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Wednesday, August 26, 2009

Recount On The Card

Okay, enough nagging on why the past three weeks' correction was so shallow. I found the answer ! Using the "what if" feature in my Elliot Wave software, I was able to emulate the wave count when the index breaks 2,700 again. When that happen, there will be a recount.

The chart below is the present count. I think I have nagged before the 3 & 5 are too cramp and should not be almost the same height. Now I know why.... !

Below is the emulation. The last candle is hypothetical. Once I added that last candle purposely exceeded 2,700, the chart immediately show the recount as below :

Of course in real life, the market will not give us such a long candle in one session or would it happens by tomorrow. Whatever time it takes for us to break 2,700, that will be last leg of the 5 waves. After that, the real deeper correction I have anticipated will follow.
To conclude, it was my mistake to have thought that the 5 Waves have completed and that the past three weeks correction was the correction after 5 Waves. I think we have at least another 100 points up from here as the last leg !


Tuesday, August 25, 2009

Updated STI Chart

Updated STI Chart :

Parabolic SAR buy phase triggered today. With this, I am more optimistic that the index will clear the last significant high at 2,647 and possibly retest 2,700. However, I am still very apprehensive about the correction being too shallow. Correction at the end of 5 waves really should not be so shallow. So even if we are heading north in the near term, we should stay cautious !

Noble closed at $2.21. For those who missed the opportunity today or haven't buy enough can look up for the return move to buy on dip ( provided if the return move take place at light volume ).

Next, I am beginning to monitor SingTel at around $3.25 ~ $3.26 but this may take a few days and depend on market sentiment.

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Noble Breakout ?

[11:00am] $2.13/$2.14


Monday, August 24, 2009

Good Closing !

STI rose 67.47 points to close above the downtrend line. Although a close above 2,647 is required to mark a higher high, I am cautiously optimistic the market is turning bullish. ( I have edited this paragraph slightly after the initial publish )

Please read also the cautious view from UOB Analyst : UOB Kayhian Technical Analysis

I am still holding half of the Wilmar I bought at $6.28. I was stopped out at $6.16 for half the position ( lose almost $500 ). The other half where I didn't place a stop was intentionally done that way for hedging purpose. So far, this strategy has been working fine for me. Several counters such as Golden Agri where my broker was wronged were eventually squared this way with a small gain ( instead of loss ). This method may be against all of the money management rule. But imagine if I let the entire position to be stopped out, my losses would have been $1,000 instead of $500. As of today, my net loss has reduced to $200 ( since Wilmar bounced back to $6.41 ). If prices continue to rise, I should end up with a gain due to the hedging.


Capitaland $3.75 / Noble $ 2.10


[4:30pm] I don't think it will happen today since we left only 30 minutes to closing but do look up for Noble breaking $2.10 at high volume the next few days!


The chart below was prepared before the market open this morning. I thought it will take 1 ~ 2 days to trigger $3.75 but apparently it was done upon the gap up at opening. In my last post, I stated the long term trendline was broken ( which is still correct ) but I neglected a less steep trendline which was supported



Sunday, August 23, 2009

The Week Ahead

STI has corrected by 38.2% from the peak & trough of Aug 4 ~ July 8. The uptrend & downtrend lines are converging. The week ahead should see STI try to sort out a clear direction. A break below the last significant low of 2,520 ( which will break the uptrend line too ) signal a bearish move. Next support will be 2,424 ( then gradually 2,250 ). A break above 2,630 ~ 2,650 ( which is the last significant high ) signal the three weeks correction may possibly be over.

Personally, I feel 38.2% is too shallow for a correction at the end of 5 waves. However, the market has not been given late comers too much chance to find good entry since the rally began on March 10. So it is hard to say, this may be it ! Furthermore, Dow has turned bullish with the strong gain of 155 points on Friday. If the rally is sustainable, regional bourses will take cue and should rally out of the dark cloud built up the last three weeks!

