Sunday, March 29, 2009

Retracement or start of reversal?

STI: Many many gaps to play... The one at 1664 is where it confluences with Fibo retracement... wah i wonder should i try a long there... majam the retracement also has meat to short...

HSI: I longed HSI in a somersault action trading upon the breakout of 13.9k... the rally fizzles out around 14.1k. I read Dow's Thurs night rebound correctly and wanted to sell at the usual morning gapup. However, HSI not only did not gap up, it trades flatly around 14k to my disappointment. No wonder they say expect the unexpected! Currently there are two overhanging downtrend resistance line to be wary of. Once we clear that, 15.8k should be within grasp. How does HSI falls from here? Any catalyst? Yes. G20's statement will be a market mover. Not to forget, window dressing should be over by Tuesday. Any plunge in Apr has to be taken seriously. No doubt alot of people already compared MAr'08 recovery to this one, but we ought to be careful of the bank's reporting in Apr.

HSI: This is the other reason why i long HSI... it has broken the 20-week MA. The possible nightmare would be HSI to close lower and whipsaw me.

I also took a long position in NYSE WFC... i notice the recent rally in Dow was not lead by banks... banks were taking a breather, consolidating after the strong surge. At this point in time, i still cannot identify if it is a healthy retracement because there are no clear signs from candle patterns nor volume. The thing i wanna see happen would be, the next rally to be lead by banks again... because it will then become a typical bull market sector in play. Right now, they are all supported nicely at support levels and nothing looking bearish as yet.

As for Singapore stocks, indeed it is still early to take up my long positions. It is only day 1 of retracement. Recent pull backs has been shallow... i dare not short as yet. The last time i shorted at resistance plus candlestick reversal pattern, technically it was a good short and yet the market moved against me mercilessly. The stupidest thing is... i hesistated in cutting loss and act smart by hedging... at the next turn, i took off my hedge and nett short again... once again STI faked the turn and broke through to 1780.... This is where i know i am wrong in my analysis.

One of the way to determine retracement is using fibonacci... thus, i will be waiting at those retracement levels patiently... So far we did not see a consectutive 2 day retracement... let's see where it will lead us to. Also, as the index falls, my experience tells me to watch how the market absorb the selling... there are many times where the index fell but leading sector is firm.. this is part of the typical sector rotation. Thus, i will watch if banks and properties are at support and the selling well absorbed.. this may be an important clue that we are in a bullish market.

I also did some research on past market bottoms... the retracement is not always at 38.2%... in some cases, not even 20-day MA is not penetratable... too many variations... but one thing is for sure, along the way, it is sure to test 20-day MA as support and that is where we can go long. But got to wait... the question is, do I have the patience to wait? How about shorting to benefit from the retracement? Especially the gap is some distance away.

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