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Sunday, May 31, 2009

Market Commentary

STI did clear 2,283 on Wednesday. The breakout on Wednesday, retracement on Thursday & further rally on Friday resembles an A-triangle breakout ( although I still like to reiterate the pattern itself is not as ideal as I would like to see so I am casting doubt on the validity myself ). If the pattern is valid, the minimum target is 2,508.
Depending on the time frame we are examining:
Time frame: March 10, 2009 ( 1,463 ) ~ May 5, 2008 ( 3,270 )
Fibo 50% = 2,400 ( round number )
Fibo 61.8% = 2,600 ( round number )
Time frame: March 10, 2009 ( 1,463 ) ~ Oct 10, 2007 ( 3,906 )
Fibo 38.2% = 2,400 ( round number )
Fibo 50% = 2,700 ( round number )
Based on the above, 2,400 appears to be a critical level that STI must break. Once this level is taken, 2,500 appears to be safe ( A-triangle target ). Thereafter, 2,600 ~ 2,700 will be very critical again.
In any case, STI has risen 892 since March 10. Momentum indicators are beginning to show signs of bearish divergence. As the index climb higher, it is wise to reduce exposure and hold cash. The Fibo levels above are only probable guide, the market can reverse anywhere it likes!

Below is an excerpt from a book I am currently reading called "The New Market Wizard" by Jack Schwager "Patience was an element that a number of the super traders stressed as being critical to success. James Rogers said it perhaps most colorfully, "I just wait until there is money lying in the comer, and all I have to do is go over there and pick it up. I do nothing in the meantime." In essence, by not wanting to trade, I had inadvertently transformed myself into a master of patience. By forcing myself to wait until there was a trade that appeared so compelling that I could not stand the thought of not taking it, I had vastly improved the odds."

PS: Stock that continued to look good to me for swing trade : IndoAgri !


Thursday, May 28, 2009

Genting / Synear / STI / Olam

The chart below was done to share my view with 'Sunflower', I thought I might as well post it here. On the chart, the uptrend is still intact ( as accurate as this moment ) for as long as it does not break below .68. However, this is news driven and I don't know how much more selling from the Lim's family to remain so this is as accurate as the EOD data available as of now. I have actually picked up a small quantity yesterday based on Swing setup. Will see....

Buy signals from the two systems I use. These signals, however, are for longer time frame ( in between Swing & Position trade ). Therefore, it is good to time the entry using other tools such as candlestick ( don't rush in ). Same for Swiber, the buy signal in an earlier post wasn't for Swing Trade.

I always like to stretch my imagination, such is the case here. Technically, the case is weak from the perspective of duration and number of touch. But never say never, real life situation may not be textbook perfect!



Tuesday, May 26, 2009


Buy signal based on two separate trading systems:


Sunday, May 24, 2009

Market Commentary

STI is currently supported by 10 days & 250 days moving averages. The weekly candle is a bullish engulfing candlestick although not large enough to my liking. At a glance, all is well. The uptrend is still intact ( and that may still be true ). However, the failure for STI to break 2,283 on Wednesday provided the first warning sign of market weakness. RSI exhibited clear sign of Failure Swing** provided a even more serious signal that the trend is weakening and likely to reverse.
That said, there is still hope because all those are only 'warning signs' at this time. It is not uncommon for the index who had failed on the first attempt to clear a major resistance to pull back / gather strength and then clear it on the next attempt. The labels "1/1, "2/2" in the chart are not Elliot Wave count but to demonstrate the argument on how STI has behaved before. I am cautiously optimistic that last Friday marks the pivot point of the pull back and we can clear 2,283 next week. Usually, rally on late Friday afternoon would mean there is follow through buying momentum on Monday. I hope this tradition will not be dampened by the 14 points drop in Dow on Friday & that the US market will be closed on Monday ( Memorial Day ) where locally STI may be searching for direction.
If the 'hope' I have depicted does not come true ( ie: STI to break 2,283 does not come true ), then the 'warning signs' will turn into reality ! For now, this is something to be cautioned about !!

** ChartNexus does not show the failure swing, I don't know why. But MetaStock & SI Dynamic TA chart show it very clearly.

PS: I am scaling down on my post as I need to commit more time to crunch 8 ~ 9 books from now till Oct in preparation for the CFTe level II Exam. Some of the books are harder than hell to read. If you are not convinced, try reading "Forecasting Financial Markets" by Tony Plummer. I think it required someone from A*Star to understand the book!



