What timing! The rally was inline with the upcoming Chinese New Year! :D Now that we have 1.5 days before we close for CNY holidays, i am considering a hedge for my longs.
I shorted Chartered last Friday right before closing. It was a powerful rally in late afternoon and we close the week stronger. It has always been my plan to hold longs and go short one at least 1 downtrending stock. This is because I am still not sure we are out of the woods. I expect another test to the downside after the holidays hence as soon as I see weakness in my long positions, i will take my profit and add to my short positions. The rationale being, if market is to go down from here, there are 2 possibilities.
A) We achieve a higher low and selling will be well absorbed and I can square off my shorts and turn long the market.
B) We go down to at least test the low at 2745 level. If market was to head that way, i forsee it to happen in less than 5 trading sessions. Any hesistation is a sign of bulls.
2 levels we can look at from STI point of view is 3171 & 2964.
As for DJ, it is trading at the resistance level 12,800s. It is normal for a pull back as we have been going up for quite some time since the rate cut. It was a relief to see market reacts positively to the rate cut. Otherwise i would have taken a more aggressive stance in shorting.
I see DJ's support at 12,600 thereabts. But worse case scenario shouldn't take out 12340s which is a short-term fibonacci 38.2% support.
I am still not agressive in turning long on stocks. The next higher low will be excellent for me to initiate another long position. Until then, i feel it doesn't make sense to take up long positions when indexes are trading at resistance levels.
For new readers who are new to my blog and found the articles inspiring, i only have this to say, if i can do it, so can you! Trading is never a complicated affair and it is certainly not difficult unless you are trying to find a sure-win system which any experienced market participant will attest to this - it is non-existant! I too started out on the wrong foot and accumulated anything but wealth. Slowly but surely, I was able to turn profitable by managing my psychology and money management well. Of course I acquired trading methodologies known as technical analysis to aid in my comeback.
Trading should never be regarded as a form of gambling. This should be a highly regarded business where one will go through plenty of heartache, mood swing and still have the heart to continue. It is a business where failures are expected and accepted. It must be an enjoyable process otherwise those market swing days will kill the passion and joy to a certain extent, affect the personal life. One has to be emotionless in trading and this has somehow filtered into the personality. I for one has changed alot in which I would avoid senseless confrontations with fellow peers. I mean, what is there to win or lose about in an argument? Pride? Market has taught me a lesson about pride and ego long time ago. Who cares about personal opinons? In trading, we back our opinion through our positions. When we are right, we will be rewarded handsomely. If we are wrong, we accept the wrong opinion and be flexible enough to opinionate in the right direction. Pride has no place in trading. Hence, if you are new to trading, decide early if you are serious about it as a business or gambling. Otherwise don't bother, as you may end up losing in the thousands before you realise.
A simple test, from the price movement of capitaland, can you tell if it is going up or down? What are the price levels to watch out for? This is the kind of information you need to conjure opinions from.
DISCLAIMER: This is not an inducement to buy or sell. You should do your own analysis on top of my postings.