While reviewing the 30 STI component stocks to find out whether they are currently above ,below or touching the long term uptrend lines. I obtained the following summary ( A = above, B = Below, T= Touching ) :
Capitaland ( B )
CapitaMall ( A ) - look up for $1.57
CityDev ( A )
Cosco ( B )
DBS ( B )
F&N ( B )
Genting ( A ) - look up for potential breakout at .92 ~ .925 at high volume
GoldenAgri ( T )
HK Land ( T )
Jardine C&C ( A )
JSH ( B )
JMH ( B )
KepCorp ( A )
Kepland ( A )
NOL ( T )
Noble ( A ) - triangle pattern forming, look up for pot breakout at $2.10 at high vol
Olam ( T )
OCBC ( A )
SemCorp ( A )
SembMar ( A )
SIA ( A )
SIA Eng ( B )
SGX ( A ) - there seem to be a wedge formation, look up for $8.6
SPH ( A )
ST Eng ( T )
SingTel ( B )
Starhub ( pretty trendless, can't classify )
UOB ( T )
Wilmar ( T )
Yanlord ( B )

The results : 9 has broken the trendline, 13 above & 8 touching.

PS: Technical Analysis is time sensitive. Some of the numbers referenced before such as 2,480 was good through the last few days but have little meaning as we move forward. This is because the trendlines & moving averages are either ascending or descending. Take next week for example, if we break below 2,520 which is the last significant low, the uptrend line will be broken. So 2,480 has little meaning to be mentioned again.


Thursday, August 20, 2009

Candlestick Trade - High Risk Game !

Time and again, I hurt myself in the same fashion. Despite that I have a view of the market and my own trading plan. I could not resist the temptation when I receive the daily SMS buy alert from my technical broker cum trainer. I have filtered off two such prior alerts but not sure why I didn't do the same for the 3rd call which was for Wilmar.
I entered the trade at $6.28 two days ago based on a SMS buy alert. There was a candlestick setup called STS. The result, few hundred dollars have flushed down the toilet soon after I took the position in the morning where the stop loss at $6.16 was triggered the same afternoon !
I am fully convinced by now that the so called "Professional Trading Tactics - Using Candlestick" is a high risk game. I may have made a little bid of money out of a few trades but more often ended up with larger losses. The problem is that these setup ( STS, CTC, Bullish Gap, Bearish Gap, Tired Bear, Tired Bull, Exhausted Bear, Exhausted Bull... etc. ) required that you enter the position after a large decline of 3 ~ 5 days when prices push back to above the previous day low. The trigger for the setup often turn out to be a bull trap. The fact that we can only enter when prices push back to higher than previous day low versus a layman who simply grab it at the low price is making us more vulnerable when we realized we are tripped by a bull trap. Moreover, the setup pays no attention to the current trend. & broad market sentiment. Even if the current trend is bearish, it is still a buy based on the setup since this is a guerrilla
This is not an isolated incident ! On June 10, I entered a trade for Kepland at $ 2.6 based on exactly the same SMS alert & setup. Guess what, when Kepland nose dived to $ 2.05. My paper loss was $5,500 ! I did not practice cut loss for that trade. I bite the bullet and eventually ride it through to see the sky....
I write this to remind myself, I should refrain from candlestick & counter-trend trade..... no more buying on impulse based on SMS alert too ! If I stick on to my belief consistent with my blog here, I won't be a few hundred dollars poorer this week ! Well, if someone hurt me once, it is not my fault. When someone hurt me twice, it is my fault !


Wednesday, August 19, 2009

Updated STI Chart

No change in my view on the market, just an updated chart on STI :

As shown in the chart, 2,480 is indeed a pretty strong support. However, based on 38.2% retracement as reasoned out in my post on Saturday, chances is we may see 2,250. But we shall maintain a neutral view and let the market tell us the answer.


Monday, August 17, 2009

2,480 Support !

