Desperate?

Last week I opened two short positions suspecting market to weaken. I share in CNA but didnt reveal which counters. Its hard to publicly declare you are shorting when general sentiment still bullish. This week HSI futures drop 1000 points from its high, is this the start?

I also noticed 4th liner stocks getting into top volume daily, with many rapid markup. Although this appear bullish could it be the institutions becoming desperate, markup with limited time left?

Two of these counters have good formations. They fit my rule one of technical trading - potential breakout of consolidation after taking out major resistance. Catch is when such "perfect" setups fail, expect hell to follow. Hence rule two - cut losses short and let profits run.

Sell Calls

Closed my long positions.

Market go through cycles of profitable and unprofitable periods. It was a huge profit for bulls from 2003-2007. The bears had their share of profits in 2008. So far in 2009 bulls are enjoying their revenge. Its somewhat a no man's land to me now. What's next?

HSI's Fan

From the HSI fan we can tell at latest breakdown, price is unable to reach the usual distance between fan lines. This suggest something out there is supporting the market. When price subsequently breakout from a mini HHHL, it marks start of a strong rally.


On cycle of stock market in general:
Trending -> Ranging -> Trending -> Ranging -> Repeat

Trading method to capture above:
Position long -> Swing long -> Swing short ->
Position short -> Swing short -> Swing long -> Repeat

When asked what kind of trader:
Trade long term (weeks to months) using short term (day-to-day) movement to tell me where price is heading. Then follow it. I can stalk a stock for months before deciding that is the time to buy it.

Arbitrage

The wave cycle and direction for these two counters coincide pretty well, until this week. Arbitrageurs might put up something like short GENTING long YONGNAM for a return-to-"value" trade. Could they?

Hit-&-Run

My students know I'm a proponent of long term trading - buy a good stock and hold it for months. Short term plays are more likely to result in losses, as its impossible to time market on the dot.

Digress a bit, the next course for Practical TA should be from nov onwards. It will take sep/oct to complete the course for clients who already signed up or just contacted me.

Took some short term trades recently in case a possible scenario happen to market. Dont follow, using earlier profits as buffer. Post the buy and sell calls to CNA. These trades are not selection of winning trades. These are all trades done including flops haha.