Friday, May 15, 2009

Olam & Golden Agri

Today is not a day for commodity stocks players! Both Olam & Golden Agri ( FirstRes too ) were beaten up badly. They were warded in the ICU and subsequently being sent to the hospice. I am not trying to be humorous but other than self-amused, what else can I do? Net profit rose by 56% but share price plunged by 6.5%!? Personally, I have pretty high exposure on this counter.
Gaining early entry in anticipation of a flag pattern formation can result in such a situation. That's why the book always advocate 30% of probe during the formation. A bull flag formation comes with a bearish channel. If the channel is not bearish, it would not call 'bull flag'. Now, 'bearish' channel will always associate with the risk on whether it will be bearish all the way or will it reverse at some point to complete the bull flag.
I only have Olam but not GoldenAgri. I did not cut loss although 1.75 was triggered. I use my discretion based on other factors such as the counter is severely oversold. Despite the flag pattern formation has been destroyed, as long as prices are within the 20MA & 40MA. This actually fit the Swing Trade setup. In other word, if I did not look at this counter from the 'flag pattern' standpoint. I will still get in at this point prompted by Swing Trade buy signal.


Thursday, May 14, 2009

Golden Agri

The flag pattern continued to take shape. It is looking even better than on Monday when I first mentioned about it. Again, a chart pattern is not valid until it is completed and when the breakout takes place.
The correct way to trade chart pattern is to
spilt your positions into three batches. 30% buy during the formation ( this is called the "probe", aimed at taking advantage of the lower entry price but risk if it is a false pattern ). 30% on breakout, 40% on completion of the return move ( or throwback ).
SMS alert can be used to help monitor the breakout during your business day. Set the alert to the expected breakout price ( say .495 ) and volume to 150K ( which is the average volume for a full day, on breakout, this volume should be achievable by mid-day because full day volume should be double ).


Possible Reversal Day ?

In Technical Analysis, there is this thing called "The Measured Move**". It describes the phenomenon where a major market advance or decline is divided into two equal and parallel moves.

Mar 10 - April 16 : 1947.30 - 1,455.47 = 491.83
April 28 - May 8 : 2,283.84 - 1,791.45 = 492.00
April 16 - April 28 : 1,947.3 - 1,791.45 = 155.85
May 8 - May 14 : 2,283.84 - 2,125.93 = 158.01 ( Intra-day figure )

The index is now touching 10 MA, CCI is low. We could, if the market so wish, to take today as the reversal day.

** Reference: Technical Analysis of the Financial Markets by John Murphy, Chapter 6 page 151


Wednesday, May 13, 2009

Wilmar - Time Tell !!

This is NOT a buy call. Just a revisit to demonstrate the power of chart pattern breakout ! Since my last post on April 21 ( here ), a new trend has born for Wilmar and it has now become a momentum stock ( too high to chase for now ). I wish I have bought 200 ~ 300 lots and kept it till now !!
Now, I can only hope Olam can be as accurate as Wilmar !


A friend of mind requested for a more thorough analysis & chart on Olam. I have done the below for her and at the same time updating here:

[Quote] Attached are two charts for Olam. One is the zoom out view giving you the big picture, another is the close up view showing the flag formation. Please note this is as accurate as today. A chart pattern is not a chart pattern until it is complete and the breakout takes place. Both daily & weekly charts are still bullish based on Parabolic SAR. Cut loss at : $ 1.75. [Unquote]


Tuesday, May 12, 2009

Straits Times Index Elliot Wave Upate


Mid-Day Digest

[12:50pm] I am queuing for some stocks to go long but I am not chasing at this time. Although STI has dipped by 72 points yesterday and almost 30 points by mid-day today, the index is still quite far away from the 10, 20, 40 days moving averages. CCI has not reached oversold yet.
The sharp rally last week was almost vertical. What may happen is that the correction may not be an inverted V erasing all gains from the previous 7 days. It may take the form of bearish bias sideways consolidation move edging down gradually over the next 1 ~ 2 weeks forming a flag or pennant ( this is only my own speculation ).....
Many counters such as Olam, Golden Agri and even the ST Index all look as if this is the case. Of course, this is as accurate as of now because the market was downed only 2 days so far. Anytime, if prices pierce through on either sides, this speculation will be void.

Potential STS play: ST Eng

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Monday, May 11, 2009

Golden Agri

This counter is pronged to chart patterns. I caught the symmetrical triangle but missed the flag subsequently because I no longer monitor it. Now, it seems like another flag or pennant is forming subject to breakout confirmation. On breakout, target equal to the flagpole height.