Regional bourses plummeted Monday :

As of the time this blog was written ( 8:30pm ), Dow future was triple digits in the red. If Dow ended the day with triple digital plunge, we may see some more downside tomorrow. 2,480 looks set to be a strong support. This level is confluence by the following:

1. Uptrend line support
2. Gap support
3. 40 days simple moving average support
4. Aug 4 ( 2,700 ) - Aug 7 ( 2,542 ) = 158 points
... Aug 14 ( 2,647 ) - 158 points = 2,489

If the market ever get there ( 2,480 ~ 2,500 ), it could be a good entry for rebound play ! The rebound may take the index back to 2,580 ~ 2,600. I am ready to take the calculated risk too !

IF $2.4 holds, it is looking attractive. Anything below $2.40 is not a good idea ! So maybe let it test $2.40 and buy when it bounces back to $2.45?

Why I pick Olam is because this is one of the stocks where the uptrend line is still intact. Many other stocks the uptrend lines have already been violated. Volume / distribution chart shows sellers are weak hands whereas buyers are strong hands. This is the opposite of the many counters I have reviewed such as Capitaland, Kepland, SGX, Noble, Wilmar, Yanlord, IndoAgri, SingTel....etc. The sellers are strong hands, buyers are weak hands.

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Saturday, August 15, 2009

Straits Times Index - Macro View

One of the premises of Technical Analysis is "History repeats itself" ( the other two are "Market action discounts everything" & "Prices move in trends"). The Elliot Wave chart I have produced below is based upon this premise.

This is probably the most comprehensive Elliot Wave chart I have ever produced. It is a weekly chart traced back to ten years ago where the last bull market has begun. The circle on the right is where we are today. I believe this is corresponding to where we were in the last bull on the left hand circle :

If my assumption make sense, we may already be in the correction. Based on history, the corresponding correction lasted for 4 weeks & corrected by 38.2%. Using the same ratio, we may be looking at 2,250 in the coming weeks.

The odds, however, may happen. That is, if STI managed to hit 2,680 to trigger Parabolic SAR buy phrase. The market will turn bullish and may score a new higher high. This will cause Elliot Wave 5v to be recounted as 5iii and 5v may move up to 2,800 or beyond. The correction I anticipate will still happen but postponed till the new 5v is met.

I know this can be frustrating but unfortunately no one has the power to dictate how the market should move. Elliot Wave count or Technical Analysis are tools which could help us to observe how the market may move. It won't provide the sure answer neither nor it is infallible.

The chart below is a close up shot of the right hand circle in the above chart. It paints the two scenarios I have depicted above. The orange color assumes we are already in the correction. The blue color is "the odds" I mentioned, where it will cause the recount.

The above is my subjective view. It explains why I have been so cautious about the market lately.

"If you don't bet, you can't win. If you lose all your chips, you can't bet" -- Larry Hite.

Why I am so defensive the past 1 ~ 2 weeks ( by staying sidelines ) is to safe guard my chips!

PS: In regard to the Corrective Wave count. I am aware many people ( including EWI ) believe what we are going through now is a bear market rally (Primary Wave B of the Primary A, B, C wave). Again, up until now I do not subscribe to this view for reasons stated before. But I stand corrected when market unfold enough to prove me wrong. Regardless of where we are, it does not affect the impending correction which is a result of the completion of a 5 impulse waves move.


Friday, August 14, 2009

Trading Idea - SembMar ( 3.36/3.37)

[9:30am] SembMar appears to make another attempt to clear the resistance at $3.41. If successful, we can look forward for $3.6. Cut loss at $3.20.


Wednesday, August 12, 2009

Capitaland $3.68

This counter is trading near support. Technical indicators are bearish and there is no buy signal. However, if the support holds. It may bounce back from here. Good for those who believe in buying low. If the support don't hold, we may see $3.25.


Tuesday, August 11, 2009

Every Dog Has Its Day Under The Sun !

