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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."

Monday, June 26, 2006

Other: Long Lumber Lah

OtherI overheard a short conversation my grandma had over the phone recently. It is very funny and I thought I should share it. It goes like this:

"Hello? Hello? Huh? Hello? Huh?
Heeelllo.....?
...
...
...

Long lumber lah!"

Not quite what you expected right? Haha.
=P

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Monday, June 05, 2006

Journal: Range-bound or Rebound?

JournalLooks like the STI closed down today. However, looking at the top volume and a few of my watchlists, the picture is mixed and green in my closely watched list. I usually view a variety of watchlists and the top volume to gauge the generate intra-day trend of the market. Last 2 weeks were indiscrimately red in most cases, so today's mixed bag must a signal of some sort. I take this to be a sign that the market is sorting out the cream from the chaff.

In a market decline, all stocks fall indiscriminately. However as the dust settles and people re-evaluate their positions and portfolio, the mixed price movements will reflect what is good and what is not. As an example, we can see the strength shown in the food stocks(which I am personally watching closely) and weakness in the transport stocks.

Back to the topic, "Range-bound or Rebound?". Of course the correct answer will be "Who knows really?". =P
My personal opinion is skewed towards range-bound. The market needs some time to sort the good from the bad. Also, I think sentiment is still very cautious after such a decline. People would rather err on the side of caution and not participate rather than risk getting burnt again. I view the 14-day MA as a good resistance level. A breakout of this level and subsequent break down would be a signal to sell.

Hope this helps!
=)

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Saturday, June 03, 2006

Chart: Asiapharm and Luzhou

ChartGoody, more chart requests! Keep 'em coming, guys! =)
I love having to look at charts!



Asiapharm broke out of its declining short term trend with little fanfare last week. MFI trend is still down from more than a month ago. On top of that, a bearish double top was seen last month. However the recent trend for the past 2 weeks seems to be one of consolidation between the resistance of 0.80 and support of 0.75.
My advice would be to stay on the sidelines till a clear breakout enters the picture. If you are more adventurous, you would be inclined to trade the range of 0.75 and 0.80. =)

After its IPO, Luzhou saw months of slow uptrend: long periods of consolidation followed by sudden short up spikes. Then, it broke out upwards rapidly and crashed just as fast to its pre-runup levels. Like Asiapharm, it broke its recent short term downtrend with no sudden activity. I suspect this consolidation will last as long as its previous ones with the range of 0.645 and 0.715.

Come to think of it, my previous chart of Hengxin also saw the start of a consolidation. Perhaps this will be the case for most stocks next week: a range-bound trading week.

I hope you found this useful!
=)


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Chart: My first chart request!

ChartWow! My first chart request is from mininvestor.
Thanks, mininvester! =)

Since this is a recent IPO, there is not enough data to derive meaningful indicators. As we can see, the MAs, bollingers, RSI, etc are still not meaningful. So we work with what is available: the candlesticks, trendlines and formations.
There is nothing special about the candlesticks, although I see hints of a consolidation.
The trend is down.
The most dominant feature of this chart is its formation. The chart has formed a descending wedge formation. This is a bearish formation. When the support of 0.41 is broken downwards, most traders will see this as a shorting opportunity.

My advice is to wait a little long if you want to enter. This is not a good time to enter yet.
Hope this helps!
=)

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Perspective/Chart: When to buy? When to sell?

PerspectiveChartToday I would like to introduce my system of entry and exit. Like many other methods, it involves the elements of selection, timing and cutloss.
However, there is an additional element of testing, which I feel not many people in the market practise enough.

Selection:
Some traders may not filter their stocks based on any criteria and prefer to trade solely on the basis of Technical Analysis. I am fickle and sometimes I do that as well but most of the time I try to trade stocks that have already passed my criteria of Price/NAV, PE, earnings growth, Price/cash, Debt/Equity, industry outlook and Div yield. When I trade, I am aware that some trades are more risky than others if I do not filter them via a selection criteria first.

Timing:
Mechanically, I usually rely on the MAs, Stochastics and Bollingers. These represent the principles of "Support/Resistance", "Overpricing" and "Overdeviation". Additionally, I also look out for MFI divergences and candlestick patterns to reinforce this system. And finally, I put these criterion into context by observing the prevailing trend(ie. higher highs and higher lows, or lower highs and lower lows).

In an UPTREND,
  • The MAs act as a source of support. Stochastic indicates if the stock has been overbought. Bollinger indicates if the price has overdeviated from the mean.
  • Bullish/Bearish candlesticks provide confirmation that the short term trend has reversed.
  • So a buy signal is generated when the price hits the MA of your choice AND a Bullish candlestick pattern has formed. A sell signal is generated when the price recovers from the upper bollinger, the stock has been overbought AND a bearish candlestick pattern has formed.
In a DOWNTREND,
  • The MAs now act as a source of resistance. Stochastic indicates if the stock has been oversold. Bollinger indicates if the price has overdeviated from the mean.
  • Bullish/Bearish candlesticks provide confirmation that the short term trend has reversed.
  • So a buy signal is generated when the price recovers from the lower bollinger, the stock
    has been oversold AND a bullish candlestick pattern has formed. A sell signal is
    generated when the price hits the MA of your
    choice AND a bearish candlestick pattern has formed.
Most of the time, not all the indicators will be triggered at the same time so it is up to the trader to make a judgement whether to take a position or not.

