Quick Note III

Last post for year 2011. I wasn't posting for the first 9 months of the year when it was a bear market. October came and I saw and shared a good buy signal for decent rally. What follows is successively lesser 'meat' with each buy signals. Range gets tighter and tighter with declining volume. Market has become a sideway trend.

This is one of those times where I cannot tell which direction the next major move is going to be. It makes sense to wait for a buy signal to initiate long rather than start shorting now. However, this view is not equilvalent to continuing holding losing long positions, stick to planned cutloss if there is existing losing long positions.

In a sideway trend, bulls and bears take turns to try gaining the upper hand until fundamentally it is ripe for one party to sweep the table and emerge the dominant party. On the upside, bottoming formations of stocks could suggest easing selling pressure and poising for fair odds of upwave to come.

On the downside, it is taking too long for the rally to come and many stocks are trading near lows or reaching end of symmetrical triangles. This lack in bullish conviction could well see a move of STI towards 2350 and HSI towards 15000 before a bottom could be tested and built again.

System Z

It's been almost 3 years since I created a trading program that can automatically analyze stock prices. How did the program fare years down the road? Below are outputs of the program for STI (Straits Times Index) and HSI (Hang Seng Index).

The program will give green arrow on buy signal and color the candles green until sell signal appears. When sell signal appears, a red arrow will appear on the chart and candles will be colored red until the next buy signal appears. More about the program here.

Source code of the program hasn't changed at all or tweak since then. The results may be short of amazing to some. But my main point is - if someone with programming background and no financial training can create tools like this, imagine what kind of advanced tools WOULD the big financial institutions have at their disposal??

TA Seminar

On 10th December Saturday 2-6pm, I am organizing a half-day TA seminar. I won't be charging money nor is it a teaser to TA courses, because I don't teach now. The purpose is to share some experience what I learnt over the years and also hopefully, connect with other experienced investors and traders.

Please drop me an email to kensoh@gmail.com by 20th November with the title TA Seminar to let me know your interest. I need to roughly know how much is the turnout before I find a brokering house to sponsor the venue. Thanks!

Tentatively I will cover the following topics:

Rally's TA Seminar
How to make trading profits
What is TA and what it is not
Trendlines and price behaviour

Interactive Q&A exchange session

Tips and Tricks to Highlight:
Power of 2nd Chance Effect
Resistance-turned-Support                
Fanline Method of Selling

Updated 11th Dec:
Yes, the trading seminar was a success. Great crowd of 30 over people, excellent questions & generous sharing from participants.

What is TA?

Some sharing on what is technical analysis and what it is not.



It is:
- one of the many methods which could be used to control losses in trading/investing
- based on price action which reflects underlying tug of war in supply and demand,
- contributed by public sentiment, institutions' fair valuations, insiders-trading
- made up of different sub-methods, for me I use price behavior and trendlines
- required to know its strengths and weaknesses before consistent application
- like other methods, where profits are made from less experienced players


It is NOT:
- a method that make profits 10/10 nor do I believe anything like that exists
- meant for anticipating long term trends, which are ruled by fundamentals
- all that is to it, the right psyche and risk management comes before TA
- required to know all the TA methods, but it is important to specialise
- trading all the time, only when the specialised opportunity appears
- a sure ticket to easy money as time, effort, patience are required

Quick Note II

Just drop by again to say please ignore my buy call below.. Those who bought, your stocks would have gone up 5-10% past week. But market is still quite news driven, and nobody can be 100% sure. So just ignore the post and do your own homework k..

How technical analysis (TA) can help
identify major turning points in market:

The sell call in Oct 2010 for STI 3300 when it was still at 3150. As it happens, STI crossed 3300 and started a 25% correction to 2500.

The buy call in Mar 2009 on HSI and stocks for a major bull run. This signal was from a TA program I wrote. A 1.5-year bull run started.

In Oct 2008 bear market, estimate the bottoming of bear market to take place around Mar-Jun 2009.  Which it did in Mar 2009.

