I have now been in my role as COO of MDS Financial for 6 months during a time, which has been one of the toughest in history for an investor. When I started on the 1st July the ASX200 was trading at an already depressed 4,985 before falling to a low for the 6 months of 3,259 and rallying to where it sits now at 3,510 a long way off the markets all time highs.
I am happy to report that you, our customers have remained with us during this challenging time. To achieve this it means that you must have been applying what you have learnt in our trading events and utilising our software and data to survive these difficult markets. It also means you will be well positioned to recognise and be ready for when the opportunities in the market present themselves.
I thought I would take this opportunity to inform you what we have been up to over the last six months and what we have planned for the year ahead.
MDS Financial CFD & Share Research
In response to your requests we have been busy with the introduction of a fully web based research product that offers a heap of information and some fantastic share and CFD recommendations. Click here to get a login and check out the portfolio to see the returns our analysts have been achieving in these volatile markets. But we haven t finished yet .over the coming 3 months we are going to add more interactivity to the site with watch lists, quick quotes and a whole area dedicated to option recommendations.
To all current users we are going to send you a survey in the next month to allow you to give us your feedback on our new research and what you think we could do to improve it. Please take the time to give us your thoughts.
Market Analyser (MA)
For over 10 years in various forms the Market Analyser (MA) has been helping thousands of traders get the information they need to trade the market. We have now decided it is time that the MA under went a facelift and have introduced the new software with three levels of subscription to cater for the varying levels of traders and investors that use this product. Please click here to review the new product levels. As we move into the New Year we are working on a new way to deliver data to MA to make it one of the most stable platforms in the Australian Market and we are going to continue to allow you to trade through MA with our subsidiary Trader Dealer Online.
Relaunch MDS Financial Private Client Service
When our three companies merged 2 years ago to form what is now known as MDS Financial we had a Private Client Advice business which has been quietly running in the background. It has been decided in the new year to dust this business off and offer the services of our Private Client Traders to all of our customers. This service is perfect for those of you that wish to maintain your exposure to direct equities and are short on the time necessary to make informed decisions as well as those of you that wish to implement new strategies such as option trading but would like to do it under the guidance of a professional trader.
We expect this service to be fully integrated into the subsidiary of MDS Financial Trader Dealer Online by the middle of the first quarter of next year. If you are interested in becoming a client of this service, please click here to send us an email.
Karma Update
Our financial Karma article has started to get some traction with $870 donated to this point. Remember it is never to late to place a smile on kids face for Christmas. Click here to donate. Read the full article.
Finally, I am going to take this opportunity to thanks everybody for continuing to involve MDS Financial in your investment making decisions and wish you and your family a safe and festive Christmas season.
Damian
COO
Executive Director
New Upgrade – Market Analyser
Wednesday, December 17th, 2008A new free Market Analyser update will be released on Monday; this will be the last update before the end of the year. The main target for this release was to have the charts load faster, which I m pleased to say, was accomplished very well. I m looking forward to everyone being able to experience this faster loading.
Other changes in this release:
- The local database is now automatically compacted once per month. This should assist with people who use large portfolios and watch lists, in both better performance and smaller file sizes.
- Saving an image of a chart now saves the image at a slightly higher file size than before, but this means that extra colours in the chart are now no longer reduced, making the image sometimes appear grey.
- In Vista, there were some issues with the height of particular windows not being setup correctly, causing gaps and menu items to not appear. This has been rectified.
- Previously, if a window was open overnight, then the last price for the chart would reset to zero, as part of the initialisation for every new trading session. This has been fixed.
- Some rolling futures codes couldn t be added to watch lists in certain circumstances, this has been fixed. (You re still unable to combine rolling futures and specific month futures in a single watch list. This is intentional)
- ASX Company Announcements should now be displaying automatically and correctly again.
We ve also been working on data changes for how the program communicates with our servers for its market data, but this is not yet ready for release into the Market Analyser. More news and the ability to test this system will be coming in the New Year. Amongst other things, this will also allow us to again run multiple data centres for better redundancy, to safe guard against outages and make the program much more efficient in how it communicates with the servers, giving much more reliability.
Thank you very much, to all the team, for their contributions to this release.