Cutloss:
The cutloss is an exception handler. Your cutloss receptors should be up all the time once you have taken your position. Suppose you took a postion but the immediate result was counter to what you had expected, what should you do? You should allow a margin of error to occur before you hightail out of your position. You followed your system to the letter and yet the market disagreed with your opinion. Take that small loss and accept the fact that your system is not perfect before you inccur the mother of all losses!
The cutloss can be an absolute % loss you are willing to take or it can be based on time or based on indicators or candlesticks. Whatever your criteria of cutloss, the main reason should be a non-response to your timed position. You entered the position expecting the price to head somewhere. If it did not then obviously your system had failed! RUN AWAY!

Testing:
Now suppose you are the risk-averse type(and yet you choose to trade...). A prudent move for such a cautious trader would be to test your hypothesis. You saw all the indicators in your system pointing to a BUY. What should you do? The logical step would be to plunge head first into a buy position and expect the price to increase soon. But the prudent trader will do this:
  • Take a small position first. Say, about 30% of what you originally wanted to use. So if you had wanted to trade an amount of $20,000, you take a position with $7,000 first.
  • Wait for your position to turn positive. Then add to your position as the price indeed moved in the direction as you predicted. If not, wait for your cutloss to be triggered.
Now you have risked only 30% of your initial capital and benefited fully if your system was correct. Of course, the more confirmation you need(ie. the more the price moves up), the less gains you will make because you waited till the price increased before taking the position fully. It is like the uncertainty principle in theoretical physics: the more certain you are of a particle's position, the less certain you are of its speed. The more certain you are that your are right, the less gains you will make.

I hope this has been helpful to you.
=)


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Friday, June 02, 2006

Journal: Start of a Rebound?

JournalToday was a good day. The US market's impressive gains spilled over to the local scene. I usually start the day with a visit to this CNN money page to get a feel of what the local market's direction will be for the day. I think the next few days will be good days to hold some long positions.

However, the trend since April is still down. My mantra while this is still the case is "sell into strength". The signals to sell can be derived from MAs or bearish candlesticks, while the buy signal can be derived from lower bollinger band or bullish candlesticks. On an uptrend, sell signals can be derived from the upper bollinger band or bearish candlesticks and buy signals from MAs or bullish candlesticks.

I expect this month to be quiet as it is the holiday and world cup season. Mostly the punters will come out to play while the rest of us are away.

=)


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Thursday, June 01, 2006

Study/Other: Just for Laughs- oldguy VS the AGM

StudyOtherI just had to mention this series of hilarious posts by oldguy in the canslim forum: http://www.canslim.sg/forum/viewtopic.php?t=29

Here is an appetitzer:
Market is listless and really no eye to see some pennies falling like there
is no tomorrow.

So decided to attend Amara Holding AGM. Wow !

So so so crowded...so many aunties and uncles (including myself)
compare to last year , there was fewer attendees.

Some old familar faces never have chance to meet and chit chat
again. Are they falling ill because of age ? Or they got no more shares with
them already.

Surely u know , what are they here for. Hotel buffet refreshment leh.
So it's true...a come back of ugly S'poreans.

I smart leh, get coffee first and chop sofa seat to relax 1st.
Then comes the aunties uncles loaded with ton of food with their hands
but short of using their head.

Beg me for seat hoh..OK loh stand up and give to u loh after seeing u
so old already like my parents.
Thank me ? Don't need because u come , I go and get food.
Buffet mah...got refill what !
Why so hassle to go and push and squeeze with those sorry people
and u dressed so killing leh.
Wait food stain your dress how ?
Quarrel ah...go ahead loh. Free for all.

U fight loh, I go and get more food for my expanded stomach loh.

Yam! Full tank already. Leave now and go shopping hey.

Ok lobby already...wait a minute. Need to piss...find toilet.

No toilet sign ah ! Ask the hotel worker there..somemore wear suit
sure he knows....that way.

Ok,trust u and follow u finger pointing.

Sir, Stop here and where r u going? Another wear suit worker asked me.

I answered. Toilet where.

Not this way,it is at that way,pointing the way where I come from.

What ! that guy pointed this way and u ask me to go back.

Ok loh ,I go back. But where is the toilet. F......K up.

I will find myself. Look at the lift sign....got swimming pool at 6th floor.

Swimming sure need to change what so got toilet to piss loh.

U see I smart leh.Got swimming pools,got gym , got bikinis
but no see topless leh.

Never mind,old already. What I actually want to see.

U guess ? Cool Twisted Evil Evil or Very Mad


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