Sunday, January 11, 2009

Wicked twist

If my memory did not fail me, the market had ignored alot of bad news last few weeks and edge higher. The news recently is full of job losses and more job cuts to come. In a typical theoretical market bottom, it is said that when the market is full of pessimism, that is where the bottom is. However, we must see a typical bottom action technically in the market inorder to supplement the above statement. That is, the market should trade in small bodied candles and form a good base amidst the extreme pessimism. What we are seeing now maybe a bear market rally. Right now, i could feel the market is starting to weigh in on the massive job losses that is going on around the globe.

Alas, nothing has changed...the current graduating adults is facing what i was going through once... i remember that jobs were hard to come by and the recruit section was as thin as toilet paper. That is when i know, i cannot depend on employment... especially once we are into our 40s... the fear factor will be there. Sometimes when the companies lay off, it is not based on performance, it is based on job functions being outsourced. And when we are in the 40s... tough man... at least that's what i think. That's what draws me to trading. The most empowering thought is, no one can take this away from me and i will only get more valuable as i age.... just like a vintage pinot.. wahaha The worse part is if Obama subscribes to protectionism, will he move jobs back to US?

My anticipation of a grand stand finale didn't materialise on Friday. At noon, when the market started to head higher bolstered by nikkei's surge, i covered my F&N short and turn long on SGX while still keeping my HSI long betting the strong finale. News filtered in in the afternoon about cosco's projects cancellation about 3pm and couple that, HSI started peeling off again. I visioned the weekly charts of HSI and STI, we are at resistance and if we failed here, it would be better to be cautious because market can turn down from here as we have rebounded nearly 20% off the lows of October. What's more, STI has this shooting star on the weekly chart at the 20-week MA... how not to be bearish? Such a good volume week and we are unable to close higher... "pump and sell" syndrome? Hence i shorted 2 stocks and cut my SGX in succession on Friday. Cosco & Capitaland. Both broke key support levels. With Dow's weak closing, Monday morning should see selling... it is how the market absorb the selling that will be of key interest to me. To me, now i'm going to be a bear and see how low can market goes before the rally. I'm still keeping my HSI long until the 13.8k is broken. No doubt it is a drag on my profits. But if the market do an unexpected, and tua rally from mid-week, then i will make more money! Otherwise eat kachang puteh for now...

HSI: If anything, Monday's weak opening may be a good chance to long HSI. So long the triangle trendline is not compromised and the 13.8k holds. It could be a bear trap to kill all the bears and then tua rally from here to at least 15,500s where we have to be careful again. The last round it failed at 15,800, i was slow to short because my anticipation was a firm and strong market which is wrong for now. Now why am i so hooked on HSI? This is because it leads STI most of the time and not to mention the S-shares... hence when we see HSI has a chance to reverse...we can look at S-shares for opportunities!

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