I am creating a new tag in this blog to record important market action for future reference. For example, how the market response to major move in Dow after a holiday break :

August 7 Friday ( SG ) : STI plummeted by 52 points
August 7 Friday ( US ) : Dow rose by 115 points
August 10 Monday ( SG ) : STI was closed due to replacement holiday for N-Day
August 10 Monday ( US ) : Dow fell by 32 points
August 11 Tuesday ( SG ) : STI negated weakness from Dow on Monday, "claiming the fun it has missed on Friday" and rose by 47.95 points ( Actually, this is a technical rebound but still it has negated the current market action of Dow and take reference from the strong gain it has missed ).

When come to 'claiming the missing fun', STI is very good in it. I guess STI believes "Every dog has its day under the sun" and won't let go its turn easily.

Congratulations to those who had taken positions on Friday ! Yanlord rose 11 cents to $2.54. Another counter I have been eying but did not mention here is IndoAgri, rose 15 cents ! As stated in my previous post, I will ( have given ) this rebound a miss intentionally. I am changing my trading time frame and are currently looking at position trade entry instead of swing trade. I believe the market is currently going through a ABC correction which may last for several weeks ( gliding down slowly ). This view will be wrong should the market break above 2,700.

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Friday, August 7, 2009

Yanlord ( $2.41)

[3:50pm] STI down 56 points. Same view as mid-day break. Unless it falls by another 40 points or so to 2,480. At that level, it will be good bet for a portion of my money.

For the gutsy folks who can't control the itchy hands, Yanlord can be a good gamble. Based on my Swing Trade template, this stock is oversold after falling for three days consecutively. Any technical rebound, this counter is likely to be beneficiary. A word of caution, downside risk remains, result will be out on August 11 ( could be why the past three days drop but UOB Kayhian think otherwise ):

DJ MARKET TALK: UOB Tips Yanlord 1H09 Net Profit +179% At S$214M

Aug 5, 0349 GMT [Dow Jones] STOCK CALL: UOB KayHian tips Yanlord (Z25.SG) to post "pleasing" results, forecasts 1H09 net profit +179% on-year at S$214 million. Adds, actual result could be higher as company managed to sell almost all 100,000 sqm of completed but unsold inventory at Shanghai Riverside City in 1H09. Notes contract sales through July at CNY7.6 billion, +65% vs FY08, marking 85% of house's already bullish 2009 sales target; notes 95% of house's 2009 revenue forecast secured. Results due Aug. 11 around midnight. Keeps at Buy, puts S$2.99 target price under review for upgrade after results release. "With the continuous rally of the sector, Yanlord is now close to our target price. Admittedly, trading at a 4% premium to NAV, the stock is not cheap. But liquidity will boost the sector valuation to an otherwise unjustifiable level. As Yanlord is one of the most solid and transparent mainland developers, we are keen to keep the stock as one of our top picks." Shares +0.4% at S$2.85. (LES)


Mid-Day Break

[1:00pm] At the mid-day break, STI gave up 35.68 points or 1.37% to pause at 2,565.82. Stock markets across the region are looking at the US economic data released tonight and will likely to stay cautious. HSI gave up 350 points while Nikkie loss 104 points.

Is this a good time to enter ( amidst STI corrected by 135 points in 4 days )?

Yes, only to those with extremely high risk appetite and are trading in very short time frame who want to target at 1 ~ 2 sessions of possible technical rebound after our long weekend. However, the risk is really quite high in view of the impending key economic data to be released and that the US markets are still in over bought region. Any slight bad news may trigger the US market to tumble heavily.

No, to the more conservative traders like myself. Technical indicators suggest we still have rooms for more downside even if there is strong technical rebound to serve as a pause in between. At mid-day, we are not even touching the 20 days simple moving average yet. RSI has not reached center line yet. Unless the index nose-dive to 2,480 ( which I doubt it will by today )...

My 2 cents, I could be wrong!


