Wednesday, March 18, 2009

Retracement or Reversal?

I shorted the market because i want to bet on an intra-week pull back in the markets. Pull back is imminent in my opinion because of the strong surge last week. Now the question is, whether this is the reversal to continue the downtrend or a normal healthy retracement. I won't know for sure as yet. But if my money is on the turn down, if it's the reversal, then i would have shorted at the high and a very good position. If it is just a natural retracement, then i will cover back with small profits or near breakeven then i can somersault to long the market.

HSI: A very nice bearish candle right at 50-dma. However there was no confirmation. I shorted at 12,900 level and am now being squeeze about 200 points... a very uncomfortable feeling. I wouldn't cut loss here because i am along the primary trend and it is at resistance. Dow overnight closing rallied 172 points overnight and despite that, HSI only humbly climb 200 points and i think this is weak. Furthermore with each passing day, Dow may pull back due to the strong surge from it's 13 yrs low last week. I also find it wierd why suddenly all the banks are reporting strong start to 2009? Didn't they just make alot of noise about stress test and nationalisation? If HSI doesn't turn down from here, i think 13.8k may be the next level and it will be my last chance that the market should fall from there. Otherwise, it will be BBQ time....

Dow: How suay can i get? The bearish candle at resistance, classic weakness at resistance. On theory it requires a black candle as a confirmation... instead what was staring at me is a big fat white candle!! ki si lang.... it doesn't help when Nikkei broke 8k...

STI: This is where my second short position is bbq'ed... A classic sell signal whereby the bearish hanging man has a confirmation this time! Guess what? STI still resilient... this is a grim reminder that one do not apply T.A blindly. I shorted because HSI, Dow and Nikkei all are trading at resistance... although it may be bullish.. but if market is trading at resistance, if I do not short then when to short? The key to be able to pull trigger is by controlling your risk via the size of the position. Hence even if BBQ, so long mai hurt capital... just do it!

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