Sunday, May 10, 2009

Straits Times Index

STI gained 475 points in 7 straight sessions closing above the 250 days Moving Average. 250 MA is the bull / bear divider. Below this MA, the bear is having fun. Above this MA, the bull is in control. The past week rally was extraordinary. However, any upward momentum will be exhausted after some time just like when we toss a ball up in the air. Friday's closing was a spinning top candlestick, a sign of weakening momentum. I won't know for sure which day(s) next week this may happen but I do foresee a decent pull back on the cards. The pull back, however, is unlikely to be too vicious as in it will erase the recent gains. The rally was attributed by the strong hands (institutions). They probably won't let the market falls too much before the public has a chance to participate ( so that they can distribute, my guess ). Furthermore, many people are waiting to buy on dip especially for those who have missed the boat or betted on the wrong side of the market ( like myself ). Supports are at 2,100, 1950 ( support figures updated ).


Friday, May 8, 2009

I Was Hurt Again !

I was hurt again yesterday when I shorted Capitaland at around 11:30am. I am not a gambler and I don't take the market as casino. The short position was entered based on technical ground as there was valid set-up & trigger for short sell. Unfortunately, most ( if not all ) of the short sell signals failed to work amid the current strong uptrend rally. This bull run is not only powerful but quite cunning. Started since Wednesday, each day STI would plunge by as much as 50 points just before mid-day hoovering between positive & negative giving people an impression of an impending pull back. Despite that I have factored in market weakness as an additional filter to the set-up, the market then rally back by 104 points or 62 points after lunch to stop out my positions.
Three trades in two days are all it takes to wipe out my entire gain in April. Fortunately, my risk appetite is not big and this is as far as the market can punish me.
One of my friends Cheridan wrote an e-mail to the Yahoo Group we belong. I really love these two paragraphs from him and I hope he don't mind me quoting it here without his prior consensus: "Today was a day that most or all valid shorting setups failed again.... Anyone and everyone who was buying without any valid setups or reasons. Any Tom, Dick, Harry, May, June or April who was buying simply won! Anyone sitting in front ot the terminal and just clicking the "BUY" key for the past two days was laughing all the way to the bank. The hardworking folks who were doing their homework diligently burnt holes in their pockets. ".
That is true, I spent hours at night to scan for those valid short positions but they all failed. Although I am not defeated, I must say I have succumb to the fact that we shouldn't buck the trend. Many TA books often mention sell signal in a strong uptrend don't always work and buy signal in a strong downtrend often fail. I am convinced counter-trend trade is rather risky although the past week rally was also quite exceptional.
I will need some time to lick my wound and to rebuild my morale!


Wednesday, May 6, 2009

Wrong Side Of The Market !!

Ouch !! I was caught on the wrong side of the market ! I shorted Yanlord & SembCorp this morning thinking that the market will pull back after the past few days of strong rally. Unfortunately, the new wave of powerful rally in the afternoon has proven me wrong. My stop loss for both positions were triggered and I have to return as much as half the profit I gained last month to the market. Actually, the losses won't have to be so much but I adjusted the stop loss for Yanlord a few times using my own discretion.
Lesson learnt : Don't buck the trend, don't anticipate, adhere to the trading plan.... and more.... all recorded in my trade journal.

The volume/distribution charts below explained why "katek die pain pain" today. There is presence of strong hand since last Thursday. A friend of mind just shared this with me after he attended an investment seminar at Merril Lynch today: The fund managers missed out the action over the last 6 weeks so they are all dying to get a piece of the action which explained the continual rally.


Tuesday, May 5, 2009

Straits Times Index Breakout

This post addresses the question from the anonymous reader who left me his question in the "comment" area of my last post:
What we have seen the last few days was a strong breakout from a double bottom neckline as shown in the chart below. Support is 1,945, resistance is 2,145. Double top takes place in an uptrend usually at market top and serves as a bearish trend reversal. Double bottom is the opposite, take place in a downtrend reverse upward.


Sunday, May 3, 2009

Post Removed ( May 4 )

I have removed the post I made on Sunday ( SPH & Yanlord ) because I realized there are readers who come to this blog just to pick up the name of stocks I post here and go buy without reading carefully the analysis ( eg: whether it is meant to be for short or long and action only if there is trigger or void if there is no trigger....etc. ). I don't want to cause anyone to lose money potentially for mis-interpreting what I have posted here !
Mimosa ( May 4, Monday )