for my heirs & descendents
Case Study 6: Australian Sector Opportunities
The Abuelo System’s Australian IT Sector contains 46 stocks in a watch list. In the 5 weeks from 1 May 2026 to early June 2026 the top 8 shares increased about 50%. The best performing share MP1 almost doubled.
This out-performance was caused by an earlier large drop in the sector caused by widespread fears that AI code writing would decimate companies in the sector leading to later bargain hunting by investors.
It is interesting that MP1’s RSI (Relative Strength Index) was 98/100 on 5 June, a strong signal to the nimble investor to take profits. The Close on the day also fell 8% from the Open price. Note there are strong SELL
signals for three other stocks as well.
Case Study 5: Fund Managers
Changes in the Australian All Ordinaries Index have a close similarity
to changes in the Dow Jones Index (US) which cannot be ignored.
The Dow Jones Industrial Average had fallen for 8 days straight in late April prior to the increase on April 30, 2026. The Dow surged, closing with a gain of approximately 790 points or 1.62%, to finish at a level of 49,652. The S&P/ASX 200 also rose 0.7 per cent also snapping an eight-day losing streak, the longest since 2018.
There are several explanations for the sudden rise in the Dow. The main one seems to be the sharp reversal in the oil price. By midday, WTI had fallen 1.7% to $105 a barrel, with Brent crude sliding 3% to $114.50. The reversal suggests traders concluded the Iran briefing reflected contingency planning rather than imminent action — and that the initial geopolitical premium was overdone. For equity markets, lower oil is a direct input cost relief for airlines, retailers, shipping companies, and manufacturers. It is also an inflation dampener at a moment when the Fed is watching energy prices ..
The Economic Times
02 May 2026 04:24 am IST
A word of warning! Sudden rises like this are usually followed by equally sudden falls!
This is not advice to buy or sell anything. Prior results do not
guarantee future performance!
The week commencing 27 April 2026 was not a good week for short term
investing. Support markets were all in decline. Sometimes there are stocks going against the trend but investors must proceed with caution.
This is not advice to buy or sell anything. Prior results do not
guarantee future performance!
The Abuelo System, being short term, uses the best intra week gains by selected individual shares for weekly momentum investing.
In this mid April 2026 case study #2 we are using the Australian IT sector with 46 shares. While these are actual results, they are "on paper" as no shares were actually bought or sold.
At the start of the week we zero the sector by making the
current and bought Prices the same and the start Buy Date
the Monday at the start of the week. As the week unfolds
we select the best performing shares for purchase after comparison with appropriate technical analysis indicators
Note by the end of the week ending 24 April 2026 all the
shares "bought" have been cashed out.
As a consequence of this trading strategy, we made a gain of $1048 on investment of $21K (7 x $3000) or 5% for an average of 4 days. The maximum
any share was held was 7 days. Brokerage has been deducted at 2 x -$20 per share.
This is an extraordinary result given the turmoil in world oil markets and Trump playing Battleships.
In terms of trading efficiencies, the win loss ratio for the 7 shares was 5:2 or 5 wins to 2 losses, a win loss ratio of 2.5 to1. Our long term minimum is 2 wins for each loss to protect capital.
In addition, at the end of the week, 6 of the 7 shares were below their sale prices so much of the $1048 profit would have been lost if we had not sold out. In the case of NXL ($ 689 profit) the RSI was 94/100. The only way from there was down!
The main reason for selling out was weaknesses in the essential support markets.
This is not advice to buy or sell anything. It is for illustrative and educational purposes only and is selective.
Here is an example of the effectiveness of the Abuelo System (Case 1) from April 2026. It shows a return of 13% for 7 stocks, bought with RSIs (Relative Strength Indices) less than 35 (“Oversold” level). The stocks were “held” for an average of 5 days. This is a slightly confected situation due to the volatility caused by America's Iran war. The stocks were also selected with ranking hindsight, but a return of 13% for 5 days demonstrates the potential of the Abuelo System.
It also shows the importance of buying the ASX dip when available but notice the ASX subsequently fell back so having an exit strategy is critically important to protect gains.
It also shows that it is possible to make money in a falling (sector) market depending on your risk appetite.
