Yesterday the Johns Lyng Group Ltd (JLG) position was closed when the stop loss level of $6.85 was reached just before mid-morning.
The minor pullback in JLG which triggered our stop is somewhat perplexing considering JLG FY 22 reporting numbers were in line with broker estimates.
End of the day all that matters is the actual price action of the stock as opposed to what we think.
So much can change in a matter of days.
Markets continued to slide in the US last night and broke key technical levels (50 DMA). These levels we were hoping would hold have slowly been chipped away.
Much of the recent downturn is on the back of Jerome Powell’s hawkish speech From Jackson Hole on Friday 26th of August. The key takeaway was higher interest rates for longer are a concern for equity markets.
All 3 big cap indexes in the US are now trading below their medium-term 50-day moving average, and many stocks that have broken out above their 52-week highs on the ASX have almost all failed.
The market is clearly communicating that conditions aren’t ideal at the moment, and when there is this much pressure coming, it’s wise to scale back on exposure.
The current outlook can be summed up as a bear market rally which is now under pressure.
With the general market servery punished on Monday, clearly, conditions are still hostile, so we’ll continue to scale back on any exposure going forward, keep smaller position sizing as opposed to larger, with smaller investment amounts as opposed to larger, along with keeping stops tighter as opposed to wider. When our index is trading above the long-term 200-day moving average coupled with a confirmed new uptrend, wider stops can be adopted.
Closed position result
Number of shares: 1,000
Entry Price: $7.75
Exit Price: $6.85
Loss: $900