Quick Note

Those looking to invest in stocks, think its time to consider looking at market again. Eg counters like Cosco, Indoagri, etc. Midterm trend is still down exercise caution, cut if it turns out not yet ripe for improvement in market fundamentals.

Drop by to post a quick note. It's been a really busy year with work. This year, I have move on to a new job after being with my first for around 5 years. And as many of you already know, I don't trade actively now. I outsource to a friend I trust let him manage.

He's been doing great so far.. So those of you who's looking for a good fund manager let me know. I prefer to have more personal time over having follow market closely. Alright that's all post again next time!

Updated 30th Oct:
Just a follow-up note to my buy call. Friday 28th Oct looks like a sell point to me, it could be churning distribution. Stock prices could go up much higher nobody knows for now but this is fair sell point in my opinion. Can always wait for next clear opportunity again.

Updated 5th Nov:
Stocks really dropped badly after the sell call above, erasing most of the earlier gains if one was still holding. Just a note Thursday 3rd Nov looks like a potential buy point to me, with cutloss few bids below day's low.

Updated 13th Nov:
After another round of rally, told some that 9th Nov looks like clear sell again, because there is no strength to break through overhead resistance. Market is not yet ripe to advance.

Market poo with bad news from Europe. With this flush-out, I would think a vibrant bullish backdrop next week could be a potential buy again, with cutloss few bids below last week's low.

Updated 30th Nov:
Looks like a buy today in market for next wave of stock rallies. As usual, if no strength to follow through and rally on a good technical formation that is the reason to sell.

New Year

2010 is coming to a close. Next year I'll be posting lesser to dedicate time into research. System Z captures my trading method quite well but it can't handle parabolic exhaustion and short-term trading.

Exiting at high when price goes parabolic is easy to see using eyeball but not straightforward to program into code. The lack of hourly data makes resolution too coarse for generating short-term signals.

Anyway, we'll see.. To my readers,


Updated 2nd Jan:
Technical analysis of MERMAID/SYNEAR.

S-Shares

The shanghai composite index looks likely a bullish chart to me. That could likely bode good upside for china stocks listed in singapore.

Examples of stocks basing near lows are YANLORD and SYNEAR, while examples of those strong ones are YZJ and GMG etc.. Look out for good buying demand to signal time is ripe and confirm this view.

PS: we beat the tetris game.. she play first 10 levels i play last 5 levels. if not usually reach the end really fast already lost concentration. yes!

New High

Stock indices are breaking new highs.
Will their new highs be sustainable?

First let's look at US and Hongkong index. They are singing the same tune except that its quite obvious the asian index HSI is relatively stronger than US index DJ (compared to their levels 1 year ago).



Next let's look at DJ which reacted well to a bull signal. Normally if market sentiment is bearish, when buy signals appear out of bullish setups, they will fail. However this time the buy signal did not fail.


Finally, let's take a closer look at STI. View of STI:
Above 3220 - bullish (at least test old support line)
Below 3100 - bearish (likely severe correction)
In between - neutral (with slight bullish bias)


I remain bullish (since july) on market until dropping below 3100, which could mean major sell signal even for longer term investors.

PS: in oct i said sti will rally 150 points to 3300 then selloff. it really cross by few points then drop to 3120. media blame it on north korea firing missile. oh pls they just happen to be scapegoat. the correction is already decided two months ago.

JAYA / ASTI

Initiated buy call on JAYA at $0.735. Last year july my buy call coincide with a 50% rally in two weeks. Well, that happened due to market over-reaction on some terrible news and there were quick profits in taking advantage of temporary mispricing of the stock.

This round, the bull market is now 1.5 years old. In the primary bull phase solid stocks aka bluechips would have already been pushed up in price. I suspect to fund managers, for next bull phase there is lesser upside in those index stocks compared to laggard pennies which have either not moved much, or had been on retracement past one year.

JAYA is one such laggard compared to other shipping bluechips.


ASTI looks interesting too. Can smell its potentially ripe..