Trading is indeed a tough game. After the bloodshed on Wednesday, we saw some minor rebound on Thursday and Friday. It began very threatening on the downside on Friday Morning. However, bargain hunters returned to the market and bought as though it's the Great Singapore Sales. Thus making my disciplined cut loss on Thursday look stupid. I honestly did not expect the recovery to be so quick so strong. What is going on? Why the sell off on Wednesday which look very much like a bear strike and then a Friday where the risk of holding over the weekend was overlooked by bargain hunters. I do not believe those silly reasons offered, interest rates, bird flu, end of bull run...etc... The selling on Wednesday is a very well coordinated affair accross all regions. I felt terrorised. In the last 2 chapters of his book, Livermore explained in details how dirty the stock market was, well he did not explicitly said that, but i drew my own opinions. He was paid to manipulate stock prices of a dormant stock. He also described how he knew who are the stock operators in some stocks. If it can happen during his time, I do not doubt it can happen in our time. Think! Have you ever seen a stock price rise well ahead of their results? Surely it's a no brainer that "people" knew that positive news is coming and bet it. How did they know? I leave it to your imagination. Another example is how SGX steps in and request information if a stock price rockets with unusually high volume. The company will reply ignorantly instantly. However, 2 weeks later it announces a very positive news.
Conclusions, I will remain cautious over the market and prefer to see a defined trend before attempting another trade. The market look to have recovered with that buying on Friday. US stocks look set to reverse fortunes with good earnings reports expected. But I will always remind myself to expect the unexpected. I will stick to my system. It's either when I see strength in resuming the major uptrend, or I see lower highs.
Let's see if I can draw some nice charts after tomorrow's session.
