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Monday, April 4, 2011


This post is in response to the question from "Style" who has posted the question in the comment of my last post :

Yangzijiang ( YZJ ) has reclaimed much of its lost ground since March 16. The counter is turning bullish. However, technical buy signal has not been generated yet and will probably be generated when prices breach $1.90. Traders who are trend follower will forever faced the dilemma of missing the bottom if they wait for the technical buy signal or if they enter ahead of the buy signal may end up catching the falling knife. It is a tough decision that one need to be made based on risk appetite. Perhaps buy 50% in anticipation of the buy signal and another 50% when the buy signal surfaced? Another consideration is the investment time horizon. If you intend to hold for 3~6 months then minor fluctuation of $0.05 ~ $0.10 is not so important. If you are a swing trader aiming to reap a small profit, timing become very critical...

My view on STI and many counters including YZJ is that they are currently quite overbought. Some profit taking may be on the card. Since the market is generally bullish based on Point and Figure buy signal, buy on dip can be considered.