Thursday, June 01, 2006

Bulls Vs Bears; Who will win?

A very tight contest today and we manage to stay afloat but still short of the 200MA. It was inline with my anticipation that we will have another final dip to break under 200MA and then hugging it like a lover. The bullish sign would be to see STI index going back up 200MA and never come down again. That to me will be identical to May'04 and Oct'05. Back in May'04, China stocks were battered down too. That was when I lost quite a fair bit of money. Can you imagine I was trading with say 10% of what I know today back then? Fully deserve to lose for I pay little attention to the kind advise of fellow forumers to start slow. I was too greedy for instant success. I mean who isn't? Everyone who trades the market for the first time expects to get rich quick! It is after losses and gaining more experience, one will learn that the more impatient you get in the market, the more you will lose.

Another thing I learnt is, this is the time to pick up leading stocks! Instead of picking up stocks that has corrected the most or looks pretty cheap, I will be picking up leading stocks. Look at who recovers the fastest in Oct'05. The most gains are usually those with fantastic results. Many fanciful penny shares will flaunt at me but I shall be disciplined and look out for value for it is proven time and again that these are where the big money will invest in as well.

Following the market over the last few weeks, memories of Oct'05 came floating back. Today was a classic reminiscences of that day where I tried to play rebound. The market on that day gapped up and I tried to be smart and chased after Cosco. Of course when a stock gapped up, I bought at the high. Without saying, Cosco came back down and I had to cut loss. That lesson taught me never to trade until the direction is clear. Being a small retail player, the 2 bids 3 bids profit margin is never worth the risk for me. Hence today, when I saw the gap ups, I tell myself not to touch for I remembered the pain. The pattern was, both were uncertainty times in the market and I have to be realistic, even with gap up, the odds of follow through bullish phase will simply not happen. After such a sharp decline, buying high is not exactly what most people will do. Worse still, the resistance is so close by that it makes little risk/reward sense.

I am currently pouring over all the resources trying to learn the characteristics of a bottom. I am seeing plenty of potential bottoms after my scans but recently the market has a knack of breaking support after support. Art Shalt wait.