Sunday, February 19, 2006

Stock Market faces Strong Resistance

STI resistance 2450 is like a rock. We tried for 2 weeks and we couldn't break it. The worst part of the attempts were long upper shadows signifying selling at the top. I remember ignoring these signs back in Sept'05 to October'05. Then I thought market was consolidating to burst through that resistance. How wrong I was. We had the biggest decline of 60 over points and the market basically gave way! Ouch! Prior to this, I remembered selling due to weakness in my stocks. Hence I was not hurt. But bottom fishing during that decline costed me quite a bit. Hence I always tell myself to wait for a perfect chart patterns. Frankly the risk/reward is not favorable to trade now. I shall wait for a clearer direction.

Things i did wrong in January and Febuary:
1) Bought DBS thinking bank will rotate in play. It never did. When weakness was seen, I held on thinking banks will be in play especially on the budget day week. Finally sold at a 25% loss.

2) Didn't sell my Datacraft despite a 25% ROI. The chart had shown me it is struggling at the upper channel line. Now it has declined to a small loss. The volume ain't heavy hence I'm not selling.

3) Bought Semb Marine anticipating it's good results. I should never have done it. Deviated from my usual chart patterns trading. I thought Oil, Gas play will be in play but definitely did not happen when I hold the stock.

The wins in January got to my head and i begin to think trading is easy. The wins in January coincides with the chart formations which took the whole of December to form. I was merely at the right place at the right time as I have many sound proper base to choose from. I went back to my favourite trading book for both psychology and chart formation recognition. It reinforces what I already knew and filled in some of the areas i forgotten. Conclusions, I'm on the hunt for the next runner again! :)