Sunday, January 04, 2009

Big start to 2009; How to ambush hang seng

What a roaring start to 2009 as we see major markets rally big time and most stocks are green green on the watchlist. But I did not benefited from the run-up on Friday. The green green market make me green with envy.. at this point in time, i had to ask myself, what did i miss? How come i miss it. If i travel back in time, would i have done the same.... answer is probably yes. Results were bad, econ numbers coming in were bad. What basis can the market rally upon? If anything, only window dressing can be the only answer. If so, then we should watch out for selling because window dressing at most last a week as far as i can remember, sometimes it only last a few days... the important thing to observe going forward will be the weak candles after the recent run-up.

Now those stuffs i missed:
1. Market didn't go lower on any bad news
2. The risk/reward of going long is pretty
3. Properties & the Financials were trading at their higher low support after the last round of rally.
4. Off-shore came again as i had blogged about last week.
I had wanted to see strength. However, offshore's didn't head much higher. Especially after Cosco's poor guidance. I am wary because going by the pattern, i would have expected Cosco to ignore the bad news and advance on Friday which it did not. It caused a drag on the offshore sector.
5. Stock market is 6 months faster than Fundamentals
6. Stock market already down for 7 months without a decent rebound... the probability is higher.
7. Obama takes office in Jan
8. Singapore budget day in Jan

You can look at Midas... very strong rally after October... burst through all the resistances and even trades above the 100-day ma... look where is it now? I painted a possible scenario, these stocks which had lead the rally, stalls, wait for others to catchup, and then altogether they crash downwards again. That's why you see me observing offshores keenly although i have yet to have any vested interest in the stock market. I always put market direction as the priority. Anyway, for those like me who is sidelined, after such a hefty fall, market may be side way for some time before the next bull market returns... hence plenty of chances!

Hang Seng: Like a bear, when i saw HSI rebounded off 13,700s which is the trendline support of the Ascending triangle, i refuse to long. This is because i didn't rule out a trading range for HSI. My resistance zone for HSI is from 15,700 to 15,200.... any weak candle formation confirms with weak indicators i will take a short position. If it burst through, i will somersault the position to long and 17,300s is where the next resistance may be. One warning though, whipsaw can hurt the confidence level especially when you trade HSI. A way to remain composed and handle whipsaw is to reduce your position size. Although all these levels are in the vincinity of 1000 points at least, due to the huge volatility, HSI can achieve those levels within days. Which explains why i am so obsessed with it for so many years.. keke

I will also be agressive in growing my wealth in 2009. I have finally settled in my new life as a married man since late last year and thus can trade in peace now. I believed my wife has finally understood the demands of trading and would be as understanding as she can be. (I wonder if she will read this) keke.
For 2009, i will be employing a more agressive money management style which i used before my marriage. I didn't practise this in 2008 because i wasn't sure of my finances commitment as it is my first time setting up a family. Furthermore i was shocked that my time had to be divided for in-laws, my own folks and then wife it wasn't mention in the oath... gone were the days where i can read charts as and when i like. keke All through 2008, i couldn't find my rythem until Nov'08. I believe T.A is only a part of the picture and it is not difficult to pick up. I may not be the best in T.A but am comfortable in applying them in my trades with positive results. The next thing i am going to focus on is Money Management. Ok the money management style is to first grow my account to 20% and then using it to take more risk. Take more risk as in increasing position size hor, doesn't mean buy blindly. These way, the money will grow faster when i am right about the market. If i am wrong, at most i give back the profits then i restart by grinding out the 20% returns again and then take bigger risk. Never ever risk CAPITAL!

DISCLAIMER: The contents in this website are for fun reading and must not be taken as a buy or sell advice. You must do your own analysis on top of my postings. By reading this blog, you agreed that i am not responsible for your trading.