Wednesday, March 14, 2007

Market showed true colours

The market rebounded spectacularly for 5 days before another rout took place. The rebound was noted with lesser volume on the way up which to many wasn't going to sustain. But the rise caught many in complacent mode and once again we tanked this time lead by US subprime loans problems. Nikkei and HangSeng lead us into the red and this selling erased all the gains in the rebound, classic! Fear not, this is how a bottom should be formed. Let us be patience and wait for it to form.

STI on the daily: We have now met resistance at the first gap and reversed to a lower high recorded. Now this is what can happen:
1) STI finds support at the last low near 2960s thereabts.
2) STI finds support along 100MA.
3) STI test 2880 thereabts.
4) Most unlikely to happen is we rebound tomolo to close the gap.

HSI 18,618 is major support, breaks that, up the lorry....

The rebound over the last 5 days left me looking silly as stocks threatened to resume uptrend without me onboard. My opinion of the market after I liquidated was that it should head down further however it traded otherwise. Hence inorder not to miss the run if we really have a reversal in the making, I bought Chartered and Noble yesterday. My plan was to buy small and add if market continues to head higher however both tanked and I look set to liquidate and focus on the short side.

"V" type of rebound has the highest failure rate and today market turned down again. My plan last week was to liquidate my portfolio and turn short at rebound, hence with this turn in market, i proceed accordingly. Important thing is ask not where the market is going, but what you going to do when the market gets there.

DISCLAIMER: This is not an inducement to buy or sell. You should do your own analysis on top of my postings. Copyright © 2006 GrowMoney Blog. All rights reserved.