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"The market is a treacherous and fascinating game. I am a player and this is the quiet place i go to pen my thoughts and emotions."

Wednesday, May 31, 2006

Prespective/Chart:What is the common pattern?

PerspectiveChartPop Quiz! What do the following patterns have in common?






Marks to you if you answer all of them are bullish signs. Bonus marks if you named them: double bottom, cup and handle, inverse head and shoulders, engulfing and morning star. More marks if you stated that they are reversals(except for the cup and handle).
Now the interesting common factor among them I want to point out is this: if you took each pattern and combine all the candlesticks in each pattern from start to end into a single candlestick, you will get this:

Yes all the bullish reversal patterns, boiled down to their essense, are bullish hammers. That is the gist of a reversal isnt it? Under the backdrop of a downtrend, the price suddenly plunges and then reverses its trend and recoups all its losses in more or less equal measure.


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Saturday, May 27, 2006

Chart: The Case for Optimism

ChartTechnical Analysts will usually view RSI and MFI Divergences favourably. Such patterns usually mean impending reversals.
RSI measures the values of up days versus the values of down days. If RSI is increasing, it means the up values are greater than the down values. MFI is a similar indicator. The difference is that it takes volume into account and weights the values based on the daily volume.
So MFI is a much more powerful indicator than RSI. An increasing MFI literally means more money has been flowing into the stock than out.

From last week, I have managed to spot a number of MFI Divergences. Here are a few charts:

In the case of People's Food, it formed a base with heavy volume and was one of the first few stocks to reverse its bearish stance. I look forward for the gap to be covered.

Next week will be an exciting week.
As always.
=P

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Perpective: Sell in May and Go Away. But what about June???

PerspectiveDoes the saying "Sell in May and Go Away" hold true most of the time? It seems like it is an apt saying for this year. This month was the worst month since 2002.


How about we compare the STI's May performance since 1995? Comparing the end of the month to the start:
1995: The end of May was higher than the start.
1996: Lower
1997: Higher
1998: Lower
1999: Higher
2000: Lower
2001: Lower
2002: Lower
2003: Higher
2004: Lower
2005: Higher


Thats 6 lows verus 5 highs for the past 11 years (this year excluded), or about 55.5% chance that a May month in the past 11 years will be a down one.
Convincingly evidence? You decide!


Now what about the next month of June?
1995: The end of june was lower than the start.
1996: Lower
1997: Lower
1998: Lower
1999: Higher
2000: Higher
2001: Higher
2002: Lower
2003: Higher
2004: Higher
2005: Higher


Its 5 lows versus 6 highs for the past 11 years, or about 45.5% chance that a June month in the past 11 years will be a down one.


Maybe if we try to spot a continuation trend...
Did the June's trend continue from the May's one? (ie. if May was an uptrend/downtrend, did June's trend follow the same?)
1995: No, the trend of June was the not same as May's.
1996: Yes
1997: No
1998: Yes
1999: Yes
2000: No
2001: No
2002: Yes
2003: Yes
2004: No
2005: Yes


Its 5 No versus 6 Yes for the past 11 years, or about 55.5% chance that the trend in a June month will follow the trend in May.


My conclusion: There is a 50% chance June will be an up month and 50% it will be down - the same conclusion anyone will come to even if they did not compare past data!
=) What a waste of time...
29/05/06 EDIT: Maybe it was not such a waste of time after all! As fellow blogger and market participant Itachi pointed out, in the World Cup Years of 1998 and 2002, May and June were both down months. This bit of historical data is pretty discerning. Thanks for the keen observation, Itachi! =P


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The Official Start of this Blog!

OtherNothing fancy here. I just want to set out the foundation and direction of this blog.
This blog will consist of mainly 5 lines of thoughts:

Perspective:
My viewpoint on the market or related issues. This will mostly be opinionated statements.

Chart:
My own technical analysis on certain stocks. Please feel free to request for certain charts.

Journal:
My review of my market actions or inactions. The main purpose is to document my feelings and thoughts.

Study:

Personal writeups and articles from elsewhere. This will mostly be researched materials.

Other:
Interesting news,links, products and services that I want to mention. This will mostly be non-market related.


The purpose of this blog is, first and foremost, to cater to my whims and for the fun of it. I do not care about the ads. I just want to have the experience of doing something i find FUN!


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