Thursday, August 6, 2009

Parabolic SAR Sell Phrase Triggered

[10:30am] Parabolic SAR sell phrase triggered.

Another View of the Elliot Wave count from the professional ( EWI ). Chart extracted from Aug issue of EWI newsletter :

Based on the above, EWI thinks we are in primary wave B. We have just completed B(a) and are heading for B(b) at 2,250 ( that's what the arrow points to, not sure if it is to scale or anyhow draw ). When B(b) is achieved, we will rally up to B(c). After that, another 5 wave down to complete primary C wave.


Wednesday, August 5, 2009

Day 2 of pull back !

Day 2 of pull back ! This time by 41.93 points. Both days combined, -74 points.

In the past, I would have gotten ready for opportunity trades using setup such as STS, 3~5 bars drop or other swing trade method
to take advantage of possible technical rebound. However, I am cutting back on my trades since early July. From March to June, I have been generating about $800 per month of commission for my broker ( based on 0.145%, $25 min ). Almost everyday there is a trade! I think I am making too many trades and ought to scale down. That's why, I am more picky on my entry this time. If not, everyday there is trading opportunity.

STI is at the verge of triggering Parabolic SAR sell phrase. RSI over bought situation has eased but still have room for further downside. I will pass on the technical rebound play ( if any ) and focus on better entry ( probably take 1 ~ 2 weeks or beyond because the market won't move in a straight line ) should the index continue to correct further. However, the odds of a 5iii, 5iv & 5v recount still exist unless the index continue to plunge heavily from here.


Tuesday, August 4, 2009

Waiting for new buying opportunity !

The Straits Times Index closed lower today by 32.88 points, the first significant pull back since July 14. It is, however, too early to conclude if the bull has succumb to the bear. My Elliot Wave chart has shown some additional details & recount. 5iii & 5v are now almost the same height. This leads me to speculate 5v may push higher after the overbought situation is corrected, maybe to 2,800? Not very sure, just my speculation!

Today's closing is a bearish engulfing candle. Parabolic SAR is accelerating with the trend. The downside support are marked in the chart based on Fibonacci retracement ratio. I think between 2,400 ~ 2,450 is a good buy zone. I am beginning to monitor some counters awaiting the opportunity!


Monday, August 3, 2009

The Hound of the Baskervilles

When a reliable chart pattern or indicator does not lead to the action you expect and prices move in the opposite direction, this is what Dr Alexander Elder referred to as "The Hound of the Baskervilles" signal.
When a Head & Shoulder pattern gives a strong sell signal but the market refuses to collapse and rallies from the right shoulder, it gives the Hound of the Baskervilles signal. When prices rise above the 'head', it is time to cover shorts, reverse, and go long.... ( page 105, Trading For A Living - Elder ). This is exactly what has happened to our closely watched and valid H&S pattern spotted recently !
After the refusal by STI to submit itself to the H&S pattern, the index has risen 415 points almost in a straight line since July 14. I know everyone is tired of being cautioned and so do I am tired of cautioning. But the index is very over bought now ( RSI = 79.6 ) and any upside is limited without a decent pull back.
In my post dated July 1 "Frustrating Moment", I mentioned " I am certain that the index will break 2,400 in the intermediate term ( unless it is a failed Wave 5 ) and probably hit 2,600 ~ 2,800". At that time, STI was 2,352. Today, STI is 2,681.
Moving forward, I have two scenarios for STI : We may still hit 2,800 depending on how deep the pull back is. If the pull back is shallow and bounce back fast, the last significant high will be recounted as 5iii, the pull back target is 5 iv and 2,800 is 5v. If the pull back is hard and we can't return to the last significant high, 5v is met ( last significant high ) and we are heading for a deeper correction.
While the market may not reward you just because you are diligent or patient, it will absolutely punish you if you are slacken or impatient. Although the rally is over extended and the pull back is overdue, I won't let the market suck me in. In fact, I have offloaded everything I have by today waiting for new opportunity !